Christmas 25 Dec 2017


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In Portfolioticker today

  • The portfolio today
  • News
  • flag_japan Japan Update
  • flag_china China Update
  • Today at the stock market

    US Markets were closed for Christmas.Reuters

    Portfolio Indices

    USD and AUD denominated indices over the past 52 weeks (Chart: Bunting)
    ^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting

    Index values

    Index Currency Today Change 31 Dec 16 YTD
    USD-denominated Index USD 3.141 +0.00% 2.105 +49.23%
    Valuation Rate USD/AUD 0.77687 +0.03% 0.72663 +6.91%
    AUD-denominated Index AUD 4.045 -0.04% 2.895 +39.72%

    FX: USD/AUD

    USD

    DXY movements
    ^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg

    AUD

    AUD movements
    ^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com

    Bitcoin

    The biggest cryptocurrencies resumed their decline on Sunday, failing to reverse a selloff that began when bitcoin’s unprecedented rally fell short of breaking above USD 20,000.

    A rebound on Saturday fizzled in the afternoon and traders turned pessimistic again, driving bitcoin down 13% in the past 24 hours. The drop among the 10 largest digital coins, ranging as much as 17% for iota, brings more end-of-year weakness to a market that just had its worst 4-day tumble since 2015.

    “The West is what’s causing this selloff,” said Mati Greenspan, senior market analyst at Tel Aviv-based online broker eToro, pointing to increased trading in USD and less in JPY. The recent cryptocurrency rally was so steep that investors were prone to take money off the table going into the Christmas holiday season, he said.

    The retrenchment isn’t typical for cryptos, which often snap back after a few losing sessions. The last time bitcoin dropped for five successive weekdays was Sep 2017 and, before that, Jul 2017. While the market has been volatile for most of this year, the rapid run-up has made the recent selloff sting more for digital coin enthusiasts.

    Traders have knocked about $160 billion in market value off the biggest cryptocurrencies in about3 days, according to CoinMarketCap data Chart. The tumble coincided with several warnings in the past week from financial authorities about elevated risk in holding digital coins.

    “The crypto market went to astronomical highs, so it’s got to come back to reality,” Greenspan said. “Something that goes up 150% in less than a month is probably going to have double-digit retracement.”Bloomberg 25 Dec 2017

    Analysts Cut iPhone X Sales Forecasts

    Analysts have lowered iPhone X shipment projections for the first quarter of next year, citing signs of lackluster demand at the end of the holiday shopping season.

    Sinolink Securities Co. analyst Zhang Bin said in a report Monday that handset shipments in the period may be as low as 35 million, or 10 million, less than he previously estimated. “After the first wave of demand has been fulfilled, the market now worries that the high price of the iPhone X may weaken demand in the first quarter,” Zhang wrote.

    JL Warren Capital LLC said shipments will drop to 25 million units in the first quarter of 2018 from 30 million units in Q4/2017 (Apple’s Q1/2018), citing reduced orders at some Apple suppliers. The drop reflects “weak demand because of the iPhone X’s high price point and a lack of interesting innovations,” the New York-based research firm said in note to clients Friday.

    “Bad news here is that highly publicized and promoted X did not boost the global demand for iPhone X,” according to the note.

    Apple has been counting on a redesigned 10th anniversary iPhone to boost shipments as its market value advances toward USD 1 trillion. The Cupertino, California-based company is facing new challenges from Samsung Electronics Co., which is quickly recovering from the Galaxy Note 7’s recall after fires. In the meantime, Chinese brands such as Huawei, Oppo and Xiaomi are also luring away potential customers in China and other emerging markets such as India.

    Taiwan Report

    Apple is said to have trimmed its Q1/2018 (Apple’s Q2/2018) sales forecast to 30 million units from 50 million, Taiwanese newspaper Economic Daily News reported, citing unidentified supply chain officials. It also said Hon Hai Precision Industry Co.’s main iPhone X manufacturing hub in Zhengzhou, China, stopped recruiting workers. The company also known as Foxconn is the sole iPhone X assembler, and also makes the handsets in Shenzhen and Chengdu.

    Shares of Asian suppliers, such as Lens Technology Co., Shenzhen Desay Battery Technology Co. and Largan Precision Co. fell Monday on the report.

    An Apple representative declined to comment on production arrangements. Foxconn said in an emailed statement that company policy prevents it from commenting on such matters.

    Apple received a rare downgrade last week from Nomura Instinet analyst Jeffrey Kvaal, who said iPhone X sales as well as other positive factors are already baked into the stock price. He lowered his rating to “neutral” from “buy.”

    The stock has soared 51% this year, bringing its market value to almost USD 900 billion.

    Supply, Demand

    Apple’s efforts to increase iPhone X production in recent months have made supply and demand fairly balanced at the moment, said Jia Mo, an analyst at Canalys in Shanghai.

