MNI EUROPEAN OPEN: ’21 Nearly In The Books

EXECUTIVE SUMMARY

• OFFICIAL CHINESE PMI DATA PROVIDES MODEST BEAT
• BIDEN TELLS PUTIN U.S. & ALLIES WILL 'RESPOND DECISIVELY' IF RUSSIA MOVES ON UKRAINE (NBC)
• KREMLIN: PUTIN TOLD BIDEN NEW SANCTIONS COULD RUPTURE U.S.-RUSSIA TIES (RTRS)

Fig. 1: NASDAQ Golden Dragon China Index

Source: MNI - Market News/Bloomberg

UK

CORONAVIRUS: NHS chiefs do not believe that the threshold for new Covid-19 restrictions has been crossed despite a surge in hospital admissions. The number of patients with the coronavirus on wards in England rose to 11,452 yesterday, the highest since February and up 61 per cent in a week. While concerned by the increase in admissions, NHS leaders have been reassured by the fact that serious illness among the elderly has not risen significantly. Chris Hopson, the head of NHS Providers, told The Times: “Trust chief executives are saying we should be careful interpreting the daily Covid hospital data. (The Times)

CORONAVIRUS: Nurses, lorry drivers and government officials could be prioritised for Covid tests under plans to prevent the New Year return to work from being thrown into chaos by a national shortage. (Telegraph)

BREXIT: Ports and border officials are deploying thousands of extra staff for the New Year in a bid to avoid a wave of disruption sparked by post-Brexit trading rules that come into force on January 1. (Telegraph)

POLITICS: Boris Johnson is reportedly due to be cleared of breaking the ministerial code over payments for his Downing Street flat refurbishment after an independent adviser looked into whether he had been misled during an initial investigation. (Guardian)

EUROPE

GERMANY: Chancellor Olaf Scholz called on his fellow Germans to get vaccinated against Covid-19 to beat the pandemic and open up opportunities for sweeping economic reforms. The 2020s will be a decade of transformation as Europe’s largest economy pushes to become climate-neutral in about 25 years, the Social Democrat who succeeded Angela Merkel earlier this month said. “We are embarking on a new era -- an era that will be good if we actively shape it,” Scholz said in prepared remarks for his first New Year speech. “It makes a difference if we resolutely take our fate into our own hands.” (BBG)

PORTUGAL: Portugal’s government said it injected EU536m in airline TAP SA through a capital increase, according to a statement from the finance ministry. Amount corresponds to limits authorized by EU Commission. EU1.2b loan provided to TAP in 2020 was converted to capital. During 2022, new capital injections may be carried out; maximum limit authorized by EU Commission will be respected. TAP says in a separate statement that the Portuguese state is now the company’s sole direct shareholder. (BBG)

GREECE: Greece is reducing to five days from 10 the self-isolation requirement for people who test positive as long as they have no symptoms at the end of the period, Greek Health Ministry officials said Thursday. Individuals who have received the booster no longer need to self-isolate after coming into contact with a confirmed case, but must wear FFP2 technology or two surgery masks for 10 days and undergo a PCR test after five days. Greece reported Thursday 35,580 new cases, a fourth straight daily record. (BBG)

IRELAND: Ireland could tap bond markets as early as next week, continuing a tradition of being one of the first euro-region countries to sell debt at the start of the year. The National Treasury Management Agency is set to sell as much as 4 billion euros ($4.5 billion) of debt through a syndicated sale in January, according to Danske Bank A/S. A sale is likely to come “in the first week of January,” Danske analyst Jens Peter Sorensen said in an emailed response to questions. “Given the modest funding requirement, we expect a deal size of 3 billion euros to 4 billion euros.” An NTMA spokesman declined to comment. (BBG)

U.S.

