Asian Market Update: Samsung Q4 results disappoint; RBNZ holds cash rate at 2.50% with a dovish outlook; BOJ policy decision in focus
***Economic Data***
- (JP) JAPAN DEC RETAIL SALES M/M: -0.2% V +1.0%E; RETAIL TRADE Y/Y: -1.1% V +0.2%E
- (AU) AUSTRALIA Q4 IMPORT PRICE INDEX Q/Q: -0.3% V -0.8%E; EXPORT PRICE INDEX Q/Q: -5.4% V -3.9%E
- (NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE UNCHANGED AT 2.50%; AS EXPECTED
- (NZ) NEW ZEALAND DEC TRADE BALANCE (NZD): -53M V -131ME; 7th straight month deficit
- (SG) SINGAPORE Q4 PRELIMINARY UNEMPLOYMENT RATE: 1.9% V 2.0%E
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -0.4%, S&P/ASX +0.6%, Kospi +0.1%, Shanghai Composite -0.5%, Hang Seng +0.2%, Mar S&P500 +0.2% at 1,878
***Commodities/Fixed Income***
- Apr gold +0.6% at $1,122/oz, Mar crude oil -1.3% at $31.89/brl, Mar copper -0.3% at $2.05/lb
- (NZ) Fonterra cuts FY15/16 forecast milk price to NZ$4.15/kg from NZ$4.60/kg; Sees cash payout NZ$4.50-4.55/kgMS
- USD/CNY: SWIFT: CNY use in international transactions 2.3% of total in Dec v 2.3% prior
- USD/CNY: *(CN) PBOC SETS YUAN MID POINT AT 6.5528 V 6.5533 PRIOR; strongest Yuan setting since Jan 6th, 14th straight firmer setting relative to Close
- (CN) PBOC to inject CNY80B in 7-day reverse repos and CNY260B in 28-day reverse repos; Injects net CNY590B (3-year high) this week v injected CNY315B prior
- JGB: (JP) Japan MoF sells ¥2.28T in 0.1% 2-year JGBs; Avg yield: -0.018% v -0.013% prior; bid-to-cover 4.84x v 4.72x prior
- (JP) Japan investors bought net ¥475B in foreign bonds v sold net ¥375B in prior week; Foreign investors sold net ¥189B in Japan stocks v sold ¥358B in Japan stocks in prior week
***Market Focal Points/FX***
- Asian indices are mixed as investors digest policy statement tweaks by the FOMC and prepare for tomorrow's Bank of Japan announcement. The Fed largely accomplished its delicate task of acknowledging global market turmoil since its December hike in the context of both - tempering expectations for four 2016 rate hikes implied by the dot chart while still remaining data dependent. Removal of "balanced risks" and return of "monitoring global developments" were seen as key to diminished expectations of another March tightening - in fact the fed funds futures now only price in a full hike toward the end of the year. USD majors were somewhat volatile in the wake of the decision but did not make significant leaps. In Asian session, USD/JPY was rangebound in 50pip band below 119, EUR/USD traded in a 25pip range above 1.0880, and AUD/USD was supported above the 0.70 level.
- NZD was most volatile after the RBNZ rate decision, falling over 60pips below 0.6420. As expected, New Zealand central bank kept rates on hold at 2.50% but reintroduced an easing bias, judging that return to target inflation range is likely to take longer than last anticipated. Recall last time RBNZ cut rates but concluded it could achieve its inflation objective at current rates, sending NZD higher. Today, RBNZ expressed new concerns about China and other emerging markets, reiterated it would prefer to see further depreciation in exchange rate, and acknowledged the impact of falling fuel prices. After the decision, Westpac pushed forward its expectation of next easing from June to March, while ANZ noted RBNZ stepped up its easing bias but did not necessarily set up expectations for another cut in March. Separately in New Zealand, Fonterra cut its FY15/16 forecast milk price to NZ$4.15/kg from NZ$4.60/kg, noting there was still imbalance between supply and demand which continues to put pressure on global milk prices. New Zealand trade data was in deficit for the 7th straight month but much smaller than the prior 6 deficit readings, as shipments to China were up nearly 9% and those to Australia and US up 2%.
