BoJ’s Kuroda Comments On Brexit, Other Overseas Risks

Dec 06 18, 07:27 GMT

General Trend:

Hong Kong equities underperform on news related to Huawei
Nasdaq Futures underperform, in line with tech weakness in Asia
US markets to resume on Thursday after holiday
Arrest of Huawei CFO in Canada weighing heavily on the markets, suppliers significantly lower. Will add to friction for trade between Canada and China; China and US and could be a positive to relations between Canada and US if Canada extradites her the US for unspecified charges
Apple supplier Largan declines over 9%, sees Dec sales lower m/m
Chinese officials have still not offered new details on trade ‘truce’ (financial press)
China Commerce Ministry (MOFCOM) is due to hold its weekly news briefing later on Thursday in Beijing (time not disclosed) – financial press
China skips OMO operations for the 30th consecutive session, and again conducts 1-yr MLF for the 13th time this year
Oil prices decline ahead of upcoming OPEC meeting
Commodity currencies track declines in equities
Taiwan Central Bank Gov rules out QE for now

Headlines/Economic Data

Japan

Nikkei 225 opened -0.7%
(JP) Japan Trade Min Motegi: Reiterates US want to reduce trade deficit with Japan
(JP) Japan constitutional reform discussions to be delayed to 2019 – Nikkei
(JP) Bank of Japan (BOJ) Gov Kuroda: Risks for Japan’s economy is tilted to the downside; economy is expanding gradually, negative Q3 GDP growth due to temporary factors like natural disasters; BOJ can theoretically cut short and long term rate targets, ramp up asset buying or accelerate pace of base money expansion if it needs to ease further -6178.JP President Nagato: Expect 2019 GDP around 1%; interest rates wont rise for the next couple of years; impact of BOJ tweak in July on the company has been nothing
9984.JP Underwriters of $23B mobile unit IPO expected to cover entire book by Wednesday

Korea

Kospi opened -0.3%
(KR) North Korea has “significantly” expanded a key long-range missile base while denuclearization negotiations with the United States have stalled – Press citing satellite images
005380.KR Refused a revised plan that removed a restriction on collective wage bargaining at a proposed plant in Gwangju – Korean press
(KR) South Korea Oct Current Account Balance: $9.2B v $10.8B prior; Goods Balance: $11.0B v 13.2B prior
005930.KR To promote president/CEO of device solution (chip) unit Kim Ki-nam to Vice Chairman position – annual executive shake up; retained its leaders in its smartphone and consumer electronics divisions
(KR) South Korea rival political parties held talks to make a breakthrough over the government’s 2019 budget bill; electoral reform emerging as a sticking point in moving their talks forward – Yonhap
(KR) North Korea Foreign Min Ri Yong-ho to arrive in Beijing today at the invitation of his China counterpart – Korean press

China/Hong Kong

Hang Seng opened -1.8%, Shanghai Composite -0.8%
HUAWEI.CN Canada reportedly arrests global CFO, Deputy Chairwoman and daughter of founder, Wanzhou Meng in Vancouver on trade sanction violation suspicions in the US – Globe & Mail; Follow Up: Confirms Wanzhou Meng is detained by Canada authorities, not aware of any wrongdoing by Meng, not provided with much information so far; confirms US is seeking to extradite her
Follow Up: China Embassy has asked Canada to free CFO Meng, resolutely opposes the arrest
(CN) CHINA PBOC CONDUCTS CNY187.5B IN 1-YEAR MEDIUM-TERM LENDING FACILITY (MLF) V CNY403.5B PRIOR AT 3.30% V 3.30% PRIOR
1810.HK Accounts for 20% of wearable tech global market share in Q3, beating Apple and FitBit – SCMP citing IDC data
(HK) Hong Kong micro flats expected to be hit the hardest on falling prices; seen -30% v the -20% to -10% expected in the overall residential market – SCMP
(CN) China PBoC sets yuan reference rate: 6.8599 v 6.8476 prior
(CN) China PBoC Open Market Operation (OMO): Skips open market operation v skipped prior (30th straight skip)
(CN) China PBoC Advisor: PBoC to allow yuan to gain in trade truce – China press
54.HK Strength attributed to plan by Chairman to take the company private for $2.7B (+30%)

Australia/New Zealand

ASX 200 opened -0.3%
FCG.NZ Reports prelim Q1 EPS NZ$0.25-0.35, Rev NZ$3.8B, -4% y/y, gross margin 17% v 16.6% y/y; Cuts FY18-’19 milk price forecast to NZ$6.00-6.30/kg (prior NZ$6.25-6.50/kg)
NUF.AU Guides FY19 earnings growth; EBITDA A$500-530M; Rev to grow y/y; Guides H1 EBITDA similar to 2018 – AGM
(AU) AUSTRALIA OCT TRADE BALANCE (A$): 2.3B V 3.0BE (10TH CONSECUTIVE SURPLUS); Exports m/m: +1% v +1% prior; Imports m/m: +3% v -1.0% prior
(AU) AUSTRALIA OCT RETAIL SALES M/M: 0.3% V 0.3%E (prior revised lower)
AHY.AU Sells Australian consumer tissue division for A$180M; accretive to FY19 EBITDA (+45%)
DNA.AU CEO Joey Lim requests leave of absence for ~3-months (-18%)
(NZ) New Zealand sells NZ$100M v NZ$100M indicated in 2.50% Sept 2040 Inflation-Indexed Bonds, avg yield 1.7244% v 1.6952% prior, bid to cover 2.90x v 2.67x prior

Other Asia

(TW) Taiwan Central Bank Gov Yang Chin-Long: US/China trade ware may last 1-2 years

North America

(US) FEDERAL RESERVE BEIGE BOOK: ECONOMIC GROWTH ‘MODEST OR MODERATE’; LABOR MARKETS TIGHTENED FURTHER
(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATE UNCHANGED AT 1.75%; AS EXPECTED
(US) Fed Quarles (hawk; FOMC voter): No comments on monetary policy: US economy is strong, especially so in the West
Citi [C]: CFO: may see Rev growth in branded cards in Q4; fixed income trading Rev may be lower in Q4 – GS conf comments

Europe

OPEC delegate: some nations see a reduction of under 1M bpd as an adequate cut
(RU) According to Russia calculations a return to 2016 oil quotas could result in cuts of 1.2M bpd – press
(RU) Russia agrees to cut oil output in tandem with OPEC and allies in 2019; debates regarding figures and baseline for cuts still ongoing
(FR) France Parliament votes in favor of tax announcements by 358-194 margin; Govt has now abandoned fuel tax rise
(UK) PM May being pushed to call off Parliament vote on Brexit next week over worries that if it fails the Govt will break down – Times
(UK) UK Government reportedly seeking compromise to avoid defeat at Dec 11th vote; to include Parliamentary Veto on Backstop – press
(IT) Italy to send revised budget proposal to Brussels by next week – press

Levels as of 12:50ET

Hang Seng -2.8%; Shanghai Composite -1.5%; Kospi -1.6%; Nikkei225 -2.3%; ASX 200 -0.4%
Equity Futures: S&P500 -1.3%; Nasdaq100 -1.6%, Dax -1.5%; FTSE100 -0.8%
EUR 1.1339-1.1352; JPY 112.58-113.24 ; AUD 0.7218-0.7274;NZD 0.6858-0.6901
Feb Gold +0.2% at $1,244/oz; Jan Crude Oil -1.0% at $52.39/brl; Feb Copper -1.0% at $2.75/lb