General Trend/Theme: Continued weakness in chip-related and China/Hong Kong equities amid dearth of economic data
China/Hong Kong
Markets opened lower following declines on Monday: Shanghai Composite opened -0.3%, Hang Seng opened -0.3%
Hang Seng Materials Index -1.1%, Financials Index -0.8%, Property Index -0.7%, Information Technology Index -0.7% (Tencent -1%)
(CN) China said to ban certain funds from selling stocks on a large scale – Chinese Press
(CN) China govt reportedly to make punishment harsher for banks’ law violations – China press
(CN) China should be ‘vigilant’ of risk from loan company closures – Chinese Press
(CN) China said to target adoption of e-commerce law in 2018 – Chinese Press
(HK)) China PBoC renews CNY400B currency swaps agreement for another 3 years with Hong Kong Monetary Authority (HKMA)
(CN) PBoC sets yuan reference rate at 6.5944 v 6.5874 prior
(HK) Hong Kong Oct Trade Balance (HKD): -44.B v -41.9Be; Exports Y/Y: 6.7% v 10.1%e
(CN) PBoC OMO: Injects CNY250B in 7, 14-day, 63-day reverse repos v CNY140B injected in 7,14 and 63-day reverse repos prior; Net: nil v nil prior
(CN) China Development Bank (CDB) sells 1, 3, 5 and 7-year bonds (**Note: On Nov 24th, there was speculation that China Development Bank might not sell the usual 10-year bonds in its weekly bond sale)
Australia:
ASX200 opened -0.1%; closed flat
ASX 200 Financials Index -0.3%; REIT Index +0.9%, Utilities Index +0.8%
Telstra -2% (block trade)
(AU) Australia sells A$150M in Nov 2027 Indexed Bonds, avg yield 0.6407%, bid to cover 4.83x
Japan
Nikkei 225 opened -0.1%; Closed flat
TOPIX Textiles & Apparels Index -1.4%
Chip-related stocks remain weaker following Monday’s declines: Tokyo Electron -2.5% Toshiba -2%, SUMCO -1.5%
Index component Toray (chemicals/Plastics & Rubber) -3.4%: Data falsification issue spreads to the company
Toyota +0.3%: Names new CFO
Softbank said to offer to buy Uber shares at a $48B valuation, 30% below Uber’s current valuation – US financial press (in line with valuation reported in early Aug)
BoJ Gov Kuroda: Reiterates global economy continues to recover; Asia’s economy will be at core of global growth; Asia is more resilient against economic shocks.
JP) BOJ’s Suzuki: Reiterates view that must maintain powerful monetary easing; yield Control changes is possible when CPI is near 2% level – financial press
(JP) BOJ’s Kataoka: should strive to reach the 2% inflation target by FY18
Japan PM Abe: Reiterates don’t think necessary to make changes on accord with BoJ
Japan govt reportedly considering tax cuts for companies that have cybersecurity plans – Japanese press
Japan MoF sells ¥500B v ¥500B in 0.90% 40-yr bonds; bid to cover 3.00x v 3.24x prior
South Korea
Kospi opened +0.2% (declined 1.4% prior session)
Samsung Elections +0.3% (declined over 5% prior session)
South Korea sells 30-year bonds at 2.52%
South Korea Dec Business Manufacturing Survey: 82 v 84 prior; Non-Manufacturing Survey: 80 v 79 prior
Channel News Asia reporter: Japanese govt is detecting signals that North Korea may be prepping ballistic missile launch (report is from US morning on Monday)
Other Asia
Malaysia
Ringgit (MYR) -0.2%
Malaysia Central Bank (Bank Negara) Deputy Gov Singh said to resign, effective immediately – Malaysian Press; The official is said to have chosen to retire early, says the report
Europe:
(IE) Ireland opposition Justice spokesperson: unless deputy PM resigns, will force Ireland into new election
(IE) Ireland Foreign Minister: Relationship with UK is ‘tense’, last thing we need right now is an election in the middle of Brexit talks
(DE) Germany Econ Min Zypries: we’re prepared to take countermeasures if US imposes new tariffs on steel
Unilever: Board to delay decision related to choice of headquarters – financial press
M&A: IAG.UK: Confirms acquisition of Monarch Airlines’ Gatwick landing slots
Constantin Medien [EV4.DE]: Highlight Communications makes takeover offer to the shareholders of Constantin Medien AG to acquire no-par value ordinary bearer shares
North America
US equity markets end mixed: Dow Jones +0.1%, S&P500 flat, Nasdaq -0.2%, Russell 2000 -0.4%; Energy Sector -1%, Materials -0.6%
The US National Retail Federation (NRF) expected to release its Black Friday and Cyber Monday sales data on Tuesday, Nov 28th.
