JP bets on growth in biggest stimulus since Covid as JPY stabiliises, Asian stocks fall heavily

Asia Market Update: JP bets on growth in biggest stimulus since Covid as JPY stabiliises; Asian stocks fall heavily; EU goes to AU to escape CN supply chains.

General trend and developments

- As expected, Japan cabinet approved its new Economic Package for ¥21.3T (top end of estimates), including general account outlays of ¥17.7T. Far exceeds last year's ¥13.9T and is the largest stimulus since the COVID pandemic. Govt estimates the package can push up economic growth by 1.4% annually and notes it includes ¥2.7T in tax cuts. Takaichi said she still expects JGB issuance next year to be smaller than the past year (¥41.2T) , even while adding that if increased tax revenues are not enough will fund any shortfall with new bond issuance

- Prior to the release Fin Min Katayama affirmed that she expects Japan's debt-to-GDP ratio to fall slightly from previous year's level even with the increased budget.
[** Note that next week Japan’s MOF will meet with JGB investors on Nov 27th, the same day that BOJ member Noguchi scheduled to give a speech]

- Following the afternoon drop in Wall St overnight (as Nvidia lost >-3% despite beating estimates in overnight its Q3 earnings and guidance), stocks fell heavily throughout Asia with the Kospi worst performed -4.5%. Reports that a China basket of 8 ETFs said to be favored by the "National Team" saw a surge in turnover today as Chinese stocks slid, but still the Shanghai Composite fell nearly -2%.

- Japanese JGB yields came off their multi-decade highs of yesterday, especially at the long-end by 5.5bps.

- Bitcoin continued its plunge, -7% to $85K handle.

- With the Yen stabilizing in the lower part of the 157 handle overnight Fin Min Katayama overtly warned for the first time in her tenure that FX intervention is an option. Overnight a Japan govt panel member said that Japan may intervene before it reached 160.

- Japan’s national CPI for October was inline with estimates, and above 2% target for the 44th month. Japan’s November prelim PMI figures saw manufacturing stay mired in a 5th month of contraction, while PMI Services remained strong for a 12th month.

- Japan trade balance for October again came at lesser deficit than expected, with exports outperforming expectations as US exports down just -3% y/y compared to the -13% drop in September.

- Korean exports for first 20 day of November also continued to confirm a bounce-back.

- Australia preliminary Nov PMI figures moved back into expansion after an unexpected contraction in October.

- EU Trade Commissioner Sefcovic popped up in Australia, with the EU wanting to invest in and buy more Australian resources, including critical minerals. [Comes as the EU talks softly with China, but scrambles to diversity its supply chains]. Ironically the EU moves come as China govt said to widen ban on BHP iron ore to further products, likely making the EU’s path in Australia smoother.

- Mayne Pharma in Australia reportedly to bear the brunt of Australia govt medical supply chain concerns, with the bid by US company Cosette likely to be overturned.

- US equity FUTs +0.2% to +0.3% during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Fri Nov 21st Nov Global Flash PMIs.

Holidays in Asia this week

- No holidays in Asia this week.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -1.9% at 8,393.

- AUSTRALIA NOV PRELIMINARY PMI MANUFACTURING: 51.6 V 49.7 PRIOR; (moves back into expansion after one month contraction).

- (AU) EU Trade Commissioner Sefcovic: EU considering how to best invest in Australian resources projects - financial press at Melbourne press conference.

- Australia sells A$700M v A$700M indicated in 1.25% May 2032 bonds; Avg Yield: 4.1071% v 3.9431% prior; bid-to-cover: 3.52x v 3.38x prior.

- BHP: China govt said to widen ban on BHP iron ore to more products – press [overnight updat.

- Mayne Pharma: Reportedly Australia is expected block Cosette's bid; The government cites the need to protect the security of medical supply chains - press.

- New Zealand Oct Trade Balance (NZD): -1.5B v -1.4B prior.

- RBNZ: New Zealand Oct Credit Card Spending M/M: +1.5% v +0.2% m/m; Y/Y +1.4%.

China/Hong Kong

- Hang Seng opens -1.5% at 25,460; Shanghai Composite opens -0.9% at 3,896.

- China basket of 8 ETFs said to be favored by "National Team" sees surge in turnover today as Chinese stocks slide - press.

- Follow Up: Banks in China 'ramp up' sale of bad loans related to the retail sector and accelerating sales of Non Performing Loans to asset managers - Securities Times.

- China interest rate cuts have diminishing returns on the economy - Chinese press.

- (RU) Russia Kremlin Spokesperson Peskov: Had talks with China this week on missile defense and strategic stability [overnight update].

- CAICT: Sept shipments of phones within China +8.0% y/y v -6.0% y/y prior.

- Chair: Vanke to stay under pressure [overnight update]..

- Hong Kong Oct CPI Composite Y/Y: 1.2% v 1.2%e [overnight update].

- China PBOC sets Yuan reference rate: 7.0875 v 7.0905 prior.

- China PBOC Open Market Operation (OMO): Injects CNY375B in 7-day Reverse Repos; Net injects CNY162B v injects CNY110B prior.

Japan

- Nikkei 225 opens -1.1%.

- JAPAN OCT NATIONAL CPI Y/Y: 3.0% V 3.0%E; CPI (EX-FRESH FOOD) Y/Y: 3.0% V 3.0%E.

- JAPAN NOV PRELIMINARY PMI MANUFACTURING: 48.8 V 48.2 PRIOR (5th month of contraction).

- JAPAN OCT TRADE BALANCE: -¥231.8B V -¥284.2BE.

