CN trade-in program ‘upgrade’ fails to impress – Soft AU CPI

Asia market update: CN trade-in program ‘upgrade’ fails to impress; Soft AU CPI; Samsung Q4 misses ests, but stock still rises; Focus on US FOMC Minutes.

General trend

- CN/HK equities continued to stumble (Hang Seng now at 3-month lows), as the PBOC, MOF and NDRC joint announcement on trade-in program ‘upgrades’ was short on specifics and failed to impress. It is not even clear whether the total amount apportioned in 2025 will be more than 2024. Xiaomi -4.7% [smartphone]. SSE Consumer Discretionary index -2%.

- ASX 200 reversed early losses to be up nearly 1% post CPI data (financials index up >2%, steeper AU yield curve post CPI). ANZ now sees the first 25bps cut by RBA not till May, 2025. Nov CPI trimmed mean came in softer than prior. AU 3-year yield -5bps with AUD also back down to last week’s levels (were both up pre-data).

- Nikkei softer (following US lead) after yesterday’s strong showing while Kospi rebounded as part of its strong showing since the end-of-year lows - now trading at levels above Dec 3rd, when martial law was briefly imposed and subsequent political tensions kicked off.

- Overnight, USTs ripped higher on the back of strong US ISM and JOLTS jobs data (as well as a soft bid-to-cover at the UST 10-year auction). 10-yrs nearly 4.70%, only 25-30 ticks off the Oct 2023 highs (prior to that back to 2007 for 5% rates).

- Japan yields also continued up, with 10-yr JGB yield rising to the highest since Jul 2011 at 1.18%. BOJ will be encouraged by Nikkei heavyweight Fast Retailing increasing wages up to 11% by March.

- In a less-than-positive sign for the amount of resources that the Japanese govt has thrown at local chip-maker Renesas in an attempt to win Japan back a place at the leader’s table for high-end chip development, the company said to be cutting several hundred jobs.

- Samsung Electronics missed Rev and Op profit expectations in their Q4 prelim results. Co blamed weak demand for conventional memory chips for PCs and mobile, higher R&D costs and increasing competition in the mobile phone space. No mention was made of AI demand. Shares opened down -1.1% but then rebounded, +3.0%.

- Despite China state media saying today it expected the Yuan to remain 'resilient' and rebound despite headwinds, onshore Yuan (CNY) traded at lowest level since Sept, 2024 [7.3309].

- US equity FUTs +0.2% during Asian trading.

Looking ahead (Asian time zone)

- Wed Jan 8th (Wed night US FOMC Minutes).

- Thu Jan 9th AU Nov Trade Balance, AU Nov Retail Sales.

- Fri Jan 10th JP Nov Household Spending, (Fri night CN New Yuan Loans, US Dec Non-Farm Payrolls, + Jan Michigan Consumer Sentiment).

- Sun Jan 12th CN Dec CPI/PPI, CN Dec Trade Balance.

Holidays in Asia this week

- Thu Jan 9th (US time), market holiday for former Pres Carter state funeral.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 8,281.

- Australia Nov CPI Y/Y: 2.3% V 2.2%E.

- Australia Nov Job Vacancies Q/Q: 4.2% v -5.6% prior.

- Australia Treasurer Chalmers: Fall in Nov core inflation 'very welcome' sign - media conference.

- New Zealand Dec ANZ Commodity Price Index M/M: 0.2% v 2.9% prior.

- Fonterra Global Dairy Trade Auction Dairy Trade price index: -1.4% v -2.8% prior.

China/Hong Kong

- Hang Seng opens -0.3% at 19,390; Shanghai Composite opens -0.3% at 3,218.

- Pres Xi Jinping personally ordered the punishment of economist Gao Shanwen, after Gao raised doubts about China's true growth rate and economic measures - WSJ.

- China NDRC, MOF, PBOC briefing on consumer goods trade-in program: To provide loan discounts for equipment upgrade - financial press.

- HSBC cuts China 10-year bond yield forecast to 1.20% (prior: 1.80%).

- China onshore Yuan at lowest level since Sept 2024 [7.3309].

- China Securities Time: Sees more China bond market volatility in 2025 [inline].

- China News: Yuan expected to remain 'resilient' and rebound despite headwinds.

- Follow up: China MOFCOM: US endangering stability of global supply chains; Asks US to stop its 'wrongdoing' (in reference to blacklisting of Chinese firms by US).

- China newspaper sees a "chance for ‘forceful’ monetary policy moves" - Shanghai Securities News.

- China Commerce Ministry (MOFCOM): Firmly opposes inclusion of 11 Chinese entities in export control list by US on grounds that they are military-related [overnight update].

- China is willing to work with US on anti-drug cooperation - Following a video call with US on said cooperation - Asia press [overnight update].

- China Foreign Ministry Spokesman Guo: To take countermeasures [asked about the blacklisting of Tencent and CATL by the US] [overnight update].

- China PBOC sets Yuan reference rate 7.1887 v 7.1879 prior.

