Asian Market Update: Equities slump as China HSBC flash manufacturing PMI unexpectedly contracts
***Economic Data*** - (CN) CHINA JAN HSBC/MARKIT FLASH MANUFACTURING PMI: 49.6 V 50.3E (1st contraction in 6 months) - (CN) CHINA DEC CONFERENCE BOARD LEADING ECONOMIC INDEX: 0.4% (9-month low) V 1.3% PRIOR - (AU) AUSTRALIA JAN CONSUMER INFLATION EXPECTATION: 2.3% (5-month high) V 2.1% PRIOR - (NZ) NEW ZEALAND JAN ANZ CONSUMER CONFIDENCE INDEX: 135.8 V 129.4 PRIOR; M/M: 4.9% V 0.8% PRIOR - (NZ) NEW ZEALAND DEC BUSINESS PMI: 56.4 V 57.0 PRIOR - (NZ) NEW ZEALAND DEC ANZ JOB ADVERTISEMENTS: -0.7% V -2.5% PRIOR - (KR) SOUTH KOREA Q4 PRELIM GDP Q/Q: 0.9% V 0.9%E; Y/Y: 3.9% V 3.9%E; 2013 GDP: 2.8% v 2.0% in 2012 - (KR) SOUTH KOREA DEC DEPT STORE SALES Y/Y: -0.3% V 5.3% PRIOR; DISCOUNT STORE SALES Y/Y: -5.7% V 1.0% PRIOR - (SG) SINGAPORE DEC CPI M/M: -0.3% (first decline since Apr) V +0.2%E; Y/Y: 1.5% V 2.0%E - (JP) Japan investors sold net ¥226.0B in foreign bonds last week vs sold net ¥740.6B in prior week; Foreign Investors bought net ¥71.2B in Japan stocks v sold net ¥219.1B in prior week
***Observations/Insights*** - Netflix surges nearly 20% to new 52-week highs on strong Q4 results; Western Digital underperforms on soft guidance. - China HSBC flash manufacturing PMI contracts for the first time in 6 months, sending regional stock and US equity futures lower; New orders component also falls into contraction, while new export orders - gauge of overseas demand - accelerated the pace of decline. HSBC chief economist noted the data reflect "cooling domestic demand conditions" implying "softening growth momentum." - PBoC injects another CNY120B through open market operations following a CNY255B injection on Tuesday. Money market rates were steady despite the multi-month high injection of fresh liquidity into the system going into the Lunar New Year holidays. - Australia's Newcrest, Whitehaven, and Santos are all down over 1% after quarterly production metrics, tracking weaker sentiment in Sydney.
***Fixed Income/Commodities/Currencies*** - JGB: (JP) Japan's MoF sells ¥1.09T in 1.6% (1.6% prior) 20-year JGBs; Avg yield: 1.538% v 1.586% prior; bid-to-cover: 5.32x v 4.49x prior - (CN) PBoC to conduct CNY120B in 21-day reverse repos (2nd consecutive injection); Injects net CNY375B (multi-month high) this week v zero prior - (CN) China Qinhuangdao coal price falls to CNY585-595/t (3rd consecutive decline) - GLD: SPDR Gold Trust ETF daily holdings fall 1.2 tonnes to 795.9 tonnes - (US) API PETROLEUM INVENTORIES: CRUDE: +4.86M (first build in 4 weeks) v +1Me; GASOLINE: +1.1M v +1.5Me; DISTILLATE: -2.29M v -1Me - USD/CNY: (CN) PBoC sets yuan mid point at 6.1107 v 6.1087 prior setting (Weakest setting since Jan 9th) - USD/JPY: (JP) Nikkei feature anticipates slowing in the pace of depreciation of JPY as latest BOJ comments give little hint of further easing
- Disappointing HSBC manufacturing PMI from China has sent AUD back below the $0.88 handle, down about 50pips, as AUD/USD erased all of its gains overnight following hotter than expected inflation figures. NZD/USD also hit its session lows on the PMI data, falling 50pips from the highs to $0.8260. Japanese Yen, which had actually traded softer in the morning session, strengthened on risk-off flows - USD/JPY fell below 104.30, EUR/JPY below 141.30, and AUD/JPY all the way down to 91.70. EUR/USD was little changed, trading flat around the $1.3550 levels. USD/CAD continued to strengthen in the wake of dovish BOC comments, reaching C$1.1150 - highest level since June 2009. SGD also fell after a surprising drop in Singapore sequential CPI, as USD/SGD hit a 5-month high.
