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Asia Econochat

 

 

 

Markets data:  Markets Data 17 December

  • China is casting Asia adrift. At least, when it comes to exchange rates. That’s the view of analysts pointing out the potential implications of China this month moving away from a managed peg to the dollar : Bloomberg News.
  • China’s economy, already in the midst of a half-decade deceleration, won’t arrest its downward trajectory until at least 2018: Bloomberg News.
  • While Governor Kuroda may provide hints about additional asset purchases or the renewal of loan-support programs, the chances of additional BOJ easing tomorrow are low: Yuki Masujima.
  • Reforms of state-owned enterprises in China could send small-scale metal producers into the arms of larger ones and reshape the way mining companies invest abroad: Yi Zhu, Bloomberg Intelligence.

WHAT TO WATCH:

The Federal Reserve raised interest rates for the first time in almost a decade, unanimously voting to set the new target range for the federal funds rate at 0.25 percent to 0.5 percent, while signaling that the pace of subsequent increases will be “gradual” and in line with previous projections.  New Zealand’s economy grew by 0.9 percent in the third quarter from the previous three months. Year-on-year GDP rose 2.3 percent. Japan updates on its trade balance for November, with analysts expecting a 449.7 billion yen deficit compared with a revised positive reading of 108.3 billion yen previously, 7:50 a.m.

ECONOMICS: Singapore‘s non-oil domestic exports are forecast to have increased by 1.5 percent year on year in November, compared with a 0.5 percent decline previously, 8:30 a.m. Australia reports on foreign exchange transactions in November, 8:30 a.m. The Philippines‘ central bank is forecast to leave its policy rate unchanged at 4 p.m. Taiwan and Indonesia (see chart below) announce their policy rate decisions.

GOVERNMENT: Chinese Premier Li Keqiang meets Russian counterpart DmitryMedvedev in Beijing to discuss increasing economic cooperation.

MARKETS: The U.S. dollar strengthened against the euro and the yen, while slipping against the Australian and New Zealand dollars after the Fed’s expected rate increase.

(All times local for Hong Kong.)  

EQUITY MONITOR:

  • Tighter rules on housing loans in South Korea should cause the economy to slow in the second half of 2016, though this is unlikely to trigger a sharp housing recession, says Samsung Securities. Private sector consumption growth should also ease in the second half, it adds.
  • Indonesia’s November trade deficit is a likely portent of a return to more sustained trade deficits over the course of 2016, according to ANZ. It says its estimate of a current-account deficit of 1.8 percent of GDP for 2016 looks “disproportionately optimistic,” and adds that it is reviewing this forecast.
  • A USD/JPY move below the 120 mark following the likely Fed liftoff could offer a good tactical opportunity to short the yen, says NAB. It adds that the uptrend line held since Sept. 2012 has provided good support at 119.
  • The Philippines’ central bank is likely to leave its policy rates unchanged at today’s meeting, says Citigroup. It says upbeat sentiment, strong third-quarter domestic demand and a lower jobless rate will probably be “neutralized” by a two-digit export downtrend and two-digit underemployment, and steady inflation expectations are likely to sustain the central bank’s neutral rate bias.
  • Maybank recommends going short CNY/INR on rallies toward a potential double-top of 10.5, targeting an initial move toward 10.2 before the next target at 10. It says an increasing growth differential between China and India and positive yield differential make the trade viable.
  • ANZ sees USD/MYR rising toward 4.4 by the end of 2016 and 4.42 by June 2017. It says the yuan’s new downward flexibility will encourage more Asian currency weakness.
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