Asia Market Update: China foreign reserves gain for 11th consecutive time; markets generally higher in a quiet session, Korea suspected of intervention
***Headlines/Economic Data***
General Trend: Asian markets trade generally higher after Friday's gains in the US
-Property developers in China and Hong Kong outperform amid release of Dec sales figures
-Chinese cement names (Anhui Conch, China Res Cement ) raise FY17 outlooks on higher prices
-South Korea steps up currency warning: Korean Won (KRW) weakens ahead of Tuesday’s expected talks with North Korea
Japan
-Nikkei 225 closed for holiday
- Fast Retailing: Reports Dec Uniqlo SSS +18.1% y/y (includes online sales); cites factors including cold weather conditions (from Jan 5th after close)
Korea
-Kospi opened +0.5%
-Automakers gain: Hyundai Motor +0.9%, Kia +1.1%
- Chipmakers trade mixed: Samsung Electronics flat, Hynix -1%
-General strength among financials and chemicals: KB Financial +4%, Lotte Chemical +8%, LG Chemical +3.5%
-LG Electronics, 066570.KR Reports prelim Q4 (KRW)Op 366.8B v 464Be; Rev 16.97T v 16.3Te
- (KR) South Korea reiterates will take steps if one-sided moves are seen in FX market; to take steps 'sternly' in case of drastic move in FX; Amid the comments, USD/KRW is now moving higher on the session, currently +0.4%, speculation that South Korea officials may have intervened on today's session by purchasing US dollars (USD) in order to slow the rise of the Korean Won (KRW)
-(KR) Bank of Korea (BoK) sells KRW600B in 6-month monetary stabilization bonds: yield 1.60%
-(KR) Bank of Korea (BOK) banks are likely to tighten their rules on household loans in Q1 of this year amid a recent trend of rising interest rates
-(KR) South Korea Finance Ministry: finalized the details on a tax code overhaul whose main features are the levying of an additional tax on owners of multiple homes, a move intended to curb rising housing prices, and the raising of the highest corporate income tax rate
-(KR) South Korea official: special investigation will be implemented on virtual accounts used for cryptocurrency deals, as part of the government’s recent pledge to crack down on excessive speculations
Looking Ahead: LG Electronics may report prelim Q4 results later today; Samsung Electronics may report prelim Q4 results on Tuesday
- South Korea and North Korea expected to hold talks on Tuesday which are expected to cover the Winter Olympics and other issues
China/Hong Kong
-Hang Seng opened -0.1%, Shanghai Composite -0.2%; Shanghai markets later pare losses
-Hang Seng Property/Construction Index +1.8%; Financials -0.5%
-China airlines trade broadly higher: China to permit airlines to independently set prices for top routes – US financial press
- (CN) China NDRC: China to support merging of coal and electricity companies, sector names stronger on the news from Friday
-(CN) PBOC has asked banks to let foreign firms freely remit yuan profits, dividends - China Daily
- (CN) China Hebei province planning to cut 6.0Mt steel capacity in 2018 - Chinese press
-(CN) China NDRC: China to support merging of coal and electricity companies
-(HK) Hong Kong Monetary Authority (HKMA) Chan: As of Nov Hong Kong home prices 101% above the 1997 peak
-(CN) CICC sees PBOC raising interest rates by 25bps in 2018
- (CN) China PBOC deputy head of research Ji Min: There is room for an increase in interest rates in the short term as industrial product prices and enterprises' profitability have improved since last year - China Daily
- (CN) Chinese Academy of Social Sciences (CASS) expected China's economy to post stable growth in 2018 and expand by around 6.7% from 2017, despite headwinds from both home and abroad - China Daily
-(CN) China PBoC: Skips OMO for 10th straight session; Net drains CNY40B v CNY130B prior
-USD/CNY (CN) China PBoC sets yuan reference rate at 6.4832 v 6.4915 prior (strongest yuan fix since May 2016)
-(CN) China Dec Foreign Reserves: $3.140T v $3.127Te (highest since Sept 2016, 11th consecutive gain, biggest gain since July); 2017 FX reserves rose $129.5B to $3.1405 v $3.011Tin 2016 (first annual rise since 2014)
- 1169.HK Reports FY17 Pretax CNY30B, +41% y/y; Rev CNY241.9B, +20% y/y
-HNA Holdings -2.5%: HNA units said have missed payments to more China banks – press
Australia/New Zealand
-ASX 200 opened +0.3%; closed +0.1%
-ASX 200 REIT Index +0.6%, Financials +0.2%
-(AU) Australia Dec Foreign Reserves (A$): 85.4B v 85.8B prior
-(AU) Australia Department of Industry, Innovation and Science quarterly Resources and Energy report made near-term changes to the iron ore price outlook but kept longer-term projections unchanged
- (AU) Australia Dec AiG Performance of Construction Index: 52.8 v 57.5 prior
Looking Ahead: Australia Nov Building Permits due to be released on Tuesday
Other Asia
- (TW) Apple supplier LARGAN Precision -4.5%: Reports Dec Rev NT$4.88B, -10.4% y/y
-2409.TW Reports Dec Sales NT$25.8B, -17.1% y/y
North America
-(US) S&P 500 companies are expected to report Q4 y/y earnings growth of 10.5%, revenue growth seen at 6.7% - Financial Times; Earnings growth is expected to be led by Energy, Materials and Technology sectors
-(US) Pres Trump: will try to get a bipartisan deal on welfare reform or will hold the issue for a later time - meeting with GOP leaders at Camp David; Hopefully economic advisor Gary Cohn will be staying for a long time
-(US) Fed's Williams (2018 voter): Reiterates three rates hike in 2018 makes sense - financial press interview
- (US) White House chief economist Hassett: Fed would not need to tighten policy at a faster rate in response to recently passed tax cuts - American Economic Association; White House modelling shows the economic effects of the tax plan result in interest rates that are not inconsistent with the Fed’s current guidance.
-Celgene: Confirms to Acquire Impact Biomedicines for $1.1B upfront and up to $1.25B in contingent payments, Adding Fedratinib to Its Pipeline of Novel Therapies for Hematologic Malignancies
Looking Ahead: Consumer Electronics Show (CES) to be held in Las Vegas Jan 9-12
Europe
-(UK) UK PM May said to plan cabinet changes, which are expected to include a cabinet minister for 'no deal' – UK Press
- (EU) ECB's Weidmann (Germany, head of the Bundesbank): central bank should set a concrete date for ending its QE program; signs for inflation to return to a level that is sufficient to maintain price stability - El Mundo
-(UK) UK Visa Dec Consumer Spending Y/Y: -1.0% v -0.9% prior (first Dec decline since 2012)
-(SA) Saudi prosecutors confirm 11 princes were arrested for 'disturbing public order' after they staged a sit in at a royal palace
-UBS CEO Ermotti: Will not discuss relationship with HNA; Wealth management business needs to continue to evolve; premature to discuss stock buybacks
-ABLX.BE Rejected proposal from Novo Nordisk to acquire it for up to €30.50 per share in cash
***Levels as of 01:00ET***
- Nikkei225 closed, Hang Seng -0.1%; Shanghai Composite +0.5%; ASX200 +0.1%, Kospi +0.5%
- Equity Futures: S&P500 +0.1%; Nasdaq100 +0.1%, Dax +0.3%; FTSE100 -0.0%
- EUR 1.20.52-1.2012; JPY 113.27-113.02; AUD 0.7873-0.7836;NZD 0.7184-0.7161
- Feb Gold -0.3% at $1,318/oz; Feb Crude Oil +0.2% at $61.55/brl; Mar Copper -0.2% at $3.23/lb