ECONOMY: Americans didn’t let omicron stop them from going out for some last-minute holiday shopping and entertainment. Activity at businesses including restaurants and retail stores increased as much as 4.8% in the week leading up to Christmas compared with the beginning of the month, according to figures from SafeGraph, which tracks mobile-phone geolocation data. Foot traffic peaked mid-week before declining on Dec. 24 as some shops closed for the holidays. (BBG)

CORONAVIRUS: The Food and Drug Administration is planning to broaden eligibility for coronavirus vaccine booster doses on Monday, allowing 12- to 15-year-olds to receive third doses of Pfizer-BioNTech’s vaccine, according to people familiar with the agency’s deliberations. Regulators also plan to allow both adolescents and adults to seek an extra shot of Pfizer’s vaccine five months after receiving a second dose, instead of the current period of six months. A booster shot is also expected to be authorized for younger children, ages 5 to 11, with immune deficiencies. (New York Times)

CORONAVIRUS: Pfizer Inc.’s vaccine caused mostly mild side effects for children ages 5 to 11, according to data from the Centers for Disease Control and Prevention. Results of a survey covering 30,000 children who each received two shots show adverse reactions were similar to those seen in clinical trials, the CDC said. The phone survey, called v-safe, found the most frequent reactions were injection site pain, fatigue and headache. (BBG)

CORONAVIRUS: Fights at the U.S. Supreme Court over the Biden administration’s Covid-19 shot-or-test rule for large employers and its separate vaccine mandate for health-care workers moved forward with another round of briefing Thursday. The administration urged the justices to let its rule for employers remain in effect while litigation against the measure proceeds at a federal appeals court. A group of Republican-led states separately told the high court that the health worker mandate—currently blocked in half the U.S.—shouldn’t resume nationwide while several lawsuits unfold. The cases test the power of federal agencies to make critical decisions and protect workers and patients in the face of a pandemic that’s killed more than 820,000 Americans. The high court will consider both vaccine measures during a special session on Jan. 7. (BBG)

CORONAVIRUS: New York City’s Mayor-elect Eric Adams promised Thursday to keep schools and businesses open amid record coronavirus infections by encouraging more vaccinations, boosters and testing. Adams outlined a six-point Covid-19 plan during a news briefing that includes keeping outgoing Mayor Bill de Blasio’s mandate for all private sector employees to be vaccinated. His approach to the mandate will be “cooperative, not punitive,” with the city’s focus on “vaccine and testing, vaccine and testing,” said Adams, who takes office on Saturday. (BBG)

CORONAVIRUS: California Governor Gavin Newsom has issued a state of emergency for both Los Angeles County and Orange County in response to the winter storms that have affected California over recent weeks. The storms have caused destruction, flooding and a countless number of road closures across the state, prompting emergency responses from cleanup crews and recover efforts. The statement, which can be viewed in its entirety here, issued an official State of Emergency for several California counties, including: Alameda, Amador, Calaveras, El Dorado, Humboldt, Lake, Los Angeles, Marin, Monterey, Napa, Nevada, Orange, Placer, Sacramento, San Bernardino, San Luis Obispo, San Mateo, Santa Cruz, Sierra, and Yuba Counties. (CBS)

CORONAVIRUS: Hospitalizations jumped 60% from a week ago in New Jersey, the most densely populated U.S. state. The 3,604 patients numbered just 122 short of those a year ago, before vaccinations were widely available. The state logged 27,975 cases over 24 hours, a record, and 38 Covid-related deaths. (BBG)

CORONAVIRUS: Texas virus hospitalizations jumped 54% in the past week to a level not seen since mid-October as Houston threatens to become the Lone Star state’s newest hot spot. Hospitals reported more than 5,550 Covid-19 patients across the second-largest U.S. state, according to health department figures. Almost one-fourth of those patients required intensive- care treatment, straining already stretched ICU capacity in El Paso, Lubbock, Amarillo, Wichita Falls and Waco. Meanwhile, the burden on medical facilities is increasing in the Houston area with almost 12% of hospital beds occupied by virus patients, state figures showed. Houston, the fourth- biggest U.S. city, surpassed Lubbock in terms of hospital load, trailing only El Paso and Amarillo. (BBG)

CORONAVIRUS: Delaware Governor John Carney said he will issue a state of emergency on Monday to combat record cases and hospitalizations at 100% capacity in parts of the state. Carney said as recently as a week ago that he was reluctant to declare an emergency out of worry over the effect on businesses. He said the new order will allow members of the Delaware National Guard to work as nursing assistants in hospitals and nursing homes. “We need all Delawareans and Delaware businesses to step up and help us get through this winter surge,” the Democrat said in a press release. “At the state level, we are focused on reducing the strain on our hospitals this winter.” (BBG)

