Asian Mid-session Update: BOJ expands ETF buying, raises assessment of exports; China property prices continue recovery
***Economic Data***
- (JP) BANK OF JAPAN (BOJ) POLICY STATEMENT: ANNOUNCES NEW ¥300B ETF PURCHASE PROGRAM (NOT EXPECTED); MAINTAINS ITS MONETARY BASE EXPANSION AT ANNUAL PACE OF ¥80T (AS EXPECTED); Maintains overall assessment
- (NZ) NEW ZEALAND DEC ANZ ACTIVITY OUTLOOK: 34.4 V 32.0 PRIOR; BUSINESS CONFIDENCE: 23.0 V 14.6 PRIOR (8-month high)
- (NZ) NEW ZEALAND NOV ANZ JOB ADVERTISEMENTS M/M: 2.0% V 1.3% PRIOR; 3rd straight increase
- (US) NORTH AMERICA NOV SEMI BOOK/BILL RATIO: 0.96 V 0.98 PRIOR; 2nd straight month below parity
- (KR) South Korea Nov PPI Y/Y: -4.6% v -4.6% prior
- (CL) CHILE CENTRAL BANK (BCCH) RAISES OVERNIGHT RATE TARGET BY 25BPS TO 3.50%, NOT EXPECTED
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +0.7%, S&P/ASX -0.2%, Kospi +0.1%, Shanghai Composite flat, Hang Seng +0.1%, Mar S&P500 -0.2% at 2,019
***Commodities/Fixed Income***
- Feb gold +0.3% at $1,052/oz, Feb crude oil -0.4% at $36.11/brl, Mar copper +0.6% at $2.05/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 4.4 tonnes to 630.2 tonnes; Lowest since Sept 2008
- (CN) China considering merger of aluminum producers in order to cut capacity - Chinese press
- USD/CNY: (CN) PBoC sets yuan mid point at 6.4814 v 6.4757 prior; weakest Yuan setting since June 2011; 10th straight session of weaker setting
- (US) Weekly Fed Balance Sheet Total Assets for week ending Dec 16th: $4.49T v $4.48T prior; Reserve Bank Credit: $4.45T v $4.44T prior; M1 y/y change: 6.4% v 6.6% prior; M2 y/y change: 6.0% v 6.1% prior
***Market Focal Points/FX***
- Post-FOMC volatility in Asian indices is more subdued than in the US markets, where the initial post-liftoff gains have been completely erased in Thursday's rout. China markets are little changed heading toward the close, with positive property sales data offsetting the troubling Beige Book report. Gyrations are still pronounced in Tokyo in the wake of the BOJ policy statement containing some surprises to both its QE program and its statements. Likewise, USD/JPY is is most volatile among the USD majors, initially spiking nearly 100pips above ¥123.50 on the BOJ announcement before selling off to ¥122. AUD/USD is up about 30pip in a steady day of gains, approaching $0.7150. NZD/USD was mired in a 25pip range, capped by $0.67, while EUR/USD was up about 30pips toward $1.0850 as it reversed most of the early US session drop.
- Bank of Japan maintained its overall QQE program of expanding monetary base by an annual ¥80T, but also unveiled a new ¥300B ETF purchase program that will commence at the start of next FY in Apr of 2016. The decision for these new purchases that will track JPX-Nikkei Index 400 was approved by a 6-3 margin, with BOJ's resident hawk Kiuchi supported by 2 other members. USD/JPY initially spiked on the release but then sold off sharply, as the statement also maintained its overall assessment of economy as continuing to recover moderately and also revealed an upgrade on the Exports component. Traders suggest the more bullish view on this key sector of economy, along with the start date of incremental ETF buying, will keep a lid on more aggressive QE expansion. As Tokyo headed toward the close, USD/JPY was en route to new session lows around 121.80.
- China property names got a lift from continued recovery in prices during November. Across the top 70 cities, prices were up 0.3% m/m (7th straight month of gains) v +0.2% prior. Y/Y gains were particularly impressive, accelerating to +0.9% v +0.1% prior and marking the 2nd straight increase. Y/Y prices were also down in 49 cities out of 70, less than 54 reported in October, while m/m declines were registered in 27 cities vs 33 prior. The bounce in China housing helped erase the initial pessimistic tone of the latest Beige Book report that observed some deterioration in Q4 economic growth with data worse than in Q3. This would run counter to the already announced monthly metrics for industrial output and retail sales in Oct and Nov as they generally showed signs of recovery. On FX front, PBoC has once again weakened the midpoint to over 4-year lows - the 10th straight session of lower Yuan settings.
***Equities***
US equities / ADRs:
- RHT: Reports Q3 $0.48 v $0.46e, R$524M v $521Me; +6.4% afterhours
- RMBS: Will collaborate with Microsoft researchers in the exploration of future memory requirements for quantum computing; +2.7% afterhours
- AKS: Guides Q4 -$0.38 to -$0.33 v -$0.16e; cites idling of Ashland facility and impairment charge; -0.5% afterhours
- VTAE: Top-line results from remaining Monotherapy Arm of BI187004 Phase 2 Clinical Trial in overweight Type 2 Diabetes patients did not meet the predefined primary efficacy endpoint criteria; -2.6% afterhours
- KNX: Cuts Q4 $0.31-0.33 v $0.37e (prior $0.36-0.38); -7.0% afterhours
- ICPT: FDA extends PDUFA date by three months for obeticholic acid for the treatment of PBC; -7.2% afterhours
Notable movers by sector:
- Consumer discretionary: Sydney Airport SYD.AU +1.3% (Nov result); China Southern Airlines Co 1055.HK +4.6%, China Eastern Airlines 600115.CN +4.3% (oil trends lower); Corporate Travel Management CTD.AU +7.8% (raises guidance)
- Financials: China Vanke 000002.CN +10.0% (unhappy with its largest shareholder, China Nov property data)
- Industrials: Samsung Engineering Co 028050.KR +5.9% (awarded contracts); GrainCorp GNC.AU -2.0% (guidance); Mitsubishi Heavy Industries 7011.JP -1.1% (plans to cut cruises ship business)
- Technology: Toshiba Corporation 6502.JP -1.9% (plan to spinoff flash memory)
- Materials: Yunnan Aluminum Co 000807.CN -5.1%, Aluminum Corporation of China 2600.HK -4.1 % (China to merge aluminum producers); Kumiai Chemical Industry Co 4996.JP +15.9% (FY14/15 result)
- Energy: China Shenhua Energy Co 1088.HK -0.7% (Nov result); Oil Search OSH.AU -1.6% (lower oil price)