Asia Breakfast Briefing - 30 Nov 2017 ASIAN PREVIEWHeavy Asian docket with

ASIAN PREVIEW

Heavy Asian docket with CN mfg PMI, BoK policy decision, IN GDP

EU and DE unemployment rate will be the European highlights

US to feature personal spending/income, PCE price index

JP unemployment and CPI late into Europe"s evening

Viewpoint: Kiwi"s FSR bounce blunted by tighter foreign investment rules

Focus Comment: Not tax optimism but positional adjustments, no shift in macro bias

China Nov NBS manufacturing (prev 51.6, f/c 51.2) and non-manufacturing PMI (prev 54.3, prev 54.2) due on Thursday 30 Nov 01:00GMT

China Nov Caixin manufacturing PMI (prev 51.0, surv 51.0) due Friday 01 Dec 2017 01:45GMT

We mentioned that robust PMIs in Q3 despite tighter financial conditions and curbs on the property market were suspected to be the results of producers taking advantage of high base metal prices to ramp up industrial/mfg output ahead of winter curbs as well as possibly politically-motivated incentives to boost growth ahead of the CCP congress. With the conclusion of the CCP congress, Oct"s PMIs thus slipped with small and medium enterprises, already exhibiting early signs of weakness in the Caixin survey, taking a notable brunt of the retreat.

Looking forward Nov, we thus expect the PMIs to continue reflecting the slowing sentiments in China, especially as higher yields start weighing on corporate profitability. Early indicators such as S&P Global Platts China Steel Sentiment Index was flat in Nov, while the World Economics Sales Managers index came in at a 13mth low. That said, there are signs that China"s attempts to engineer a gradual retreat, such as the easing of the RRR to facilitate better credit conditions for smaller firms, may be working as the Standard Chartered China Small Medium Enterprises Confidence Index saw broad improvements across most subcomponents. As such, we expect a continued but gradual decline in the PMIs.

BANK OF KOREA RATE DECISION due Thu 30 Nov f/c 1.5%; last 1.25%

The BOK together with a handful of central banks, is expected to be one of the first to make tightening moves after taking on a hawkish tone in recent times. The last meeting saw a dissenting member seeking a rate hike while another member said the benchmark rate was below neutral. Since then, bank lending and household debt had continued its upward climb while consumer sentiment reached levels last seen in 2010. With the benchmark 7D repo rate at 1.25% and core inflation above that since Jan this year, there is one more CPI print for Nov before the BOK "s rate decision is due. Expectations are for 1.8% y/y matching October"s print, while core CPI is expected to climb to 1.7% y/y from 1.3%. In fact, Bloomberg economists surveyed are skewed towards a 25bps rate hike, aided by an earlier IMF report that sees even 2 rate hikes leaving policy still accommodative. Even if there is no action at this meeting, it seems clear that all things being equal, the BOK will act before Q1 of 2018 is over. The only thing holding back the BOK would be the effect of a tightening on the strength of the KRW, which has gained over 11% YTD.

INDIA Q3 GDP/GVA due Thurs 30 Nov f/c 6.5%/6.3%; last 5.7%/5.6%

Having been disappointed by the prints twice in a row, investor are betting for a 3rd time charm as estimates from economists polled by Bloomberg are firmly in the greater-than-6% camp. The previous disappointments were laid at the door of demonetization as well as GST implementation, which crippled the cash and small business segments more severely than initially estimated. However, things are seen heading back to normal now with amendments in the GST structure further adding to tail winds to the economy. At the very least, some analysts expect a favourable base effect to boost the number. While there are signs of firming activity during the time period, they all seem to come in the later part of the quarter. Additionally, oil prices started its climb from July while crops were lost to heavy rain, possibly crimping agriculture growth. A good print will bring good cheer to the markets, adding to positive sentiment from bank recap plans and Moody"s upgrade. However, if it does not happen in Q3, there is always Q4.

Japan Oct prelim industrial production due Thu Nov 30; BBG f/c 7.2% y/y, last 2.6% y/y

Japan"s final industrial output print for Sep came in came in at 2.6% on a y/y NSA basis and -1.0% on a m/m SA basis with BBG estimates now priming for the prelim Oct print to come in very strong at 7.2% on a y/y NSA basis and 1.9% on a m/m SA basis.

