General Themes: Chip-related shares track earlier gains in the US
Retail name Li & Fung gains over 10% amid broker upgrade
Tencent gains over 2% on session in volatile week of trading
China/Hong Kong
Markets opened mixed: Shanghai -0.2%, Hang Seng +0.3%
Hang Seng Information Technology Index +1.9%, Materials +1.7%, Consumer Goods +1.7% (Li & Fung +10% amid broker upgrade) ; Energy -0.7%
Conglomerate HNA Group: Says it is adjusting portfolio and not ‘blindly’ selling assets; Asset sales not related to liquidity; Stakes in Deutsche Bank and Hilton are ‘profitable’ investments, has no interest in selling the stakes in ‘near future’
(CN) China Nov Retail Auto Sales Y/Y: +3.2% v 2.7% prior – PCA
(CN) Dalian Iron Ore extends weakness seen on Thursday’s session, down a further 3% today (**Note: Traded limit down-over 5%- on yesterday’s session)
(CN) CHINA NOV TRADE BALANCE ($): V $40.2B V $35.0BE; Exports Y/Y: 12.3% v 5.3%e (fastest growth since March)
(CN) CHINA NOV TRADE BALANCE (CNY): 263.6B V 240.8BE; Exports Y/Y: 10.3% v 2.0%e
(CN) China Jan-Nov Iron Ore Imports Y/Y: 991M tons, +6%; Nov Iron Ore imports 94.77M tons v79.49M m/m; Nov Natural Gas imports 6.4M tons (record high)
(CN) China State Planner NDRC issues guidelines on producer and user coal stockpiles: Plans to set a cap and floor for stockpiles
(CN) China Nov Export Leading Index M/M: +0.2 to 41.8
(CN) PBoC Open Market Operations (OMO): Skips OMO and says banking system overall liquidity at ‘moderate level*’ v CNY270B injected in 7,14 and 28-day reverse repos prior; Net drain CNY10B v nil prior (*Note: On Dec 5th, the PBoC said that current banking liquidity was at a ‘high level’)
(CN) PBoC sets yuan reference rate at 6.6218 v 6.6195 prior
(CN) CHINA NOV FOREIGN RESERVES: $3.119T V $3.124TE (10th straight month of increases)
(CN) China FX Regulator SAFE: Forex reserves size to remain stable overall
(CN) China PBoC regulators are reportedly clamping down on unlicensed payment companies – China press
(CN) China PBoC said to meet major commercial banks amid the recent bond market sell-off – financial press
(CN) Reportedly 10 Chinese banks push back at new asset management rules in closed meeting – sources
Looking Ahead: China Nov CPI and PPI tentatively scheduled for over the weekend
Japan
Nikkei 225 opened +0.6%: closed: +1.4%
TOPIX Securities index +1%
Chip-related shares gain: Toshiba +1%, SUMCO +2.5%, Tokyo Electron +2.5% (follow-through buying, tracks gains in US chip space)
Softbank +0.7%, Fast Retailing +2%
Dec Nikkei 225 Futures and Options seen settling at ~22,590 – financial press
USD/JPY trades marginally higher with the Nov US payrolls report in focus
Q3 GDP revised higher supported by Capex
JAPAN Q3 FINAL GDP Q/Q: 0.6% V 0.4%E; ANNUALIZED SA Q/Q: 2.5% V 1.5%E; NOMINAL Q/Q: 0.8% V 0.7%E; Business Spending Q/Q: 1.1% v 0.4%e (highest reading since Q4 2017, revised upwards from +0.2%)
JAPAN OCT LABOR CASH EARNINGS Y/Y: 0.6% V 0.8%E; REAL CASH EARNINGS Y/Y: 0.2% (weakest reading since July) V 0.2%E
Japan Oct BoP Current Account: ¥2.18T v ¥1.72Te (40th straight surplus)
Japan Oct Trade Balance BoP Basis: ¥430.2B v ¥418.1Be