CORONAVIRUS: The U.S. Centers for Disease Control and Prevention on Thursday advised people against going on cruises regardless of their vaccination status after a recent surge in positive Covid cases onboard ships as the highly contagious omicron variant sweeps the world. The CDC increased its travel warning for cruises to the highest level as the agency is investigating or observing dozens of ships that have had Covid outbreaks. (CNBC)

OTHER

GLOBAL TRADE: Chinese telecommunications giant Huawei said Friday it expects revenue for this year will come in at 634 billion yuan ($99 billion), a 28.9% drop from a year ago. The company has suffered from U.S. sanctions, the semiconductor shortage and a global slump in demand for smartphones. The full-year estimate for 2021 indicates Huawei’s revenue for the second half of the year declined from that of the first six months to 313.6 billion yuan, from 320.4 billion yuan. (CNBC)

JAPAN: Japan's securities industry wants to reduce the time needed for companies to list on the stock market following approval for an initial public offering, looking to create a more welcoming environment for fundraising. It takes a month for a new stock to debut on the Japanese market after receiving approval. The Japan Securities Dealers Association will recommend cutting the waiting period to about 21 days in a draft report the group will finish in January. Market watchers say IPO prices in Japan are lower than they could be. The JSDA's proposal follows a government call for a new approach toward IPO pricing as a way to encourage more startups to list their shares in Japan. (Nikkei)

BOK: South Korea's central bank will properly adjust the extent of its monetary easing to the country's economic improvement in 2022, the top central banker said Friday. "The Bank of Korea will keep close tabs on the country's economic growth and inflation before deciding on monetary policy changes next year," BOK Gov. Lee Ju-yeol said in his address for the new year. The central bank should also pay attention to any imbalance in the local financial markets and the impact of changes in monetary policies of major economies, Lee said. Lee's remarks were widely construed as hinting at the possibility of additional hikes in the country's benchmark interest rate in the new year. (Yonhap)

SOUTH KOREA: South Korea said its newly strengthened social distancing rules will stay in place for at least two more weeks. The restrictions, which ban private gatherings of five or more people and close restaurants and coffee shops at 9 p.m., were reinstated in mid-Dec. as daily cases hit a record. Prime Minister Kim Boo-kyum said it’s too early to say the crisis is over, even if cases have declined following the new rules and a ramped-up booster campaign. The country reported4,875 new cases Thursday, falling for third day and bringing the seven-day average to its lowest since the tighter restrictions took effect. (BBG)

CANADA: Quebec, the Covid hot zone of Canada once again, is resorting to a curfew and adding another round of restrictions to stem fast rising hospitalizations. Starting Friday, residents of the mostly French speaking province will need to stay home from 10 p.m. to 5 a.m., Premier Francois Legault said at a news conference Thursday. Restaurants will close, private indoor gatherings will be banned, and schools will only reopen from the winter break on Jan. 17 as the omicron variant pushes infections to records. “Over the next weeks, there is a risk that the number of hospitalizations surpass our capacity,” Legault said. “If there is something I learned since the start of the pandemic, it’s that we must act quickly.” (BBG)

CANADA: Ontario will reserve publicly funded Covid-19 PCR tests for only the most vulnerable residents as Canada’s most populous province can’t keep up with record infections from the omicron variant. Official testing will no longer be required for people who had a positive result using a rapid antigen test, Chief Medical Officer Kieran Moore said Thursday during a virtual announcement. “The omicron variant is rapidly spreading and we must preserve these resources for those who need them the most,” Moore said. (BBG)

BRAZIL: Payroll tax exemption will be signed into law on Dec.31, President Jair Bolsonaro said during a broadcast live on social media. Bolsonaro said that new minimum wage for 2022 will be 1,212 reais. President said he will send a bill to Congress with renegotiation of Brazil Student Financing Fund known as Fies program debts. (BBG)

