Asian Mid-session Update: Shanghai remains in retreat; BOK to lower CPI target
***Economic Data***
- (AU) Australia OCT Conference Board Leading Index m/m: -0.2% v -0.6% prior; 3rd consecutive decline
- (KR) South Korea Dec Consumer Confidence: 102 v 103 prior (3rd straight decline and 15-month low)
- (VN) Vietnam Dec Consumer Price Index (CPI) Y/Y: 1.8% v 2.1%e; 2014 average inflation 4.0% v 6.6% in 2013
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +1.2%, S&P/ASX +0.3%, Kospi +0.4%, Shanghai Composite -1.9%, Hang Seng +0.2%, Mar S&P500 +0.1% at 2,080
***Commodities/Fixed Income***
- Feb gold flat at $1,178, Feb crude oil -0.8% at $56.66/brl, Copper flat at $2.87/lb
- (US) API PETROLEUM INVENTORIES: CRUDE: +5.4M (3rd consecutive build; largest build since Oct 15th) v -2.3Me, GASOLINE: +5.5M v +0.5Me, DISTILLATE: +1.1M v -1.0Me
- SLV: iShares Silver Trust ETF daily holdings fall to 10,333 tonnes from 10,517 tonnes priors (lowest since Aug 29th)
- GLD: SPDR Gold Trust ETF daily holdings fall 11.7 tonnes to 712.9 tonnes; Lowest level since Sept 2008; largest decline since June 2013
- (CN) China MoF sells 2-yr bonds at 3.39% yield
- USD/CNY: (CN) PBoC sets yuan mid point at 6.1247 v 6.1230 prior setting (weakest setting since Dec 8th)
***Market Focal Points/Key Themes/FX***
- After a 3% slump overnight, Shanghai Composite remains in year-end profit-taking mode, falling another 2% and testing below the psychological 3,000 level. Financials are again under pressure following CBRC report that November-end non-performing loan ratio rose another 15bps to 1.31%. Brokers were also heavily sold on press reports indicating that some firms have raised margin thresholds on concerns over rising volatility.
- Nikkei225 returned from holiday break with a catch-up rally, even though USD/JPY has come off its late US-session high of 120.80 to trade in the 120.30s. Fin Min Aso reiterated the govt will proceed with Abenomics policies, but also added the upcoming budget needs to be mindful of Japan's fiscal target. Automakers Nissan, Mitsubishi, and Honda reported double-digit y/y declines in domestic output, reflecting the high base-effect of strong demand last year going into the April sales tax hike. Separately, local press also reported that Honda's domestic production would fall short of the company's target by about 15%.
- Report out of the Bank of Korea announced it will be lowering its inflation target next year to account for changing economic conditions - presumably the falling oil prices. Recall the most recent CPI figure of 1.0% in November was a 9-month low and also marked the 25th straight month below central bank's target band of 2.5-3.5%. BOK added the domestic economy would maintain a modest recovery trend, even as financial and fx markets see increased volatility.
***Equities***
US markets:
- SEE: Discloses restructuring; sees aggregate costs of approximately $275M to $285M - filing
Notable movers by sector:
- Financials: Greentown China 3900.HK +19.6% (China Communications Construction to subscribe stake at premium)
- Materials: Silver Lake Resources SLR.AU -6.1% (shareholder cuts stake) - Energy:
- Industrials: Gansu Dayu Water-saving Group 300021.CN +1.5%, Anhui Water Resources Development 600502.CN +3.0%, Chongqing Three Gorges Water Conservancy 600116.CN +3.1%, Beijing Originwater Technology 300070.CN +2.7% (China Fin Min comments on water conservancy projects); Honda Motor 7267.JP +1.9%, Nissan Motor 7201.JP +1.7%, Toyota Motor 7203.JP +1.6% (Yen moves lower