Headlines/Economic Data
General Trend: Asia equity markets trade mixed, in line with NY trading session.
BoJ tweaks statement as official Kataoka continues to dissent
Asia Pacific companies start to comment on financial impact of US tax reform (Australia’s Bluescope Steel, New Zealand-based Tourism Holdings)
South Korean Chipmakers trade lower; Energy companies outperform
Indonesia Rupiah rises on Fitch sovereign upgrade
Japan
Nikkei 225 opened -0.2%; closed -0.1%
BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED, Vote 8-1; Said will make policy adjustments as appropriate based on economy, prices and financial conditions. (Note: This statement was not in the prior policy review. On Dec 15th, there was press speculation that the BoJ might ‘tweak’ its message as dissenter called for more easing, said a US financial press report)
BoJ official Kataoka issues dovish dissent at 3rd straight policy meeting: Said considering that, taking account of risk factors such as the consumption tax hike and a possible economic downturn in the US, it was desirable to achieve the price stability target in FY2018; Should take additional easing if delay in hitting inflation target continues due to domestic factors and it is necessary to include that in the text; Possibility of the y/y rate of change in the CPI increasing toward 2% going forward was low at this point; Appropriate to purchase JGBs so that yields on JGBs with maturities of 10 years and longer would be broadly lowered.
Japan investors net bought ¥51.0B in foreign bonds v sold ¥487.6B in prior week; Foreign investors net sold ¥622.5B in Japan stocks v sold ¥84.8B in prior week
Japan Nov Nationwide Dept Store Sales y/y: +2.2% v -1.8% prior; Tokyo Dept Store Sales y/y: 3.8% v -0.3% prior
Looking Ahead: BoJ Gov Kuroda due to hold post rate decision press conference at 1:30 GMT
Korea
Kospi opened flat, has since traded lower
Weakness in the chip sector: Samsung Electronics -3%, Hynix -3.5%
LG Display +0.1%: South Korea to hold meeting on Dec 26th on company’s planned KRW1.8T investment in China
According to industry sources, most luxury restaurants and buffet restaurants at major hotels in Seoul have almost been fully booked for Christmas and year-end holidays – Korean press
South Korea Dec 20-day Exports y/y: 16.4% v 9.7% prior; Imports y/y: 19.5% v 14.0% prior
Bank of Korea (BoK) Gov Lee: Economy to grow close to potential rate in 2018; CPI near 2% target
South Korea Govt ruling Democratic Party agreed to seek a package of measures to ensure fair transactions among large and smaller companies, including bolstering negotiating power for subcontractors
South Korea to announce financial deregulation in Q1 next year
(US) White House said to have stepped up planning for potential military options for stopping North Korea’s nuclear weapons program – UK Telegraph
China/Hong Kong
Hang Seng opened -0.1%, Shanghai Composite -0.2%; Markets later pare losses
Hang Seng Materials Index +2%, Energy +1%, Information Technology +0.8%, Consumer Goods +0.8%, Financials +0.6%
Tsingtao Brewery -3% (Japan’s Asahi lowers stake)
(CN) Renewed speculation that China 2017 GDP growth may be higher than in 2016 (6.7%) – Chinese Pres
(CN) Central Economic Work Conference Statement: Prudent monetary policy should be kept neutral, the floodgates of monetary supply should be controlled, and credit and social financing should see reasonable growth
(CN) PBoC Researcher calls for monitoring of risks related to debt and liquidity; China should increase reforms to prevent financial risks – China Daily
(CN) China Stats Official says can use innovation and other ways to evaluate the economy; supports new ways to measure the economy – China Daily
(CN) China said to have temporarily lifted coal import restrictions
