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Reports Asia

Asian stock market, economy and companies update (January 06, 2014)

January 6, 2014, Monday, 06:37 GMT | 01:37 EST | 11:07 IST | 13:37 SGT
Contributed by Trade The News


***Observations/Insights***
- Fed's Plosser - a hawkish FOMC voter - surmised the Fed may accelerate the pace of taper to as high as $25B/month. Separately, JPMorgan economists expect $10B/month pace to run the course of the entire taper, with the end of QE3 coming some time in November.
- Asian markets are under pressure again. Shanghai Composite is down nearly 2% in the afternoon session, with losses coming in the wake of another multi-month low PMI. HSBC services PMI marked the slowest expansion in 28 months amid "slower new business growth". Chief economist did note that the steady expansion of manufacturing sectors would ultimately support service sector expansion. Separately, Moody's reflected on the findings of China's National Audit Office (NAO), noting the high level of local govt debt does pose some risk to the central govt, but also stating the "local and central government debt is rising relatively moderately as a share of GDP." Moody's added that the debt volume increase to 37.1% of GDP in June 2013 from 34.1% in 2010" is "still manageable" even under base assumption of 7% annual GDP for the next 5 years.
- In Japan, Tokyo returned after 4-day holiday to more profit-taking by yen sellers, falling about 2% on the day. Yen pairs are down sharply, even as a Nikkei survey projects the local equity indices to be at the forefront of regional markets again in 2014.
 
 
***Fixed Income/Commodities/Currencies***
- (JP) BOJ offers to buy ¥250B in 1-3yr JGB, ¥250B in 3-5yr JGB and ¥200B in JGB with maturity over 10-yr
- (KR) South Korea to sell 3-yr govt bonds, avg yield 2.905%; 30-yr govt bond, avg yield 3.980%
- (CN) China Ministry of Finance (MOF) sells CNY10B in 5-yr bonds, avg yield 4.47% (highest yield since 1998)
- (CN) Daily Shibor fixings: O/N: 2.9200% v 3.0060% prior (9th consecutive decline, lowest Sep 5th); 1-week: 4.6330% v 4.7110% prior (3rd consecutive decline)
- (CN) China Statistics Bureau: China pork price +0.2% in late Dec; Marbles pork price +0.2% in last ten days
- USD/CNY: (CN) PBoC sets yuan mid point at 6.1059 v 6.1039 prior setting (weakest Yuan setting since Dec 25th)
 
- Yen pairs are once again in freefall amid short-covering in one of the most heavily sold currencies of 2013 to start the new year. USD/JPY fell about 80pips below 104.20, just shy of the Friday US session low. On the crosses, GBP/JPY is down for the 3rd day, falling sharply by nearly 200pips from the highs to 170.40 - a 2 week low - while EUR/JPY and AUD/JPY were down 110 and 80pips respectively below 141.50 and 93.30. GBP was also a notable underperformer, falling 60pips against USD below $1.6350 and 30pips against the Euro to £0.8305. In EM currencies, KRW was sharply lower, with USD/KRW rising about 1% above 1,065 - a 7-week high - after a bearish KRW call from Goldman Sachs.
 
***Speakers/Political/In the Papers***
- (CN) Moody's: China local govt debt pose risks for central govt
- (CN) More than CNY50B of lock-up shares to be eligible for trade in Shanghai during the week of Jan 6th, highest level in 7 months - Chinese press
- (CN) China issues policies to regulate shadow banking; PBoC to develop new statistics to monitor shadow banking - Chinese press
- (CN) China plans to continue support for solar industry; Taking measures to promote healthy development of solar industry - financial press
- (CN) China big four banks Dec new loans reached CNY180B - Chinese press
- (JP) Tokyo Olympics of 2020 expected to create as many as 1.2M new jobs in Japan - Nikkei citing research from Mori Memorial Foundation
- (JP) According to a Nikkei survey, 77% of respondents expect Japan equity market to register the largest % increase in 2014
- (JP) According to a Nikkei survey, as many as 70% of retailers expect sales to fall when Japan sales tax increase goes into effect in April - Nikkei
- (KR) South Korea President Park to set up 3-yr plan for economy; may boost South Korea's potential growth rate to 4% - financial press
- (KR) South Korea Ministry of Knowledge Economy: Q1 Business Survey Index (BSI) fell to 93, down from 106 q/q and 101 y/y - Korean press
- (KR) South Korea Ministry of Trade, Industry and Energy: South Korea exports will continue to grow in 2014 - Korean press
 
