Asian Market Update: Firmer Yuan fix and further moves to discourage selling help to contain panic
***Economic Data***
- (CN) CHINA DEC HOME PRICES M/M: FALL IN 27 OUT OF 70 CITIES VS 27 PRIOR; Y/Y: FALL IN 49 OUT OF 70 CITIES V 49 PRIOR
- (CN) China Shanghai new home sales: -5.4% w/w at 293.7K sqm; avg new home prices +4.6% w/w at CNY38.1/sqm - Uwin
- (JP) JAPAN NOV TERTIARY INDUSTRY INDEX Y/Y: -0.8% V -0.7%E
- (JP) JAPAN NOV FINAL INDUSTRIAL PRODUCTION M/M: -0.9% V -1.0% PRELIM; Y/Y: 1.7% V 1.6% PRELIM
- (IN) INDIA DEC TRADE BALANCE: -$11.7B V -$9.5BE
- (AU) AUSTRALIA NOV NEW MOTOR VEHICLE SALES M/M: -0.5% V 1.3% PRIOR; Y/Y: 2.2% V 6.0% PRIOR
- (AU) AUSTRALIA DEC TD SECURITIES INFLATION M/M: 0.2% V 0.1% PRIOR; Y/Y: 2.0% (1-year high) V 1.8% PRIOR
- (NZ) NEW ZEALAND Q3 WESTPAC EMPLOYMENT CONFIDENCE INDEX: 101.5 v 99.3 PRIOR
- (SG) SINGAPORE DEC ELECTRONIC EXPORTS Y/Y: -0.3% % V -5.9%E; NON-OIL DOMESTIC EXPORTS M/M: -3.1% V +0.5%E; Y/Y: -7.2% V -4.4%E
- (UK) UK DEC RIGHTMOVE HOUSE PRICES M/M: +0.5% (first increase in 3 months) V -1.1% PRIOR; Y/Y 6.5% V 7.4% PRIOR
***Index Snapshot (as of 05:00 GMT)***
- Nikkei225 -1.7%, S&P/ASX -0.7%, Kospi flat, Shanghai Composite +0.4%, Hang Seng -1.1%, Mar S&P500 +0.1% at 1,877
***Commodities/Fixed Income***
- Feb gold +0.1% at $1,092/oz, Mar crude oil -1.0% at $30.06/brl, Mar copper +1.1% at $1.97/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 3.8 tonnes to 657.9 tonnes; highest since Nov 22nd
- SLV: iShares Silver Trust ETF daily holdings fall to 9,795 tonnes from 9,840 tonnes; lowest since Nov 11th
- (CN) PBOC SETS YUAN MID POINT AT 6.5590 V 6.5637 PRIOR; strongest Yuan fix since Jan 6th; 7th straight firmer setting relative to Close
- (KR) South Korea Finance Ministry sells 10-yr bonds at 2.01%
- (JP) BOJ offers to buy ¥450B in 5-10yr JGBs, ¥260B in 10-25yr JGBs, and ¥180B in 25-yr and longer JGBs
***Market Focal Points/FX***
- Asian equity markets opened lower after Friday's rout on Wall St, but the selling was more contained by the afternoon hours. China measures on the currency and policy front helped ease some worries and S&P500 futures erased early 0.7% decline. Among key Asian equities, Shanghai Composite also flipped into positive on strong housing data. Oil prices were down as much as 4% after confirmed lifting of Iranian sanctions over the weekend, but WTI returned above the $30 handle later in the session. In FX, USD/JPY was up 50pips from the lows above 117.20, AUD/USD opened below 0.6840 but rallied 80pips above 0.6920, while NZD/USD was also up about 50pips off its lows above 0.6470.
- PBoC set the Yuan stronger relative to the close for the 7th straight session. A setting of 6.5590 was also the strongest since the mini-devaluation of Jan 6th while the margin of strength relative to the prior setting was the highest in 4 weeks. Attempts to discourage one-way action the Yuan were also on display in the policy actions, as regulators announced an increase on RRR for Yuan deposits among offshore clearing banks, raising the cost of borrowing to short the currency. PBoC added the rules - effective Jan 25th - were not expected to affect domestic liquidity, and that the central bank will continue to use multiple policy tools to maintain ample liquidity.
- Separately in China, Premier Li announced that 2015 GDP would be close to 7%, with services sector now accounting for nearly half of China growth and consumption also taking up a bigger part of the economy. China GDP, along with other 2015 and Dec metrics will be released tomorrow. China property names also traded higher on continued recovery in property prices. Across 70 top cities, new home prices rose again by 0.3% - 8th straight month of increase. Y/Y growth was even more impressive at 1.6%, up from 0.9% prior and 3rd straight rise. Finally, CSRC chief Xiao issued a high profile apology over "shortcomings" in supervision of the Chinese equities markets, stating the " fluctuations on the stock exchanges have revealed the immaturity of the Chinese markets, inexperienced traders and a trading system that is imperfect."
- In Japan, PM Abe noted the govt continues to monitor financial markets, with some weakness coming in the EM space. BOJ Gov Kuroda reiterated the central bank will maintain policy easing as long as needed to achieve 2% inflation target, adding the easing is exerting intended effects. Kuroda also reiterated that while the economy is no longer in deflation, it has not reached the point where there are no lingering risks or concerns.
***Equities***
US equities / ADRs:
- BIDU: Company is under scrutiny from China's technology regulator amid complains about false advertisements, pornography and leaks of personal information - FT
- NTAP: Cisco said to be unlikely to bid for NetApp; "not now, not ever" - Business Insider
- PERY: Chairman said to have considered selling his women's apparel business - NY Post
- SU: Said to be in talks for a friendly takeover with Canadian Oil Sands; Expected to increase bid - financial press
Key movers in Asia:
- Sinopec Shanghai Petrochemical 338.HK +5.2% profit alert
- WOW.AU +4.4%: To sell its stake in the hardware unit Masters due to ongoing losses
- OZL.AU +0.9%: Prominent Hill mine confirms significant value in stockpiles
- WPL.AU -2.6%, STO.AU -8.4%; Oil prices fall on Iran end of sanctions
- China Hongqiao Group 1378.HK -3.5% profit warning