JP equities volatile amid headlines related to foreign investors, other Asia equities fall sharply

Asia Market Update: JP equities volatile amid headlines related to foreign investors; Other Asia equities fall sharply; CN data dump shows econ still struggling; UK CPI in focus; Tonight US Retail Sales + Fed Beige Book.

General trend

- Nikkei 225 quickly pushed through 36,000 again after the open (+1.7% at peak) with Topix Marine index +2% as Japan's three largest shippers reportedly halting shipping routes through the Red Sea. At 36,099 the Nikkei is the best since the 1989 high of 38,950.

- However, JP prices gave back all gains later in the session to turn slightly negative, as other Asia markets fell heavily (Hang Seng -3%, Kospi -2.5%).

- Foreign interest in Japanese securities said to have increased as Warren Buffett reported to be further raising stakes in Japan trading companies, however the CEO of Sumitomo Corp later walked back his comments in a company statement.

- China Securities Journal also reports that China investors’ desire for positive returns has seen them flooding into Japanese stock ETFs, leading to surges in premiums with China AMC Japan ETF management toady issuing risk warnings.

- China PBOC net injects >CNY1.1T in 2 sessions of 7-day reverse repo ops.

- China confirms to issue >CNY1T of sovereign bonds to support growth – the 4th such sale in the past 26 years (prior 1998, 2007 and 2020).

- However, HK and CN stocks continued their slide down despite the promised cash injections. Hang Seng Properties -4%, Tech Index -2%, Hang Seng -3% (Nov 2022 lows) and CN Composite -0.7%.

- The China data dump more or less in-line with estimates for GDP and Industrial Production, but reduced Retail Sales and Property prices and sales continuing their slide will worry policy makers.

- China restarted reporting of youth unemployment since pausing it in June, 2023, but readjusting the figures by no longer including students going forward.

- According to the Japan BOJ latest quarterly survey, Japan households' inflation expectations fall q/q.

- US equity FUTs down during Asia trading.

Looking ahead (Asian time zone)

- Jan 18th Thu Australia employment, China FDI + Thus evening ECB Minutes.

- Jan 19th Fri Japan inflation + Fri evening UK Retail Sales.

- Jan 20th (Friday night) US Michigan Consumer Confidence.

Holidays in Asia this week

- N/A.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 7,418.

- Australia sells A$800M vs. A$800M indicated in 3.50% Dec 2034 bonds; Avg Yield: 4.2311% v 4.4479% prior; bid-to-cover: 3.18x v 3.38x prior.

- TTN Research Alert: Leading mining group Rio Tinto warns US economy is slowing down with labor market cooling; Summary of recent profit warnings and comments on global consumer state made by European, Asian and US firms (overnight update).

- New Zealand Dec CoreLogic House Prices Y/Y: -3.3% v -4.5% prior (overnight update).

- New Zealand Dec Total Card Spending M/M: -0.6% v 0.8% prior.

China/Hong Kong

- Hang Seng opens -0.6% at 15,764.

- Shanghai Composite opens -0.2% at 2,887.

- China National Bureau of Statistics (NBS): Reiterates to enhance economic vitality and prevent risks - comments on Q4 and Dec data.

- CHINA Q4 GDP Q/Q: 1.0% V 1.1%E; Y/Y: 5.2% V 5.3%E.

- CHINA DEC INDUSTRIAL PRODUCTION Y/Y: 6.8 % V 6.6%E.

- CHINA DEC RETAIL SALES Y/Y: 7.4% V 8.0%E.

- CHINA DEC YTD FIXED URBAN ASSETS Y/Y: 3.0% V 2.9%E.

- China Dec Surveyed Jobless Rate: 5.1% v 5.0% prior (resumes posting youth unemployment data, ex-students).

- China Dec YTD Property Investment Y/Y: -9.6% v -9.5%e.

- (CN) China Dec New Home Prices M/M: -0.5% v -0.4% prior (6th straight decline).

- (CN) China AMC's Nomura Nikkei ETF warns investors of risk, to halt trading temporarily on Wed - financial press.

- China said to keep Jan LPR rates unchanged after MLF decision - China Securities Daily.

- China and EU officials said to discuss EV and liquor probes during meeting in Davos – press.

- China AMC's Japan ETF warns investors of risk, to halt trading temporarily on Wed - financial press.

- (CN) CHINA CONFIRMS MORE STIMULUS WITH CNY1T OF SPECIAL ULTRA-LONG SOVEREIGN BONDS - PRESS [**Note: would be 4th such sale in the past 26 years] (overnight update).