RUSSIA: President Joe Biden on Thursday urged President Vladimir Putin to "de-escalate tensions with Ukraine," while warning that the U.S. and its allies would "respond decisively" if Russia takes military action, White House press secretary Jen Psaki said after a call between the two leaders. Biden's remarks were similar to those in a virtual call with Putin earlier this month, in which Biden said Moscow would face "severe consequences" if it attacked Ukraine. Thursday's call, which lasted about 50 minutes, comes as Biden administration officials grow increasingly concerned that Russia might invade Ukraine like it did in 2014. "President Biden urged Russia to de-escalate tensions with Ukraine. He made clear that the United States and its allies and partners will respond decisively if Russia further invades Ukraine," Psaki said in a statement Thursday. "President Biden also expressed support for diplomacy, starting early next year with the bilateral Strategic Stability Dialogue, at NATO through the NATO-Russia Council, and at the Organization for Security and Cooperation in Europe. President Biden reiterated that substantive progress in these dialogues can occur only in an environment of de-escalation rather than escalation," she added. The United States and Russia are scheduled to hold security talks on Jan. 10. Biden and Putin are not expected to participate. (CNN)

RUSSIA: Russian President Vladimir Putin on Thursday warned his U.S. counterpart Joe Biden in a call that new Western sanctions against Moscow could rupture ties between Russia and the United States and would be a big mistake, the Kremlin said. But Kremlin aide Yuri Ushakov said Russia was satisfied with their phone conversation which he said centred on security guarantees that Moscow wants from the West amid a build-up of Russian forces close to the Ukrainian border. (RTRS)

SOUTH AFRICA: South Africa lifted a midnight to 4 a.m. curfew on movement with immediate effect as it believes the country has passed the peak of its fourth Covid-19 wave driven by the Omicron variant, a cabinet statement said on Thursday. South Africa, which is currently at the lowest of its five-stage Covid-19 alert levels, made the changes based on the trajectory of the pandemic, levels of vaccination in the country and available capacity in the health sector. (CNBC)

M&A: Global mergers and acquisitions for 2021 have soared to their highest levels since records began more than four decades ago, thanks in part to booming markets and widespread stimulus measures. Deals worth more than $5.8tn were agreed worldwide this year, according to figures from Refinitiv, a 64 per cent rise from last year and the fastest pace of growth since the mid-1990s. The value of deals was 54 per cent higher than in 2019 before the pandemic. It marks out 2021 as an exceptionally busy year, even for an industry that has been accelerating for much of the past decade. “In 2021 the stars aligned and virtually everything that could go right for [dealmaking] did,” said Frank Aquila, head of M&A at law firm Sullivan & Cromwell. The M&A boom also contributed to record-breaking fees for investment banks in 2021. These totalled $157bn, including $47bn in fees for M&A advice, the most since records began more than two decades ago. (FT)

OIL: The U.S. Department of Energy said on Thursday it had approved a release of two million barrels of crude oil to Exxon Mobil Corp from its Strategic Petroleum Reserve as part of a previously announced plan to try to reduce gasoline prices. (RTRS)

CHINA

ECONOMY: The Chinese economy is expected to grow slightly over 5% in 2022, with next April hitting a low point while September achieving a high point, the 21st Century Business Herald reported citing Liu Shijin, deputy director of the Economic Committee of the National Committee of the Chinese People's Political Consultative Conference. As China heads into a medium-speed growth era, new economic drivers should be developed by promoting the digital economy and green development, Liu was cited as saying. Metropolitan areas and city clusters should lead the high-quality growth and are expected to provide 70-80% of the growth momentum in the next 5-15 years, the newspaper said citing Liu. (MNI)

POLICY: Carbon emission peak and neutrality goals should not be pursued at the expense of stable economic growth, which is the main task, the 21st Century Business Herald reported citing Li Yang, chairman of the National Institution for Finance & Development. China needs to establish a green finance system, including risks in the transition, which requires support from monetary and fiscal policies, Li said. In the medium and long term, the backbone of China’s potential economic growth may decline given poor investment, weak consumption and unsustainable robust exports, the newspaper said citing Li. (MNI)

PROPERTY: A Chinese state-run enterprise will buy into struggling developer China South City Holdings Ltd., as Beijing moves to limit the fallout from a widening debt crisis engulfing the country’s real estate industry. Shenzhen SEZ Construction and Development Group Co., a unit of the southern Chinese city’s local state asset regulator, has agreed to pay HK$1.91 billion ($245 million) for a 29% stake in the Hong Kong-listed developer, the latter said in a stock exchange filing Friday. The effective bailout is the latest move by the authorities to prevent an unprecedented cash crunch in the nation’s property sector from hurting economic growth and threatening financial and social stability. Policymakers have taken steps ranging from easing property financing conditions to encouraging financially healthier companies to acquire assets from troubled developers. (BBG)