- Ahead of tomorrow's BOJ decision, PM Abe's advisor Honda said he would conduct further monetary easing and also postpone sales tax hike in 2017 amid slowdown in global economy. PM Abe also remarked that the govt is working with the BOJ to end deflation. In China, state press People's Daily reiterated the economy will not experience a hard landing in spite of recent comments to the contrary from famed investor George Soros.
- Samsung Electronics traded down nearly 3% as Net profits in Q4 were well below expectations. Samsung noted its 2016 capex plan remain under review and that it takes efforts to stay profitable in every business unit. For 2016, Samsung forecast single-digit percentage growth for smartphone and tablets amid overall slowdown in IT industry during Q1. Finally, Samsung announced it was buying back KRW2.5T in common stock.
***Equities***
US equities / ADRs:
- FB: Reports Q4 $0.79 v $0.68e, R$5.84B v $5.36Be; +12.1% afterhours
- TER: Reports Q4 $0.13 ex-items v $0.10e, R$318M v $310Me; +8.8% afterhours
- MLNX: Reports Q4 $0.77 v $0.69e, R$176.9M v $174Me; +7.9% afterhours
- PYPL: Reports Q4 $0.36 v $0.34e, R$2.56B v $2.51Be; Announces $2B share buyback; +4.8% afterhours
- TXN: Reports Q4 $0.71 v $0.69e, R$3.19B v $3.20Be; +3.4% afterhours
- CTXS: Reports Q4 $1.50 (ex tax benefit) v $1.19e, R$905M v $878Me; authorizes $400M (3.9% of market cap) increase to share repurchase program; +2.6% afterhours
- LVS: Reports Q4 $0.62 v $0.64e, R$2.86B v $2.92Be; +2.0% afterhours
- LRCX: Reports Q2 $1.57 v $1.42e, R$1.43B v $1.41Be; +1.5% afterhours
- QCOM: Reports Q1 $0.97 v $0.90e, R$5.77B v $5.70Be; -0.6% afterhours
- DFS: Reports Q4 $1.14 v $1.30e, R$2.21B v $1.80Be; -7.4% afterhours
- JNPR: Reports Q4 $0.63 v $0.60e, R$1.32B v $1.30Be; CFO resigns; -10.7% afterhours
- URI: Reports Q4 $2.19 v $2.35e, R$1.52B v $1.55Be; -11.2% afterhours
- EBAY: Reports Q4 $0.50 v $0.49e, R$2.32B v $2.32Be; -12.3% afterhours
- NOW: Reports Q4 $0.19 v $0.08e, R$285.7M v $280Me; -16.9% afterhours
Notable movers by sector:
- Consumer discretionary: Huayi Brothers Media Corp 300027.CN +1.1% (guidance); Japan Airlines Corp 9201.JP +1.1% (9-month result speculation)
- Financials: China Merchants Securities Co 600999.CN +0.5% (guidance)
- Industrials: Vinda International 3331.HK -8.3% (FY15 result); Zoomlion Heavy Industry Science and Technology Co 000157.CN +3.5% (proposed acquisition); Weichai Power 2338.HK -0.7% (guidance); Chongqing Changan Automobile Co 000625.CN +4.3% (guidance); Asciano Limited AIO.AU +3.3% (consortium makes proposal); Kawasaki Heavy Industries 7012.JP -5.2 % (9-month result); GS Engineering & Construction Corp 006360.KR +1.6% (Q4 result)
- Technology: Canon 7751.JP +1.2% (FY15 result); Samsung Electronics 005930.KR -2.8% (Q4 result)
- Materials: China Minmetals Resources 1208.HK +1.4% (Q4 result); Drillsearch Energy DLS.AU -3.1% (Q2 result); Fortescue Metals Group FMG.AU +4.5% (Q2 result); Newcrest Mining NCM.AU +2.7% (Q2 result); Sandfire Resources SFR.AU +2.3% (Q2 result)
- Energy: Sinopec (China Petroleum & and Chemical Corp) 600028.CN -0.2% (FY15 result); Beach Energy BPT.AU -3.4% (Q2 result)
- Telecom: Ten Network TEN.AU -0.8% (H1 result); M2 Telecommunications Group Ltd MTU.AU +2.6% (in favor of agreement with Vocus Communications)