Asian markets down in quiet start to week – HK and CN continue fall

Asia market update: Asian markets down in quiet start to week - HK & CN continue fall; US lawmakers urge more action against CN chips; Boeing and suppliers look ahead to Monday post-Alaskan Air door blow-out. Samsung prelim Q4 in focus tomorrow.

General trend

- Hang Seng (-2%) and China mainland equities (-1.1%) down again. Led by banks and property with Hang Seng Tech index declining to the lowest level since Nov 2022 while China’s tech-focused Star50 index also -2.5% to record lows. (Japan closed for holiday).

- US lawmakers pressure Commerce and Trade Sec's to defuse China's dominance of older gen chips.

- Boeing and its suppliers along with Alaskan Airlines brace for Monday trading following an incident over the weekend involving the door blowing out of a 737-9 MAX while mid-air.

- Non-monetary Asian officials seek rate cuts: (Thai PM; PHP Fin Min). Thai Baht falls -0.7% post comments).

- CN FX reserves the highest since 2021.

- US equity FUTs slightly down with Dow FUTs lagging (-0.4%).

Looking ahead (Asian time zone)

- Tue Australia Retail Sales.

- Tue Tokyo CPI.

- Wed China New Yuan Loans.

- Thu Australia Balance of Trade.

- Thu night US CPI.

- Fri China CPI, PPI, Balance of Trade.

- Fri UK GDP and Industrial Production.

- Fri night US PPI.

 Holidays in Asia this week

- Mon, Jan 8 Japan.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens flat at 7,491.

- Australia Dec Foreign Reserves (A$): $93.9B v 92.2B prior.

China/Hong Kong

- Hang Seng opens +0.3% at 16,581.

- Shanghai Composite opens -0.2% at 2,923.

- (US - Friday post HK close) More press reports Pres Biden reportedly preparing to keep many of ex-Pres Trump tariffs on $300B of China imports, but still considering lower duties on some consumer goods from China; Biden hasn't made a final decision, but announcement expected in the coming weeks (weekend update).

- Hang Seng TECH index declines to the lowest level since Nov 2022.

- According to US intelligence, China Pres Xi is less likely to contemplate major military action in the coming years due to several examples of the impact of graft and corruption in China's Rocket Forces, including missiles filled with water instead of fuel.

- China Dec foreign reserves: $3.238T V $3.206TE (weekend update).

- China to sanction five US defense manufacturers over US arms sales to Taiwan - Foreign Ministry (weekend update).

- China troubled shadow bank Zhongzhi formally files for bankruptcy – press (weekend update).

- More press reports Pres Biden reportedly preparing to keep many of ex-Pres Trump tariffs on $300B of China imports, but still considering lower duties on some consumer goods from China; Biden hasn't made a final decision, but announcement expected in the coming weeks – Axios (weekend update).

- China reportedly to start anti-dumping probe into some EU liquor products, including brandy (weekend update).

- China's oil trade with Iran reportedly stalled as Iran seeks higher prices - press [**Note: Iranian oil is ~10% of China's crude imports] (weekend update).

- China PBOC: Reiterates prudent monetary policy needs to be flexible, appropriate, precise and effective; To further optimize credit structure - Aggregate financing to rise rapidly through 2024. (weekend update)
Reportedly China's major state-owned banks were active in onshore and offshore FX markets this week trying to contain the Chinese yuan's (CNY) slide (weekend update).

- China Foreign Min Wang Yi: No conflict or confrontation between China/US is most important peace dividend for mankind (weekend update).

- China Securities Regulatory Commission (CSRC) regulator reportedly asked mutual fund managers to prioritise the launch of equity funds in a new effort to boost domestic stock market (weekend update).

- US issues final anti-dumping duty determinations for tin mill products from multiple partners including China (weekend update).

- China PBOC sets Yuan reference rate: 7.1006 v 7. 7.1029 prior.

- China PBOC Open Market Operation (OMO): Sells CNY50B in 7-day reverse repos; Net drains CNY40B v drains CNY411B prior.

Japan

- Closed for holiday.

- Japan prosecutors make first arrest in funding scandal of PM Kishida's ruling party (LDP)

- Japan press.

South Korea

- Kospi opens +0.2% at 2,584.

- On Mon [Jan 8th] Taeyoung Group provided KRW89B for the construction unit -South Korea.

- Follow Up: North Korea's Kim Yo Jong says North Korea did NOT fire artillery shells, but instead detonated explosives - State media.

Other Asia

- Indonesia Dec Foreign Reserves: $146.4B v $138.1B prior.

- Thailand PM Srettha: Reiterates Central Bank's rate hikes note good for economy, affecting low income people and smaller businesses.

- Philippines Fin Min Diokno: Sees 100bps in BSP [Philippines Central Bank] rate cuts in 2024.

- India Dec Total Passenger Vehicle Sales 293.0K units, +2.65% y/y.

- Taiwan Defense Ministry: Chinese balloons ware a serious threat to the safety of international aviation routes (weekend update).

- Taiwan Dec CPI Y/Y: 2.7% v 2.6%e (weekend update).

- Foxconn (2317.TW) Reports Dec (NT$) Rev 460.1B -26.9% y/y v 650B m/m; 2023 Rev -7% y/y; Q1 Rev expected to decrease y/y (weekend update).

North America

- (US) House Panel Leaders reportedly sent letter to Commerce and Trade Sec's urging action against China to defuse China's dominance of older gen chips, incl. possible tariffs - WSJ.

- Boeing (BA) To hold company-wide webcast on safety on Tues [Jan 9th] to address response to Alaska Airlines safety event.

- Boeing( BA) NTSB: Pilots reported pressurization warnings on 3 occasions in the weeks before the Alaska Airlines 737 Max 9 emergency landing.

- (US) Reportedly senate democratic and house GOP leadership expect to announce a top-line spending deal today – Punchbowl.

- Reportedly former US Pres Trump plans to keep the 21% corporate rate if he is elected and to make permanent his 2017 individual tax cuts that he enacted - press.

- US Pres Biden invited to give the State of the Union address on Mar 7th - press.

- (US) Fed's Logan (non-voter in 2024): Fed should slow the pace of asset runoff as the overnight reverse repurchase (RRP) balances approach a low level; Need to maintain sufficiently restrictive financial conditions.

- US Supreme court agrees to hear Trump's appeal of Colorado ballot case; Supreme Court will hear oral arguments in the case on Feb 8th - press [**Note: Colorado was the first US state to block Trump from a ballot].

- Apple (AAPL) Reportedly DOJ is in late stages of antitrust probe with focus on how Apple used its range of products and services to block threats to its core business - NYT.

- Harpoon Therapeutics (HARP) Merck said to be in advanced talks for Co. at ~$700M or $23/share [~118% premium to prior close] - US financial press.

Europe

- (IL) US intelligence found that it would be difficult for Israel to succeed in a war against Hezbollah amid ongoing fighting in Gaza - WaPo.

- US Sec of State Blinken: Israel-Hamas conflict could 'easily metastasize'; This is a moment of profound tension in the region.

- (IL) Israel military spokesperson: Have completed the dismantling of the Hamas military framework in northern Gaza.

Levels as of 00:20 ET

- Nikkei 225 closed; ASX 200 -0.5%; Hang Seng -1.9%; Shanghai Composite -1.1%; Kospi -0.4%.

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

- EUR 1.0930-1.0953; JPY 144.31-144.93; AUD 0.6696-0.6737; NZD 0.6233-0.6262.

- Gold -0.4% at $2,042/oz; Crude Oil -1.3% at $72.85/brl; Copper +0.3% at $3.8142/lb.