The strong y/y BBG forecast for the prelim Oct print is likely the result of a combination of comparatively low base effects (base period Oct 2016 saw a decline of 4.60 index points from Sep 2016, as compared to the 10-year average decline of 2.10 index points for the same period) and a strong Oct showing in the Nikkei manufacturing PMI space (which is highly correlated with Japan"s industrial production prints and is released earlier than said prints as well).

BBG estimates, if materialized, would signal a break away from somewhat strong seasonal effects on the data series which tend to favour m/m declines in Oct.

NZ ANZ Nov Business Confidence due Thu Nov 30; last -10.1

New Zealand"s ANZ business confidence turned negative for the first time in 2 years with a -10.1 reading for Oct, though other key survey results such as those in employment, investment and activity outlook were still kept in the green, albeit with declines seen likewise in the headline print. In truth, the series" Oct print is deemed to be largely irrelevant by the time it was released given how the underlying survey data was likely to be tainted with "noise" from NZ"s pre-elections uncertainty.

That said, it is deemed for the Nov print to be a more indicative expression of NZ"s businesses" perception of a Labour-NZ First coalition government setting, though the element of doubt surrounding the effectiveness and plausibility of the new NZ government"s policies may still linger for the next few prints ahead.

Australia Q3 private capital expenditure (prev 0.8%, f/c 0.4%), Oct private sector credit (prev 5.4%y/y, 0.3%m/m f/c 0.5%m/m) due Thursday 30 Nov 12:30GMT

Private capital expenditure is one of the key ingredients needed to boost productivity, employment and most importantly wages in Australia, which would in turn help alleviate high household debts and boost inflation, paving the way for higher rates in the country. It is also the key input in GDP and as such will be closely watched on Thursday. Q3 is expected to come in at 1.0%q/q, given strong business conditions that should provide firms with the capacity to invest. The retreat in mining investments has also been slowing, although the biggest drag would likely be from the slowdown in the engineering sector as projects near completion.

Japan Oct Nationwide CPI due Thu 30 Nov; BBG f/c 0.2% y/y, last 0.7% y/y

Japan"s headline CPI print came in at 0.7% on a y/y basis for Sep, with CPI ex fresh food and CPI ex fresh food, energy coming in at 0.7% and 0.2% respectively. BBG consensus estimates currently prime for Oct"s y/y headline print to come in at a mere 0.2%, with Oct"s CPI ex fresh food expected to come in at 0.8% and CPI ex fresh food, energy expected to come in at 0.2%.

A possible factor influencing the stark contrast between the forecasted Oct headline print and the Oct ex fresh food print lies in the spike in Japan"s fresh food CPI index from Sep 2016 to Oct 2016, which would exert dampeners on the headline CPI print relative to the ex fresh food prints due to net expected higher base effects in the former.

Conversely, the likely reason for Japan"s Oct y/y CPI ex fresh food, energy print BBG forecast being much lower than its Oct y/y ex fresh food BBG forecast is likely due to the exclusion of Japan"s energy CPI index, which still stands to gain significantly from relatively low base effects from a year ago, though lifts from said base effects are set to dissipate over time.

OVERNIGHT SESSION WRAPS

US FX Close

EUR/USDUSD/JPYGBP/USDAUD/USDUSD/CADDOWDXYOPEN1.1937111.211.33480.76401.2682+103.9792.660HIGH1.1866112.151.34480.75821.2874CLOSED93.435LOW1.1818111.581.33750.75521.2805@93.128CLOSE1.1851111.871.34110.75751.285923940.6893.231

