Shanghai volatile as investors take profits

Asian Mid-session Update: Shanghai volatile as investors take profits; New Zealand trade deficit shrinks

Economic Data

- (CN) CHINA NOV CONFERENCE BOARD LEADING ECONOMIC INDEX M/M: 0.9% V 0.8% PRIOR

- (NZ) NEW ZEALAND NOV TRADE BALANCE (NZD): -0.2B V -0.6BE; 5th month of deficit

- (NZ) New Zealand Nov M3 Money Supply Y/Y: 5.8% v 5.5% Prior

Index Snapshot (as of 03:30 GMT)

- Nikkei225 closed, S&P/ASX -0.8%, Kospi -0.1%, Shanghai Composite -0.7%, Hang Seng +0.2%, Mar S&P500 +0.1% at 2,073

Commodities/Fixed Income

- Feb gold +0.2% at $1,198, Jan crude oil +1.1% at $57.78/brl, Copper -0.1% at $2.89/lb

- (CN) PBoC won't conduct open market operations (OMO) in today's session (8th consecutive halt)

- (CN) China 7-day repo rate opens at 5.48%, down from 6.17% previous close (largest decline since Apr)

Market Focal Points/Key Themes/FX

- Despite new highs in the US indices, Asia indices are trading with a more subdued tone. Materials in Australia and Shanghai are leading the decliners, even though mainland financials remain bid. In the currency market, AUD is down less than 20 pips from the open around $0.8115 contained to a narrow range, NZD/USD is marginally positive around $0.7740, and USD/JPY is consolidating a 5-day rebound above ¥120 handle.

- New Zealand Trade figures are the most notable economic data for the session, printing its 5th month of deficit but a narrower one than expected. A closer look at the components show smaller than expected import volume, even as Exports to China and Australia are down 44% and 11% y/y. Exports of dairly are also off by 27% at NZ$1.23B.

- In Chinese press, a researcher with the PBoC called for the govt to support further easing of policy via a RRR cut. Separately, a PBoC survey showed 91.5% of bankers expecting monetary policy to be "moderate" or "somewhat loose" in next quarter, higher from 86.6% this quarter. A Conference Report on China for the month of November rose 0.9%, but resident economist noted that real estate activity continues to deteriorate, and manufacturing and industrial output both showed significant weaknesses in November as well. Also of note, PBoC decided not to inject liquidity via repos despite the rising short-term demand for funds. Shanghai Composite fell nearly 3% in the opening hour before paring much of those losses going into the afternoon break.

Equities

Market Snapshot (as of 03:30 GMT):

- Feb gold -0.3% at $1,177/oz, Feb crude oil +1.7% at $56.20/brl, Mar Copper flat $2.87/lb

US markets:

- PRLS: To be acquired at $7.00/shr in cash by Mobius Acquisition LLC; +24.9% afterhours

- VNDA: To regain US and Canadian rights to Fanapt; +17.6% afterhours

Notable movers by sector:

- Materials: Zijin Mining 601899.CN -4.2% (shareholder cuts stake); Kingsgate KCN.AU -5.9% (shareholder cuts stake)

- Energy: Sundance Energy SEA.AU -13.1% (2015 production guidance)

- Industrials: BYD Corp 1211.HK +2.7%, Geely Auto 175.HK +1.6%, Great Wall Motor 2333.HK +4.2% (Russia Ruble recovers 6%); AVIC International Holding HK 232.HK +24.2% (Li Ka Shing raises stake)