Japan Nov Bank Lending Incl Trusts Y/Y: 2.7% v 2.8%e; Ex-Trusts Y/Y: 2.7% v 2.8% prior
Japan Nov Eco Watchers Survey Current:55.1 v 52.1e: Outlook:53.8 v 54.0e
Australia/New Zealand
ASX 200 opened +0.2%; Energy Index +0.7%, Financials +0.6%; Resources -0.2%; Closed +0.3%
AWE: +7% (received higher bid from China Energy and Chemical Group)
(AU) Lynas, Pilbara Minerals and Wisetech to be added to the S&P ASX 200; To replace Flexigroup, Japara and Regis Healthcare; effective at open of trade on Dec 18th
(AU) Australia Oct Home Loans M/M: -0.6% v -2.0%e; Investment Lending: +1.6% v -6.2% prior
(AU) Australia sells A$500M in Dec 2021 Bonds, avg yield 2.0730%, bid to cover 8.54x
(NZ) New Zealand Q3 Manufacturing Activity Q/Q: 0.5% v 3.9% prior; Mfg Activity Volume: 0.3% v 1.0% prior
Korea
Kospi opened +0.3%
Samsung Electronics +1.6%, Hynix Semi +2.1%
Shipbuilder Samsung Heavy continues to decline after recent profit warning and capital raise announcement; -4.5%
South Korea to announce measures related to shipbuilding in early 2018; to establish a KRW1T corporate restructuring fund – South Korea Press
South Korea Finance Ministry: To enhance monitoring of ‘debt-ridden’ companies to prevent corporate insolvency; Sees economic recovery to continue on ‘robust’ exports
Russia Foreign Min Lavrov: North Korea would like talks with the US over security guarantees – press
Other Asia
Taiwan computing products firm Compal Electronics plays down speculation Lenovo is seeking a 20% stake
Taiwan Semi: Reports Nov Rev NT$93.2B v NT$94.5B m/m, +0.1% y/y
(TW) Taiwan said to forecast 2018 GDP growth 2.4-2.6% (*Note: On Nov 24th, Taiwan’s government maintained its 2018 GDP growth forecast at 2.3%)
Europe
(EU) ECB’s Draghi: confirms Basel III is completed; it’s a great day and a major milestone
(EU) EU: Reiterates UK PM May and EU Commission President Juncker likely to meet at 7 AM CET in Brussels; 7:30 CET press conference ‘possible’
(UK) EU officials reportedly tell negotiators they hope for a Brexit breakthrough tomorrow morning (Friday) – press
(DE) Germany SPD Party Congress votes in favor of entering talks on joining grand coalition with Merkel’s party – press
North America
US equities ended higher: Dow +0.3%, S&P500 +0.3%, Nasdaq +0.5%, Russell 2000 +2.1%
S&P500 Industrials Sector +0.9%, Tech +0.6%; Consumer Staples -1%
(US) Senate passes stopgap spending measure that will keep the govt funded through Dec 22nd; vote 81 to 14
(US) Trump admin reportedly preparing infrastructure plan announcement in Jan – press
(US) Fed’s Dudley (dove, FOMC voter): high college costs lower economic mobility; Did not discuss monetary policy in prepared remarks
M&A: Silicon Labs agrees to acquire Sigma Designs, Inc. for $7.05/shr in $282M deal
Looking Ahead: US Nov Avg Hourly Earnings and Nonfarm payrolls due for release on Friday
Fed FOMC meeting due on Dec 12-13 (Tues-Wed)
Levels as of 01:00ET
Hang Seng +1%; Shanghai Composite +0.6%%; Kospi +0.2%
Equity Futures: S&P500 +0.1%; Nasdaq100 +0.4%, Dax +0.1%%; FTSE100 flat
EUR 1.1761-1.1777 ; JPY 113.08-113.39 ; AUD 0.7502-0.7517 ;NZD 0.6823-0.6841
Dec Gold -0.2% at $1,250/oz; Jan Crude Oil flat at $56.67/brl; Dec Copper +0.7%% at $2.984lb
