Headlines/Economic Data
Japan
Weakness in the financial sector: Mega banks decline; Topix Securities brokers index -1%
(JP) Japan’s government may seek to cut corporate tax rate to ~25% vs ~30% currently for companies that increase wages by 3% and make capital expenditures – Japanese Press
(JP) Japan PM Abe: Reiterates desirable for BoJ to continue ‘super easy’ policy, Japan no longer in deflation and excessive Yen strength has been corrected
Drug companies, Shionogi and Chugai, decline: Japan’s Health Ministry released its reform plan which seeks to gradually lower prices for off-patent drugs.
Steel makers trade generally higher: Tokyo Steel to raise steel prices amid strong demand and higher raw materials costs.
Japan exports rise for 11th straight month in Oct: JAPAN OCT TRADE BALANCE: ¥285.4B V ¥330.0BE; ADJ ¥322.9B V ¥206.7BE; Exports y/y: 14.0% v 15.7%e; Exports to China +26% y/y, EU +15.8% y/y, US +7.1%; Asia +18.9%
Korea
Kospi opened +0.1%; Market has since reversed gains
Weakness in Chip Sector: Samsung -0.6%, Hynix -0.6%
Korean Won declines by over 0.4% (first drop in 4 sessions)
South Korea Q3 average daily FX transaction volume $51.6B (highest since Q1 2016) v $50.8B q/q – Bank of Korea
South Korea sold 20-yr bonds at 2.56%
SOUTH KOREA OCT PPI M/M: 0.0% V 0.5% PRIOR; Y/Y: 3.5% V 3.8% PRIOR
Politics: South Korea and China foreign ministers to hold meeting this week – Korean press
South Korea President Moon approval rating rises after Southeast Asia trip
(KR) Bank of Korea (BOK) sells KRW400B in 6-month monetary stabilization bonds at 1.68%
China/Hong Kong
Equity markets are currently lower as of the time of writing. Volatility seen in small cap Chinext index.
Hang Seng Materials Index -0.8%; Hang Seng Energy Index -0.8%, Hang Seng Utilities Index -0.7%, Hang Seng Information Technology Index % (Tencent +1%)
Hypermart company Sun Art Retail Group declines by over 8% after reChinext indexceived HK$62.0B bid from Alibaba unit’s which valued company at discount to prior close
On Friday, the PBoC said that it would ban financial companies from the capital pool business. As part of the rules, ‘highly indebted’ companies will not be allowed to invest in asset management products.
China will more quickly establish a regulatory framework for financial holding companies, according to the PBoC’s Quarterly Monetary Policy Report.
(CN) CHINA OCT PROPERTY PRICES M/M: RISES IN 50 OUT OF 70 CITIES V 44 PRIOR; Y/Y RISE IN 60 CITIES OUT OF 70 CITIES V 67 PRIOR
(CN) China PBOC Q3 monetary policy implementation report: Will maintain a prudent and neutral monetary policy and keep liquidity conditions stable, to fend off systemic risks
6808.HK Alibaba forms strategic alliance with Auchan Retail and Ruentex Group to acquire 36.16% stake in Sun Art for HK$22.4B
(CN) PBoC OMO: Injects CNY100B v CNY30B injected in 7,14 and 63-day reverse repos prior; Net injects CNY20B v CNY10B drain prior
USD/CNY (CN) PBoC sets yuan reference rate at 6.6271 v 6.6277 prior
Australia/New Zealand
ASX Consumer Discretionary Index -0.5% Financials Index -0.4%; Energy Index +0.5%
(AU) Australia Liberal National Party Senator Barry O’Sullivan drafting a bill for a parliamentary commission of inquiry into the nation’s banking sector, covering superannuation, insurance, banks, financial services, protections for small business and the rural sector
(AU) Reserve Bank of Australia (RBA) head of financial stability Kearns: Australia banks have tightened lending conditions for commercial property in recent years
