Adani DOJ suit stirs contagion concerns – CN to dial back GDP target in 2025?

Asia market update: Adani DOJ suit stirs contagion concerns; CN to dial back GDP target in 2025?; JP budget impasse progress; BTC $97K; Nvdia falls despite new records.

General trend

- Adani Enterprises stock fell -23%, wiping out $23B of value after the open with multiple units also -20% after its Founder and Chair along with two other board members were charged by US DOJ in an alleged $250M solar power bribery scheme. Adani units also said to cancel USD bond sales. Signs of potential contagion with GQG Partners in Australia -25% investment exposure, and Wilmar in Singapore simply stating "No comment". Moody's also expressed concern on ability of group's companies to access capital.

- Little effect on major Asia stock markets, with just the Kospi well into positive figures in quiet trading in Asia.

- Four China govt advisers said to advocate for 2025 GDP growth target of ~5%, similar to 2024; while two advisers recommended just "4.0%" and "4.5-5.0%".

- Japan’s budgetary impasse appeared to be overcome after yesterday’s close with the DPP, LDP and Komeito parties agreeing on a stimulus package and passing an extra budget by end-2024. The DPP also appeared to have won the concession of raising the income tax-free ceiling in the plan. Follow-up reporting out of Japan today said an economic package of ~¥21.9T was being planned (unclear if referring to the 'extra budget', earlier seen at ¥13.5T). Yields on 5-yr JGBs rose 1.5bps to highest since Aug, 2009, 10-yrs >1.08%.

- Japan October Machine Tool Orders from China were up +48.7% y/y late yesterday, another potential sign of China stocking up on supplies ahead of further export restrictions and/or tariffs from a Trump presidency.

- China saw a second consecutive steep fall in its Swift Global Payments, at the lowest since Jun 2023, while the PBOC set today’s Yuan fix 539 pips stronger than estimates.

- Bitcoin hits fresh record high $97K.

- AI bell-weather Nvida beat estimates in earnings and guidance, but with sky high expectations over the past 2 years simply being below the so-called ‘whisper numbers’ was enough to see the stock -5% in after-hours trading. Later pared some losses to -2.5%.

- US equity FUTs -0.2% to -0.3% during the Asia session.

Looking ahead (Asian time zone)

- Wed Nov 20th (Wed eve UK Oct CPI. DE prelim Q3 GDP).

- Thu Nov 21st JP BOJ Ueda speech, AU RBA Bullock speech.

- Fri Nov 22nd JP Oct National CPI, JP + AU + IN Flash Nov PMIs, (Fri eve UK Retail Sales, DE Nov Flash PMI).

Holidays in Asia this week

- No holidays in Asia this week.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 8,335.

- New Zealand RBNZ: Oct Credit Card Spending M/M: +1.1%.

- New Zealand sells total NZ$500M vs. NZ$500M indicated in 2029, 2032 and 2041 bonds.

- New Zealand Treasury chief economist Stephens: The downturn was deeper than expected; The economic recovery may begin later than expected [overnight update].

China/Hong Kong

- Hang Seng opens -0.3% at 19,646; Shanghai Composite opens -0.2% at 3,362.

- China Oct Swift Global Payments (CNY): 2.9% v 3.6% prior [lowest since Jun 2023].

- Four China govt advisers said to advocate for 2025 GDP growth target of ~5%, similar to 2024; Two other advisers recommend slightly lower targets of "above 4%" and "4.5-5.0%"- financial press, quoting discussions with the advisers.

- China banks seen cutting lending rates in 2025; these banks might leave benchmark lending rates unchanged in Dec 2024; cites analysts – China Securities Journal.

- China state firms are seeking to increase their valuations by using M&A and stock buybacks; cites analysts – China Securities Journal.

- China Commerce Ministry (MOFCOM) Official: Planning the continuation of car trade-in incentives for 2025 in order to stabilize market expectations.

- China PBOC sets Yuan reference rate: 7.1934 v 7.1935 prior.

- China PBOC Open Market Operation (OMO): Injects CNY470B in 7-day reverse repos; Net injects CNY142B v net injects CNY69B prior.

Japan

- Nikkei 225 opens flat at 38,352.

- Japan releases weekly flows data [period ended Nov 15th]: Foreign buying of Japan equities: ¥127.6B v ¥514.2B prior; Japan buying of foreign bonds: -¥966.9B v +¥1.72T prior.

- Japan said to plan economic package of ~¥21.9T (unclear if 'extra budget') – NHK.