Gbp/Usd rose to a fresh two-month high above the 61.8% retracement of the 1.3657/1.3027 decline at 1.3416 on continued optimism stemming from Tuesday"s report of an initial agreement on terms between the UK and the EU for the “Brexit divorce bill". Gbp/Jpy rose the most in 5.5 weeks while breaking cleanly above the 20 DMA to probe the +2 SD upper Bollinger band. Gbp/Aud rose for the tenth time in eleven days to a new 14.5-month high. Aud/Usd fell for the fourth consecutive session while failing to close above the 2+ month falling trendline off .8102. Usd/Jpy broke above a minor 4-session range to probe the prior 111.48/111.65 rising trendline at 111.98, before paring gains. The USD Index eased off earlier gains to leave a spinning top candle after the release of mixed data which included better-than-expected Pending Home Sales, QoQ GDP and QoQ PCE data along with disappointing MBA Mortgage Applications, Personal Consumption and GDP Price Index data. The Fed"s Beige book commentary was in line with expectations and offered little impetus to push the Greenback in either direction. Usd/Cad rose to a 3.5-week high above the 1.2917/1.2837 falling trendline and the 21 November 1.2837 minor reaction high as WTI Crude Oil fell over 1.0% to test the 20 DMA. Thursday"s calendar includes Initial Jobless/Continuing Claims, Personal Income/Spending, PCE and Chicago Purchasing Manager data along with Fedspeak from Kaplan.

US Treasury Close

10-YEARDec TENDec BONDDec S&PJan 0IL2/105/303/10/30HIGH99-12+

125-03+154-222634.0058.3061.873.27.6LOW98-23+124-16+152-282620.0056.7556.869.04.4LAST98-29

124-23153-102625.2057.3860.972.37.0CHANGE-13/32-8/32-31/32-0.80-0.61+3.2+2.6+1.7

TREASURIES CLOSE 3:00PM Prices were under pressure throughout the US session with the only buying coming from day trade short covers. The sidelines are very crowded now due to month end restrictions, which did impact liquidity today and will Thursday. Recent auction paper is nicely underwater, while curve profit taking was another issue for the long end. the complex finished with large losses and a moderate bear steepening. Some techs note that the key 18-day support zone caved easily, which flipped the long end near term trend neutral. However, the 50-day zone held, but barely. We favor a flat stance overnight. JK

DAY AHEAD

Time (GMT)CtyEventPeriodSurveyPrior29/11/17 21:45NZBuilding Permits MoMOct---2.30%29/11/17 23:00SKIndustrial Production SA MoMOct0.20%0.10%29/11/17 23:00SKIndustrial Production YoYOct3.00%8.40%29/11/17 23:00SKCyclical Leading Index ChangeOct---0.229/11/17 23:50JNIndustrial Production MoMOct P1.80%-1.00%29/11/17 23:50JNIndustrial Production YoYOct P7.10%2.60%29/11/17 23:50JNJapan Buying Foreign BondsNov-24--￥231.3b29/11/17 23:50JNJapan Buying Foreign StocksNov-24--￥330.9b29/11/17 23:50JNForeign Buying Japan BondsNov-24---￥285.1b29/11/17 23:50JNForeign Buying Japan StocksNov-24---￥324.5b29-11-17GECPI Baden Wuerttemberg MoMNov---0.20%29-11-17GECPI Baden Wuerttemberg YoYNov--1.50%29-11-17PHMoney Supply M3 SRF YoYOct--14.50%29-11-17PHBank Lending Net of RRPs YoYOct--21.10%29-11-17PHBank Lending YoYOct--20.10%30/11/17 00:00NZANZ Activity OutlookNov--22.230/11/17 00:00NZANZ Business ConfidenceNov---10.130/11/17 00:00AUHIA New Home Sales MoMOct---6.10%30/11/17 00:01UKGfK Consumer ConfidenceNov-11-1030/11/17 00:01UKLloyds Business BarometerNov--2630/11/17 00:30AUPrivate Sector Credit MoMOct0.40%0.30%30/11/17 00:30AUPrivate Sector Credit YoYOct5.30%5.40%30/11/17 00:30AUPrivate Capital Expenditure3Q1.00%0.80%30/11/17 00:30AUBuilding Approvals MoMOct-1.00%1.50%30/11/17 00:30AUBuilding Approvals YoYOct14.10%0.20%30/11/17 01:00CHManufacturing PMINov51.451.630/11/17 01:00CHNon-manufacturing PMINov--54.330/11/17 01:00CHSwift Global Payments CNYOct--1.85%30/11/17 02:00SICredit Card Billings SGDOct--4488.9m30/11/17 02:00SICredit Card Bad Debts SGDOct--23.0m30/11/17 02:00SIMoney Supply M2 YoYOct--5.40%30/11/17 02:00SIMoney Supply M1 YoYOct--9.20%30/11/17 02:00SIBank Loans and Advances YoYOct--6.20%30/11/17 02:00CHBloomberg Nov. China Economic Survey

