Asian Market Update: China flash PMI slows to 3-month low; BOJ keeps policy and economic assessment unchanged
***Observations/Insights*** - USD bid higher while US treasuries sold off after Fed meeting minutes revealed the start of QE taper may still begin in anticipation of the improved outlook; Markets reprice possibility of a December move despite the dovish sentiment from Yellen and Bernanke in recent days. - PBoC conducted open market operations on 2 separate occasions this week - marks first weekly net liquidity injection in 5 weeks. - China Nov HSBC flash manufacturing PMI falls to 3-month low as New Orders component fall into contraction territory; Chief HSBC economist noting growth momentum has softened in November, while muted inflation allows Beijing to keep policy accommodative. - BOJ on hold with policy and also keeping economic assessment unchanged for the 3rd month as widely expected; Statement mentions "lackluster performance" in overseas economies but still sees exports as "picking up", disappointing some expectations of a more direct acknowledgement of risks to overseas shipments.
***Economic Data*** - (CN) CHINA NOV HSBC/MARKIT FLASH MANUFACTURING PMI: 50.4 V 50.8E (3-month low) - (JP) BANK OF JAPAN (BOJ) POLICY STATEMENT: REITERATES TO INCREASE MONETARY BASE AT ANNUAL PACE OF ¥60-70T (AS EXPECTED) - (JP) JAPAN OCT SUPERMARKET SALES Y/Y: 0.5% V 0.4% PRIOR - (JP) Japan investors bought net ¥349.9B in foreign bonds last week vs bought net ¥357.1B in prior week (6th straight week of net purchases); Foreign Investors bought net ¥1.29T in Japan stocks v bought net ¥273.1B in prior week - (KR) SOUTH KOREA OCT DISCOUNT STORE SALES Y/Y: -6.4% V -5.3% PRIOR; DEPARTMENT STORE SALES Y/Y: -2.2% V +2.8% PRIOR - (AU) AUSTRALIA OCT RBA FX TRANSACTIONS (A$): 648M V 663M PRIOR - (NZ) NEW ZEALAND OCT CREDIT CARD SPENDING M/M: -0.8% v -0.1% PRIOR; y/y: 3.2% v 5.1% PRIOR (5-month low) - (NZ) NEW ZEALAND OCT ANZ JOB ADVERTISEMENTS: 4.5% V 1.3% PRIOR - (SG) SINGAPORE Q3 FINAL GDP Q/Q: +1.3% V -0.3%E; Y/Y: 5.8% V 5.3%E; Raises 2013 GDP forecast to 3.5-4.0% from 2.5-3.5% prior
***Fixed Income/Commodities/Currencies*** - (CN) PBoC to inject CNY33B in 14-day reverse repors; Injects net CNY59B this week (first injection in 5 weeks) v drained CNY15B prior - (CN) China MOF sells CNY2B in 5-yr RMB bonds at Hong Kong, avg yield 3.09%; CNY5B in 3-yr RMB bonds, avg yield 2.60%
- USD/CNY: (CN) PBoC sets yuan mid point at 6.1366 v 6.1305 prior setting (weakest Yuan setting since Nov 10th) - GLD: SPDR Gold Trust ETF daily holdings fall 2.7 tonnes to 860.3 tonnes (lowest since Feb 2009)
- USD/JPY hit 2 1/2 month highs at ¥100.50 as less dovish than expected Fed meeting minutes lifted the greenback across the board. AUD/USD was down about 40pips at session lows below $0.93 handle, with added AUD headwinds coming from disappointing China PMI. NZD/USD also saw its lows after the China data, falling over 30pips below $0.8240. EUR/USD largely consolidating the sharp decline in US session within a 25pip range, supported by 100day EMA around $1.3420.
***Speakers/Political/In the Papers*** - (CN) China Qinhuangdao coal price in China rises to CNY560-570/t, highest level since early Aug - Chinese press - (CN) China Fin Min Lou Jiwei: China to cut tax for property transactions while raise for possessing properties - People's Daily - (CN) China Ministry of Housing and Urban Rural Development: China won't significantly change property curbs in short term - Chinese press - (CN) Former PBoC adviser Li Daokui: Chinese economy must experience "temporary pains"; China economic growth may slow down to 7% in the next 2-3 years - Chinese press
- (JP) Japan Cabinet Office to keep its economic assessment unchanged for the 2nd consecutive month in its monthly November report - Nikkei News - (JP) Japan, China agree to increase economic cooperation - Japanese press
- (KR) Bank of Korea (BOK) policy board member: Economic transition in China poses risks to South Korea's export growth - Korean press - (KR) Korea Center for International Finance (KCIF): South Korea CPI will likely accelerate in 2014 - Korean press - (KR) South Korea Fin Min Hyun: State-run companies' debt is a big concern to govt
- (DE) German Finance Ministry releases monthly report: Supports govt 2013 GDP forecast of 0.5% - financial press - (EU) ECB's Noyer: Sees no signs of deflation in the euro zone - financial press
- (CA) BOC Gov Poloz: Substantial stimulus in Canada still appropriate; Economic outlook roughly unchanged since Oct monetary policy report; BOC maintaining a neutral policy stance - (US) Goldman Sachs Chief Economist: Fed minutes were for the most part neutral; reiterates March is the most likely start for tapering QE, but December is still an option
***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 +1.5%, S&P/ASX -0.2%, Kospi -1.3%, Shanghai Composite -1.0%, Hang Seng -0.7%, Dec S&P500 -0.1% at 1,777, Dec gold -0.9% at $1,247, Dec crude oil flat at $93.35/brl
US markets: - WSM: Reports Q3 $0.58 v $0.54e, R$1.05B v $1.03Be; +6.2% afterhours - GMCR: Reports Q4 $0.89 v $0.74e, R$1.05B v $964Me; GMCR: Board approves $1B buyback program (10% of market cap); initiates quarterly dividend of $0.25/shr; +4.6% afterhours - JCI: Announces 3-yr $3.65B (11% of market cap) share repurchase program; raises quarterly dividend by 16% to $0.22/shr from $0.19/shr; +4.2% afterhours - JACK: Reports Q4 $0.45 (adj) v $0.39e, R$338M v $336Me; +4.0% afterhours - RTN: Increases share repurchase authorization by $2.0B (7.3% of market cap); +0.8% afterhours - LTD: Reports Q3 $0.31 v $0.28e, R$2.17B v $2.17Be; -3.3% afterhours
Notable movers by sector: - Consumer discretionary: Peak Sports Products Co Ltd 1968.HK -2.7% (Q2, Q3 guidance) - Industrials: Jiangsu WELLE Environmental Co Ltd 300190.CN -3.7% (FY13 guidance); Downer EDI DOW.AU -3.5% (analyst action); Honda Motor Co Ltd 7267.JP +3.2% (production plans); Daewoo Shipbuilding & Marine 042660.KR +0.4% (awarded order); Komatsu Ltd 6301.JP +1.6% (to begin rental business in North America; analyst action) - Materials: Paladin Energy Limited PDN.AU +0.5% (trading update); BHP Billiton Ltd BHP.AU -0.1% (AGM comments) - Financials: New China Life 601336.CN -3.6% (investment plans); Dexus Property Group DXS.AU -1.0% (provides update on acquisition); Ping An Insurance 601318.CN -2.9% (to issue convertible bonds) - Utilities: TEPCO 9501.JP -2.0% (closes two reactors); Taiyo Nippon Sanso Corp 4091.JP +1.8% (announces acquisition)