Asia Market Update: Quiet last day of trading for 2017; China smartphone maker Huawei expects slower revenue growth in 2017; PBoC to again seek
***Headlines/Economic Data***
General Themes: Asian currencies continue to gain
-Major Asian equity markets end 2017 higher: Hang Seng YTD return +36.2%, Kospi +21.8%, Nikkei 225 +19.2%, Taiex +14.8%, ASX 200 +7.1%, Shanghai Composite +6.3%
-South Korea 2017 inflation below 2% target
-Upcoming Euro Zone data in focus
Australia/New Zealand
-ASX 200 opened flat; closed -0.4%
ASX 200 REIT Index -0.7%, Consumer Discretionary -0.6%, Financials -0.3%
-(AU) AUSTRALIA NOV PRIVATE SECTOR CREDIT M/M: 0.5% V 0.4%E; Y/Y: 5.4% V 5.2%E
-Milk Producer Fonterra cuts New Zealand milk collections forecast on dry weather conditions
China/Hong
-Shanghai Composite opened flat, Hang Seng +0.2%
Hang Seng Services Index +0.9% (airlines and gaming shares gain), Industrial Goods +0.6%; Information Technology -0.4%
-(CN) PBoC: To set up temporary liquidity facility for the China Lunar New Year, which will allow banks to use official required deposit reserves of up to 200bps
-(CN) China MOF researcher aid to suggest a property tax trial in Xiongan - financial press
-(CN) China Finance Ministry (MOF) says to continue to cut tax and fees in 2018; To focus on local govt debt risk prevention in 2018 - Xinhua
-(CN) China End-Nov Outstanding Local Government Debt: CNY16.6T – MOF
-(CN) PBoC: Skips OMO for 6th straight session; Weekly net drain CNY290B v CNY200B injection w/w; For 2017, the PBoC drained CNY65B
-(CN) PBoC sets yuan reference rate at 6.5342 v 6.5412 prior
-Smartphone maker Huawei sees slower revenue growth in 2017 vs 2016: Guides FY17 Rev CNY600B v CNY522B y/y, +14.9% y/y; sees smartphone shipments 153M units, +10.1% y/y (Note: In FY16 Smartphone shipments were +29% y/y and total Rev growth was 32%)
- (CN) China Copper treatment and refining charges (TC/RCS) for Q1 2018 said to have been set by smelter group at $87/ton vs $95 q/q - financial press
Japan
-Nikkei 225 opened +0.2%; closed: -0.1%
TOPIX Securities Index +0.6%
Asahi Glass +2% (Speculation that FY op profit may exceed expectations)
Mitsubishi UFJ +1.2%
Retailer Adastria -8% (9-month profits declined 41%)
-Japan Foreign Minister said to visit China in Jan – Japanese Press
Looking ahead: Japanese markets are closed for holiday from Jan 1-3rd
Korea
-Kospi was closed in observance of holiday
-Nov inflation remained below the Bank of Korea’s 2% target: SOUTH KOREA DEC CPI M/M: 0.3% V 0.3%E; Y/Y: 1.5% V 1.4%E; CPI Core Y/Y: 1.5% v 1.5%e; 2017 Avg CPI: 1.9% v 1.0% in 2016
-South Korea Industry Minister Paik: Reiterates expects 2018 exports to rise amid global recovery
-South Korea Foreign Ministry: Seized a vessel with a Hong Kong flag in relation to oil sales to North Korea
Other Asia
- (SG) Singapore Nov Bank Loans and Advances Y/Y: 7.1% v 6.8% prior
- (SG) Singapore Nov Money Supply M1: 7.3% v 8.8% prior; M2 Y/Y: 3.2% v 4.6% prior
-(TW) Taiwan Dollar (TWD) +0.5%, continues to trade at 4-year high
-(TW) Taiwan Central Bank said to ask banks to purchase US dollars amid gains in the TWD
North America
-US equity markets closed higher: Dow +0.3% (record close), S&P500 +0.2%, Nasdaq +0.2%, Russell 2000 +0.3%
S&P500 Real Estate Sector +0.6%, Utilities +0.6%
-(US) US based stock funds see $24.1B inflow in week ended Dec 27th (largest since Dec 2014) – Lipper
-Networking equipment firm Adtran [ADTN] cut Q4 outlook: Guided Q4 ~$0.01 v $0.15e, Rev ~$125M v $162Me (guided $155-165M prior); cites factors including slowdown in spending at domestic Tier 1 customer
-(US) TREASURY $28B 7-YEAR NOTE AUCTION RESULTS: DRAWS 2.370%; BID-TO-COVER: 2.55 V 2.36 PRIOR AND 2.52 AVG OVER LAST 12 AUCTIONS (highest BTC since Sept)
-(US) US President Trump: Been ‘soft’ on trade with China - NYT
-(US) DOE CRUDE: -4.6M V -3.5ME
-During Asian session, WTI Crude Oil Futures trade above $60/bbl, highest since June 2015 amid US weekly inventories data
Europe
-(IT) Italian Pres signs decree to dissolve parliament ahead of elections (as expected); Italy officials confirm general election will be held March 4th
Looking Ahead: Early close for the UK; Dec Preliminary CPI data due to be released for Germany and Spain, along with Euro Zone Nov M3 Money Supply and Private Sector Loans.
***Levels as of 01:00ET***
- Hang Seng +0.3%; Shanghai Composite +0.2%; Kospi closed
- Equity Futures: S&P500 +0.1%; Nasdaq100 flat, Dax +0.1%; FTSE100 +0.1%%
- EUR 1.1936-1.1949; JPY 112.69-112.97; AUD 0.7790-0.7804 ;NZD 0.7084-0.7103
- Feb Gold flat at $1,297/oz; Feb Crude Oil +0.7%% at $60.27/brl; Mar Copper +0.1% at $3.309/lb