(CN) China Wuhan Gas says it has placed limits on monthly residential natural gas purchases as of Dec 20th
(CN) PBoC OMO: Injects CNY70B in 7,14 and 28-day reverse repos v CNY80B prior; Net drains CNY10B v injected CNY10B prior
(CN) PBoC sets yuan reference rate at 6.5795 v 6.6066 prior (highest setting since late Sept )
(HK) Hong Kong Dollar (HKD) trades at lowest level since early 2016
(CN) China said to have temporarily lifted coal import restrictions
3800.HK Considering solar material business spin-off +10%
Australia/New Zealand
ASX 200 opened +0.1%; closed -0.3%
ASX 200 Resources Index +1%, Energy +0.9%; REITs -1.1%, Utilities -0.5%, Financials -0.4%
Bluescope Steel [BSL.AU] +5%: Raised H1 outlook on estimated impact of US tax reforms
(NZ) NEW ZEALAND Q3 GDP Q/Q: 0.6% V 0.6%E; Y/Y: 2.7% V 2.4%E; Prior q/q revised higher from 0.8% to 1.0%; Prior y/y revised higher from 2.5% to 2.8%
(AU) Australia Nov RBA Govt FX Transactions (A$): -457M v -721M prior
(AU) Australia Treasurer Morrison: Australia needs to cut corporate taxes after US moves
(AU) Fitch: Australia’s budget update reinforces improving outlook
Other Asia
(ID) Fitch upgrades Indonesia Sovereign Rating to BBB from BBB- (lowest level of investment grade); Outlook stable [**Note: The rating at Fitch is now above the rating BBB- rating that S&P has for Indonesia (outlook stable) and Moody’s Baa3 rating (outlook Positive)]
(IN) India 10-yr bond yield tests 17-month high after the Reserve Bank of India’s (RBI) minutes showed that all members of rate setting committee were worried due to rise in inflation and an uncertain recovery of growth
(MY) Malaysia Central Bank (Bank Negara): Onshore Ringgit (MYR) liquidity has improved
(TH) Thailand Nov Trade Balance: $1.76B v $755Me; Exports y/y: 13.4% v 7.2%e
Noble Group [NOBG.SG] +4%: Confirmed that it obtained extension on debt waiver
Looking Ahead: Taiwan Central Bank to hold policy meeting
North America
US equity markets ended mixed: Dow -0.1%, S&P500 -0.1%, Nasdaq flat, Russell 2000 +0.2%
S&P500 Energy Sector +1.4%; Real Estate -1.1%
(US) US House of Reps passes tax bill (as expected); The re-vote was needed after procedural irregularity
(US) Pres Trump: my advisors think markets have not yet fully digested the tax bill
(US) President Trump is said to plan to sign the tax bill on Wed, Jan 3rd, according to a financial press report.
(US) House GOP Leaders said to be unsure if they have enough votes to pass stop-gap bill to avert partial government shutdown on Saturday – financial press; No vote has been scheduled thus far, says the report.
(US) The House Rules Committee is expected to meet at 8 AM EST on Thursday regarding the stopgap bill, according to a separate financial press report.
Looking Ahead: US final Q3 GDP, along with Canada Nov CPI and Oct Retail Sales data due on Thursday.
Europe
(UK) PM May to allow a delay from Britain’s departure from the EU in exceptional circumstances – financial press; This is a compromise with rebellious pro-EU lawmakers against the idea of setting a fixed exit day.
(UK) Dec GFK Consumer Confidence: -13 v -12e
(DE) German Monthly Report: High debt and asset prices may be economic risk
M&A: Euronav [EURN.BE]: Said to be close to a deal to merge with Gener8 Maritime Inc – US financial press; Merged company would be one of the largest oil tanker owners in the world
Looking Ahead: Catalonia due to hold parliamentary elections
Levels as of 01:00ET
Nikkei225 -0.1%, Hang Seng +0.5%; Shanghai Composite +0.6%; ASX200 -0.3%, Kospi -1.5%
Equity Futures: S&P500 +0.0%; Nasdaq100 -0.1%, Dax +0.1%; FTSE100 -0.0%
EUR 1.1822-1.1863; JPY 113.45-113.20; AUD 0.7674-0.7655;NZD 0.7019-0.6996
Feb Gold -0.1% at $1,269/oz; Feb Crude Oil -0.1% at $58.03/brl; Mar Copper +0.1% at $3.19/lb
