Asian Mid-session Update: China industrial profits post 6th month of decline; Japan retail sales disappoint while industrial output forecast brightens
***Economic Data***
- (JP) JAPAN NOV RETAIL SALES M/M: -2.5% (first decline in 4 months) V -1.4%E; Y/Y: -1.0% (biggest decline in 8 months) V -0.1%E; LARGE RETAILERS' SALES: -1.5% V -0.2%E
- (JP) JAPAN NOV PRELIMINARY INDUSTRIAL PRODUCTION M/M: -1.0% (first decline in 3 months) V -0.5%E; Y/Y: 1.6% (first rise in 3 months) V 1.6%E
- (JP) JAPAN NOV VEHICLE PRODUCTION Y/Y: +6.0% V -0.5% PRIOR; first rise in 15 months
- (CN) CHINA NOV INDUSTRIAL PROFITS Y/Y: -1.4% (6th straight decline) V -4.6% PRIOR; YTD: -1.9% v -2.0% PRIOR
- (CN) China State Planner NDRC sees Nov rail freight volume at -15.6% y/y; YTD volume -12.3% y/y - financial press
- (CN) China Shanghai new home sales: -5.4% w/w at 452.8K sqm; avg new home prices -3.0% w/w at 32.3K/sqm - Uwin
- (TH) THAILAND NOV CUSTOMS TRADE BALANCE: $0.3B V $1.7BE; Exports y/y -7.4% v -5.0%e; Imports y/y: -9.5% v -14.5%e
- (VN) Vietnam Q4 YTD GDP Y/Y: 6.7% v 6.6%e (5-year high)
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +0.3%, S&P/ASX closed, Kospi -0.8%, Shanghai Composite -0.2%, Hang Seng -0.4%, Feb S&P500 +0.1% at 2,052
***Commodities/Fixed Income***
- Feb gold -0.3% at $1,073/oz, Feb crude oil -0.3% at $37.83/brl, Mar copper -0.8% at $2.11/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 1.1 tonnes to 644.8 tonnes
- (JP) BOJ offers to buy ¥350B in 1-3yr JGBs, ¥350B in 3-5yr JGBs, ¥240B in 10-25yr JGBs and ¥140B in JGBs with maturity over 25-yr
***Market Focal Points/FX***
- Asian indices traded mixed in light holiday session, with expectations of seasonal low volatility expected to persist in the final week of 2015. Nikkei225 eked out modest gains as soft retail data justified the latest ETF purchase additions to BOJ's QE program. Korea's Kospi was the laggard as Samsung Group conglomerate was reportedly forced to sell some of its holdings in C&T affiliate due to regulatory rules. Shanghai and Hang Seng were down modestly, while ASX was closed for Boxing Day. In FX, USD/JPY was up about 40pips from opening lows, rising above 120.50. EUR/USD traded in about a 30pip range but stayed capped below 1.0980. AUD/USD range was at a narrow 20pip window above 0.7260. Chinese Yuan was set slightly weaker at 6.4750 v 6.4713 prior after last week's rally.
- Economic calendar was most concentrated in Japan with mixed results. Retail sales saw multi-month declines on m/m and y/y basis, but Prelim industrial output findings were more robust. While m/m fell for the first time in 3 months, y/y rose. Outlook for Dec was also revised higher to +0.9% m/m v -0.9% prior forecast, and that of Jan was initiated at an impressive 6.0%. METI maintained its overall assessment for industrial sector as "fluctuating".
- China put out its industrial profits data for November, and while the y/y result was the 6th straight decline at 1.4%, it was much more narrow than the prior months. Among notable press reports from the mainland, the State Council approved the proposal to adjust China's IPO system from govt-directed to a more liberal registration-based one. New system details are still being worked out by the govt, though reports did suggest it may be in place by Mar of 2016. Separately, MOFCOM head Gao speculated 2015 FDI is on track to rise nearly 13% y/y to about $135B, while another cabinet official acknowledged that while reduction of overcapacity is a painful process, but it will not cause huge unemployment. Over the longer term, China's labor force is also set to receive an eventual boost, as the govt has formally confirmed the end to its one child policy today. Recall last month the govt denied the immediate validity of the two-child policy in the wake of the last 5-year plan that put forth this change.
- Elsewhere, Korea's Pres Park requested that the govt prepare measures to boost domestic demand if effect from earlier support runs out in Q1, calling for steps that would raise GDP to 3%. Note that Q3 GDP was at 2.7% y/y. BOK private debt for Q3 was reported at a record high, accounting to 180% of Korea's GDP.
***Equities***
- Consumer discretionary: J.Front Retailing 3086.JP -4.4% (9-mo result); Takashimaya Co 8233.JP +3.4% (9-mo result); DIS: "Star Wars" remained the top earning film in weekend box office with $153.5M in N America sales
- Industrials: Toyo Engineering 6330.JP +2.3% (Thailand contract)
- Materials: China Polymetallic Mining 2133.HK -3.3% (guides FY15 lower y/y); Samsung C&T 028260.KR -3.8% (Samsung SDI ordered to divest stake)
- Healthcare: Takeda 4502.JP +0.4% (deal with Teva)
- Telecom: China Telecom 728.HK -1.1% (CEO under probe)
- Technology: Sharp 6753.JP +8.2% (report of takeover offer from Hon Hai)