Asian equities trade weaker

Asia Market Update: Asian equities trade weaker, China industrial production misses ests ; Tech shares decline ; Key meetings seen next week

General Trend:

- Asian chip and technology companies trade broadly weaker, Hynix drops over 5%

- Australian banks trade broadly lower, RBNZ commented on capital rules

- Japan Display rises over 38%, confirmed alliance talks

- JGB Futures rise to highest level since late 2016 as equities drop

- Japan Q4 Tankan Survey mixed, large company outlooks decline

- Commodity currencies track declines in equities amid China data, RBNZ commented on capital rules

- The auto and electronic sectors weighed on China’s Nov Industrial Production data (Stats Agency)

- China Stats Agency official commented on 2019 growth

- China PBoC conducts second MLF operation in Dec, skipped OMO for the 36th straight session

- China is expected to hold its Economic Work Conference Dec 19-21

- US Fed FOMC expected to hold policy meeting Dec 18-19

Headlines/Economic Data

Australia/New Zealand

-ASX 200 opened -0.4%

-(AU) Australia Dec Preliminary PMI Manufacturing: 53.7 v 54.6 prior

-(AU) Australia AOFM: There will be no further issuance or bond buybacks in 2018

-(NZ) Reserve Bank of New Zealand (RBNZ): Consulting on a proposal to raise the amount of capital that banks must hold: Generally bank capital level increase will be between 20 and 60%

-(NZ) New Zealand Nov Manufacturing PMI: 53.5 v 53.7 prior

-(NZ) New Zealand sells NZ$250M v NZ$250M indicated in 3.00% April 2029 bonds: avg yield 2.4828%, bid to cover 1.79x

China/Hong Kong

- Shanghai Composite opened -0.3%, Hang Seng -1.2%

-(CN) CHINA NOV INDUSTRIAL PRODUCTION Y/Y: 5.4% V 5.9%E (matches slowest growth rate since early 2016)

-(CN) CHINA NOV RETAIL SALES Y/Y: 8.1% V 8.8%E (slowest growth since 2003)

-(CN) CHINA NOV FIXED ASSETS INVESTMENT (EX-RURAL) YTD Y/Y: 5.9% V 5.8%E

-(CN) China Nov Surveyed Jobless Rate: 4.8% v 4.9% prior

-(CN) China National Bureau of Statistics (NBS) Official: Nov industrial production was impacted by the auto and electronics sectors; China 2019 economic growth target should reflect goal of doubling GDP by 2020 from 2010

-(CN) China Politburo: Will keep economic operation within 'reasonable' range in 2019; to continue campaign against pollution, poverty

-(CN) China PBoC Gov Yi Gang: Domestic economic growth has neared its potential; downward pressure is increasing

-(CN) CHINA PBOC CONDUCTS CNY286B IN 1-YEAR MEDIUM-TERM LENDING FACILITY (MLF) V CNY187.5B PRIOR AT 3.30% V 3.30% PRIOR

-(CN) China PBoC Open Market Operation (OMO): Skips operation for 36th straight session

-(CN) China PBoC sets yuan reference rate: 6.8750 v 6.8769 prior

-(US) Commerce Sec Ross: we are having frequent conversations with China

Japan

-Nikkei 225 opened -0.8%

-(JP) Nikkei 225 Dec Futures and Options said to settle at ~21,619

-(JP) BoJ announcement related to daily bond buying operation: Trims offer to buy 5-10 yr JGBs to ¥430B v ¥450B prior

-(JP) JAPAN Q4 TANKAN LARGE MANUFACTURING INDEX: 19 V 18E; OUTLOOK: 15 V 17E (weakens for first time in 3 quarters); LARGE ALL INDUSTRY CAPEX: 14.3% V 12.8%E

- (JP) JAPAN DEC PRELIM PMI MANUFACTURING: 52.4 V 52.2 PRIOR

Korea

- Kospi opened flat

-(KR) South Korea President Moon approval rating 45% v 49% prior (record low) - Gallup Poll

North America

-US equity markets ended mixed: Dow +0.3%, S&P500 flat, Nasdaq -0.4%, Russell 2000 -1.6%

- Apple [AAPL]: China Unit: To publish iPhone software update early next week to resolve any possible concerns about compliance with court order

-(SA) Saudi Arabia reportedly to target the US with a sharp reduction in oil exports; Saudi total exports to drop to around 7M bpd in Jan - press

Europe

-(EU) Juncker: UK has to say what it wants in the future relationship; wants to start talks on future relations between the UK and EU as immediately after ratification by both parliaments

-(EU) Tusk: UK PM May informed EU about difficulties of ratifying deal; EU stands by Nov Brexit deal, won't renegotiate it

-(UK) EU has reportedly strengthened the wording on Brexit backstop in its summit document; reiterates it doesn't seek to use Brexit backstop, backstop should be temporary; notes 'firm determination' to work speedily on subsequent agreement by Dec 2020 – press

-(EU) ECB sources: Policymakers debated modifying the balance of risk assessment to highlight downside risks - press

Levels as of 01:30ET

- Nikkei 225, -2.1%, ASX 200 -1.1%, Hang Seng -1.7%; Shanghai Composite -0.9%; Kospi -1.2%

- Equity Futures: S&P500 -0.7%; Nasdaq100 -0.9%, Dax -0.6%; FTSE100 -0.4%

- EUR 1.1373-1.1354 ; JPY 113.69-113.42 ; AUD 0.7231-0.7178 ;NZD 0.6867-0.6790

- Feb Gold -0.2% at $1,246/oz; Jan Crude Oil -0.4% at $52.38/brl; Feb Copper -0.6% at $2.751/lb