30/11/17 03:00THMfg Production Index ISIC NSA YoYOct3.20%4.21%30/11/17 03:00THCapacity Utilization ISICOct--63.5630/11/17 04:00JNVehicle Production YoYOct--1.70%30/11/17 05:00JNHousing Starts YoYOct-2.80%-2.90%30/11/17 05:00JNAnnualized Housing StartsOct0.952m0.952m30/11/17 05:00JNConstruction Orders YoYOct---11.60%30/11/17 07:00GERetail Sales MoMOct0.30%0.50%30/11/17 07:00GERetail Sales YoYOct2.80%4.10%30/11/17 07:00UKNationwide House PX MoMNov0.10%0.20%30/11/17 07:00UKNationwide House Px NSA YoYNov2.70%2.50%30/11/17 07:30THExports YoYOct--13.40%30/11/17 07:30THExportsOct--$21873m30/11/17 07:30THImports YoYOct--6.50%30/11/17 07:30THImportsOct--$16473m30/11/17 07:30THTrade BalanceOct--$5400m30/11/17 07:30THBoP Current Account BalanceOct$3000m$6287m30/11/17 07:30THBoP Overall BalanceOct--$4578m30/11/17 07:45FRCPI EU Harmonized MoMNov P0.10%0.10%30/11/17 07:45FRCPI EU Harmonized YoYNov P1.20%1.20%30/11/17 07:45FRCPI MoMNov P0.10%0.10%30/11/17 07:45FRCPI YoYNov P1.20%1.10%30/11/17 07:45FRPPI MoMOct--0.50%30/11/17 07:45FRPPI YoYOct--2.10%30/11/17 08:00SPGDP QoQ3Q F0.80%0.80%30/11/17 08:00SPGDP YoY3Q F3.10%3.10%30/11/17 08:30HKRetail Sales Value YoYOct4.90%5.60%30/11/17 08:30HKRetail Sales Volume YoYOct4.50%5.50%30/11/17 08:55GEUnemployment Change (000"s)Nov-10k-11k30/11/17 08:55GEUnemployment Claims Rate SANov5.60%5.60%30/11/17 09:00SPCurrent Account BalanceSep--2.6b30/11/17 09:00ITUnemployment RateOct P11.10%11.10%30/11/17 09:30SLCPI YoYNov7.50%7.80%30/11/17 09:30SLCPI Moving Average YoYNov--6.10%30/11/17 10:00ECUnemployment RateOct8.90%8.90%30/11/17 10:00ITCPI NIC incl. tobacco MoMNov P0.00%-0.20%30/11/17 10:00ITCPI NIC incl. tobacco YoYNov P1.10%1.00%30/11/17 10:00ITCPI EU Harmonized MoMNov P0.00%0.00%30/11/17 10:00ITCPI EU Harmonized YoYNov P1.20%1.10%30/11/17 10:00ECCPI Estimate YoYNov1.60%1.40%30/11/17 10:00ECCPI Core YoYNov A1.00%0.90%30/11/17 11:00INFiscal Deficit INR CroreOct---2610730/11/17 11:00ITPPI MoMOct--0.30%30/11/17 11:00ITPPI YoYOct--2.00%30/11/17 11:30INEight Infrastructure IndustriesOct--5.20%30/11/17 12:00INGVA YoY3Q6.20%5.60%30/11/17 12:00INGDP YoY3Q6.40%5.70%30/11/17 13:30USInitial Jobless ClaimsNov-25240k239k30/11/17 13:30USContinuing ClaimsNov-181890k1904k30/11/17 13:30USPersonal IncomeOct0.30%0.40%30/11/17 13:30USPersonal SpendingOct0.30%1.00%30/11/17 13:30USReal Personal SpendingOct0.20%0.60%30/11/17 13:30USPCE Deflator MoMOct0.10%0.40%30/11/17 13:30USPCE Deflator YoYOct1.50%1.60%30/11/17 13:30USPCE Core MoMOct0.20%0.10%30/11/17 13:30USPCE Core YoYOct1.40%1.30%30/11/17 14:45USChicago Purchasing ManagerNov6366.230/11/17 14:45USBloomberg Consumer ComfortNov-26--51.730/11/17 21:45NZTerms of Trade Index QoQ3Q1.30%1.50%30/11/17 22:00AUCBA Australia PMI MfgNov--55.530/11/17 22:30AUAiG Perf of Mfg IndexNov--51.130/11/17 23:00AUCoreLogic House Px MoMNov--0.00%30/11/17 23:00SKGDP SA QoQ3Q F1.40%1.40%30/11/17 23:00SKGDP YoY3Q F3.60%3.60%30/11/17 23:00SKCPI MoMNov0.00%-0.20%30/11/17 23:00SKCPI YoYNov1.80%1.80%30/11/17 23:00SKCPI Core YoYNov1.70%1.30%30/11/17 23:30JNJobless RateOct2.80%2.80%30/11/17 23:30JNJob-To-Applicant RatioOct1.521.5230/11/17 23:30JNOverall Household Spending YoYOct-0.30%-0.30%30/11/17 23:30JNNatl CPI YoYOct0.20%0.70%30/11/17 23:30JNNatl CPI Ex Fresh Food YoYOct0.80%0.70%30/11/17 23:30JNNatl CPI Ex Fresh Food, Energy YoYOct0.20%0.20%30/11/17 23:30JNTokyo CPI YoYNov-0.10%-0.20%30/11/17 23:30JNTokyo CPI Ex-Fresh Food YoYNov0.60%0.60%30/11/17 23:30JNTokyo CPI Ex-Fresh Food, Energy YoYNov0.20%0.10%30/11/17 23:50JNCapital Spending YoY3Q3.20%1.50%30/11/17 23:50JNCapital Spending Ex Software3Q3.10%0.60%30/11/17 23:50JNCompany Profits3Q18.40%22.60%30/11/17 23:50JNCompany Sales3Q--6.70%30-11-17SKBoK 7-Day Repo RateNov-301.50%1.25%30-11-17IDMoney Supply M2 YoYOct--10.90%30-11-17IDMoney Supply M1 YoYOct--15.80%30-11-17MUHotel Occupancy RateOct--86.630-11-17HKBudget Balance HKDOct---4.7b30-11-17HKMoney Supply M1 HKD YoYOct--13.40%30-11-17HKMoney Supply M2 HKD YoYOct--13.20%30-11-17HKMoney Supply M3 HKD YoYOct--13.20%

