Kospi outperforms on chip investments
|Asia market update: Kospi outperforms on chip investments; US expects CN rare earths by Thanksgiving; JP Q3 GDP weak per ests; JP yield curve steepens; JP-CN relations on edge; US govt data to start trickling out.
General trend and developments
- Japan's expected Q3 GDP contraction (first drop in 6 quarters) came in a bit better than expected. The contraction primarily due to a negative Net Exports contribution to GDP as opposed to deterioration in the domestic economy, reflecting higher US tariffs. USD/Yen was little moved initially but later rose +0.1%. Japan JGB yield curve steepened sharply at the long-end; 10-year yields +2bps to 1.720%, highest since Jun 2008, with 20-years to their highest since 1999 and 40-years +5.5bps to 3.60% (close to the life-of-contract highs since 2007 of ~3.6950%) Comes amid Japan govt's FY25 stimulus package being reported to be ~¥17.0T, with only around ¥14T of that to be funded by Japan’s extra budget.
- Japanese consumer retail and travel-related stocks fell heavily (Shiseido -11%, Ryohin Keikaku and Isetan Mitsukoshi -12%) following weekend warnings by China govt for Chinese tourists not to travel to Japan for ‘safety reasons’. Follows the aggressive rhetoric put out by Chinese officials since Japan PM Takaichi said that defense of Taiwan was critically important for Japan. However, initial social media reports out of China suggested that Japan-bound flight bookings were not being greatly affected. [** Note that Chinese tourists in recent months have comprised up to 25% of Japan’s total tourist numbers since former PM Ishiba relaxed visa restrictions for Chinese tourists].
- Samsung +3%, Hynix +6.3% with Korea’s Kospi outperforming +2.2%. Samsung said it plans to invest $309B over the next 5 years while Hynix to invest ~$87B in chips through 2028.
- The rest of Asia saw a negative bias in Monday trading.
- In trade-related news, US Treas Sec Bessent said over the weekend that the US aims to complete its rare earths trade agreement with China by Thanksgiving (Nov 27th), and expects US military to also get access. Came amid separate reports that the White House believes Alibaba is aiding the China military in targeting the US.
- India’s Oil Minister said that Indian State Oil companies have committed to a 1-year deal to buy 2.2M tons of LPG from the US Gulf Coast during 2026.
- Another trade fact sheet released for US trade, ending months of uncertainty for Switzerland. Switzerland and Liechtenstein will open their markets to US exports including some agricultural, medical, auto and digital products among others as well as $200B of investment into the US, including at least $67B of investment in 2026.
- Bitcoin fell as low as the $93K in early Monday trading, a multi-month low, with ETH touching as low as $3,000, also a multi-month low.
- US earnings season winds down this week, with Q3 earnings from large retailers WMT, TGT, TJX, GAP, HD and plus the world’s biggest company by market cap, NVDA.
- Summary of US govt data catch-up: US economic data delayed by the 43-day government shutdown will finally begin to be released this week, with September’s jobs report to come out on Thursday, Nov 20th – six weeks late. However, the October jobs figures may not be able to be calculated at all (for the first time in 77 years), or may be limited to a partial release. Analysts and White House officials have suggested that there will be no October CPI report, due to inability to gather data during the shutdown. (** Reminder: September CPI figures were indeed released 9 days late on Oct 24th). August construction, manufacturers’ shipments and US trade figures will be respectively released on Mon Nov 17th, Wed Nov 19th and Fri Nov 21st. November data may also be partially impacted in terms of their usual depth, as the shutdown lasted nearly the first two weeks of November. Overall, it may take several weeks for US government-derived data releases to fully recover.
- US equity FUTs +0.5% to 0.7% during Asian trading.
Looking ahead (Asian-weighted releases, using Asian time zone)
- Tue Nov 18th AU RBA Minutes.
- Wed Nov 19th JP Oct Trade Balance, UK Oct CPI, ID Rate Decision, (Wed night US FOMC Minutes).
- Thu Nov 20th CN Nov LPR rates, JP BOJ’s Koeda, (Thu night US Sept Jobs – delayed release).
- Fri Nov 21st JP Oct CPI, Nov Global Flash PMIs.
Holidays in Asia this week
- No holidays in Asia this week.
Headlines/economic data
Australia/New Zealand
- ASX 200 opens -0.5% at 8,594.
- RBA board member Renee Fry-McKibbin; Backs 'flexible approach' to price and employment goals - Australia press guest opinion.
- New Zealand Oct REINZ House Sales Y/Y: +6.1% v +3.1% prior.
- New Zealand Oct Performance Services Index (PSI): 48.7 v 48.3 prior (update).
- New Zealand Oct Food Prices M/M: -0.3% v -0.4% prior (update).
- RBNZ: Mean Household 2-year inflation expectations fall to 4.3% (prior 4.6%).
China/Hong Kong
- Hang Seng opens -0.5% at 26,441; Shanghai Composite opens -0.1% at 3,988.
