Asian Mid-session Update: Japan guides FY16/17 bond issuance and GDP; China shares unimpressed with Central Economic Work Conference communique
***Economic Data***
- (CN) China Nov Conference Board Leading Economic Index: 0.6% v 0.3% prior
- (TW) TAIWAN NOV UNEMPLOYMENT RATE 3.8% V 3.8%E
- (UK) DEC GFK CONSUMER CONFIDENCE: 2 V 1E
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 flat, S&P/ASX +0.2%, Kospi -0.1%, Shanghai Composite -0.5%, Hang Seng -0.1%, Mar S&P500 +0.1% at 2,017
***Commodities/Fixed Income***
- Feb gold -0.3% at $1,077/oz, Feb crude oil +0.7% at $36.06/brl, Mar copper -0.6% at $2.12/lb
- (JP) Japan MoF sells ¥2.33T v ¥2.5T indicated in 0.1% 2-year JGBs; Avg yield: -0.013% (record low) v -0.004% prior; bid-to-cover 4.72x v 5.18x prior
- (CN) PBoC to inject CNY30B in 7-day reverse repos (49th consecutive injection)
- USD/CNY: (CN) PBoC sets yuan mid point at 6.4746 v 6.4753 prior
- USD/KRW: Onshore opens at KRW1,176 v KRW1,177 prior close
- GLD: SPDR Gold Trust ETF daily holdings fall 0.5% to 645.9 tonnes
***Market Focal Points/FX***
- Financial press citing an un-named Japan Govt official said that the planned issuance of deficit financing bonds in FY16 would be at ¥28.8T, which would be an 8-yr low. This was attributed to increased tax revenue arising from stronger company profits. Japan released its FY16/17 guidance, seeing nominal GDP at 3.1% and real GDP at 1.7%. CPI is seen at 0.4% but expected to rise to 1.2% in FY16/17. The report also noted that the recently complied stimulus package to add 0.6% to GDP over next 3 years. FY16/17 bond issuance was guided at ¥34.4T. USD/JPY was last trading at 121.25, with very little action in the session keeping it in a 20 pip range.
China leaders, late Friday, said that they will address long term problems including industrial overcapacity and property glut. Specifics were not released, though seemed to point to looking for new sources of economic growth. The lack of details did not give investors much confidence which sent the Shanghai Composite into negative territory most of the session and dipping -0.5% after break. Currencies related to larger trading partners of China saw gains AUD/USD +0.5% to 0.7228; USD/IDR -1.17% (there is some talk the central bank has been intervening); EUR/USD traded mutely in a 20pip range 1.0924/04. Some of the oil producing country's currencies came under pressure as Brent crude prices hover near their lowest level since 2004; Mexico's Peso, Russia's Ruble and Norway's Krone all hit by falling oil revenue.
The Bank of Korea (BoK) bi-annual financial stability report indicated that fiscal health of household sector has worsened slightly; debt growth outpaces income growth in H2 due to the country's economic expansion being unable to back income. Kospi was under slight downward pressure, while the Korean Won and Singapore dollar made some smaller gains.
***Equities***
US equities / ADRs:
- ALXA: Presents AZ-002 Phase 2a interim results (Staccato alprazolam) in epilepsy patients; generally safe and well tolerated; +41.2% afterhours
- CTAS: Reports Q2 $1.03 v $1.00e, R$1.22B v $1.22Be; +1.5% afterhours
- PFE: Phase 3 study evaluating desvenlafaxine succinate sustained-release formulation in pediatric patients with major depressive disorder did not meet its primary objective; +0.1% afterhours
- SCS: Reports Q3 $0.30 v $0.33e, R$787.6M v $813Me; -20.3% afterhours
Notable movers by sector:
- Consumer discretionary: Skyworth Digital 751.HK +0.6% (acquisition proposal)
Unicharm 8113.JP -1.1% (earning speculation); Bic Camera Inc 3048.JP +1.4% (acquisition); McDonald's Corp 2702.JP -7.2% (considers partial sales in Japanese arm); Kirin Holdings Co 2503.JP -5.3% (cuts guidance)
- Financials: Poly Real Estate Group Co 600048.CN -2.3%, Gemdale Properties and Investment Corp 535.HK -1.9% (China to push property destocking); GPT Group GPT.AU +0.4% (asset sale)
- Industrials: Doosan Infracore Co. 042670.KR -9.1% (to sell machine tool business)
- Technology: Sharp Corp 6753.JP +0.8% , Hon Hai Precision Industries 2317.TW -1.0% (Hon Hai offers investment in Sharp); Toshiba Corporation 6502.JP -10.8% (sell stake in unit, guidance)
- Materials: Zijin Mining 2899.HK +2.1% (adjusts private placement); Posco 005490.KR +0.9% (awarded contract); Kentor Gold KGL.AU -4.8% (cost saving measures); Saracen Mineral Holdings SAR.AU +2.1% (reassess production outlook)
- Energy: Guodian Technology & Environment Group Co 1296.HK -2.7% (asset impairment); Origin Energy ORG.AU -1.8% (cuts exposure to lower oil prices)