FTSE Russell commented on index removals

Asia Market Update: Asia trades mixed; Financials drop in CN and HK amid report related to frozen bank accounts, FTSE Russell commented on index removals; China trade surplus above ests, but components mixed.

General Trend

- Financials weigh on the Hang Seng, Tech trades mixed [Alibaba drops]; CNOOC continues to move lower; SMIC rises over 3%

- ZhengTong Auto Services drops over 20% in HK; China regulator said the firm improperly obtained the approval for the establishment of Shanghai Dongzheng Automotive Finance Co., Ltd.

- Financial and Property shares are the leading decliners in Shanghai; Consumer Staples and IT sectors outperform

- FTSE Russell: Will remove shares of 8 China companies (including Hikvision, China Railway Construction, China Spacesat, China Communications Construction, China Nuclear Engineering & Construction, CRRC Corp) from its indexes; effective Dec 21st (Monday); will evaluate CNOOC and SMIC in due course.

- Topix Air Transportation and Iron/Steel indices are among the decliners; Insurance and Pharma indices outperform

- South Korean chipmakers extend gains

- Australian iron-ore, Energy and Consumer Staples firms rise; Consumer Discretionary and Financial sectors lag.

- Australia 10-yr yield pares rise amid stepped up bond buying by the RBA

- China’s Nov iron ore imports again declined m/m

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened +0.5%

- MTS.AU Reports H1 (A$) underling Net 129.6M v 95.7M y/y; underlying EBIT 203.0M v 149.7M y/y; Rev 7.1B v 7.2B y/y

- (AU) Reserve Bank of Australia (RBA) Gov Lowe: Skeptical about need for central bank digital currency, maybe with the success of a digital currency elsewhere may change my view - Q& A

- (AU) Reserve Bank of Australia (RBA) Gov Lowe: Australia's Payments System Board has resumed its periodic Review of Retail Payments Regulation; board does not see a strong case for a significant revision of the interchange framework in Australia.

- (NZ) RBNZ buys NZ$310M v NZ$310M prior in government bonds as part of QE v NZ$310M sought

- (AU) Australia sells A$2.0B v A$2.0B indicated in 1.00% Dec 2030 bonds, avg yield 1.0656% v 0.7482% prior, bid to cover 2.47x v 5.1x prior

Japan

- Nikkei 225 opened +0.5%

- (JP) Japan PM Suga confirms to announce further economic measures tomorrow, will include loans, more reserve funds

- (JP) Japan Nov FX Reserves: $1.38T v $1.38T prior

- 9201.JP Japan LDP Lawmaker: Public debate on funds for airlines is premature, ANA, JAL are able to stay in business and keep routes

- 9432.JP To sell ¥1.0T in bonds in record corporate bond sale for Japan (upsized from ¥700B)

Korea

- Kospi opened +0.2%

- (KR) More than 12 South Korea lawmakers are pushing the Bank of Korea (BOK) to broaden its mandate to cover employment stability (would be the 1st time in ~10-years mandate was adjusted) in order to address economic issues exaggerated by COVID - press

- (KR) South Korea tightens restrictions to 2.5 in Seoul, as Saturday recorded 631 cases (highest since early March)

- (KR) South Korea said to consider extension of tax cuts related to car purchases - South Korean press

China/Hong Kong

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

- (CN) CHINA NOV TRADE BALANCE (CNY-DENOMINATED): 507.1B V 373.2BE; Exports Y/Y: 14.9% v 5.7%e; Imports Y/Y: -0.8% v 0.6%e

- (CN) CHINA NOV TRADE BALANCE: $75.4B V $53.8BE (record high); Exports Y/Y: 21.1% v 12.0%e (fastest pace in 19 months); Imports Y/Y: 4.5% v 7.0%e

- (HK) HKMA said it is in talks with the PBOC regarding 'technical test' related to digital yuan usage - financial press

- (CN) FTSE Russell said it will remove shares of 8 China companies (including Hikvision, China Railway Construction and China Spacesat) from its indexes; cited order from the US government

- (CN) China PBoC Open Market Operation (OMO): Injects CNY50B in 7-day reverse repos v Injects CNY10B in 7-day reverse repos prior; Net Drain CNY100B v Net drain CNY100B prior

- (CN) China PBOC sets Yuan reference rate: 6.5362 v 6.5507 prior (strongest since June 26, 2018)

- JD Has become the first China online mall to test the digital yuan – SCMP

- 5.HK Former Hong Kong democracy lawmaker Ted Hui said some of his bank accounts had been unfrozen, said he moved funds from HSBC; said he no longer trusted HSBC - financial press

- 000800.CN FAW-Volkswagen and SAIC Volkswagen said to have halted or reduced production due to auto chip shortages - China press

North America

- (CN) Trump Administration is preparing new sanctions on at least 12 China officials, relates to China's move to disqualify elected lawmakers in Hong Kong - financial press

- (US) Pres Trump urges Georgia Gov Kemp to "immediately ask for a Special Session of the Legislature"

- ABNB Indicated IPO pricing said to be raised to $56-60/shr (prior $44-50/shr) - US financial press

- (US) Attorney General (AG) Barr said to be considering leaving position before end of Trump term - press

Europe

- (EU) German Chancellor Merkel and France President Macron to soften level playing field demands in Brexit talks - UK press

- (UK) BOE's Haldane (chief economist): A nationwide spending spree could help the economy recover more quickly than current seen - UK press

- (UK) According to an un-named source on the UK side there has been no break through on fishing negotiations with EU – BBC

- (UK) PM Johnson and EU's Von der Leyen: still significant difference on 3 issues: level playing field, governance, and fisheries (Saturday)

- LHA.DE Expected to cut additional 10K jobs in Germany in 2021 and possibly another 20K cuts outside of Germany taking total global workforce to 109K - German press

Levels as of 12:15ET

- Hang Seng -1.5%; Shanghai Composite -0.5%; Kospi +0.2%; Nikkei225 -0.6%; ASX 200 +0.6%

- Equity Futures: S&P500 -0.2%; Nasdaq100 -0.1%, Dax -0.1%; FTSE100 +0.1%

- EUR 1.2141-1.2119; JPY 104.23-103.94; AUD 0.7437-0.7425; NZD 0.7050-0.7035

- Commodity Futures: Gold +0.2% at $1,843/oz; Crude Oil -0.5% at $46.02/brl; Copper -0.6% at $3.50/lb