Asian Market Update: China 2015 GDP slows to 25-year lows but still "around 7%" objective
***Economic Data***
- (CN) CHINA Q4 GDP Q/Q: 1.6% V 1.8%E; Y/Y: 6.8% V 6.9%E
- (CN) CHINA DEC YTD FIXED URBAN ASSETS Y/Y: 10.0% V 10.2%E; multi-year low
- (CN) CHINA DEC INDUSTRIAL PRODUCTION Y/Y: 5.9% V 6.0%E; YTD Y/Y: 6.1% V 6.1%E
- (CN) CHINA DEC RETAIL SALES Y/Y: 11.1% V 11.3%E
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.2 v 114.1 prior
- (NZ) NEW ZEALAND Q4 BUSINESS CONFIDENCE: 15 V -14 PRIOR
- (KR) SOUTH KOREA DEC PPI Y/Y: -3.9% (17th straight decline) V -4.7% PRIOR
***Index Snapshot (as of 05:00 GMT)***
- Nikkei225 flat, S&P/ASX +0.9%, Kospi +0.2%, Shanghai Composite +2.4%, Hang Seng +1.0%, Mar S&P500 +0.7% at 1,889
***Commodities/Fixed Income***
- Feb gold -0.2% at $1,088/oz, Mar crude oil +0.2% at $30.44/brl, Mar copper +0.8% at $1.98/lb
- (CN) PBoC injects CNY80B in 7-day reverse repos and CNY75B in 28-day reverse repos
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.5596 v 6.5590 PRIOR; 8th straight firmer setting relative to Close
- JGB: (JP) Japan MoF sells ¥2.27T in 0.1% (0.1% prior) 5-year JGBs; Avg yield: 0.016% v 0.035% prior; Bid-to-cover: 4.10x v 4.25x prior
***Market Focal Points/FX***
- Asian indices are in rally mode and US futures portend an upbeat return for markets from a long weekend. China economic data points whiffed across the board, boosting speculation of expanded PBoC easing in time for the extended Lunar New Year holiday early next month. Q4 GDP came in at 1.6% V 1.8%E q/q and 6.8% V 6.9%E y/y. For 2015, GDP slowed to a 25-year low of 6.9%, even though services component rose to 50.5% v 48.2% in 2014 and consumption marked 66.4% of total economy vs 51.2%. Fixed asset investment slowed to a new multi-year low, with property investment growth slowing to v +1.3% prior and new construction falling y/y by -14.0%. Industrial Output growth slowed below 6% after last month's bounce, with power generation component back in the red at -3.7% v +0.1% prior.
- The initial reaction to China data was pronounced risk-off, but expectations of more easing in the pipeline have trumped the fears of a deeper slowdown. In FX, USD/JPY fell toward 117.20 but since rallied to 117.80, while AUD/USD erased initial 50pip decline to 0.6840 to rally back above 0.69. China Stats Bureau head said China will step up reform on supply side even with the economy in "reasonable" range, also warning that some industrial companies would slow further in 2016. NBS added employment situation remains stable, local debt remains within safety lines, and the trend of currency depreciation will not be long term. In that regard, today's setting was firmer for the 8th straight day relative to the close. PBoC's open market operations also included 28-day repo's for the first time since early 2015, and there were also reports that the central bank will use Mid-term Lending Facilities (MLFs) in coming liquidity injection for the first time.
- Out of Japan, BOJ Gov Kuroda reiterated the central bank will do whatever it takes to achieve price target and that there were no issues with JGB liquidity. Econ Min Amari also reiterated cabinet position that the economy is solid and the volatility in Japan equities was due to external factors.
***Equities***
US equities / ADRs:
- NFLX: CEO: May get license to offer services in China "soon"; Will be patient - financial press
- YHOO: Company may cut as much as 20-25% of workforce - NY Post
Key movers in Asia:
- Sharp 6753.JP +3.3%: Innovation Network Corp. of Japan (INCJ) considering increasing proposed investment to ¥300B, up from prior offer of ¥200B, to top the offer from Hon Hai - Nikkei
- TCL.AU +3.3%: Reports Q2 toll Rev A$433M, +16.2% y/y; H1 toll rev A$900M, +18% y/y
- RIO +0.3%: Reports Q4 global iron ore production 87.2M tons v 91Me v 79.1Mt y/y v 86.1Mt q/q
- Hop Hing Group 47.HK +1.9% : Issues profit alert for FY15; Increase in profit of no less than 60%
- 2503.JP -1.8% : Expected to report FY16 Op profit more than ¥130B, +10% y/y from expected ¥122B in FY15 - Nikkei