Monday's Asian Market Update

• (CN) CHINA NOV MANUFACTURING PMI: 50.6 V 50.8E (7-month high; 2nd consecutive expansion)
• (CN) CHINA NOV HSBC MANUFACTURING PMI: 50.5 V 50.4E (first expansion in 13 months)
• (CN) CHINA NOV NON-MANUFACTURING PMI: 55.6 V 55.5 PRIOR (9th month of expansion)
• (JP) JAPAN NOV VEHICLE SALES Y/Y: -3.3% V -9.0% PRIOR
• (JP) JAPAN OCT LOANS & DISCOUNTS CORP M/M: 0.3% V 0.3% PRIOR
• (JP) JAPAN Q3 CAPITAL SPENDING: 2.2% V 4.4%E (1-year low); CAPITAL SPENDING EX-SOFTWARE: 2.4% V 1.0%E
• (AU) AUSTRALIA OCT RETAIL SALES M/M: 0.0% V 0.4%E (3-month low)
• (AU) AUSTRALIA NOV RPDATA-RISMARK HOUSE PX Y/Y: 0.0% V -1.0% PRIOR
• (AU) AUSTRALIA NOV TD SECURITIES INFLATION M/M: -0.1% V +0.1% PRIOR (first decline in five months); Y/Y: 2.5% V 2.4% PRIOR
• (AU) AUSTRALIA Q3 COMPANY OPERATING PROFIT Q/Q: -2.9% V -3.0%E (4th consecutive quarter of decline); INVENTORIES Q/Q: 1.1% V 0.4%E
• (AU) AUSTRALIA NOV ANZ JOB ADS M/M: -2.9% V -4.6% PRIOR (8th consecutive month of decline)
• (AU) AUSTRALIA NOV AIG PERFORMANCE OF MANUFACTURING INDEX M/M: 43.6 V 45.2 PRIOR (9th month of contraction; 4-month low)
• (NZ) NEW ZEALAND Q3 TERMS OF TRADE INDEX Q/Q: -3.2% V -1.5%E (3- year low)
• (KR) SOUTH KOREA NOV HSBC MANUFACTURING PMI: 48.2 V 47.4 PRIOR
• (KR) SOUTH KOREA NOV EXTERNAL TRADE BALANCE: $4.5B V $3.7B prior
• (KR) SOUTH KOREA NOV CONSUMER PRICE INDEX (CPI) M/M: -0.4% V 0.0%E; Y/Y: 1.6% V 2.0%E; CORE CONSUMER PRICE INDEX: 1.3% V 1.5% PRIOR
• (IN) INDIA NOV HSBC MANUFACTURING PMI: 53.7 V 52.9 PRIOR
• (ID) INDONESIA NOV HSBC MANUFACTURING PMI: 51.5 V 51.9 PRIOR
• (ID) INDONESIA NOV INFLATION M/M: 0.1% V 0.3%E; Y/Y: 4.3% V 4.6%E; CORE INFLATION M/M: 4.4% V 4.6%E
• (ID) INDONESIA OCT TOTAL TRADE BALANCE: -$1.5B V +$466ME
• (TH) THAILAND NOV CONSUMER PRICE INDEX (CPI) M/M: -0.4% V 0.1%E; Y/Y: 2.7% V 3.2%E; CORE CPI Y/Y: 1.9% V 1.9%E
• (VN) VIETNAM NOV HSBC MANUFACTURING PMI: 50.5 V 48.7 PRIOR
• (TW) TAIWAN NOV HSBC MANUFACTURING PMI: 47.4 V 47.8 PRIOR
• (UK) UK NOV HOMETRACK HOUSING SURVEY M/M: -0.1% V -0.1% PRIOR; Y/Y: -0.3% V -0.4% PRIOR
• (UK) UK NOV LLOYDS BUSINESS BAROMETER: 17 V 17 PRIOR

• Nikkei225 +0.6%
• S&P/ASX +0.5%
• Kospi +0.3%
• Shanghai Composite -0.3%
• Hang Seng +0.1%
• Dec S&P500 +0.2% at 1,417
• Feb gold +0.5% at $1,721/oz
• Jan Crude Oil +0.3% at $89.16/brl

Asian equity markets opened the week mixed as the official China manufacturing PMI data reached a seven-month high but still fell short of expectations. Shanghai Composite is the only index in the red after trading positive for a brief period in early trade. Nikkei225 pared some of its early gains late in the day as JPY firmed, with investors taking note of overstretched net short yen positions (multi-year high) reported in the latest CFTC data.

EUR/USD pared the late session selloff on Friday that followed Moody's downgrade of ESM/EFSF. News out of Europe over the weekend was likewise mixed. German press said Chancellor Merkel may consider a "haircut" on Greek debt holdings within a few years if Greek financial situation improves. In Spain, PM Rajoy warned it may be difficult to achieve 6.3% deficit to GDP target in 2012, noting the EMU request go from 8.9% to 6.3% in only one year is challenging. Similarly, UK fin min Osborne warned austerity may persist longer, as Britain could also miss its debt targets.

Japan PM Noda attempted to parry the charges of the LDP with just two weeks to go to elections, warning that BoJ should not finance govt debt or be forced to purchase bonds on the open market. LDP remains firmly in the lead ahead of the national polls, while the ruling DPJ party has returned to second place in the polls, now just 5pts behind. Fin Ministry's Nakao said caution should be paid to downside risk for economy and the strength of the yen is partly due to speculation. USD/JPY pair retreated below ¥82.30 late in the day - session lows.