***Speakers/Political/In the Papers*** - (CN) China big four banks new loans CNY440B in Jan 1st-20th v CNY300B y/y - financial press - (AU) ANZ warns Australian Securities and Investments Commission about risks in the property sector - SMH - (KR) South Korea Ministry of Land, Infrastructure, and Transports: 2013 air cargo traffic rose 0.7% to 3.5M tons; first increase since 2010 - Korean press - (KR) Bank of Korea (BOK): South Korea bankruptcies in Dec fell to 68 from 84 in Nov; 6-month low - Korean press - (KR) Bank of Korea (BOK) official: Private sector led economic growth in Q4 - (KR) IMF: Sees KRW "Moderately undervalued"; Korean authorities need to boost transparency in currency intervention - (NZ) New Zealand PM Key: Economy to post budget surplus next year - (NZ) BNZ economist: New Zealand dairy industry revenue to be a lot higher in 2014 vs 2013 - NZ press - (EU) ECB Pres Draghi: Domestic demand will gradually boost growth in the EMU; Reiterates no deflation concerns as inflation expectations remain well anchored - Swiss press
***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 -0.3%, S&P/ASX -1.1%, Kospi -1.1%, Shanghai Composite -0.5%, Hang Seng -1.4%, Mar S&P500 -0.4% at 1,831, Feb gold -0.3% at $1,234, Mar crude oil -0.2% at $96.50/brl
US markets: - NFLX: Reports Q4 $0.79 v $0.66e, R$1.18B v $1.17Be; +18.0% afterhours - FFIV: Reports Q1 $1.22 v $1.19e, R$406.5M v $396Me; approves $500M buyback program (6.6% of market cap); +9.9% afterhours - ARIA: Three international groups said to have made "friendly approaches" for the company - UK press; +9.1% afterhours - PLCM: Reports Q4 $0.16 v $0.15e, R$347.9M v $341Me; +5.8% afterhours - EBAY: Reports Q4 $0.81 v $0.80e, R$4.53B v $4.56Be; Announces $5B share repurchase (7% of market cap); Icahn submits proposal for spinoff of Paypal, nominates two directors to the Board; Icahn has acquired a 0.82% stake; Company has explored a PayPal spinoff; +5.7% afterhours - VLO: Provides Q4 Interim Update: Guides Q4 $1.60-1.80 v $0.86e; +3.8% afterhours - SNDK: Reports Q4 $1.71 v $1.58e, R$1.73B v $1.70Be; Guides Q1 R$1.45-1.525B v $1.52Be; Guides initial FY14 R$6.4-6.8B v $6.72Be - conf call; -0.9% afterhours - WDC: Reports Q2 $2.19 v $2.08e, R$3.97B v $3.86Be; Guides Q3 $1.80-1.90 v $1.90e, R$3.65-3.75B v $3.69Be; GM at midpoint 27-32% - conf call; -2.0% afterhours
- JEC: Reports Q1 $0.71 v $0.73e, R$3.07B v $3.08Be - LOGI: Reports Q3 $0.35 adj (unclear if comp) v $0.15e, R$628M v $575Me
Notable movers by sector: - Consumer Discretionary: Esprit Holdings 330.HK +0.9% (issues positive profit alert); Huayi Brothers Media Corp 300027.CN +2.2%, Zhejiang Huace Film & TV 300133.CN +5.6%, Shanghai Oriental Pearl Group 600832.CN +4.9%, BesTV New Media Co Ltd 600637.CN +3.9% (China Premier comments on cultural, media industry); Hisense Kelon Electrical Holdings 921.HK +5.0% (FY13 guidance) - Consumer staples: Inner Mongolia Yili Industrial Group 600887.CN +4.7% (FY13 guidance) - Financials: Industrial Securities 601377.CN -1.1% (prelim FY13 report); Insurance Australia IAG.AU -3.6% (FY14 guidance) - Materials: Newcrest Mining NCM.AU -1.9% (Q2 production results); Whitehaven Coal -1.6% (Q2 production, weak outlook for coal prices) - Energy: Santos Ltd STO.AU -1.1% (Q4 results); Sino-Tech International Holdings 724.HK +5.0% (issues positive profit alert) - Industrials: Sound Global 967.HK +10.2% (awarded project) - Utilities: Huadian Power International Corp 1071.HK +6.4% (FY13 guidance)