New Zealand Nov Food Prices M/M

Asian Market Update: Equities, commodities boosted by foiled expectations of a China rate hike despite 28-month high November CPI

Economic Data
- (NZ) NEW ZEALAND NOV FOOD PRICES M/M: -0.6% V 2.2% PRIOR (6-month low and first decline in 3 months)

- (KS) SOUTH KOREA NOV EXPORT PRICE INDEX M/M: +1.2% V -1.7% PRIOR; Y/Y: 1.9% V 1.0% PRIOR; IMPORT PRICE INDEX M/M: +2.1% V -0.9% PRIOR; Y/Y: 8.2% V 8.1% PRIOR

- (UK) UK DEC RIGHTMOVE HOUSE PRICES M/M: -3.0% V -3.2% PRIOR (Second consecutive m/m drop; Fifth drop in 6 months); Y/Y: 0.4% V 1.3% PRIOR (14-month low)

Markets Snapshot (as of 12:30amET)
- Nikkei225 +0.4%

- S&P/ASX +0.2%

- Kospi +0.5%

- Taiex +0.3%

- Shanghai Composite +1.3%

- Hang Seng +0.3%

- Dec S&P Futures-0.1 % at 1,235

- Feb Gold +0.1% $1,386/oz

- Jan Crude oil +0.4% $88.14/brl

- Mar Copper +1.1% at $4.15

Overview/Top Headlines
- Asian equity markets are sharply higher as markets reassess cautious positioning in the wake of the weekend's release of November economic data from China against a more benign central bank action. Nikkei225 closed up nearly 1% and Shanghai Composite rose over 2% in the final hour. In commodities, Jan crude gained over 0.5% and Mar copper rose 1.3% - hitting a fresh multi-month high above $4.17. In currencies/fixed income, outflows from safehaven US treasuries boosted 10-yr yields above 3.37%, in turn helping USD/JPY above ¥84.10 and AUD/JPY to near 7-month highs around ¥83. In European majors, modest USD strength saw both EUR and GBP fall about 3- pips from Friday US session close around 1.3190 and 1.5780 respectively.

- Despite the highest CPI growth since Jul of 2008 and a 5-month high PPI, the PBoC abstained from tightening it's 1-yr lending rates for the 2nd time this year, showing continued preference to withdrawing liquidity through banks reserve requirement ratio with another 50bp tightening late on Friday. Several factors are being attributed to China central bank decision to keep its key policy rate unchanged. Food inflation - rising 11.7% y/y in November - was the strongest CPI component, while non-food showed a much more benign 1.9%. Local officials have claimed that November will mark a peak in food prices following govt measures to expand supply. According to China Daily, National Development and Reform Commission (NDRC) claimed Dec CPI is likely to fall back below 5% as vegetable and grain prices have started to stabilize. China's National Bureau of Stats (NBS) noted govt measures appear to be effective in the property sector, with housing prices rising at the slowest pace of 2010.

Commentary from Beijing policymakers also appeared to justify a rate hold.
PBoC advisor Li Daokui said inflation unlikely to surpass 5% in 2011, which dictates a more gradual policy tightening. Likewise, a former PBoC advisor and now a senior lawmaker Wu Xiaoling suggested he prefers RRR to official interest rate hikes because of extra-easy monetary policy in the US spurring speculative carry-seeking flows that would risk even higher inflation trends.

Speakers/Geopolitical/In the press
- (AU) Reserve Bank of Australia (RBA) Gov Stevens: Banking is now more competitive than in the 90s; Higher funding costs have had an impact on the competition

- (CH) Reportedly China Reserve Requirement Rate (RRR) hike that is due to expire this week will be extended for an additional 3-months - CNBC

- (KS) Bank of Korea Gov Kim: Rising wages and prices in China may push South Korea's domestic prices upwards; Higher core inflation expected in 2011 shows a growing demand side price pressure

- (HK) Hong Kong Govt is expected to maintain stamp duty on share transactions and a single platform bid policy in order to continue to control hot money - HK Standard (KS) Bank of Korea (BOK): Per capita income is expected to return to pre-crisis level of $20K thanks to a strong economy - Korean press

Equities
- (AU) Australia banking competition reforms announced: Banks may now may issue covered bonds; Boost oversight, Govt to invest A$4B into residential backed mortgage securities

- HMC: Aims for 80% growth in global auto sales by 2020 - Nikkei News

- NSANY: Delivers the first Leaf electric car to California; Backlog for the US stands at about 20K - Nikkei

- TEL.NZ: Was selected as the preferred bidder to build the New Zealand broadband network - NZ Herald

- China Southern Airlines Co: Will be flying to Auckland Airport through new routes; Could bring up to NZ$50M in new tourism to the country - NZ Herald

FX/Fixed Income/Commodities
- (CH) China's largest steel maker Baosteel increasing January prices on hot rolled steel by CNY260/ton or about 6% to CNY4,662/ton and cold rolled steel CNY200/ton (about 4%) to CNY5,736/ton

- (CH) China has ordered companies to freeze thermal coal prices for 2011 at 2010 levels to power stations and key
https://www.tradethenews.com/