S. Korea Worried About Trade War Impact

General Trend:

• Asian equity markets trade generally lower, Nikkei 225 closed for holiday
• Chinese equities markets decline
• Xiaomi declines over 9%, Chinese exchanges said mainland investors will not be able to invest in HK companies with super-voting shares
• China Q2 GDP in line, June industrial production slows more than expected, fixed asset investment growth slows to multi-year low
• Yuan (CNY) trades near 11-month low
• New Zealand June Performance of Services index hits lowest level since Dec 2012
• New Zealand Q2 CPI data due for release on Tuesday, along with the Reserve Bank of Australia’s policy meeting minutes
• Fed Chairman Powell is due to testify before Congress on July 17-18th (Tues-Wed)
• Farnborough International Airshow to be held July 16-22nd
• Russian President Putin and US President Trump to meet in Finland Monday starting 06:00 ET

Headlines/Economic Data

Japan

• Nikkei 225 closed for holiday
• (JP) Japan FY17/18 listed company dividend payments ¥13.58T, +13% y/y (fresh record high); payout ratio 30.4%, -4% y/y (lagging other parts of the world) – Nikkei
• (CN) China to impose anti-dumping deposit measures on rubber from South Korea and Japan, effective today; To collect deposits from 12-37.3% on some rubber imports from South Korea and 18.1-56.4% on some rubber products from Japan

Korea

• Kospi opened +0.1%
• (KR) US President Trump: “There hasn’t been a missile or rocket fired in 9 months in North Korea, there have been no nuclear tests and we got back our hostages. Who knows how it will all turn out in the end, but why isn’t the Fake News talking about these wonderful facts? Because it is FAKE NEWS!” – tweet
• (KR) Bank of Korea Gov Lee and Fin Min Kim agree to closely monitor markets and take preemptive measures against risk factors
• (KR) South Korea Jun Foreign Buyers of Korean Bonds: 6.4% v 6.3% prior; Foreign Buyers of Korean Stocks: 31.9% v 31.9% prior
• (KR) Bank of Korea (BoK) Gov Lee: Domestic economy continued sold growth path; To discuss H2 risks to the economy with South Korea Fin Min Kim
• (KR) Bank of Korea Gov Lee and Fin Min Kim agree to closely monitor markets
• (KR) South Korea Fin Min Kim: Minimum wage increase may have a negative impact
• (KR) South Korea sells KRW1.65T v KRW1.65T indicated in 10-yr Govt bonds at 2.555%

China/Hong Kong

• Hang Seng opened +0.2%, Shanghai Composite -0.1%
• Hang Seng Property/Construction index -1.1%, Materials -0.9%, Consumer Goods -0.7%, Financials -0.5%: Info Tech +0.4%
• Chinese liquor maker Kweichow Moutai [600519] rises over 1%, Guided H1 profit +40% y/y
• (CN) CHINA Q2 GDP Q/Q: 1.8% V 1.6%E; Y/Y: 6.7% V 6.7%E; YTD: 6.8% V 6.7%E
• (CN) CHINA JUN INDUSTRIAL PRODUCTION Y/Y: 6.0% V 6.5%E; YTD Y/Y: 6.7% V 6.8%E
• (CN) China Jun Retail Sales y/y: 9.0% v 8.8%e; YTD y/y: 9.4% v 9.4%e
• (CN) China Jun Surveyed Jobless Rate: 4.8% v 4.8% prior
• (CN) China Jun Fixed Assets Urban YTD y/y: 6.0% v 6.0%e (multi-year low)
• (CN) CHINA JUNE M2 MONEY SUPPLY Y/Y: 8.0% (record low) V 8.4%E; M1 MONEY SUPPLY Y/Y: 6.6% V 5.9%E (released on July 13th)
• (CN) CHINA JUNE NEW YUAN LOANS (CNY): 1.840T V 1.520TE (released on July 13th)
• (CN) China has started inspections related to local implicit debt – China Securities Journal
• (CN) China investors to be barred from trading in shares of a dozen foreign companies and those with weighted voting rights, in order to protect retail investors using HK stock link from less understood securities – Shanghai Stock Exchange
• (CN) China National Bureau of Stats (NBS): H1 rise lays sound foundation for meeting 2018 target; Prudent monetary policy will help keep CPI steady in H2
• (CN) China PBoC Open Market Operation (OMO): Injects CNY300B in 7-day and 14-day reverse repos v skips prior (1st injection after 5 consecutive skips, highest injection since Feb): Net: CNY300B injects v CNY0B drain prior
• (CN) China PBoC set yuan reference rate at 6.6758 v 6.6727 prior
• (CN) China Premier Li: Reiterates China and EU to uphold multilateralism and free trade

Australia/New Zealand

• ASX 200 opened +0.1%
• ASX 200 Resources index -0.9%, Energy -0.8%, REIT -0.7%, Financials -0.5%; Telecom +1%, Consumer Discretionary +0.5%
• WHC.AU Reports Q4 ROM coal production 5.9Mt v 6.6Mt y/y; saleable coal production 4.7Mt v 5.5Mt y/y [+1.1%]
• (AU) Australia AOFM announces details to this week’s debt syndicate: To issue new 2.75% May 2041 bond, pricing guidance is 39.5-44.5bps/primary 10-yr Futures
• SMA.AU Announces agreement with 2WayWorld Technologies for the proposed divestment of Smarttrans China Ecommerce business structure; consideration is equal to A$300K, plus a transaction expense allowance of A$60K [+14%]

North America

• LMT Said to have reached prelim agreement with US Govt for F-35 jets, that under a larger multi-year deal would bring the cost per jet to $80M by 2020 – US press
• (US) Sec of State Pompeo and Treasury Sec Mnuchin are said to have rejected Iran sanction carve outs – FT
• Arconic [ARNC]: Reportedly getting takeover interest from private equity firms; could get a $10B valuation in any deal – press
• GS Expected to name David Solomon as the new CEO as soon as this week – NY Times

Europe

• (EU) US President Trump: “I think the European Union is a foe, what they do to us in trade. Now you wouldn’t think of the European Union, but they’re a foe.” “Russia is a foe in certain respects. China is a foe economically, certainly they are a foe. But that doesn’t mean they’re bad. It doesn’t mean anything. It means that they are competitive. They want to do well and we want to do well.” – CBS interview
• (EU) EU President Tusk: Trade wars can lead to hot wars, Europe seeking support for thorough reform to WTO; EU, Russia, US and China have duty to uphold order – visiting China
• (ES) Fitch affirms Spain sovereign rating at A-; outlook Stable (from July 13th)
• (IT) Canadian ratings agency DBRS affirms Italy sovereign rating at BBB (high), Stable trend (from July 13th)
• (NO) Union adds 900 workers to ongoing strike related to oil and gas workers in Norway, no agreement was reached by deadline – financial press
• (UK) Tory MP Greening said to call for 2nd UK referendum – UK Press
• (UK) Jul Rightmove House Prices m/m: 0.1% v 0.4% prior; y/y: 1.4% v 1.7% prior
• RR.UK Planning to offer maintenance credits to airlines that were impacted by 787 groundings – press
• (EU) EU Commission President Juncker: China knows how to open up, can do so if it wishes – visiting China
• (RU) Kremlin Spokesperson: Hope that Putin/Trump summit will be some sort of step away from current crisis in relations

Levels as of 01:30ET

• Hang Seng -0.3%; Shanghai Composite -0.8%; Kospi -0.3%; Nikkei225 closed; ASX 200 -0.5%
• Equity Futures: S&P500 +0.0%; Nasdaq100 +0.1%, Dax +0.1%; FTSE100 -0.2%
• EUR 1.1613-1.1695; JPY 1112.21-112.56; AUD 0.7409-0.7436;NZD 0.6758-0.6777
• Aug Gold +0.3% at $1,244/oz; Sept Crude Oil -0.7% at $69.44/brl; Sept Copper +0.1% at $2.78/lb