Asian Market Update: Equities slip as oil slides back below $30/brl; Analysts and officials debate BOJ policy options ahead of Friday meeting
***Economic Data***
- (JP) JAPAN DEC PPI SERVICES Y/Y: 0.4% V 0.2%E
- (NZ) NEW ZEALAND DEC PERFORMANCE OF SERVICES INDEX: 58.9 V 59.8 PRIOR
- (NZ) NEW ZEALAND DEC RETAIL CREDIT CARD SPENDING M/M: -0.8% v +0.6% PRIOR; Y/Y: 7.4% v 8.4% PRIOR
- (SG) SINGAPORE DEC INDUSTRIAL PRODUCTION M/M: 2.0% V 1.4%E; Y/Y: -7.9% V -7.2%E
- (KR) SOUTH KOREA Q4 PRELIMINARY GDP Q/Q: 0.6% V 0.6%E; Y/Y: 3.0% V 3.0%E
- (TH) Thailand Dec Customs Trade Balance $1.5B v $1.2Be
- (PH) Philippines Nov Trade Balance: -$1.0B v -$1.4Be; Imports $6.1B v $6.5B prior
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -2.0%, S&P/ASX closed, Kospi -1.2%, Shanghai Composite -2.1%, Hang Seng -1.8%, Mar S&P500 -0.1% at 1,868
***Commodities/Fixed Income***
- Feb gold +0.7% at $1,113/oz, Mar crude oil -2.4% at $29.60/brl, Mar copper flat at $1.99/lb
- SLV: iShares Silver Trust ETF daily holdings fall to 9,662 tonnes from 9,692 tonnes; multi-year low
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.5548 V 6.5557 PRIOR; strongest Yuan setting since Jan 6th, 12th straight firmer setting relative to Close
- (CN) PBOC to inject CNY80B in 7-day reverse repos and CNY360B in 28-day reverse repos (largest daily injection in 3 years)
***Market Focal Points/FX***
- Asian equities are back in the red, tracking the final hour selloff on Wall St, as oil prices erased their Friday bounce to fall some 7% back below $30. Concern with oversupply in the energy space resurfaced as OPEC Sec Gen blamed non-members, while Iraq output hit record highs. The cloud of falling oil and the potential turmoil it creates in high-yield debt and emerging markets overshadowed 3-year high liquidity injection by the PBoC, which pumped in some CNY440B in 7 and 28 day repos. Chinese central bank also set Yuan higher for the 12th straight day, seeking to diminish concerns over outflows from the mainland, even as PBoC official Zhang reiterated there were no plans to lower RRR for the time being. Shanghai Composite is leading the thrust lower with an over 2% drop. In USD majors, USD/JPY was down over 30pips below 118, AUD/USD is down 30pips from the highs below 0.6940, and NZD/USD is little changed just below 0.6450 ahead of Thursday's RBNZ decision.
- With a close call of a BOJ decision looming on Friday, there is plenty of rhetoric over its policy options. PM Abe's advisor Hamada noted more easing is still needed, but because of constraints of current JGB buying policy, BOJ should consider buying foreign-denominated debt or other methods. Econ Min Amari said he did not believe the BOJ will be as dovish in its intentions as ECB's Draghi, though he reiterated confidence in Kuroda to take appropriate measures. Former Dep Gov Iwata however would not rule out the possibility of expanded QE. Analysts with BBH did not see more easing as their expected scenario, with the research note citing late-2014 highs in core-core CPI and BOJ's lack of concern over market volatility impact on corporate activity in Japan. Instead, the central bank's update on CPI and GDP forecasts will be in focus, and only a cut in FY16/17 CPI target below 1% is seen as a recognition of further delay in reaching its 2% target.
- In economic data, Korean GDP was in line with expectations, though a local think tank noted potential GDP has fallen to 2-3% range and may fall to 1-2% within 10 years. Korea's Hynix and Hyundai Motors also reported Q4 results that were largely in line with consensus - respective shares were down -1.5% and -0.4% in late session trade. Hyundai's Q4 global sales were unchanged y/y and China sales fell, but sales in Europe and US were higher. Hynix noted Q1 memory market demand would be uncertain amid seasonal weakness, but DRAM demand for PCs would improve in H2.
***Equities***
US equities / ADRs:
- RLYP: Nine of the 12 drugs tested in Veltassa Drug-Drug Interaction Study showed no clinically meaningful reduction in absorption; +17.2% afterhours
- RMBS: Reports Q4 $0.18 v $0.15e, R$76.8M v $72.5Me; Acquires Secure Mobile Payment and Ticketing Solutions for £64.7M cash; +6.2% afterhours
- SWFT: Reports Q4 $0.53 v $0.47e, R$1.09B v $1.11Be; +5.3% afterhours
- SANM: Reports Q1 $0.58 v $0.60e, R$1.53B v $1.58Be; +4.7% afterhours
- STLD: Reports Q4 $0.09 v $0.08e, R$1.59B v $1.66Be; +2.3% afterhours
- MEG: Nexstar reportedly willing to pay $2.3B for Media General; Said to be close to deal - NYPost
Notable movers by sector:
- Consumer discretionary: Air China 753.HK -0.4% (guidance); Juneyao Airlines Co 603885.CN +4.2% (guidance); Ajinomoto Co 2802.JP -0.3% (9-month result speculation); JSR Corp 4185.JP -0.6% (9-mo result)
- Industrials: CRRC 1766.HK -6.2% (to issue bond); China Machinery Engineering Corp 1829.HK -1.4% (contract awarded); Nippon Yusen 9101.JP -3.5% (considers forecast revision)
- Technology: Hynix Semiconductor 000660.KR -0.2% (Q4 result); Samsung SDI 006400.KR -13.2% (Q4 result); LG Innotek 011070.KR -5.6%?(Q4 result); Toshiba Corporation 6502.JP -4.5% (considers write down for some business)
- Materials: Shandong Chenming Paper Holdings 1812.HK +4.5% (guidance); China National Materials Company 1893.HK +7.5%, China National Building Material Co 3323.HK -1.9% (parent considers strategic reorganization)
- Energy: Guodian Technology & Environment Group Co 1296.HK +1.9% (JV plan); Kansai Electric Power 9503.JP -4.7% (speculation to lower base rates)