Nikkei tests above 40K ahead of Fri BoJ decision, China a-share market supported by CSRC comments

Asia Market Update: Nikkei tests above 40K ahead of Fri BOJ decision; China A-share market supported by CSRC comments; US earnings and Trump still focal points.

General trend

- CSRC [China securities regulator] Head Wu Qing announces new measures to support investments into markets: There will be at least 'hundreds of billions of yuan' of new long-term capital for A-shares every year from state-owned insurance companies; To implement pilot scheme of insurers buying stock during H1 with 'scales of at least CNY100B'.

- China PBOC official Zou Lan: To expand the scope and increase the scale of liquidity tools to fund share purchases at the 'proper' time; Lowered requirements for stock buyback loans. [**Reminder Jan 2nd: (CN) China reportedly lowered bar for relending encouraging share buybacks - State TV].

- Hynix declines amid cautious outlook.

- SoftBank Group extends rise on US AI optimism.

- Fortescue drops after production update; Australian equities lag overall.

- Hyundai Motor had mixed results [Reports Q4 (KRW) Net 2.5T v 2.7Te, Op 2.82T v 3.2Te, Rev 46.6T v 44.6Te].

- Yen and Yuan quiet.

- (US) President Trump: Does not care if Congress does 1 or 2 bills for reconciliation [**Reminder Jan 21st: (US) Reportedly GOP senators are hopeful that Trump will abandon his “one big, beautiful bill” preference and see the wisdom of two bills; This looks unlikely; Trump told Republican senators over the weekend that he still wants one bill - Punchbowl].

- Japan Dec CPI data also due on Fri. in addition to the BOJ decision [reminder Dec 27th: JAPAN DEC TOKYO CPI Y/Y: 3.0% V 2.9%E; CPI (EX-FRESH FOOD) Y/Y: 2.4% V 2.5%E (highest Headline since Oct 2023 of 3.3% and highest Core since Aug of 2.4%)].

- Will the BOJ issue forward guidance?.

- Singapore Central Bank (MAS): To release Jan monetary policy statement on Jan 24th [Singapore Dec CPI M/M: 0.4% v 0.0% prior; Y/Y: 1.6% v 1.5%e; CPI Core Y/Y:1.8 % v 1.7%e].

- Tesla to raise prices in Canada.

Headlines/economic data

Australia/New Zealand

-ASX 200 opens -0.2%, 8,417.

China/Hong Kong

-Hang Seng opens +0.5% at 19,881.

-Shanghai Composite opens +0.8% at 3,237.

-China Securities Regulator (CSRC): China to guide listed companies to increase share buybacks and implement policies for multiple dividends within a year.

-China PBOC Open Market Operation (OMO): Injects CNY480B in 14-day reverse repos.

-China PBOC sets Yuan reference rate: 7.1708 v 7.1696 prior.

Japan

- Nikkei 225 opens +0.4% at 39,810.

-Japan to issue less refinancing bonds in 2027 [7-year low] – financial press; Cites the declining amount of short-term notes reaching maturity.

-BOJ futures currently pricing 92.5% chance for 25bps rate hike this week v 91% d/d [**Note: would be the first since July 2024 and biggest rate hike by BOJ so far in current tightening cycle]; According to Ueda Yagi survey [large brokerage firm], 97% of 144 respondents expect a rate hike on Fri [highest level since the survey started in Jan 2016] – US financial press (**Reminder Dec 19 2024: Japan money market broker Ueda Yagi’s survey saw 9% chance of a rate hike in Dec)

-JAPAN DEC TRADE BALANCE: +¥130.9B V -¥68.5BE.

-Japan releases weekly flows data [period ended Jan 17th]: Foreign buying of Japan equities: -¥66.1B v +¥313.3B prior; Japan buying of foreign bonds: +¥819.3B v +¥756.7B prior.

- Japan said to vet investments by Chinese firms deemed to be under state influence - Nikkei.

Korea

-Kospi opens -0.2%.

-SOUTH KOREA Q4 ADVANCE GDP Q/Q: 0.1% V 0.2%E; Y/Y: 1.2% V 1.4%E.

-Hynix: Reports Q4 (KRW) Net 8.0T v 6Te, Rev 19.8T v 19.7Te; Guides Q1 DRAM low-teen % decrease q/q; Guides Q1 NAND shipments high teens % decrease q/q.

-South Korea Jan Business Manufacturing Survey: 85.9 v 86.9 prior.

- South Korea Corruption Investigation Office (CIO) to transfer Yoon case to the Prosecutors Office - Yonhap [**Reminder Dec 18 2024: (KR) South Korea prosecutors to transfer Yoon's case to CIO - South Korea press].

Other Asia

-HTC Corp [2498.TW]: To sell part of XR unit to Google for $250M - financial press.

North America

-(US) President Trump: Does not care if Congress does 1 or 2 bills for reconciliation [**Reminder Jan 21st: (US) Reportedly GOP senators are hopeful that Trump will abandon his “one big, beautiful bill” preference and see the wisdom of two bills; This looks unlikely; Trump told Republican senators over the weekend that he still wants one bill - Punchbowl].

-(US) Reportedly US White House is planning to temporarily halt US funding of virus research deemed risky, seeking to pause funding for 'gain-of-function' - WSJ.

-(US) Treasury $13B 20-year bond reopening draws 4.900% v 4.686% prior, bid-to-cover 2.75 v 2.50 prior and 2.67 over last 8 auctions.

-(US) ‘Fast spreading’ wildfire in Los Angeles county prompts evacuations; The Hughes Fire broke out north of Santa Clara in Castaic earlier on Wed – US financial press; The fire has scorched >8,000 acres and is 0% contained.

-ADM [ADM]: ADM declares force majeure along US Gulf amid snowfall - US financial press.

- Tesla [TSLA]: Model 3 prices to increase up to C$9K (~+21%), Model Y to increase up to C$4K; Model S and Model X prices will increase by C$4K, effective Feb 1st.

Europe

-(EU) Trump: Naming Andrew Puzder as the US Ambassador to the EU.

Levels as of 00:20 ET

- Nikkei 225, +0.9%, ASX 200 -0.6% , Hang Seng +0.4%; Shanghai Composite +1.3% ; Kospi -0.8%.

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

- EUR 1.0416-1.0396 ; JPY 156.71-156.28 ; AUD 0.6281-0.6266 ;NZD 0.5673-0.5659.

- Gold -0.3% at $2,761/oz; Crude Oil -0.3% at $75.25/brl; Copper -0.8% at $4.2622/lb.