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Market Update – Asian Session: S. Korea And US Start Drills

Asia Summary

Asian equity markets opened mixed with little macro data to push FX in a particular direction and little concern for the departure of Steve Bannon from the Trump administration. Regional equity indices took the que from earnings results, which continue with earnest in Hong Kong, China and Australia. Australia names saw some large double digit moves after results (see equity section), with Fortescue in focus after dividend payout adjustment. Offshore yuan nears a fresh 2017 record high, + 0.07% at 6.6786 (2017 high is currently 6.6579) and yuan overnight HIBOR fell 65bps to 1.42%. Thailand posted a stronger than expected Q2 GDP figure, also a 4-yr high. South Korea and the US prepare for its annual joint military drills, President Moon called for calm after North Korea said the drills would be adding fuel to the fire. USD/KRW fell 0.2% to 1,130.20. Later in the week the annual Jackson Hole conference will take place, where ECB’s Draghi may make a case to end QE in 2018.

Key economic data

(KR) SOUTH KOREA JUL PPI M/M: +0.1% V -0.4% PRIOR; Y/Y: 3.0% V 2.8% PRIOR

(NZ) New Zealand Jul Net Migration: 5.8K v 6.3K prior

(UK) AUG RIGHTMOVE HOUSE PRICES M/M: -0.9% V 0.1% PRIOR; Y/Y: 3.1% V 2.8% PRIOR

(TH) THAILAND Q2 GDP Q/Q: 1.3% V 1.0%E; Y/Y: 3.7% V 3.4%E (fastest pace in 4-yrs); Raises 2017 projected GDP to 3.5-4.0% (prior 3.3-3.8%)

Speakers and Press

China/Hong Kong

(HK) Cash withdrawals using China UnionPay cards migrating from Macau to Hong Kong – SCMP

(HK) Hang Seng Indexes discussed lowering the weighting limit for stocks, in 2014, the weighting limit was cut to 10% from 15% – HK Press

(CN) PBoC Vice Gov Yin Yong said financial regulators should step up penalties in relation to regulatory arbitrage – financial press

Korea

(KR) On Sunday, North Korea warned that the upcoming US/South Korea military exercises will be ‘adding fuel to the fire’ – US press

Japan

(JP) Bank of Japan (BoJ) Gov Kuroda said the central bank has methods to avoid adverse effects when it normalizes policy; wants to avoid creating confusion by discussing specifics – Japanese Press

Other

(DE) German Finance Ministry Aug Report: Monthly data suggests further economic expansion, indicators suggest industrial sector will continue to grow in Q3

(EU) ECB’s Draghi may make a case to end QE in 2018 at Jackson Hole this week due to large fall in EU unemployment, increase in growth and progress to inflation target – financial press

Asian Equity Indices/Futures (00:00ET)

Nikkei -0.4%, Hang Seng +0.5%, Shanghai Composite +0.2%, ASX200 -0.7%, Kospi -0.04%

Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%, Dax -0.1%, FTSE100 -0.3%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.1764-1.1750; JPY 100.42-109.18; AUD 0.7935-0.7919; NZD 0.7323-0.7305

Dec Gold -0.0% at $1,291/oz; Oct Crude Oil 0.0% at $48.66/brl; Sept Copper +0.0% at $2.95/lb

JGB (JP) Japan MoF said to field additional queries over JGBs from foreigners – Japanese Press

(AU) Australia sells A$800M in 2.75% 2028 bonds; avg yield 2.6998%; bid-to-cover 2.99x

USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6709 V 6.6744 PRIOR

(CN) China PBOC OMO injects CNY180B v CNY120B in 7 and 14-day reverse reports prior: net drains CNY50B v injects CNY20B prior

(KR) South Korea sells KRW 0.6T in 6-month monetary stabilization bonds; avg yield 1.34% v 1.33% prior

(KR) South Korea sells 20-yr bonds; avg yield 2.38%

Equities notable movers

Hong Kong/China

1193.HK Reports H1 Net HK$2.11B v HK$1.96B y/y, Rev HK$17.7B v HK$15.4B y/y; -9.4%

China Unicom, 762.HK Announces 9.04B shares placed at CNY6.83/shr for CNY61.73B; +8%

Australia

BHP.AU Expected to announce a $0.84/shr, $4.0B dividend this week with FY17 results – UK press

GBT.AU Reports prelim FY17 Op EBITDA A$12.2M v A$20M y/y; Rev A$88.0M v A$108.1M y/y; -23%

VOC.AU Ends takeover talks with KKR and Affinity; Guides FY18 Underlying EBITDA A$370-390M v A$380Me, Rev A$1.9-2.0B v A$1.90Be; -23%

BSL.AU Reports FY17 underlying Net A$650.8M v A$674Me; Rev A$10.63B v A$9.07B y/y; Names Mark Vassella new CEO, Announces A$150M share buyback program; -22%

Taiwan

3673.TW Speculation Apple could add 30% of iPad orders to TPK and General Interface Solution – Taiwanese Press; +0.8%

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