BOJ to conduct outright purchases of USD from MOF for the first time ever

Asia Market Update: Asia trades higher after US gains; BOJ to conduct outright purchases of USD from MOF for the first time ever; US Fed decision and forecasts due later today.

General Trend

- Apple suppliers track the recent strength in shares of Apple

- Topix Marine/Transportation, Iron/Steel and Real Estate indices are among the gainers in Japan; Pharmaceutical index lags amid report related to drug price cuts

- Gainers in Australia included Resources, Consumer Discretionary and Financial firms

- Financial and Property indices rise in HK, Tech firms trade mixed

- Consumer Staples rose in Shanghai during the morning session, IT firms lagged

- Shares of large Chinese chipmaker SMIC decline; Co-CEO said to have offered resignation, MSCI to remove SMIC from indexes

- Shanghai Fosun Pharmaceutical disclosed financial terms related to vaccine supply agreement with BioNTech

- China’s MOF issued rules related to investments by state-owned financial firms amid recent reports regarding corporate debt defaults

- China’s State Planner commented on coal prices without mentioning Australia

- Australia confirmed that it would take China to the WTO over barley tariffs, little initial reaction seen in AUD/USD

- Xinja Bank (Australian digital bank) to end its operations

- Australia Dec prelim PMIs rose

- Australia is due to release Nov jobs data on Thursday (Dec 17th)

- Australia’s Treasury is expected to release its Mid-Year Economic and Fiscal Outlook report this week

- NZ raised its 2021 GDP growth forecast, cut bond issuance view

- Japan released mixed Dec prelim PMI data

- Japan’s exports unexpectedly extended decline in Nov; Shipments to Asia, US and EU declined; growth of exports to China slowed

- BoJ is due to hold its policy meeting Dec 17-18th (Thurs-Fri)

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened +0.5%

- (AU) AUSTRALIA DEC PRELIMINARY PMI MANUFACTURING: 56.0 V 55.8 PRIOR (highest since Dec 2017, 7th consecutive month of expansion)

- (NZ) New Zealand Q3 Current Account (NZ$): -3.5B v -3.9Be (smallest deficit since Q4 2001)

- (NZ) New Zealand Treasury publishes Dec Fiscal Update: Raises 2021 GDP outlook

- (AU) Australia Bureau of Statistics (ABS) issues information paper that details the 2020 weight update for CPI: The 2020 re-weight will apply from the December 2020 quarter for the CPI which will be released on 27 January 2021

Japan

- Nikkei 225 opened +0.6%

- (JP) Bank of Japan (BOJ) to buy $6.0B USD from Japan Ministry of Finance (MOF) FX account for special operations (1st time conducting outright purchases of USD from MoF); Can purchase USD any day before end March 2021 (End of Fiscal year)

- (JP) Japan Mint, Ministry of Finance, and Bank of Japan said to reach deal for $6.0B budget

- (JP) Japan Ministry of Finance (MOF) Official: BOJ dollar funding announcement today was 'extremely extraordinary' response under coronavirus

- (JP) Japan govt reportedly plans to cut prices on 70% of drugs next year – press

- (JP) JAPAN DEC PRELIMINARY PMI MANUFACTURING: 49.7 V 49.0 PRIOR (19th straight contraction)

- (JP) Japan Nov Trade Balance: ¥366.8B v ¥522.5Be; Adj Trade Balance: ¥570.2B v ¥545.7Be

- (JP) Japan Econ Min Nishimura: Japan in phase to execute fiscal spending to protect economy, but can't continue for long - speaking to parliament

Korea

- Kospi opened +0.3%

- (KR) South Korea Nov Exports Prices Y/Y: -4.9% v -6.4% prior; Import Prices Y/Y: -10.6% v -11.6% prior

- (KR) South Korea Nov Unemployment Rate: 4.1% v 4.2% prior; Jobs -273K (9th consecutive decline in jobs)

- (KR) South Korea reports record high 1,087 coronavirus cases v 880 prior

China/Hong Kong

- Hang Seng opened +0.8%; Shanghai Composite opened +0.1%

- (CN) China Foreign Ministry spokesperson Wang Wenbin: Not aware of an official coal ban related to Australia

- (CN) China National Development and Reform Commission (NDRC): Coal prices are stable overall currently; Partial coal price rise won't affect supplies in winter

- (CN) MSCI to delete the securities of the Chinese companies referenced in President Trump's Nov. 12 executive order from its Global Investable Market Indexes, after it conducted "extensive outreach with the global investment community"; effective Jan 5th after the close; to remove Semiconductor Manufacturing International Corp., China Communications Construction Co., China Railway Construction Corp. and CRRC Corp among others

- (HK) Hong Kong Govt said to plan between HK$5.0-6.0B in coronavirus relief measures

- 981.HK Co-CEO Liang Mong Song offered to resign at yesterday's board meeting but was rejected (speculation was due to not great relationship with co-CEO Zhao Haijun) - local press

- (CN) China PBoC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v Injects CNY10B in 7-day reverse repos prior; Net drain CNY10B v Net drain CNY50B prior

- (CN) China PBOC sets Yuan reference rate: 6.5355 v 6.5434 v prior

- (CN) China Ministry of Finance (MoF): State owned companies to focus on main operations; Financial Firms must invest in units with own funds

Other

- 2330.TW Taiwan Govt considering helping companies like TSM to remain competitive amid concerns quantum computing could negatively impact semiconductor industry – Digitimes

North America

- (US) House GOP Leader McCarthy: Leaders making progress, moving in right direction

- (US) OCT NET LONG-TERM TIC FLOWS: $51.9B V $108.9B PRIOR; TOTAL NET TIC FLOWS: -$10.4B V -$79.9B PRIOR; Japan Total Holdings of US Treasuries: $1.270T v $1.276T prior (net seller for 3rd consecutive month, largest sale since 2018); China Total holding of US Treasuries: $1.054T v $1.061T prior (5th consecutive decline, lowest since Jan 2017)

Europe

- (UK) ITV's Brand: "Brussels source on flurry of speculation about a possible Brexit trade deal: 'We are not there yet by any stretch of the imagination'. Negotiations roll on"

Levels as of 12:15ET

- Hang Seng +0.9%; Shanghai Composite +0.1%; Kospi +0.5%; Nikkei225 +0.2%; ASX 200 +0.7%

- Equity Futures: S&P500 -0.1%; Nasdaq100 +0.1%, Dax -0.3%; FTSE100 -0.4%

- EUR 1.2167-1.2146; JPY 103.72-103.42; AUD 0.7564-0.7546; NZD 0.7111-0.7084

- Commodity Futures: Gold +0.2% at $1,859/oz; Crude Oil -0.2% at $47.52/brl; Copper -0.1% at $3.54/lb