HomeContributorsFundamental AnalysisCN And HK Markets Drop After Small Rate Cut

CN And HK Markets Drop After Small Rate Cut

General trend

  • Hawkish Fed speak also in focus, Waller spoke on Fri.
  • PBOC again uses 14-day reverse repo ahead of year-end.
  • WTI Crude FUTs extended drop after moving below $70/bbl.
  • 10-yr UST yields also declined; USD/JPY trades slightly lower.
  • EUR/GBP rises amid the Frost news.
  • TRY continues to drop.
  • Equity markets have generally extended drops.
  • Nikkei 225 has declined by over 2%;Toyota announced additional production disruptions.
  • Hang Seng dropped by >1% during the morning session; Property index declines [Kaisa Group, Sunac and Chinese Estates have been in the headlines].
  • Shanghai Composite also ended morning trading lower (-0.8%).
  • S&P ASX 200 pared decline.
  • RBA Dec Minutes due on Tues (Dec 21st).

Headlines/Economic Data

Australia/New Zealand

  • ASX 200 opened -0.1%.
  • (NZ) New Zealand Nov Trade Balance (NZ$): -0.9B v -1.3B prior.
  • RIO.AU Appoints Canadian ambassador to China, Dominic Barton chairman, effective on May 5th.
  • (AU) Reserve Bank of Australia (RBA) offers to buy A$800M in Semi Govt Bonds v A$800M prior.
  • (AU) Reserve Bank of Australia (RBA) Offers to buy A$1.60B in Govt bonds v A$1.60B prior.
  • MFG.AU Notes impact of St James place mandate being terminated, not material to interim results.
  • CIM.AU Responds to ASX query: Actively working with Middle East ops acquirer to ensure BICC meets commitments to employees, which is currently A$7.0M outstanding.


  • Nikkei 225 opened -0.8%.
  • (JP) Bank of Japan (BOJ) Gov Kuroda: Not time to think about normalization; will seek appropriate policy as well as fiscal health; Increase in BOJ holdings does not impact policy.
  • (JP) Bank of Japan Flow of Funds report: Q3 Household assets ¥1,999T, +5.7% y/y.
  • 7203.JP To suspend ops in Jan at 5 factories due to supply chains, chip shortages, and due to coronavirus pandemic; Affirms 9.0M production guidance.


  • Kospi opened -0.5%.
  • 052690.KR Freezes electricity prices in Q1 [in line] – Yonhap.
  • (KR) North Korea leader Kim’s sister makes appearance at event, after not being seen for over 60 days.
  • (KR) South Korea markets to be closed Dec 31 (Fri) and resume trading Jan 3rd; ex-dividend date is Dec 29th (Wed).

China/Hong Kong

  • Hang Seng opened -0.5%; Shanghai Composite opened -0.3%.
  • (CN) China Senior Diplomat Wang: China does not fear confrontation with the US; To promote steady progress in ties with US in 2022.
  • (CN) China PBOC Open Market Operation (OMO): Sells CNY10B in 7-day reverse repos v CNY10B prior and CNY10B in 14-day reverse repos v CNY0B prior; Net inject CNY10B v Net CNY0B prior.
  • (CN) Hong Kong Legislative Council elections saw just 30.2% of voter turnout (lowest on record), all candidates picked by China Communist Party and election under new rules.
  • (CN) China regulators should not allow capital to have ‘wild’ growth – China press commentary.
  • (CN) China PBOC sets Yuan reference rate: 6.3933 v 6.3651 prior.
  • (CN) China PBOC Newspaper: China encourages property project purchases.
  • (HK) China issues a paper related to Hong Kong Political development: Notes foreign forces disrupt democracy development.


  • (CL) Chile names Left wing candidate Boric as president elect, to meet with Pinera Monday, Dec 20th.

North America

  • (US) Sen Manchin (D-VW) says he will not support Biden’s “Build Back Better” legislation.
  • CERN Expected to announce it will be acquired by Oracle Monday at mid $90d/shr cash – press.
  • PFE New Zealand notes death of a 26yo man may be linked to COVID vaccine, coroner is conducting investigations – press.


  • (UK) UK Brexit Min Frost resigns, saying he is confident that Brexit was secure, but has concerns about the government’s direction – press.
  • (ES) Spain PM Sanchez to meet with regional leaders due to steep increase in COVID cases.

Levels as of 00:15ET

  • Hang Seng -1.2%; Shanghai Composite -0.6%; Kospi -1.6%; Nikkei225 -2.1%; ASX 200 -0.2%.
  • Equity Futures: S&P500 -0.9%; Nasdaq100 -1.1%, Dax -1.4%; FTSE100 -0.9%.
  • EUR 1.1252-1.1235; JPY 113.73-113.46; AUD 0.7134-0.7106; NZD 0.6747-0.6721.
  • Commodity Futures: Gold -0.1% at $1,802/oz; Crude Oil -3.5% at $68.39/brl; Copper -0.9% at $4.26/lb.


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