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Reports Asia

Asian stock market, economy and companies update (December 06, 2013)

December 6, 2013, Friday, 17:16 GMT | 12:16 EST | 21:46 IST | 00:16 SGT
Contributed by Trade The News

- Credit rating of Qantas, Australia's biggest airline, has been cut to junk. After the airline warned to expect steep H1 losses overnight, S&P said the "downgrades reflect view that the intense competition in the airline industry has weakened Qantas' business risk profile to "fair" from "satisfactory", and financial risk profile to 'significant' from 'intermediate'"; Moreover, S&P said it would take some time before Qantas credit profile can recover to investment grade. Qantas management officials responded that while the rating downgrade was not unexpected, external forces rather than internal business dynamics were to blame. QAN shares fell over 4% in the morning session.
- Airlines on the mainland remain impacted by week-long smog issues, with limited visibility preventing most of air travel around Shanghai. Separately in China, PBoC setting for the yuan fell below CNY6.13, a record high, and 3-month Shibor tightened to levels not seen since June in the wake of the first net liquidity drain in 3 weeks.
- JPY traded softer in the afternoon session after Japan pension fund official called for a reduction of domestic bond holdings in favor of less risk-averse assets.

***Fixed Income/Commodities/Currencies***
- (US) Weekly Fed Balance Sheet Assets Week ending Dec 4th: $3.889T (record high) v $3.883T prior; M1 y/y change: 8.4% v 8.4% w/w; M2 y/y change: 6.4% v 6.5% w/w
- (AU) Australia MoF (AOFM) sells A$1.5B in 2018 Bonds; avg yield: 3.5738%; bid-to-cover: 3.13x
- (JP) BOJ offers to buy ¥250B in 1-3yr JGBs, ¥250B in 3-5yr JGBs, and ¥400B in 5-10yr JGBs
- (CN) China Ministry of Finance (MOF) sells 30-yr bonds, avg yield 5.05%
- (CN) Daily Shibor fixings: O/N: 3.7000% v 3.7030 % prior (4th consecutive decline); 1-week: 4.5500% v 4.5580 % prior (3rd consecutive decline)

- USD/CNY: (CN) PBoC sets yuan mid point at 6.1232 v 6.1310 prior setting (record high setting for Yuan)
- USD majors are trading in narrow ranges after a volatile morning in the US session ahead of the all-important non-farm payrolls report that could further bolster the case for a December taper by the Fed. USD/JPY has bounced off the US-session lows around ¥101.60, approaching ¥102 handle, while EUR/JPY and AUD/JPY crosses were flat around ¥139.20 and ¥92.20 respectively. EUR/USD spend the day in a 10-pip range around $1.3670, cable remained capped by $1.6350, and AUD/USD briefly came under pressure to trade below $0.9040 following Qantas credit rating cut. NZD underperformed following recent reports of lower than expected revenues from asset sales, falling over 30pips below $0.82.

***Speakers/Political/In the Papers***
- (CN) Shanghai Academy of Spaceflight Technology: China to adjust space probe planning; To delay manned lunar landing project - Chinese press
- (CN) China 2014 fixed asset investment (FAI) may grow at about 19% - Chinese press
- (CN) China may accelerate construction of 100 ecological demonstration zones - Chinese press
- (CN) Shanghai air pollution levels remaining high (4th consecutive day) - financial press
- (JP) Chairman of govt appointed panel Takatoshi Ito: Public pension fund GPIF should reduce domestic Bond holdings to 52%; need to start selling bonds as soon as possible - financial press interview
- (JP) According to the latest data from Tokyo Stock Exchange, individual investors are selling off stocks ahead of the sales tax hike - Nikkei (update)
- (KR) According to Bank of Korea (BoK) data, at the end of Nov, foreign exchange bank deposits hit a record $48.6B v $46.1B m/m - Korean press
- (AU) Australia PM Abbott: Economic conditions not as strong as they could be
- (NZ) New Zealand Fin Min English: NZ accounts on track in 4 months to Oct; on track for FY14/15 surplus - New Zealand govt financial statement
- (DE) German Fin Min Schaeuble expresses interest to remain in office as part of the grand-coalition govt - German press

Market Snapshot (as of 04:30 GMT):
- Nikkei225 flat, S&P/ASX -0.3%, Kospi +0.1%, Shanghai Composite -0.6%, Hang Seng -0.2%, Dec S&P500 +0.2% at 1,786, Feb gold -0.6% at $1,225, Jan crude oil +0.1% at $97.46/brl

US markets:
- PSUN: Reports Q3 -$0.05 v -$0.05e, R$206.6M v $206Me; +8.7% afterhours
- TEX: Initiates quarterly dividend of $0.05 (implied yield 0.5%); approves $200M buyback program (about 5% of market cap); +0.1% afterhours
- IOC: Confirms selection of Total SA for PNG Gas Development; +0.1% afterhours
- GPS: Reports Nov SSS +2.0% v +0.9%e
- FDX: To increase 2014 ground rates by 4.9%; effective Jan 6
- KR: Reports Q3 $0.53 v $0.53e, R$22.5B v $22.9Be
- ZUMZ: Reports Q3 $0.39 v $0.46e, R$191M v $191Me; Board to repurchase $30M in common stock (3.9% of market cap); -4.7% afterhours
- BIG: Reports Q3 -$0.16 v -$0.08e, R$1.15B v $1.16Be; to exit Canadian market; -10.1% afterhours
- ULTA: Reports Q3 $0.70 v $0.74e, R$618.8M v $623Me; -18.3% afterhours

Notable movers by sector:
- Consumer discretionary: Qantas Airways Ltd QAN.AU -2.8% (S&P cuts rating); Panasonic Corporation 6752.JP +2.1% (development center plans); Flight Centre Ltd FLT.AU -3.0% (ACCC ruling); Dalian Sunasia Tourism Holding Co Ltd 600593.CN +2.2% (China to promote marine tourism)
- Consumer staples: Yuan Longping High-tech Agriculture Co Ltd 000998.CN +1.8% (acquisition)
- Industrials: Great Wall Motor 601633.CN +3.7% (Nov results); Shenzhen Green Eco-manufacture Hi-Tech Co Ltd 002340.CN +3.5% (China to subsidize waste electronic treatment companies); China Spacesat 600118.CN -3.3%, Aerosun Corp 600501.CN -4.7%, Shaanxi Aerospace Power Hi-Tech 600343.CN -3.8% (China to delay lunar project)
- Financials: Beijing Orient Landscape Co Ltd 002310.CN +6.5%, Palm Landscape Architecture Co Ltd 002431.CN +7.3%, Shenzhen Techand Ecology & Environment Co Ltd 300197.CN +3.9%, Pubang Landscape Architecture Co Ltd 002663.CN +10.0% (China may accelerate construction of ecological demonstration zones)
- Technology: Advantest Corp 6857.JP +5.0% (comments on cost reduction)
- Energy: Shandong Molong Petroleum Machinery 002490.CN +1.2%, Yantai Jereh Oilfield Services Group 002353.CN +2.0%, Kingdream PLC 000852.CN +2.1%, Zhangjiagang Furui Special Equipment 300228.CN +3.2% (China Premier, NEA comments on shale gas)

***Economic Data***
- (AU) AUSTRALIA NOV AIG PERFORMANCE OF CONSTRUCTION INDEX: 55.2 V 54.4 PRIOR (2nd straight expansion; highest reading since Apr 2010)