Asian Mid-session Update: Growth in China industrial output and urban investment fall to new multi-month lows; BOJ's Kuroda steadfast on current policy stance
***Economic Data***
- (CN) CHINA OCT YTD FIXED URBAN ASSETS Y/Y: 10.2% V 10.2%E; multi-year low
- (CN) CHINA OCT INDUSTRIAL PRODUCTION Y/Y: 5.6% (7-month low) V 5.8%E; INDUSTRIAL PRODUCTION YTD Y/Y: 6.1% V 6.2%E
- (CN) CHINA OCT RETAIL SALES Y/Y: 11.0% (9-month high) V 10.9%E; RETAIL SALES YTD Y/Y: 10.6% V 10.6%E
- (AU) AUSTRALIA NOV WESTPAC CONSUMER CONFIDENCE INDEX: 101.7 (highest since May) V 97.8 PRIOR, M/M: 3.9% V 4.2% PRIOR
- (JP) JAPAN OCT M2 MONEY STOCK Y/Y: 3.6% (6-month low) V 3.8%E; M3 MONEY STOCK Y/Y: 2.9% V 3.1%E
- (KR) SOUTH KOREA OCT UNEMPLOYMENT RATE: 3.4% V 3.5%E
***Index Snapshot (as of 02:00 GMT)***
- Nikkei225 +0.1%, S&P/ASX +0.4%, Kospi -0.1%, Shanghai Composite -0.4%, Hang Seng flat, Dec S&P500 +0.1% at 2,079
***Commodities/Fixed Income***
- Dec gold +0.3% at $1,091/oz, Dec crude oil -1.0% at $43.76/brl, Dec copper +0.2% at $2.22/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 2.7 tonnes to 663.4 tonnes; Lowest since 2008
- (US) API Petroleum Inventories: Crude: +6.3M v +2.8M prior (5th straight build, largest build since Oct 20th)
- (CN) China may ease restrictions on oil and gas exploration and development qualifications - financial press
- (CN) China MOF sells 5-yr bonds, avg yield 2.98% v 3.14% on Sept 6th
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3614 v 6.3602 prior setting; 8th straight weaker setting; weakest Yuan setting since Oct 20th
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥400B in 3-5yr JGBs, ¥400B in 5-10yr JGBs
- (AU) Australia MoF (AOFM) sells A$900M in 3.25% 2025 Bonds; avg yield: 2.8839%; bid-to-cover: 2.55x
***Market Focal Points/FX***
- Asian equity markets were fairly mixed in the morning hours before succumbing to generally underwhelming economic data out of China. Industrial output growth hit a 7-month low, missing expectations, while urban asset investment hit new multi-year low. Silver lining in the dataset was another beat on retail sales, coming in at a 9-month high and substantiating progress made in transitioning the economy toward consumption. Similar evidence was displayed in the China "singles day" metrics posted that saw triple digit growth in online orders made on JD and Alibaba. Delving into some of the key components of China figures, power output fell by the biggest margin in 7 months at -3.2%. Fixed urban asset investment data saw some modest deterioration in the property sector - YTD new property construction at 1.27B sqm was down -13.9% v -12.6% prior. Earlier, PBoC adviser Yu called for China to shift to targeted fiscal expansion policy. Chief China economist with Goldman Sachs noted China is likely to cut RRR by another 50bps again before the end of 2015, adding the soft CPI data this week also adds to probability of another interest rate cut.
- RBNZ semiannual financial stability report saw a rise in the risks to financial system, particularly in the property space where the bank saw potential for a damaging correction. NZ central bank also noted there was an increased risk in the dairy sector given the rising indebtedness of farms, but added credit losses on dairy exposure were manageable thanks to low-rate loans granted to farmers by Fonterra. RBNZ Gov Wheeler spoke after the release, mainly focusing on the property sector and deferring comments on monetary policy to the next decision in 3 weeks. NZD/USD initially fell to 0.65 but recovered to 0.6560s later in the day. ANZ economists noted the bounce is due to less worry related to the dairy industry and more focus on housing which is already correcting. Also down under, Australia Westpac consumer confidence index rallied to a 6-month high of 101.7 ahead of tomorrow's key employment data.
- BoJ Gov Kuroda comments did not indicate that he is any closer to favoring additional easing, reiterating that while BOJ is committed to achieve 2% inflation target as early as possible, the delay to achieve target is mainly due to lower energy prices. More dovish BOJ member Harada noted the central bank should be able to tell by March 2016 if CPI can reach 2%, calling for more easing if virtuous cycle is threatened. Harada added consumption and investment are still weak, and that the BOJ is monitoring external risks - shock from US rate hike and slowdown in China. USD/JPY session lows coincided with non-committal Kuroda stance, falling about 50pips from the highs below 122.80.
***Equities***
US equities / ADRs:
- ALRM: Reports Q3 $0.07 v $0.04e, R$54.0M v $47.6Me; +11.2% afterhours
- OPXA: Announces Supportive Preclinical Study Results for its Neuromyelitis Optica (NMO) Program; +9.2% afterhours
- OPWR: Reports Q3 -$0.06 v -$0.14e, R$39M v $38.2Me (2 est); +5.9% afterhours
- INGN: Reports Q3 $0.13 v $0.13e, R$40.8M v $37.5Me; +1.0% afterhours
- BOOT: Reports Q2 $0.04 v $0.04e, R$129.7M v $132Me; -9.0% afterhours
- WPRT: Reports Q3 -$0.58 (unclear if comparable) v -$0.25e, R$22.3M v $27.5Me; -12.2% afterhours
- EVDY: Reports Q3 $0.07 v $0.08e, R$54.3M v $57.2Me; -18.7% afterhours
Notable movers by sector:
- Consumer discretionary: Chow Tai Fook Jewellery Group 1929.HK -7.2% (profit warning); Flight Centre FLT.AU +0.2% (reaffirms guidance); Dulux Group DLX.AU +1.9% (FY15 result)
- Financials: China Resources Land 1109.HK +0.5% (Oct result); Evergrande Real Estate Group 3333.HK +0.8% (raises annual sales target); Computershare CPU.AU -0.6% (reaffirms guidance); Eclipx Group ECX.AU +4.6% (investor lowers stake)
- Industrials: Aurizon Holdings AZJ.AU +2.1% (share buyback)
- Technology: Tencent 700.HK +2.3% (Q3 result); Samsung Electronics 005930.KR +1.3% (pre-order for Gear VR); Hon Hai Precision Industries 2317.TW -1.2% (Oct result); Acer Inc 2353.TW -4.3% (Oct result); Taiwan Semiconductor Manufacturing 2330.TW -1.8% (Oct result)
- Materials: Sumitomo Metal Mining Co 5713.JP -9.5% (H1 result); Fortescue Metals Group FMG.AU +6.5% (pays back debt)
- Energy: Inpex Corp 1605.JP +6.1% (H1 result)
- Healthcare: Healthscope HSO.AU +2.4% (potential investor speculation)