AUD was once again sold across the board, with much of the weakness coming after the disappointing retail sales data. Oct data came in flat -- a three-month low -- briefly sending AUD/USD below $1.04. Fixed income markets are now pricing in a 90% chance of an RBA rate cut tomorrow. In other data from down under, AiG manufacturing saw its ninth consecutive month of contraction, further boosting the case for more easing, but TD securities inflation for Nov saw annual inflation in the middle of the RBA target range. TD economists saw a much closer case for the RBA noting they cannot "identify a smoking gun for a near-term policy adjustment."

Stateside, the fiscal cliff battle between the White House and the Republican-controlled House of Reps continued to be waged in the weekend media. Treas Sec Geithner reiterated there will be no deal to avert the fiscal cliff without higher tax rates on wealthiest Americans, while House Speaker Boehner noted that the talks to resolve the "fiscal cliff" are going "nowhere".

Currencies/Fixed Income/Commodities

• (AU) Fixed income markets now pricing in about a 90% chance of a 25bp rate cut by the RBA at its meeting tomorrow
• (AU) Australia Newcastle weekly coal exports for week ended Dec 3rd: +56% w/w
• AUD/USD: Falls about 20 pips below $1.0410 after weaker than expecter retail sales data
• SLV iShares Silver Trust ETF daily holdings fall to 9,757 tons from 9,780 tons (lowest level since 9,734 on Sept 5th) - update as of Nov 30th
• GLD: SPDR Gold Trust ETF daily holdings rise by 1.8 tons to 1,348.8 tons (record high) - update as of Nov 30th

• (CN) JPMorgan economist: China manufacturing data suggests "recovery in industrial activity appears to be gaining traction, supported by policy easing and stabilization in the housing market" - China Daily
• (CN) Former China stats bureau economist Yao: China 2012 inflation to be kept within target of 4% - Chinese press
• (CN) According to Soufun, China Nov home prices increased 0.3% m/m - Chinese press
• (CN) China Fin Min Xie: China to examine the gradual expansion of property taxes - Chinese press
• (CN) PBoC Dep Gov Yi Gang: China 2013 CPI may be below 4% - Chinese press
• (JP) According to a survey, Japan LDP (opposition) continues to hold a lead among prospective voters ahead of Dec 16th national elections at 20% vs 15% for the ruling DPJ party - Asahi News
• (JP) Japan PM Noda: Having BoJ finance govt debt is prohibited as method; BoJ should not be forced to purchase bonds on the open market - financial press
• (JP) Japan Vice Fin Min Nakao: Corporate data confirm econ is weak on the back of slowing global economy - financial press
• (JP) FT comments on hedge funds increasingly positioning into a "short Japan" trade
• (JP) Survey finds Japan firms planned FY12 capital investment remains on track - Nikkei News
• (AU) Australia shadow Fin Min Cobb: Slowing economy is a concern; May lead RBA to cut rates further
• (NZ) New Zealand Treasury Publishes Monthly Economic Indicators; Economy rebounding in Q4; slow down in Q3 was a temporary blip
• (NZ) According to Realestate.co website, New Zealand Nov property listings rose about 7% m/m - financial press
• (KR) According to the Financial Supervisory Service (FSS), household debt in danger of default has risen to KRW25.6T or about 4.8% of the total mortgage loans - Korean press
• (KR) North Korea said to be progressing on missile launch preparations; missile placed on launch pad - Korean press
• (KR) According to North Korea's news agency KCNA, a new launch of long range rocket and satellite is being planned for Dec 10-22nd
• (HK) Hong Kong Financial Secy Tsang: FY growth estimates to be 1.2%; Q3 growth is weak due to trade
• (SG) Singapore PM Lee: 2-3% annual GDP is more sustainable; No longer aiming for growth rates of years past - Singapore press
• (EU) ECB's Noyer: Global economic recovery appears sluggish, uncertain, and fragile; weak trend expected to continue in coming months - financial press
• (IT) Democratic Party leader Pier Luigi Bersani wins second-round runoff vote in the primary held by Italian center-left; Seen as likely the winner ahead of the Mar-Apr 2013 national elections
• (EG) Egypt Pres Morsi announces a December 15th referendum on his controversial draft of constitution - financial press
• (US) Fed's Kocherlakota (non-voter): Inflation likely to remain at or below 2% for the next 1-2 years
• (US) Fed's Plosser (hawk; not an FOMC voter): Would be very comfortable with an inflation-only Fed mandate

• TM: Said to anticipate production in China to return to 2012 levels by the spring of 2013 - China Daily
• TM: Sales in China in Nov fell to 60.0K vehicles vs 81.8K in Oct - Chinese press
• Sharp 6753.JP: Sold 3 of its facilities involved in manufacture of TVs to Foxconn - Japan press
• Suzuki 7269.JP: India unit reports Nov sales +12.0% y/y at 103.2k units - Japan press
• WPL.AU: Enters into major gas discovery offshore Israel; Initial upfront payment of $696M for 30% stake in Leviathan - financial press
• NAB.AU: Faces investor frustration ahead of AGM, threatens to vote against CFO reelection - AFR
• RIO: To limit zircon production next year; may exit $2B diamond business - AFR