- Country Garden (2007.HK) Discloses it is in process of offshore liability restructuring; Determined to advance a holistic solution that ensures the long-term development of the Group (overnight update).

- China Premier Li Qiang: 2023 GDP growth seen at 5.2%; Chinese economy is making steady progress – Davos (overnight update).

- China Pres Xi: Urging prevention of systemic financial risks; Stress boosting high-quality development of financial sector (overnight update).

- Chinese banks reportedly tighten curbs on Russia after US sanctions order; Chinese banks said to stop providing any financial services to the Russian military industry regardless of the currency or the location of the transactions – press (overnight update).

- China PBOC sets Yuan reference rate: 7.1168 v 7.1134 prior.

- China PBOC Open Market Operation (OMO): Sells CNY547B in 7-day reverse repos; Net injects CNY527B v injects CNY659B prior (Net injects >CNY1.1T in 2 sessions).

Japan

- Nikkei 225 opens +0.6% at 35,850.

- Warren Buffett said to be further raising stakes in Japan trading companies - Nikkei (update).

- Japan's three largest shippers reportedly halting shipping routes through the Red Sea.

- Japan LDP party wants to toughen political funding law - Japanese press.

- Fujitsu (6702.JP) Co's European boss apologizes before UK MPs in discussing the company's knowledge of the faulty computer system (Horizon) responsible for the largest miscarriage of justice in British history - UK press (Fujitsu -4%).

- (JP) Japan BOJ Dec Quarterly Survey: 79.3% of Japanese households expect prices to rise one year from now v 86.8% in Sept Survey; Expect inflation to rise by avge +10.0% a year from now.

South Korea

- Kospi opens +0.1% at 2,501.

- South Korea Nov M2 Money Supply M/M: 0.9% v 0.3% prior.

- South Korea Pres Yoon urges tax reform in capital markets - Korea press.

- South Korea Financial Services Comm: Considering ways to boost stocks that trade below book value - Korea press.

- (RU) Russia Pres Putin to meet North Korean Foreign Min later today, Jan 16th - press.

Other Asia

- Singapore Dec Non-oil Domestic Exports M/M: -2.8% v 0.3% prior; Y/Y: -1.5% v 3.0%e.

- USD/TWD Taiwan's central bank sold USD on Tuesday to support depreciating Taiwan dollar - traders.

North America

- (US) Motiva Port Arthur (Texas) refinery [636K bpd capacity] reports unexpected interruption and or shutdown of several critical pieces of equipment - press.

- US Senate stopgap funding bill said to avert govt shutdown on Saturday wins enough votes to clear first procedural hurdle; Voting continues.

- (US) US major banks urge the Fed to completely overhaul a draft rule hiking bank capital - press.

- (US) JAN EMPIRE MANUFACTURING: -43.7 V -5.0E (lowest since May 2020 and lowest ever ex-pandemic, below all analysts' estimates); New Orders: -49.4 v -11.3 prior (lowest since pandemic); Prices Paid: 23.2 v 16.7 prior.

- (CA) CANADA DEC CPI M/M: -0.3% V -0.3%E; Y/Y: 3.4% V 3.4%E.

- (US) Fed's Waller (voter, hawk): Will be able to cut the policy rate this year as long as inflation doesn't rebound or stay high; No reason to move as quickly, to cut as rapidly as in the past; Policy path must be 'carefully calibrated, not rushed'.

Europe

- TSLA Cuts prices for Model Y Long Range in Germany to €49,990 from €54,990; Model Y Performance to €55,990 from €60,990 - company website
(EU) ECB's Nagel (Germany): Discussion about rate cuts is too soon - Davos.

- (EU) ECB's Simkus (Lithuania): Far less optimistic than markets on rate cuts, wage data is going to be very important.

- (EU) ECB's Muller (Estonia, hawk): Eurozone wage growth is not in line with the inflation target.

Levels as of 00:20 ET

- Nikkei 225 +0.2%; ASX 200 -0.3%; Hang Seng -3.3%; Shanghai Composite -0.8%; Kospi -2.4%.

- Equity S&P500 Futures -0.2%; Nasdaq100 -0.3%; Dax -0.4%; FTSE100 -0.7%.

- EUR 1.0865-1.0895; JPY 147.08-147.49; AUD 0.6563-0.6595; NZD 0.6129-0.6152.

- Gold -0.1% at $2,027/oz; Crude Oil -0.8% at $71.97/brl; Copper -0.4% at $3.7517/lb.