- Japan cabinet approves Economic Package for ¥21.3T (prior estimates ¥20-21.3T, or ¥42.8T if including private sector investments).

- Japan PM Takaichi: Will fund the package with new bond issuance if higher tax revenue is not enough; Overall JGB issuance expected to be smaller than last year's total - financial press.

- Japan Fin Min Katayama: It's vital that FX moves stably, reflecting fundamentals; Will take appropriate action against excessive moves; Refrains from commenting on specific moves to trigger intervention; FX intervention is an option - references Japan-US agreement in Sept.

- Japan BOJ Gov Ueda: Weaker Yen raises import costs, pushing up inflation and import costs - appearance at Lower House Finance Committee.

- Japan Chief Cabinet Sec Kihara: Closely watching FX moves with a high sense of urgency; Won't comment on Forex levels.

- Japan Chief Cabinet Sec Kihara: PM Takaichi to travel to G20 Summit from Nov 21-24 (Johannesburg, South Africa).

- Japan Exchange to revise guidelines in order to prevent 'spoofing' related to JGB FUTs.

- Japan sells ¥4.3T vs. ¥4.3T indicated in 3-Month Bills ; Avg Yield: 0.4766% v 0.4529% prior; Bid-to-cover: 2.96x v 3.00x prior.

- Japan MOF sells ¥699.1B v ¥700B indicated of JGBs in Liquidity Enhancement Auction.

Korea

- Kospi opens -2.4% at 3,908.

- South Korea Oct PPI Y/Y: 1.5% v 1.2% prior.

- South Korea Nov Exports 1-20 Days Y/Y: +8.2% v -7.8% prior; Imports Y/Y: +3.7% v -2.3% prior.

Other Asia

- Taiwan Min Cheng-Wen: US will not put 'punishing tariffs' on chip sector - FT (inline).

- Thailand Fin Min: To keep public debt to GDP ratio at <70%.

- (TW) Taiwan insurers seeking accounting relief to cut NT$90 annually - Taiwan Life Insurance Association.

- Singapore Central Bank (MAS): Affirms monetary policy stance.

- Singapore Q3 Final GDP Q/Q: 2.4% v 1.3% prelim; Y/Y: % v 2.9% prelim.

- TAIWAN OCT EXPORT ORDERS Y/Y: 25.1% V 28.0%E [overnight update].

North America

- (UR) Reportedly US draft peace plan would compel Ukraine to surrender some eastern territory to Russia, would provide security guarantees, and limit its military forces to 600K troops - Axios.

- (US) Reportedly US Consumer Financial Protection Bureau to transfer all pending enforcement and litigation cases to the DOJ after the New Year - press.

- (BR) Brazil Pres Lula: US Pres Trump has 'sent a good sign' with tariff relief; Want more than 40% tariff relief - financial press.

- (US) Treasury Sec Bessent: A lot of signals are coming out of the Fed; Fed should be looking at data and continue the interest rate cutting cycle.

- (US) Fed's Miran (FOMC voter, dovish dissenter): It's 'Incumbent upon' the Fed to move interest rates closer to neutral.

- (US) New Philadelphia Fed Pres Paulson (voter in 2026): Approaching Dec's rate decision 'Cautiously'; Expects to learn a lot from data between now and Dec.

- (AR) Argentina Nov Consumer Confidence: 46.0 v 42.3 prior.

- (CA) Canada Nov CFIB Business Barometer: 55.5 v 46.7 prior.

- (US) NOV PHILADELPHIA FED BUSINESS OUTLOOK: -1.7 V +1.0E; New Orders -8.6; Prices paid 56.1 v 49.2 prior.

- (US) INITIAL JOBLESS CLAIMS: 220K V 227KE; CONTINUING CLAIMS: 1.974M V 1.95ME.

- (US) SEPT UNEMPLOYMENT RATE: 4.4% V 4.3%E (~4-year high).

- (US) SEP REAL AVG HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 3.8% V 3.7%E.

- (CA) Ontario provincial govt to prioritize local products in procurement process - press.

- (US) Fed's Hammack (non-voter for 2025; voter in 2026): Risk management rate cuts right now may elevate stability risks and risk prolonging high inflation - speech text.

- (US) OCT EXISTING HOME SALES: 4.1M V 4.08ME (highest in 8 months).

- (EU) EURO ZONE NOV ADVANCE CONSUMER CONFIDENCE: -14.2 V -14.0E.

- (US) WEEKLY EIA NATURAL GAS INVENTORIES: -14 BCF VS. -12 TO -14 BCF INDICATED RANGE.

- (US) Fed's Cook (voter): Hedge fund footprint in treasury market is a possible risk; We need to watch it carefully.

Europe

- (UK) Nov GfK Consumer Confidence: -19 v -18e.

- (UK) NOV CBI TRENDS TOTAL ORDERS: -37 V -33E.

- (ZA) SOUTH AFRICA CENTRAL BANK (SARB) CUTS INTEREST RATES BY 25BPS TO 6.75%; AS EXPECTED.

Levels as of 01:20 ET

- Nikkei 225 -2.2%, ASX 200 +1.6%; Hang Seng -1.6%; Shanghai Composite -1.5%; Kospi -4.1%.

- Equity S&P500 Futures +0.3%; Nasdaq100 +0.2%; DAX -1.4%; FTSE100 +0.2%.

- EUR 1.1524-1.115.42; JPY 157.09-157.55; AUD 0.6438-0.6458; NZD 0.5581--5602.

- Gold -0.2% at $4,052/oz; BTC -6.8% at $86,436; Crude Oil -1.3% at $58.26bbl; Copper -0.2% at $4.9450/lb.