(AU) IMF Article IV Mission Statement: Low wage growth to weigh on Australia household incomes; economic growth pickup likely to be modest; RBA may keep rates on hold for another year
NetWealth Group (investment management firm) rises over 35% in share debut
(NZ) New Zealand Oct food prices m/m: -1.1% v -0.2% prior
(AU) Australia buys back A$400M in March 2019 and Oct 2019 Bonds, bid-to-cover 2.71x
(AU) Australia sells A$400M v A$400M indicated in 3.25% April 2029 Bonds, avg yield 2.6437%, bid to cover 4.98x
MRM.AU Placement raises $22.4M, institutional component of rights offer raises further A$15.7M at A$0.20/shr; +22%
PMP.AU CEO Peter George to retire and Kevin Slaven to be interim CEO; Cuts FY18 adj EBITDA A$50-55M (prior 70-75M); -31%
RBA in focus for Tuesday’s session: Reserve Bank of Australia to release Nov Meeting Minutes and Gov Lowe to comment on ‘Evolving Themes’ in annual year-end speech before economists
Other Asia
(TH) Thailand Q3 GDP q/q: 1.0% v 0.6%e; y/y: 4.3% v 3.9%e (fastest pace since 2013); Thai Baht (THB) -0.1%
(TH) Thailand Central Bank Porametee comments following release of Q3 GDP data: No need to rush into hike in key interest rate; reiterates monetary and fiscal policies to stay accommodative
Malaysia Central Bank (Bank Negara): Intervention is not to manage MYR level; Offshore ringgit trading is illegal; Short selling framework being extended to Islamic govt bonds; To introduce interbank bills in MYR and foreign currency.
North America
(US) According to Committee for a Responsible Federal Budget tax bill will cost $2.2T instead of the $1.41T indicated if all temp changes in the bill were made permanent – US financial press
M&A: Semiconductor processor company Cavium said to receive ~$6.0B or at least $80/share offer from Marvell Technology (at least ~5.5% premium)
Politics: US Special Prosecutor Mueller said to send request for documents to DoJ related to Russia probe , according to US media report: The directive was issued within the past month and the action is the first request for records that Mueller has made of the DoJ, says the report.
Tax Reform: US Senator Susan Collins (ME-R) said does not believe the repeal of Obamacare’s individual mandate should be part of the tax bill.
OMB Director Mulvaney said President Trump would agreement to removing the repeal of Obamacare mandate from the Senate tax bill if it becomes an impediment to passage
The health care mandate is not a ‘bargaining chip’ in the Senate tax bill, said US Treasury Sec Mnuchin.
Mexican Peso and Canadian dollar open the week lower: Mexico is thought to see US idea on NAFTA auto agreement as ‘unworkable’
Europe
(DE) Germany Free Democrats Party said to be breaking off coalition talks with Merkel; Merkel could avoid a snap election if she convinces reluctant Social Dems to enter coalition – German Press; EUR/USD fell 0.6% to 1.1722 on the report
(DE) German Chancellor Merkel: no stone left unturned to form 4-party coalition; regrets no common solution for parties – speaking to reporters
(UK) UK Fin Min Hammond: we are on the brink of serious progress in Brexit talks; UK to make proposals to EU in time for the December council meeting – BBC interview
Dutch telcom Altice SA says not preparing equity raise
Levels as of 00:00ET
Nikkei -0.5%, Hang Seng -0.3%; Shanghai Composite -0.8%; ASX200 -0.2%, Kospi -0.1%
Equity Futures: S&P500 -0.2%; Nasdaq100 -0.2%, Dax -0.4%; FTSE100 -0.1%
EUR 1.1797-1.1723; JPY 112.20-111.89; AUD 0.7571-0.7550;NZD 0.6819-0.6794
Dec Gold -0.3% at $1,292/oz; Dec Crude Oil -0.2% at $56.62/brl; Dec Copper -0.4% at $3.06/lb