- Bank of Japan (BOJ) Gov Ueda: No direct comments on monetary policy - Remarks at the Paris EUROPLACE Financial Forum 2024 in Tokyo.

- Japan Dep Chief Cabinet Sec Aoki: Majority coalition (LDP + Komeito) introducing measures to reflect DPP requests 'as far as possible' - financial press.

- Japan 5-year JGB yield rises above 0.72% [highest since Aug 2009].

- Japan Govt reportedly plans to invest further ¥200B in chipmaker Rapidus in FY25 - Nikkei.

- DPP official Hamaguchi: Confirms DPP, LDP and Komeito parties have agreed on stimulus package; agree to pass extra budget by end-2024; Notes agreed to mention raising tax-free ceiling in plan [overnight update].

Korea

- Kospi opens -0.3% at 2,474.

- South Korea Nov 1-20 Exports Y/Y: +5.8% v -2.9% prior; Imports Y/Y: -1.0% v -10.1% prior.

- Bank of Korea (BOK) survey conducted around Nov 5th: shows concerns related to expected policy change in the US
"Lotte" reported to have said has stable liquidity, no issue in debt repayments capacity - financial press.

Other Asia

- *Founder Gautam Adani charged by US federal prosecutors in alleged $250M bribery scheme related to solar power contracts - press (update).

- Adani units said to cancel USD bond sales after US bribery charges against Adani Founder.

- Indonesia central bank (BI) leaves bi-rate unchanged at 6.00%; as expected.

- Taiwan Oct export orders Y/Y: 4.9% V 3.8%; Export orders from the US rose to the highest level since Sept 2022; Sees Nov orders +4.7-8.6% y/y [overnight update].

North America

- Starbucks: (CN) Co said to consider 'deal options' for China unit - US financial press.

- (MX) Mexico Lower House on Congress approves bill to end 7 autonomous bodies that regulate certain economic sectors – financial press.

- (CA) Canada PM Trudeau expected to disclose 'affordability' policies on Thurs - Local Press.

- (US) Marty Makary said to be the leading candidate for Pres Elect Trump's FDA nomination - press.

- (US) Pres-elect Trump reported to revive the Keystone XL oil pipeline - Politico.

- (US) Fed's Collins (non-voter for 2024; voter for 2025): Monetary policy is well positioned for economic outlook; Some additional rate cuts needed as policy remains restrictive.

- (US) Treasury $16B 20-year bond reopening draws 4.680% v 4.590% prior, bid-to-cover 2.34 v 2.59 prior and 2.54 over the last 8.

- (US) MBA Mortgage Applications w/e Nov 15th: 1.7% v 0.5% prior.

- (US) DOE CRUDE: +0.5M V -1ME; GASOLINE: +2.1M V -0.5ME; DISTILLATE: -0.1M V -0.5ME.

- (US) Fed's Cook (voter): Cuts so far were a strong step to removing policy restriction; If inflation progress closed and job market solid, Fed may pause; Elevated core inflation suggests Fed still has further to go - speech text.

- (US) Fed's Barr (voter): Intends to fulfill his term as Vice Chair, which ends in 2026.

- (US) Fed's Bowman (voter): Pleased that Nov policy statement provided optionality in deciding future policy adjustments; Progress in lowering inflation appears to have stalled - speech text.

Europe

- (FR) Politico citing French PM Barnier's adviser: If the French govt fails to pass the budget and collapses, it won’t only be a political crisis, but a financial crisis; Barnier may need to turn to a constitutional tool that allows his government to adopt legislation and bypass a vote, but also allows the opposition to table motions of no confidence.

- (UK) BOE Dep Gov Ramsden: The economy will continue to normalize, with the recent trend towards low and relatively stable inflation continuing.

- (EU) ECB's Stournaras (Greece): ECB policy in taming inflation was a success; Sees inflation converging to 2% by start of 2025.

Levels as of 01:20 ET

- Nikkei 225 -0.7%, ASX 200 flat, Hang Seng +0.3%; Shanghai Composite -0.2%; Kospi +0.8%.

- Equity S&P500 Futures -0.2%; Nasdaq100 -0.3%%; Dax -0.2%; FTSE100 -0.1%.

- EUR 1.0541-1.0555; JPY 154.87 -155.44; AUD 0.6502-0.6524; NZD 0.5871-0.5886.

- Gold +0.2% at $2,657/oz; Crude Oil +0.4% at $69.00/brl; Copper -0.3% at $4.1418/lb.