Asian Market Update: Japan posts largest monthly deficit on record for December and smaller surplus for the year in 2013
***Economic Data*** - (JP) JAPAN DEC CURRENT ACCOUNT BALANCE: -¥638.6B V -¥685.4BE (largest deficit on record); ADJ CURRENT ACCOUNT: -¥196.7B V -¥64.0BE; TRADE BALANCE BOP BASIS: -¥1.21T V -¥1.26TE; 2013 Current account surplus was the smallest on record - (JP) JAPAN JAN BANK LENDING EX-TRUSTS Y/Y: 2.5% V 2.6% PRIOR; BANK LENDING INCL TRUSTS Y/Y: 2.3% V 2.3% PRIOR - (JP) JAPAN JAN BANKRUPTCIES Y/Y: -7.5% V -15.7% PRIOR - (JP) JAPAN Q4 HOUSING LOANS Y/Y: 2.9% V 3.0% PRIOR - (NZ) NEW ZEALAND JAN QV HOUSE PRICES Y/Y: 9.6% V 10.0% PRIOR; Avg national house price NZ$467.5K - (MY) MALAYSIA DEC INDUSTRIAL PRODUCTION: 4.8% V 5.5%E; MANUFACTURING SALES VALUE Y/Y: 5.4% V 4.4% PRIOR
***Observations/Insights*** - Shanghai Composite leads regional indices higher as CASS forecasts the State Council will keep its 7.5% GDP target in 2014; PBoC Quarterly Policy report pledges continued "stable monetary policy" amid concern economy yet to find a stable base. - Rising import energy costs continue to sag Japan trade figures, with December current account deficit widening to a record high for the month and sending 2013 surplus to a record low. Cabinet officials also attribute the deficit in part to a one-off strong consumption trend ahead of the increase in sales tax in April. Separately in Japan, Tokyo gubernatorial elections were soundly won by the LDP-endorsed candidate who supports PM Abe's agenda of paving the way toward a nuclear energy restart - WTI March crude contract pushed toward $100.50/brl mark - the highest in 2014 - in early electronic trade on reports Iran has sent its military fleet toward US maritime border as a sign of protest to continued US presence in the Gulf. Contract was back below $100 after Iranian media confirmed that only two ships - a destroyer and a helicopter transport vessel - had been dispatched about 3 weeks ago.
***Fixed Income/Commodities/Currencies*** - (JP) BOJ offers to buy ¥250B in 1-3yr JGB, ¥250B in 3-5yr JGB and ¥400B in 5-10yr JGB - (JP) Foreign investors sold net ¥1.26T of JGB in Dec (largest net sales since Sept) v sold ¥354.1B in Nov - (KR) South Korea sells 5-yr govt Bonds; avg yield: 3.195% - (CN) China Gold Association: Reports China 2013 gold production 428.2Mt, +6.23% y/y (remains world top gold producer for 7th straight year) - financial press
- USD majors were little changed in the afternoon session after some early bout of follow-through strength following the benign US jobs data on Friday. EUR/USD weakened over 20pips but bounced off the $1.36 handle, USD/JPY rose as high as 102.65 before a selloff following the release of record high Japan current account deficit, while AUD and NZD were both down about 15pips against the greenback around $0.8940 and $0.8270 respectively.
***Speakers/Political/In the Papers*** - (CN) China Academy of Social Sciences (CASS): reiterates China 2014 GDP forecast 7.5% - financial press - (CN) China Development Bank (CDB) said to have requested foreign clients to delay drawing back committed credit lines - FT - (CN) China Ministry of Commence (MOFCOM): China should join Trans-Pacific Partnership (TPP) negotiations at suitable time - Chinese press - (CN) PBoC Quarterly Monetary Policy Report pledges continued "stable monetary policy" in 2014; Aims to contain lending risks and warns economy yet to find a stable base for growth - press - (CN) China Foreign Min spokesman Hong Lei: "Urge US to stop making irresponsible remarks so as not to harm regional stability and the China-U.S. relationship" - financial press - (CN) China Banks end of Nov non-performing loans CNY598.3B, NPL ratio 1.05% - Caixin - (JP) Former Health Min Masuzoe wins Tokyo gubernatorial election, as expected - Japanese press - (AU) Australia's opposition Labor candidate wins the by-election for the seat vacated by former PM Rudd - press - (KR) South Korea and US to conduct joint military drills on Feb 24th - financial press
**Europe/Middle East** - (CH) Switzerland votes in favor of curbs on immigration by EU citizens, with narrow 50.3% majority supporting "Stop Mass Immigration" referendum proposal; European Commission responds: "The EU will examine the implications of this initiative on EU-Swiss relations as a whole." - press - (UR) About 70K protesters gathered in Kiev, Ukraine in continued drive to oust Pres Yanukovych - press - (IR) Iranian naval Admiral Haddad: "Iran's military fleet is approaching US maritime borders" to send a message of opposition to expanded stationing of US vessels in the Gulf - Fars - (IR) UN nuclear authorities holding further talks with Tehran to enhance transparency of its steps to meet conditions of P5+1 - press
***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 +1.2%, S&P/ASX +0.7%, Kospi +0.1%, Shanghai Composite +1.7%, Hang Seng flat, Mar S&P500 -0.1% at 1,791, Apr gold +0.5% at $1,268, Mar crude oil flat at $99.84/brl
US markets: - JRCC: To explore Strategic Alternatives; amends Its Revolving Credit Facility - YHOO: To partner with Yelp in boosting its search engine operation - US financial press - TMUS: Sprint management said to be holding talks on whether to move to reconsider acquisition of T-Mobile - financial press
Notable movers by sector: - Consumer Discretionary: Kintetsu 9041.JP -0.3% (9M results) - Financials: Beijing Capital Land 2868.HK +9.1% (FY13 results); Evergrande Real Estate Group 3333.HK +1.0% (Jan results); OzForex Group OFX.AU +7.3% (confirms discussion on proposed sale) - Materials: Sumitomo Metal Mining 5713.JP +0.5% (9M results) - Industrials: Sinochem International 600500.CN +3.6% (private company acquires stake); Zhengzhou Yutong Bus 600066.CN +8.7%, BYD Corp 002594.CN +10.0% (China extends subsidy program for new energy vehicles); Toyota Motor 7203.JP +1.0% (reports of nearing settlement on US probe); Kubota Corp 6326.JP -4.1% (9M results); Isuzo Motors 7202.JP +5.3% (9M results); Orica Ltd ORI.AU +1.6% (considers spinoff) - Technology: Mabuchi Motors 6592.JP +2.3% (FY13/14 guidance); High Tech Computer Corp 2498.TW -2.3% (enters patent agreement with Nokia); Asahi Glass 5201.JP -6.5% (FY13 results)