    “The market will still hold high expectations for Apple’s 2018 products if Apple introduces more devices with iPhone X’s key features to cover a wider price range,” he said.

    Customers seem to be opting for cheaper models of the iPhone, according to Cowen & Co., which says that suggests Apple failed to cram enough new technology into the iPhone X to justify a USD 999 price tag.

    New features such as facial recognition and virtual reality herald Apple’s vision for future smartphones, but other issues such as the lack of augmented-reality apps have cooled buyer interest in those technologies.Bloomberg 25 Dec 2017

    Putin: Russia Should Scrap Profit Tax on Repatriated Funds, Nov 2017

    Russia should scrap the 13% profit tax on funds repatriated from abroad and renew an amnesty from penalties for businesses returning capital, as Washington moves toward tougher sanctions, President Vladimir Putin said on Monday.

    Amid huge capital outflows in 2014, deteriorating relations with the West over the Ukraine conflict and weak oil prices, Moscow offered the amnesty for those returning capital to Russia. The amnesty, which expired in mid-2016, scrapped responsibility for past taxes and currency violations for those who declared assets abroad. But few agreed to take part in the amnesty. Russian Finance Minister Anton Siluanov said on Friday that his ministry was proposing such an amnesty be restored in 2018 for at least a year.

    Speaking at the meeting with the leadership of the Russian parliament, Putin said he had two proposals which he had not previously spoken about publicly.

    “The first is to extend the amnesty timeline, I mean external restrictions are not easing, but, on the contrary, tending to rise,” he said. U.S. President Donald Trump signed into law a new package of sanctions in August. One provision asked the U.S. Treasury Secretary to submit a report on the impact of expanding sanctions to cover Russian sovereign debt, with an outcome expected as early as February.

    Putin’s second proposal was to scrap 13% taxes for transfers of capital to Russia by businesses. Among other tools to encourage the return of money will be a special bonds program.

    Russia plans to adjust the terms of a sovereign Eurobond issue next year so that businesses can use the bonds to repatriate funds in a way that would protect them from being damaged by new sanctions on Moscow.

    Reuters reported earlier this month that wealthy Russians facing the prospect of targeted U.S. sanctions next year had floated the idea of a special treasury bond to help create favorable conditions for them to bring their cash home.More 25 Dec 2017

    flag_japan Japan update

    Currency: USD/JPY

    JPY movements
    ^ JPY movements against the USD over the past month (mouseover for inverse) Chart: xe.com

    Stockmarket: Nikkei 225

    N225 movements
    ^ Nikkei N225 movements over the past week Chart: Google Finance

    flag_china China update

    PBOC Official: Allow Local Government Bankruptcy

    China needs to let local governments take responsibility for their finances, including allowing bankruptcies, as part of an effort to defuse their debt risks, a PBOC official wrote on Monday.

    Central government control of the scale of local government bonds should be eliminated, while responsibility to issue and repay bonds should be held by the city or county that will actually use the funds, Xu Zhong, head of the People’s Bank of China’s research bureau, wrote in a an editorial on the financial news website Yicai. “Eliminate central government control on the scale of local government bond issues, expand the scale of local government debt issues. Whether (bonds) can be issued, and at what price, must be examined and screened by the financial markets. There does not need to be worry about local governments chaotically issuing debt, ” Xu wrote.

    China’s top leadership decided at a meeting this week to take concrete measures to strengthen the regulation of local government debt next year as policymakers look to rein in a massive debt pile and reduce financial risks facing the economy.

    The government needs to clarify responsibility as it explores a bankruptcy system for local governments, Xu wrote, as there is still an expectation that the central government will bail out those that run into fiscal problems. “China must have an example like the bankruptcy in Detroit. Only if we allow local state-owned firms and governments to go bankrupt will investors believe the central government will break the implicit guarantee,” Xu wrote, adding that social services should be maintained. Xu also said that China should dismantle the hukou system of internal migration control, as free movement of people promoted equal access to public services and helped resolve imbalances in finances.

    In a report published on Saturday, China’s National Audit Office said China should dispel the “illusion” that the central government will pick up the bill for local government debt. But China should also increase the limit for local government debt as general government debt is primarily used for poverty relief spending, while also controlling spending on new projects. “Financial institutions must not provide financing to projects without a source of stable operating cash flow or that do not have compliant collateral,” the office said.Reuters 25 Dec 2017

    Currency: USD/CNY

    CNY movements
    ^ CNY movements against the USD over the past month (mouseover for inverse) Chart: xe.com

    Stockmarket: CSI300

    CSI300 movements
    ^ Shanghai CSI300 movements over the past week Chart: Google Finance

    Merry Christmas !

    CNY movements
    Merry Christmas, from Port Melbourne, Victoria Australia