- China PBOC Open Market Operation (OMO): Injects CNY1.1B in 7-day reverse repos; Net injects CNY1.1B v drains CNY151B prior.

Japan

- Nikkei 225 opens -0.5% at 39,879.

- Japan Dec Consumer Confidence: 36.2 v 36.6e.

- Former BOJ Gov Kuroda predicts "more rate hikes" in coming years from BOJ amid continued sustained inflation toward 2% - financial press, citing research paper for House of Reps issued on Dec 24th.

- Japan's Tokyo Stock Exchange (TSE) said to toughen MBO rules by this Spring - Nikkei (update).

- Bank of Japan (BOJ) announcement related to outright bond buying operations: 1-3 Years; 3-5 Years, 5-10 Years, 10-25 Years, (Reduced purchase amounts inline with Dec guidance).

- Japan 10-yr JGB yield rise 4.4bps to the highest since Jul 2011 at 1.18%
9983.JP To increase salaries for new hires to ¥330K per month (~$2,020); To raise wages of Full-time HQ and sales staff by as much as 11% by March - financial press.

- Renesas (6723.JP) Reportedly to cut several hundred jobs - Nikkei.

Korea

- Kospi opens -0.4% at 2,481.

- South Korea Nov Current Account: $9.3B v $9.8B prior.

- South Korea Finance Ministry: Govt bond market trend being closely monitored - financial press.

- Korea online lender KBank said to drop plans for IPO - Korean press.

- Follow up: Suspended Pres Yoon's lawyer says 'not true' that Yoon has fled Presidential residence into hiding - Korean press.

- South Korea acting President Choi: Will swiftly respond to any financial market volatility - financial press.

- Samsung Electronics (005930.KR) Reports prelim Q4 (KRW) Op 6.50T v 6.93Te (2.80T y/y), Rev 75.0T v 77.2Te (67.0T y/y).

- LG Electronics 066570.KR Reports prelim Q4 (KRW) Op 146.1B v 368.7Be (v 312.5B y/y), Rev 22.8T v 22.7Te (v 23.2T y/y).

- South Korean investigators may attempt to arrest Former Pres Yoon on Wednesday - Korean press [overnight update].

- South Korea court approves new arrest warrant for impeached Pres Yoon – press [overnight update].

Other Asia

- Thailand Fin Min Pichai: Sees Q4 GDP growth of >3.0%; 2024 GDP growth seen 2.7-2.8%; hopes for 2025 GDP growth of >3.0.

- Vietnam Central Bank (SBV) Dep Gov: Reiterates monetary policies remain flexible and aim to control inflation; policy rate is still appropriate [overnight update.

- Taiwan Dec CPI Y/Y: 2.1% v 2.1%e [overnight update].

North America

- (BR) Brazil Dec FGV Inflation IGP-DI M/M: 0.9% v 0.8%e; Y/Y: 6.9% v 6.8%e.

- (CL) Chile Dec Trade Balance: $2.4B v $2.5Be.

- (US) Adobe: Consumers spent $241.4B online from Nov. 1 to Dec. 31, +8.7% y/y and setting a new record for e-commerce; Strong discounts this season drew in consumers who have become increasingly price sensitive.

- (US) Nov trade balance: -$78.2B V -$78.3BE.

- (US) Fed’s Barkin (non-voter for 2025): Businesses exposed to tariff changes must be agile; Reiterates remains highly committed to 2% inflation target - Q&A responses.

- (US) Dec ISM services index: 54.1 V 53.5E; Prices Paid: 64.4 v 57.5e (the first time >60 since Jan 2024 and ~2-yrs high); Tariff concerns elicited the most panelist comments.

- (US) Nov JOLTS job openings: 8.098M V 7.740ME; prior revised higher.

- (CA) Canada Dec Ivey Purchasing Managers Index: 54.7 v 52.3 prior.

- (US) US Pres-elect Trump said to plan announcement of $20B investment in US data centers - CNBC.

- (US) House Majority Leader Scalise: House is targeting passage of budget reconciliation by Easter [April 20th].

- (US) US Pres Elect Trump: Confirms UAE's DAMAC properties upcoming investment of at least $20B for data centers.

- (US) Treasury's $39B 10-year note reopening draws 4.680% V 4.235% prior; bid-to-cover ratio: 2.53 V 2.70 prior and 2.56 over last 8 reopenings.

- (US) Speaker Johnson: Sees debt limit handled before June deadline - Politico.

Europe

- (IL) Israel Dec Foreign Currency Balance: $214.6B v $217.1B prior.

- (ES) Spain Econ Min Cuerpo: GDP growth maintained pace in Q4.

Levels as of 00:20 ET

- Nikkei 225 -0.2%, ASX 200 +0.8%, Hang Seng -1.4%; Shanghai Composite -1.3%; Kospi +1.3%.

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

- EUR 1.0339-1.0355; JPY 157.91-158.27; AUD 0.6212-0.6242; NZD 0.5625-0.5642.

- Gold -0.2% at $2,660/oz; Crude Oil +0.6% at $74.67/brl; Copper +0.2% at $4.1870/lb.