REITS: China’s economic planning agency urges accelerating applications for infrastructure REITs and construction of projects, according to a statement on NDRC website. REITs will help reduce enterprises’ debt ratio; supervision will be strengthened in use of the funds in construction of promised projects. (BBG)

CREDIT: National Development and Reform Commission asked its local branches to conduct “comprehensive” inspections on companies’ bond repayment arrangements and risks in an annual inspection, according to a statement from the top economic planner. NDRC told its local arms to step up checks on payment risks and step up oversight on outstanding bonds to prevent any systematic risk. Underwriters of corporate bonds were also told to check and report any risks of bonds they underwrite to NDRC. NDRC required local authorities to give feedback before Jan. 30. (BBG)

CREDIT: Shimao Group Holdings Ltd. has reached a preliminary consensus with Minsheng Trust and Guotong Trust on the arrangement of outstanding debts after negotiations, its unit Shanghai Shimao Co. said in a statement. Shanghai Shimao said it has a total of 3.35 billion yuan of debt securities due in the first quarter of 2022. It added the company has taken measures to ensure debt payment including disposals of project stakes and assets, recovering funds payable to the company as creditor, identifying resources that can be sold, and coordinating with banks on mortgage loans. (BBG)

MARKETS: China’s top securities regulator will take measures to smooth capital market operations, to prevent major swings, while introducing more pro-growth policies to stabilise expectations, said the People’s Daily in an interview with Yi Huiman, chairman of China Securities Regulatory Commission. CSRC will keep a tight grip on financing, mergers, and acquisitions in specific sensitive areas, while guiding capital to support technology and industrial development, Yi said. The commission will resolve bond default risk and eliminate the impact of spillovers as much as possible, the newspaper said citing Yi. (MNI)

CORONAVIRUS: China is punishing people trying to evade its latest Covid lockdown in Xi’an as a top official urged “forceful moves” to curb the outbreak in the central city of 13 million people. Vice Premier Sun Chunlan said local authorities need to adopt more “targeted and forceful” measures and improve quarantine controls, the official Xinhua News Agency reported late Thursday. China reported 166 local confirmed cases for that day, 161 of them in the city. (BBG)

OVERNIGHT DATA

CHINA DEC OFFICIAL MANUFACTURING PMI 50.3; MEDIAN 50.0; NOV 50.1
CHINA DEC OFFICIAL NON-MANUFACTURING PMI 52.7; MEDIAN 52.0; NOV 52.3
CHINA DEC OFFICIAL COMPOSITE PMI 52.2; NOV 52.2

SOUTH KOREA DEC CPI +3.7% Y/Y; MEDIAN +3.7%; NOV +3.8%
SOUTH KOREA DEC CPI +0.2% M/M; MEDIAN 0.0%; NOV +0.5%
SOUTH KOREA DEC CORE CPI +2.7% Y/Y; NOV +2.4%

SOUTH KOREA NOV RETAIL SALES +9.6% Y/Y; OCT +14.4%
SOUTH KOREA NOV DEPARTMENT STORE SALES +18.3% Y/Y; OCT +21.0%
SOUTH KOREA NOV DISCOUNT STORE SALES -10.3% Y/Y; OCT +1.4%

CHINA MARKETS

PBOC INJECTS NET CNY90 BILLION VIA OMOS FRIDAY

The People's Bank of China (PBOC) injected CNY100 billion via seven-day reverse repos with the rate unchanged at 2.2% on Friday. This operation has injected net CNY90 billion after offsetting the maturity of CNY10 billion reverse repos, according to Wind Information.

• The operation aims to maintain liquidity towards year-end, the PBOC said on its website.
• The seven-day weighted average interbank repo rate for depository institutions fell to 2.2270% at 09:45 am local time from the close of 2.4739% on Thursday.
• The CFETS-NEX money-market sentiment index closed at 49 on Thursday vs 50 on Wednesday.

PBOC SETS YUAN CENTRAL PARITY AT 6.3757 FRI VS 6.3674 THURS

The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 6.3757 on Friday, compared with 6.3674 set on Thursday.

MARKETS