Asian Mid-session Update: Korea CPI rises to 16 month highs but remains below BOK target; CNY use in international transactions on the rise
***Economic Data***
- (AU) AUSTRALIA NOV PRIVATE SECTOR CREDIT M/M: 0.4% V 0.6%E; Y/Y: 6.6% V 6.8%E
- (KR) SOUTH KOREA DEC CPI M/M: 0.3% V 0.1%E; Y/Y: 1.3% (highest since Aug 2014) V 1.1%E; CPI CORE Y/Y: 2.4% V 2.4% PRIOR
- (SG) Singapore Nov M2 Money Supply Y/Y: 2.9% v 2.9% prior; M1 Money Supply Y/Y: -0.4% v -1.1% prior
- (UK) Weekly John Lewis Partnership LFL sales w/e Dec 26th: +2.3%
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 closed, S&P/ASX -0.2%, Kospi closed; Shanghai Composite -0.6%, Hang Seng +0.2%, Mar S&P500 +0.1% at 2,056
***Commodities/Fixed Income***
- Feb gold +0.2% at $1,062/oz, Feb crude oil +0.3% at $36.70/brl, Mar copper fat at $2.15/lb
- (CN) PBoC does not conduct open market operations in today's session; PBoC Drains CNY60B in the week through open market operations vs injected CNY30B last week; 2015 net injection CNY10B v CNY124B in 2014
- USD/CNY: (CN) PBoC sets yuan mid point at 6.4936 v 6.4895 prior; lowest setting since June 2011
- SWIFT: CNY use in international transactions rose to 2.3% of total in Nov v 1.9% prior
***Market Focal Points/FX***
- Asia's key equity indices were either closed for extended New Year's holidays or went out after a half day of generally listless action. Australia's ASX was down modestly on the day, closing 2015 off by nearly 2%. Hang Seng is also finished for 2015, rising marginally but falling over 7% for the year - the biggest annual loss since 2011. USD/JPY retreated 20pip below 120.40 from the highs, EUR/USD was in a 20pip band above 1.0915, and AUD/USD tested above the 0.73 handle with a 30+ pip advance from the lows. PBoC Yuan fix was again set at the weakest levels since 2011, as markets look to extended onshore trading session beginning next year.
- In economic data, South Korea CPI came in at a 16-month high of 1.3% y/y and core CPI was unchanged from the prior month. Also while the magnitude of annualized increase was unexpected, it was still well below the new BOK target of 2.0%. For 2015, y/y Korean CPI averaged just 0.7% - a record low. Bank of Korea gov Lee delivered his New Years address, pledging to maintain accommodative monetary policy next year amid rising household debt levels that poses a risk to the financial system. Lee said the central bank will work with authorities to curb household debt growth. In Australia, November private sector credit growth rates were below expectations, but December data on banking loan balances from APRA showed a bit of a bounce in sequential growth at +0.8% m/m. Mining names SFR and EVN were the worst performers on the ASX with declines of over 4%, while TPI, SYR, and ASB were up over 4%.
- In China, SWIFT's data showed the use of CNY in international transactions rose to 2.3% of total in Nov v 1.9% prior. CNY is making incremental progress in international use but still trails the majors - USD (42.7%), EUR (29.5%), GBP (8.9%), and JPY (2.7%). Separately, PBoC has deferred on further open market operations, and its overall 2015 net injection has come to a paltry CNY10B v CNY124B in 2014. Elsewhere, a researcher with the Commerce Ministry expressed confidence that inflation has bottomed and will not fall below 1% in 2016. Recall the latest CPI data in early Dec came in at 1.5%, moving off the 6-month lows. December figures will be released on Jan 8th.
***Equities***
US equities / ADRs:
- CHLN: Stockholders approve proposed 1-for-50,000 reverse stock split; Company to go private; +7.4% afterhours
- CMRX: Point72 Asset Management (Steve Cohen) discloses passive 5.3% stake - 13G filing; +3.8% afterhours
- VOD (+1.3% afterhours): Said to be in new merger talks with Liberty Global (+3.9% afterhours) with estimated value of £140B; Talks may take place in early 2016 - UK press
- TOSBF (Toshiba 6502.JP): Japan govt investment fund Innovation Network Corp. of Japan (INCJ) plans to support overhaul of electronics and other business units - Nikkei; +5.6%