Central Bank Watch

Time (GMT)CtyEventVoterBias30/11/17 00:00JNBOJ Iwata makes a speech in Tokyo

30/11/17 01:30JNBOJ Harada makes a speech in Fukushima

30/11/17 08:00ECECB Executive Board Member Yves Mersch Speaks in RomeYesSlightly hawkish30/11/17 08:00ITECB"s Mersch, Bank of Italy Governor Visco Speak at Conference

30/11/17 10:00ECECB Executive Board member Praet Lectures in BrusselsYesCautiously optimistic30/11/17 17:30USFed"s Quarles Speaks on Payments Systems in ClevelandYesNeutral30/11/17 18:00USFed"s Kaplan Speaks in DallasYesNeutral30/11/17 18:10UKBOE Financial Policy Committee"s Sharp Speaks in London

Auctions

Time (GMT)CtyEventPrev Avg YieldB/C30/11/17 01:30CHBeijing to Sell CNY3.83364 Bln 3Y Bonds (2017-GEN-6)

30/11/17 01:30CHBeijing to Sell CNY117.4 Mln 10Y Bonds (2017-GEN-7)

30/11/17 02:30CHBeijing to Sell CNY2.5 Bln 3Y Bonds (2017-SPE-11)

30/11/17 02:30CHBeijing to Sell CNY7.62 Bln 10Y Bonds (2017-SPE-12)

30/11/17 03:45JNJapan to Sell 2-Year Bonds-0.14%5.933x30/11/17 09:30INIndia to Sell INR80 Bln 6.79% 2027 Bonds

30/11/17 09:30INIndia to Sell INR20 Bln 7.73% 2034 Bonds

30/11/17 09:30INIndia to Sell INR20 Bln 7.06% 2046 Bonds

Destinations: