Australia lowers GDP outlook in mid-year review

Asia Market Update: Weaker China data will put focus on Economic Work Conference this week for steps that will address slowdown; Australia lowers GDP outlook in mid-year review

General Trend:

- Equities weaker on the open before trading mixed, as markets remain risk off awaiting the next move in China/US trade war

- China Ministry of Finance confirms 3 month suspension of 25% tariff on US vehicle and auto parts, starting Jan 1st

- Australia Mid-year Economic and Fiscal Outlook cuts 2018/19 GDP to 2.75% from 3.0% in May

- China PBoC resumes the use of reverse repos with its first injection after 36 consecutive skips

- South Korea Govt cuts GDP outlook for 2018 and 2019 ; affirms inflation

- Renault calling for EGM to discuss management and board changes with Nissan

- Japanese companies raise inflation expectations in the coming years

- US says it will allow Canada court to move ahead with Huawei case and will not interfere

- Canada confirms it has been able to speak to its second citizen detained in China

- Japan 2019 JGB issuances expected to decline again as 2019 budget chatter starts to leak out

- Italy seems to have reached a consensus on budget to present to EU

Headlines/Economic Data

Japan

-Nikkei 225 opened +0.1%

- 7201.JP Renault acting CEO Bollore has asked Nissan to call an EGM as soon as practicable in order to discuss the future of the alliance including possible senior management and board changes - FT

- (JP) Japan may cut FY2019/20 annual JGB issuance to ¥129.4T v ¥134.2T this year (making it 6th consecutive year of cuts) – press

- (JP) Bank of Japan (BOJ) Tankan survey shows companies see y/y inflation at 0.9% in 1-yr (prior 0.8%); 1.1% in 3-yrs (prior 1.1%) and 1.2% in 5-yrs (prior 1.1%)

Korea

-Kospi opened +0.1%

- (KR) According to North Korea press leader Kim Jong-un made more public appearances in relation to economic and diplomatic affairs than military this year - Yonhap

- (KR) New South Korea Fin Min Hong to meet with BOK Gov Lee later this week - Korean press

- 012330.KR To introduce a windshield display technology for its autonomous vehicles that can play movies and be controlled with hand gestures – Yonhap

- (KR) North Korea foreign ministry: Condemns US administration for stepping up sanctions and pressure on North Korea to drop nuclear program; if US doesn't ease there could be a return to "exchanges of fire" and disarming could be off the table completely – press

- 005380.KR Class action lawsuit filed against Hyundai Kia alleges dangerous defect affecting certain vehicle models can cause premature engine failure and spontaneous fires in the engines, putting owners at risk of accident, injury and death

- (KR) South Korea President Moon: Will adjust minimum wage increase policy if needed – Yonhap

-(KR) South Korea cuts 2018 GDP outlook to 2.6-2.7% (prior 2.9%); Cuts 2019 GDP 2.6-2.7% (prior 2.8%)

China/Hong Kong

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

- (CN) China Nov New Home Prices m/m: 0.9% v 1.0% prior; y/y: 9.3% v 8.6% prior

- HUAWEI.CN According to US, a presentation given by CFO Meng Wanzhou to a HSBC banker in 2013, describes the links between Huawei and Skycom, a “partner” doing business in Iran, US alleges that Skycom is an unofficial subsidiary, helping Huawei evade sanctions on Iran – SCMP

- (CN) Development Research Center of the China State Council chief Li Wei: China's steady and improving economic fundamentals are favorable for its development goals – Xinhua

- (CN) China Nov raw coal production 320Mt, +4.5% y/y – Xinhua

- 2388.HK Lowered property mortgage rates - HK press

- (CN) PBoC Adviser Sheng Songchen: China should defend yuan at 7 yuan per dollar level or attempts to stabilize the currency will become more costly on the foreign exchange reserves – press

- (CN) China PBoC: Will guide reasonable growth of credit and social financing

- (CN) CHINA PBOC OPEN MARKET OPERATION (OMO): INJECTS CNY160B IN 7-DAY REVERSE REPOS V SKIPS PRIOR; Net injects CNY160B (1st injection after 36 consecutive skips)

- (CN) China PBoC sets yuan reference rate: 6.8908 v 6.8750 prior

- (CN) China Ministry of Finance confirms 3 month suspension of 25% tariff on US vehicle and auto parts, starting Jan 1st

Australia/New Zealand

- ASX 200 opened -0.1%

- ANZ.AU Follow up to RBNZ capital review paper: Sees potential capital increase for New Zealand of NZ$6.0-8.0B

- (NZ) New Zealand Nov Performance of Services Index: 53.5 v 55.4 prior

- (AU) Australia Mid-year Economic and Fiscal Outlook: Cuts 2018/19 GDP to 2.75% from 3.0% in May

- Looking ahead: Tomorrow will see the release of RBA Dec meeting minutes

Other Asia

- (SG) SINGAPORE NOV NON-OIL DOMESTIC EXPORTS M/M: -4.2% V 2.3%E; Y/Y: -2.6% V 1.8%E; Electronic Exports y/y: +4.5% v -3.5% prior

North America

- (CA) Canada ambassador to China John McCallum met with second detained Canadian, Michael Kovrig - SCMP

-(US) Federal judge in Texas rules the Affordable Care Act (Obamacare) is unconstitutional – press

-(US) Pres Trump names Budget Director Mick Mulvaney as acting Chief of Staff, replacing John Kelly

Europe

-(FR) France PM Philippe: Large company tax cut to be delayed for 1-yr - French press

- (CN) Germany looking to update international trade regulation that would allow Govt to review on EU-bloc purchases of stakes as low as 10% in "security relevant" companies; seen as a move to target China – SCMP

- (IT) Italy League Leader spokesperson: Italy governing coalition leader and PM are in total agreement on 2019 budget figures that will be proposed to EU

- (UK) PM May allies want parliament members to vote on Brexit options – Times

- (UK) Dec Rightmove House Prices m/m: -1.5% v -1.7% prior; y/y: +0.7% v -0.2% prior

- (FR) France National Assembly President Ferrand: 2019 budget deficit is likely to overshoot the EU's limit of 3.0% of GDP next year and reach 3.4% - financial press

Levels as of 12:50ET

- Hang Seng 0.0%; Shanghai Composite 0.0%; Kospi +0.2%; Nikkei225 +0.7%; ASX 200 +1.0%

- Equity Futures: S&P500 +0.4%; Nasdaq100 +0.5%, Dax +0.5%; FTSE100 +0.2%

- EUR 1.1313-1.1301; JPY 113.31-113.52 ; AUD 0.7169-0.7182;NZD 0.6785-0.6802

- Feb Gold -0.1% at $1,240/oz; Feb Crude Oil +0.2% at $51.53/brl; Feb Copper +0.2% at $2.76/lb