- China Finance Ministry (MOF) is establishing a new 'centralized' debt management department related to better governance - Shanghai Securities News.
- China sends coastguard patrol near disputed islands with Japan; Follows dispute over JP PM Takaichi's recent comments over Taiwan (update)
(US) Treasury Sec Bessent: Trump administration aims to complete its rare earths trade agreement with China by Thanksgiving (Nov 27th) - Fox News- White House memo says Alibaba aids China military in targeting the US – FT [weekend update].
- Alibaba: White House memo says Alibaba aids China military in targeting the US - FT.
- Chinese researchers at CHIPX and Turing Quantum unveiled a 6-inch thin-film lithium niobate photonic quantum chip which reportedly delivers a 1,000-fold speed boost for AI data-centre workloads - SCMP (update from Nov 14th).
- China PBOC sets Yuan reference rate: 7.0816 v 7.0825 prior.
- China PBOC Open Market Operation (OMO): Injects CNY283B in 7-day Reverse Repos; Net injects CNY163B v injects CNY71B prior.
Japan
- Nikkei 225 opens -0.2% at 50,265.
- Japan Q3 preliminary GDP Q/Q: -0.4% V -0.6%E; GDP annualized Q/Q: -1.8% V -2.4%E.
- Japan Sept Final Industrial Production M/M: 2.6% v 2.2% prelim; Y/Y: 3.8% v 3.4% prelim.
- Japan 10-year JGB yield rises 2bps to 1.720%, highest since Jun 2008; 20-year JGB yields rise +2.8bps to 2.745%, highest since 1999; Japan 40-year JGB yields rise by 5.5bps to 3.60%.
- Japan govt's FY25 stimulus package said to be ~¥17.0T; Extra budget to fund stimulus package by ~¥14T - Nikkei (update).
- Japan sells ¥249.6B vs. ¥250B indicated in 10-Year inflation-linked JGB bonds; Yield at lowest accepted price: 0.113% v 0.078% prior, bid-to-cover x 3.46x v 2.92 prior.
- Tokyo Steel Raises Oct H-beam prices to ¥103K/t (prior ¥100K/t); Maintains hot-rolled coil steel prices to ¥86K/t (prior ¥86K/t).
- China Foreign Ministry issues warning to Chinese nationals about traveling to Japan in the wake of Japan PM's comments regarding Taiwan [weekend update].
Korea
- Kospi opens +1.7% at 4,078.
- SK plans to invest KRW128T (~$87B) into domestic investment through 2028; plans to build 4 large-scale chip fabrication plants at main Yongin chip cluster – update.
- Samsung plans to invest $309.0B over the next 5 years; cites co. statement - Press [update].
Other Asia
- (IN) India Oil Min Puri: Indian State Oil companies commit to 1-year deal to buy LPG from the US Gulf Coast during 2026 [amount unspecificied] - post on X.
- Thailand Q3 GDP Q/Q: -0.6% v -0.3%e; Y/Y: 1.2% v 1.6%e.
- Thailand NESDC [Planning Agency]: Sees 2025 GDP growth at 2.0%; 2026 GDP growth seen at 1.2-2.2%.
- Philippines Sept Overseas Cash Remittances: $3.1B, +3.7% y/y.
- Singapore Oct Non-Oil Domestic Exports Y/Y: 22.2% v 7.5%e.
- (TW) US Treasury Dept: Reached agreement with Taiwan central bank on FX rates policies; Will continue consultations; Taiwan central bank committed to avoiding FX manipulation [weekend update].
North America
- (US) Pres Trump: House Republicans should vote to release the Epstein files - Truth Social post.
- (US) FAA to terminate Emergency Order due to govt shutdown on Nov 17th, 6am (ET); To return to normal ops - financial press.
- (US) Pres Trump: Negotiating with some Democrat lawmakers on Healthcare - financial press.
- WorldACD Weekly Air Cargo Trends (week 45): Asia Pacific spot rates continue to rise [weekend update].
- (US) Trump: Nuclear testing will happen pretty soon; Would be best if we denuclearize; Expect the tariff dividend sometime in 2026 [weekend update].
Europe
- (UK) Nov Rightmove House Prices M/M: -1.8% v 0.3% prior; Y/Y: -0.5% v -0.1% prior.
- (CH) White House publishes fact sheet on Switzerland and Liechtenstein trade deal [weekend update].
Levels as of 01:20 ET
- Nikkei 225 -0.2%, ASX 200 flat.; Hang Seng -0.9%; Shanghai Composite -0.5%; Kospi +2.3%.
- Equity S&P500 Futures +0.5%; Nasdaq100 +0.7%; DAX flat; FTSE100 -0.1%.
- EUR 1.1597-1.116.25; JPY 154.42-154.79; AUD 0.6512-0.6537; NZD 0.5658--5680.
- Gold -0.5% at $4,073/oz; BTC -1.0% at $95,149; Crude Oil -1.0% at $59.35bbl; Copper -0.4% at $5.0413/lb.
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