General Trend:

  • Shanghai and Hong Kong equity markets lag in early trading as tech and property shares decline
  • Some believe dip in China markets is due to profit-taking ahead of expected phase 1 deal signing
  • Japanese equities rise after Monday’s holiday, sectors moving higher include Iron/Steel but banks lag
  • Consumer Staples and Resources firms rise in Australia
  • Aussie lithium-related firms continue to rise after China’s recent announcement related to auto subsidies
  • China’s imports and exports beat ests in Dec amid low base comparisons; China said imports from the US rebounded in Nov and Dec amid higher pork and soybean imports
  • China Vice Premier Liu He is due to visit the US between Jan 13-15th (Mon-Wed) for the signing of the Phase 1 trade deal
  • Thailand Central Bank did not announce new currency measures, said there is no evidence of speculative trading in the Baht
  • Hong Kong government is expected to later today announce its 5th round of stimulus measures since the protests started in 2019

Headlines/Economic Data

Australia/New Zealand

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  • ASX 200 opened +0.1%
  • (NZ) New Zealand Nov Building Permits m/m: -8.5% v -1.3% prior
  • (NZ) New Zealand Q4 NZIER Business Confidence: -21% v -40% prior; Capacity Utilization: 92.0% v 92.4% prior
  • ICQ.AU Guides FY20 EBITDA to be positive all year; Rev > +50% y/y; expect to become cash flow positive in H2
  • (AU) Australia Insurance Council: bushfire losses now estimated at A$1.34B v A$939M seen prior

Japan

  • Nikkei 225 opened +0.5%
  • TM Issues recall of 696K vehicles involving certain Toyota and Lexus models due to fuel pump issues – press
  • (JP) Japan Financial Services Agency (FSA) Commissioner Endo: Planning to allow regional banks to work outside their core business (1st time since WWII); this opens the door for them to set up management consultancies or regional trading companies – FT
  • (JP) Japan Nov Current Account Balance (BoP): ¥1.44T v ¥1.423Te; Adj Current Account: ¥1.795T v ¥1.778Te
  • (JP) Japan Econ Min Nishimura: Consumer sentiment is improving but remains at a low level
  • 7201.JP Denies press speculation: In no way considering dissolving alliance with Renault; alliance is source of Nissan competitiveness
  • (JP) Japan Dec Eco Watchers Current Survey: 39.8 v 40.9e ; Outlook Survey: 45.4 v 46.9e

Korea

  • Kospi opened +0.6%
  • (KR) South Korea chief defense negotiator Jeong Eun-bo: South Korea and the United States remain apart on reaching a “comprehensive” deal on sharing the costs for the upkeep of US troops – Yonhap
  • (KR) South Korea Finance Ministry Official: China avoiding currency manipulator label by US Treasury is a positive for market stability; S. Korea will maintain its FX stabilization policy
  • (KR) South Korea President Moon: Relations with North Korea are not pessimistic, N. Korea did not shut door to talks, but there are conditions

China/Hong Kong

  • Hang Seng opened +0.7%; Shanghai Composite opened +0.2%
  • (CN) CHINA DEC TRADE BALANCE (CNY-DENOMINATED): 330.0B V 315.0BE; 2019 Trade with US in yuan terms CNY3.73T, -10.7% y/y; Dec Soybean imports at higher level since May 2018
  • (CN) CHINA DEC TRADE BALANCE: $46.8B V $45.7BE; China Dec Trade Surplus with the US: $23.2B v $24.6B m/m v $29.9B y/y; 2019 $295.8B; Dec Iron ore imports: 101.3Mt v 90.7Mt m/m; Dec Soybean Imports: 9.5Mt v 8.3Mt m/m
  • (CN) China Customs Vice Min Zhou: China’s imports from the US have rebounded in Nov and Dec; soybean and pork imports from US significantly rebounded in Dec; Phase 1 trade deal will boost China imports from US but will not affect China’s imports from other countries
  • (CN) China expected to purchase $200B over 2-year period in Energy ($50B), Agriculture ($40B), services ($40B) and Manufactured Goods ($75B) as part of phase 1 trade deal – US Press [in line with comments from US officials on Dec 13th]
  • (CN) China expected to cut RRR and interest rate in Q2 – China Securities Journal
  • (CN) US Trade Rep Lighthizer: Close to being finished with translation of phase 1 China trade agreement, deal includes commitments on currency manipulation – Fox
  • (CN) China PBoC Open Market Operation (OMO): Skips reverse repos for the 16th consecutive session; Net drain CNY0B v drain CNY0B prior
  • (CN) China PBOC sets Yuan Reference Rate: 6.8954 v 6.9263 prior (strongest setting since Aug 2019)
  • (CN) China Banking and Insurance Regulatory Commission (CBIRC) vice chairman Zhu Shumin: 2019 New yuan loans CNY17.0T v CNY15.9T y/y – Xinhua
  • 883.HK Guides FY20 Net production 520-530M boe, Capex CNY85-95B
  • (CN) China Economic Daily WeChat: The US China trade war is not over with the signing of phase 1 trade agreement, US has yet to revoke all its tariffs on China and China is still implementing retaliatory measures
  • (CN) SCMP comments on China plans for a digital currency: THere are said to be some doubts as how application and use of digital currency may mean its launch will come much later than expected

Other Asia

  • (TH) Thailand Central Bank (BOT): Still concerned about the strength of the Baht; ready to use additional Baht steps if needed; Rising FX reserves shows BOT has intervened in FX market; QE not suitable given liquidity – briefing on Monetary Policy and Baht

North America

  • (US) Treasury Dept semi-annual currency report: confirms removes China from currency manipulator designation; says China must take necessary steps to avoid a persistently weak currency
  • (US) Pres Trump intends to reallocate an additional $7.2B in Department of Defense funds for a border wall – US Press
  • (US) Sec of State Pompeo: US is increasingly at risk from China’s actions – speaking from Commonwealth Club event
  • BA Talked Indonesia’s Lion Air’s out of simulator training in the 737 Max after they requested it for their pilots – US financial press citing House Panel

Europe

  • (UK) EU requiring fishing to be be includes in post Brexit trade agreement (UK said it wants to control its waters after Brexit) – press

Levels as of 12:15ET

  • Hang Seng -0.0%; Shanghai Composite -0.1%; Kospi +0.5%; Nikkei225 +0.7%; ASX 200 +0.9%
  • Equity Futures: S&P500 +0.6%; Nasdaq100 +0.0%, Dax +0.0%; FTSE100 +0.0%
  • EUR 1.1142-1.1132; JPY 110.20-109.92; AUD 0.6908-0.6885; NZD 0.6633-0.6616
  • Commodity Futures: Gold -0.7% at $1,539/oz; Crude Oil 0.0% at $58.09/brl; Copper 2.86% at $-0.0/lb
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