**Europe/US**
- (EU) Brussels set to ease financial reforms on bank splits - FT cites European Commission draft
- (GR) Greece Fin Min Stournaras: May see 2013 GDP around -4%; Current account reaching surplus of 0.9% of GDP v 11.2% deficit in 2009
- (US) Fed's Plosser (hawk, 2014 FOMC voter): Fed may consider a more aggressive taper of as much as $25B per month vs the $10B announced initially - financial press
- (US) Former US Treasury Sec Summers: US economy undergoing period of "secular stagnation"; Requires more fiscal stimulus to sustain growth - US financial press
- (CA) Canada Fin Min Flaherty: Govt may achieve larger budget surplus in FY15/16 than the CAD3.7B previously forecasted - financial press
 
***Equities***
Market Snapshot (as of 04:30 GMT):
- Nikkei225 -1.8%, S&P/ASX -0.5%, Kospi +0.7%, Shanghai Composite -1.9%, Hang Seng -0.6%, Mar S&P500 flat at 1,825, Feb gold flat at $1,238, Feb crude oil flat at $93.96/brl
 
US markets:
- AMZN: CEO Bezos recovering after being airlifted from Galapagos Islands due to severe pain from kidney stones - financial press
- AAL: (US) American Airlines flight from San Francisco to New York said to make emergency landing in Kansas City due to a bomb threat - financial press
- JPM: Close to $2.0B deal that would settle charges it ignored signs of Bernard L. Madoff's Ponzi scheme - press
 
Notable movers by sector:
- Consumer discretionary: Minmetals Development 600058.CN +10.0% (restructure plan); Qantas Airways QAN.AU -1.4% (shareholder cuts stake)
- Industrials: China Railway Group 390.HK -5.9% (confirms Chairman's death); Guangzhou Automobile Group 2238.HK +3.5% (Dec auto sales); Nissan Motor 7201.JP +1.4% (Dec US sales)
- Financials: Wing Hang Bank 302.HK -1.4% (Hearing OCBC in talks to acquire company); Agile Property Holdings 3383.HK -1.3% (issues shares); Shanghai Pudong Development Bank 600000.CN +0.4% (provides FY13 guidance)
- Materials: Inner Mongolia Baotou Steel Rare Earth 600111.CN +1.0%, China Minmetal Rare Earth 000831.CN +1.3%, Rising Nonferrous Metals Share 600259.CN +1.0% (China to tighten regulation on rare earths); Sinoref Holdings 1020.HK -6.3% (issues profit warning); Forge Group FGE.AU +1.1% (awarded contract)
- Healthcare: Guilin Layn Natural Ingredients 002166.CN -7.6% (private placement plan)
- Technology: Samsung Electronics 005930.KR +1.2% (expects to continue aggressive Capex)
- Utility: Chongqing Three Gorges Water Conservancy 600116.CN +0.7%, Beijing Originwater Technology 300070.CN +1.2%, Ningxia Qinglong Pipes Industry 002457.CN +2.0%, Anhui Water Resources Development 600502.CN +1.5% (China to increase investment in water conservancy projects)
 
 
***Economic Data***
- (CN) CHINA DEC HSBC/MARKIT SERVICES PMI: 50.9 V 52.5 PRIOR (Weakest expansion in 28-months)
- (HK) HONG KONG DEC HSBC/MARKIT PMI: 51.2 V 52.1 PRIOR (first sequential decline since June)
- (AU) AUSTRALIA DEC AIG PERFORMANCE OF SERVICES INDEX: 46.1 V 48.9 PRIOR (4-month low; 23rd consecutive contraction)
- (TW) TAIWAN DEC CPI Y/Y: 0.3% V 0.8%E; WPI Y/Y: 0.0% V -1.0% PRIOR
- (KR) SOUTH KOREA DEC FOREIGN RESERVES: $346.5B (record high) V $345.0B PRIOR