Asian Market Update: China stocks recover after latest PBoC injection even as rates bounce higher; China Mobile reaches a deal to sell the iPhone
***Observations/Insights*** - China Mobile and Apple finalize their long awaited partnership. Under the multi-year contract, China's telecom giant to start offering the 5S and 5C versions of the device on Jan 17th, with pre-orders starting this Wednesday. Press release indicating the "details of pricing and availability of iPhone 5s and iPhone 5c for China Mobile will be available at a later date." - Despite a 2nd consecutive liquidity injection by the PBoC on Friday - a larger CNY300B move vs Thursday's CNY200B - repo and Shibor rates are still higher. The former opened down 200bps but then spiked higher all the way toward 10% mark. 7-day shibor hit another multi-week high, rising 120bps above 8.8%. Despite the bounce in rates, Shanghai Composite is up marginally in the afternoon break, rising 0.2%. - Nikkei225 is closed in observance of Emperor's Birthday holiday. Over the weekend, govt announced it would target FY14/15 real GDP at 1.4%, up from 1.0% prior forecast but down from 2.6% expected in FY13/14.
***Economic Data*** - (NZ) NEW ZEALAND M3 MONEY SUPPLY: 6.7% V 6.6% PRIOR - (VN) VIETNAM Q4 GDP Y/Y: 6.0%; YTD Y/Y: 5.4% v 5.3%E - (VN) Vietnam Dec Industrial Production Y/Y: 7.0% v 5.7% prior - (VN) Vietnam Dec Consumer Price Index (CPI) Y/Y: 6.0% v 6.0%e - (VN) Vietnam Dec Trade Balance: +$100M v -$100Me - (TW) TAIWAN NOV UNEMPLOYMENT RATE: 4.2% V 4.2%E - (SG) SINGAPORE NOV CPI M/M: 0.7% V 0.9%E; Y/Y: 2.6% V 2.5%E
***Fixed Income/Commodities/Currencies*** - (CN) Daily Shibor fixings: O/N: 4.5150% v 3.9270% prior (6th consecutive rise, highest since Oct 30th); 1-week: 8.8430% v 7.6540% prior (6th consecutive rise, multi-week high, highest since June 19th) - (CN) China 7-day repo rate opens at 5.57% from 7.60% on Friday; Subsequently rises to 9.8% - (SA) Saudi Oil Min al-Naimi: Optimistic regarding outlook for the global oil market in 2014 - financial press
- USD majors are trading in listless holiday ranges - EUR/USD in 30pip band around 1.3680, USD/JPY barely supported by ¥104, AUD/USD just above the $0.8920 level, and NZD/USD on the lows around $0.8190 - off by about 20pips from the highs.
***Speakers/Political/In the Papers*** - (CN) China Ministry of Commerce (MOFCOM): Rare earth quota will remain stable for 2014; to prevent speculative investment in property sector in 2014 - Chinese press - (CN) China Iron and Steel Association (CISA): 2014 total crude steel output likely to increase to 800M tonnes in 2014; Annual growth is slowing to 2-3% amid industry overcapacity - press - (CN) China Academy of Social Sciences (CASS) researcher: PBoC may announce an increase in benchmark interest rates as early as H1 of 2014 - Shanghai Securities News - (CN) Coastal city of Tianjin, China to cap maximum issuance of new car license plates to 100K to help curb pollution - financial press - (CN) China aims to start building at least 6M units of public housing in 2014, which is down from 6.7M forecasted for 2013 - Chinese press - (CN) China Defense Min: Firmly opposed to Japan's plans to increase military spending by 5% over the next 5 years - press - (JP) Japan govt updated economic projections for FY14/15; Sees annualized real GDP at 1.4%, up from 1.0% prior forecast but down from 2.6% expected in FY13/14 - financial press - (JP) Japan PM Abe cabinet approval rating declines by 7 points to 56% - Nikkei - (KR) According to a US think tank monitoring North Korea, there are no signs of increased military activities that could lead to a nuclear test in the next few months - Nikkei - (TH) Thailand opposition Democrat Party has indicated it would boycott snap elections and ramp up rallies intended to topple the govt - financial press - (AU) Australian banking regulator (APRA) to set new capital buffer requirement; review preferred capital levels - (NZ) New Zealand's Kiwibank raises mortgage rates, tracking recent moves by ANZ and Westpac - NZ Press
**Europe** - (GR) Greek coalition govt passed through a property tax reform as demanded by creditors, but lost a lawmaker who was expelled after voting against the measure - financial press - (DE) According to a draft of Germany's Economics Ministry's annual report, the govt expects annual GDP to average 1.5% through 2018 - German press - (EU) ECB's Praet (Belgium): Euro is irreversible; Italians should abandon any considerations of leaving the EMU - Italian press - (UK) BOE's Bailey: Monitoring the fast-rising housing market; BOE has the policy tools to act if needed - UK press - (HU) Hungary Central Bank gov Matolcsy: Need a new law that resolves the rising risks of foreign-currency mortgage debt; May cut rates further to 2.50% - financial press
***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 closed, S&P/ASX flat, Kospi +0.7%, Shanghai Composite +0.4%, Hang Seng +0.7%, Mar S&P500 +0.4% at 1,821, Feb gold -0.3% at $1,200, Feb crude oil -0.1% at $99.18/brl
US markets: - DRI: Starboard said to have acquired 5.6% stake - financial press - GS: Said to have risen over $1B for a new fund backed by real estate - financial press - AAPL: China Mobile formally announces partnership with Apple to bring iPhone to China Mobile's 4G & 3G Networks - TSLA: Daimler concludes equity collar agreement for Tesla shareholding, to expand alliance with Tesla
Notable movers by sector: - Consumer discretionary: Goodman Fielder GFF.AU +0.8% (to sell unit) - Telecom: China Mobile 941.HK +1.3% (announces formal partnership with Apple) - Industrials: Leighton Holdings LEI.AU +4.0% (contract), Boart Longyear BLY.AU +12.7% (full-year guidance) - Utilities: Tokyo Electric Power Co 9501.JP -2.1% (reports of radioactive leak) - Financials: China Merchants Securities 600999.CN +2.9% (receives approval to open branches); Ping An Insurance 2318.HK +2.7%, China Pacific Insurance 2601.HK +2.0%, China Construction Bank 601939.CN +5.6%, China CITIC Bank 601998.CN +6.4% (adjustment from QFII fund reallocation on Friday) - Healthcare: Beijing Tiantan Biological Products 600161.CN +8.5%, Shenzhen Neptunus Bioengineering Co Ltd 000078.CN +5.5%, Hualan Biological Engineering 002007.CN +6.9% (H7N9); Shinva 600587.CN +3.2% (acquisition of Vastec)