Asian Mid-session Update: Shanghai Composite falls over 5% on margin account scrutiny even as China property correction slows
***Economic Data***
- (CN) CHINA DEC NEW HOME PRICES M/M: Fall in 66 out of 70 cities vs 67 prior; Y/Y: Fall in 68 cities v 68 prior
- (AU) AUSTRALIA DEC TD SECURITIES INFLATION M/M: 0.0% V 0.1% PRIOR; Y/Y: 1.5% V 2.2% PRIOR (lowest since Jul 2012)
- (AU) AUSTRALIA DEC NEW MOTOR VEHICLE SALES M/M: +3.0% V -0.5% PRIOR; Y/Y: -1.0% V -3.7% PRIOR
- (NZ) NEW ZEALAND Q4 WESTPAC EMPLOYMENT CONFIDENCE INDEX: 106.5 V 111.5 PRIOR
- (KR) South Korea Dec PPI Y/Y: -2.0% v -0.9% prior; 5th month of decline
- (UK) UK DEC RIGHTMOVE HOUSE PRICES M/M: 1.4% V -3.3% PRIOR; Y/Y: 8.2% V 7.0% PRIOR
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +0.6%, S&P/ASX +0.1%, Kospi +0.9%, Shanghai Composite -6.4%, Hang Seng -1.3%, Mar S&P500 +1.2% at 2,012
***Commodities/Fixed Income***
- Feb gold flat at $1,277, Mar crude oil flat at $48.99/brl, Mar Copper -0.7% at $2.61/lb
- (IR) Iran Foreign Min Zarif postponed visit to Saudi Arabia to protest against Saudi's reluctance to cut oil supply - press
- GLD: SPDR Gold Trust ETF daily holdings rise 13.7 tonnes to 730.9 tonnes; highest since Nov 6th, biggest increase since Aug 2011
- (JP) BOJ offers to buy ¥400B in 5-10yr JGB, ¥240B in 10-25yr JGB, ¥140B in JGB with maturity over 25-yr and ¥3.0T in T-bills
- USD/CNY: (CN) PBoC sets yuan mid point at 6.1230 v 6.1188 prior setting (weakest Yuan setting since Jan 12th)
- (KR) South Korea sells 10-yr bonds, avg yield 2.405%
***Market Focal Points/Key Themes/FX***
- Shanghai Composite entered midday break near session and 2015 lows, crashing over 6% in the wake of CSRC suspending new margin trading accounts at brokers CITIC, Haitong and Guotai Junan after market close on Friday. The measures reflect regulators' discomfort with the extent of the leverage-driven rally in equities in the final week of 2014 that coincided with the open of Shanghai-Hong Kong stock link. All major mainland-listed brokerage tickers were limit down, while Hong Kong-listed shares are off by mid-teens percent.
- The brokerage development spoiled more benign China property market data, as m/m new home price decline was the smallest in 7 months. With lower interest rates helping regenerate some housing investment demand, an economist at Barclays remarked that nationwide home prices may see the first y/y rise in 12 months in January if the positive momentum of recent weeks is maintained. China will also post its latest GDP along with some December economic figures tomorrow, and analysts expect Q4 growth to confirm a miss in annual GDP target for the first time in 1998. Former PBoC adviser Yu said China growth is still the highest in the world despite the slowdown, while policy advisor Song noted 2015 GDP would trend around 7.3%. A research note out of Moody's also indicated China banking system outlook is stable.
- Swiss officials were in damage control after the surprise SNB policy action riled the markets last week. SNB Gov Jordan said he expects markets to stabilize, adding the cap on the franc was no longer justified as Swiss economy was improving. Jordan also said exchange-rate situation will remain under consideration in future decisions, and the minimum rate risked loss of monetary conditions through inflated balance sheet. Swiss Fin Min Widmer-Schlumpf noted the economy can cope with the removal of the cap, but also estimating EUR/CHF cross at 1.10 as a reasonable level for companies' adjustment. With focus shifting on the European periphery for the impact of CHF-denominated loans, Hungary PM Orban said the govt will not intervene as banks and borrowers negotiate the sharp increase in loans, while Poland Deputy PM noted the govt could support borrowers with mortgages in Swiss Franc if CHF/PLN stays over PLN4 exchange rate.
- Australia TD Securities inflation hit its lowest annual rate since mid-2012, and resident economist said the latest figures suggest a lower inflationary trajectory than previously assumed. TD also acknowledged that this very low inflation environment allows the RBA cash rate to remain at 2.5% for much longer. Also of note down under, Macquarie raised its FY14/15 guidance for profits to rise 10-20% from "slightly higher" amid improved trading conditions and lower AUD. In New Zealand, Q4 Westpac Employment index slid to 106.5 V 111.5 prior, as economists pointed to lower dairy industry payouts, drought risk, and global economic uncertainty.
***Equities***
US markets:
- FB: Said to be undergoing a hiring spree of as much as 14% increase - financial press citing review of job
- GOOG: In talks to buy Softcard, a mobile payments service for over $50M; would align Google with US telecoms in mobile payment services - press
Notable movers by sector:
- Consumer Discretionary: Air China 601111.CN -8.6% (Dec op results)
- Financials: CITIC Securities 6030.HK -17.2%, Haitong Securities 6837.HK -13.2%, GF Securities 000776.CN -10.0% (CSRC temporarily suspends new margin trading); OzForex Group OFX.AU -6.3% (Westpac to no longer provide banking services); Macquarie Group MQG.AU +5.2% (guides higher FY14/15 results)
- Materials: St Barbara SBM.AU +10.8% (shareholder raises stake); Paladin Energy PDN.AU -2.8% (cuts production guidance)
- Energy: Anton Oilfield Services Group 3337.HK -6.9% (Q4 orders); Oil Search OSH.AU +4.9% (enters MoU with Exxon Mobile on energy project)
- Industrials: China Agri-Industries 606.HK +1.9% (FY14 guidance); XJ Electric 000400.CN +6.0% (FY14 guidance)
- Technology: Kingsoft 3888.HK +1.3% (Xiaomi acquires shares from Tencent); Sharp Corp 6753.JP -6.8% (sees worse FY14/15 results)
- Telecom: Ten Network TEN.AU +2.4% (resumes talks on potential joint bid)