(US) Adobe: Confirms data shows Cyber Monday is largest online sales day in history with $6.59B in sales, +16.8% y/y as of 10:00 pm ET
Fed Speak: (US) Fed’s Dudley (FOMC voter): Not particularly concerned that inflation is ‘a little bit’ below a Fed target; Reiterates we are gradually raising US interest rates; FOMC is ‘very united’ on appropriate policy path; Surprised ‘how relaxed’ markets are about government borrowing outlook
(US) Fed Chair-designate Powell: Expects interest rates will rise somewhat further from here; pledges to respond decisively to any new economic threats – prepared congressional testimony
(US) Fed’s Kashkari (dove, voter): Reiterates sees no reason to ‘tap the breaks’ on the economy, no reason to raise rates when inflation continues to run low
(US) Fed’s Kaplan (moderate, voter): backs rate hike in near future; remains mindful of Fed getting behind the curve
Tax Reform: (US) Senator Corker (R-TN): Could vote no on tax bill in committee if ‘trigger’ not done; Wants the tax bill to have ‘trigger’ to raise revenues if economic growth expectations are not met; Says ‘no vote’ is not a threat, Republicans are working to resolve the issue. (** INSIGHT: The Senate Budget Committee has 12 Republicans and 11 Democrats. One vote switching could halt the bill’s progress to the floor. Sen. Corker (R-TN) is also on the Budget Committee)
(US) Sen Johnson (R-WI): will vote against tax bill in Budget Committee on Tues unless my issues are resolved
(US) Sen Rand Paul (R-KY): will vote in favor of Senate tax bill
(US) Aides to Sen Daines (R-MT): Senator is currently a no on tax bill; however is optimistic about changes
(US) Sen Cornyn (R-TX): Senate will vote Weds on motion to proceed to tax bill; confirms that senators are considering a deficit trigger and
changes to pass-throughs
US) Sen Lankford (R-OK): working on different options for deficit ‘backstop’ if growth projections in tax bill do not pan out as expected
(US) White House: President Trump to meet with Congressional leadership on Tuesday
Fed’s Dudley: Favors tax simplification and base-broadening; Opposes US tax stimulus at current time because the economy does not really need it; Tax stimulus may be worth the price to get reform.
Fed’s Kashkari: If Congress passes a tax bill, Fed will update economic models, which may change path of interest rates
Goldman: Sees outcome of OPEC meeting more uncertain than usual, sees risks to oil as skewed to the downside this week
Saudi Arabia Energy Minster Falih: When asked how long oil output cuts will be extended, he replied that we will see when we get to Vienna
M&A: Roark said to agree to raise bid for Buffalo Wild Wings to ~$157/share or $2.4B in cash – US financial press
Levels as of 01:00ET
Hang Seng -0.8%; Shanghai Composite -0.3%; Kospi +0.3%
Equity Futures: S&P500 -0.1%; Nasdaq100 -0.2%, Dax -0.1%; FTSE100 flat
EUR 1.1892-1.1909 ; JPY 110.93-111.32 ; AUD 0.7601-0.7614 ;NZD 0.6910-0.6938
Dec Gold flat at $1,293/oz; Jan Crude Oil -0.6% at $57.77/brl; Dec Copper -0.3% at $3.124/lb
