Hang Seng Outperforms, SP ASX 200 Lags

Sep 04 19, 06:00 GMT

General Trend:

Hang Seng leads gains in Asia after recent underperformance; Few notable protest-related headlines have been seen on today’s session, Hong Kong may announce measures to aid smaller companies
Chinese education stocks rise in HK, ICBC said to provide CNY5.0B in credit support to China Xinhua Education
Large pork producer WH Group rises over 6% in HK, China expected to increase incentives related to higher hog production
Chip-related companies rise in South Korea, Samsung has started to replace materials from Japan with local supplies in its chip production process (South Korean Press)
Iron/Steel and financial companies weigh on equity markets in Japan, trade-sensitive Marine/Transportation index outperforms
Equities in Australia lag on weakness in the financial and telecom sectors, Q2 y/y GDP growth slowed
Chinese battery maker CATL to acquire equity stake in Australian lithium firm Pilbara Minerals
Australia Q2 annual GDP growth slowest since financial crisis (as expected), Aussie and bond yields rise after the data
Australia Treasurer: Talking with RBA on its inflation target, will not be any ‘radical’ change
In the past, RBA Gov Lowe has said he sees no case for lowering the 2-3% inflation target
Chinese press continues to speculate about possible PBOC easing measures during Sept.
China Aug Caixin PMI Services data hits 3-month high
BoJ dissenter Kataoka commented on preemptive action

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened -0.2%
(AU) AUSTRALIA Q2 GDP Q/Q: 0.5% V 0.5%E; Y/Y: 1.4% V 1.4%E; Capital Expenditure q/q: -1.7% v -0.7% prior
(AU) Australia Aug Final PMI Services: 49.1 v 49.2 prior; PMI Composite: 49.3 v 49.5 prior
(NZ) New Zealand Aug Commodity Price Index: +0.3% v -1.4% prior
(AU) Australia Treasurer Frydenberg: Economy is proving to be resilient; FY19 budget balance to show major improvement from May forecast
(AU) Australia sells A$800M v A$800M indicated in 1.50% June 2031 bonds, avg yield 0.964% v 0.9753% prior, bid to cover 4.09x v 2.46x prior
KCN.AU Issues clarification related to publication by lawyers acting for Thailand, relates to the amount claimed by the company under the Australia Thailand Free Trade Agreement (TAFTA); Says the amount quoted is not accurate

Japan

Nikkei 225 opened -0.2%
(JP) Bank of Japan (BOJ) Member Kataoka (dissenter): Important for BOJ to act preemptively when economic, price risks heightening; BOJ must strengthen monetary easing given there is a gap between its price target and actual inflation moves; See Japan’s GDP to fall below its potential rate in coming years, with risks tilted to the downside
(JP) Japan retailers reporting front loaded buying of higher priced appliances, clothing and jewelry ahead of sales tax increase on Oct 1st ; expect sales to drastically drop off after Oct 1 – Nikkei
(JP) Japan Aug Final PMI Services: 53.3 v 53.4 prelim
(JP) Japan automakers sold 1.4K vehicles in South Korea in August, -57% y/y – Auto Industry Association

Korea

Kospi opened -0.2%
005930.KR Has started to replace materials from Japan with local supplies in its chip production process – South Korean Press
(KR) South Korea Aug Foreign Reserves: $401.5B v $403.1B prior (1st decline since May 2019)

China/Hong Kong

Hang Seng opened +0.6%; Shanghai Composite opened -0.1%
(CN) CHINA AUG CAIXIN PMI SERVICES: 52.1 V 51.7E (3-month high)
(HK) Hong Kong Aug PMI Services: 40.8 v 43.8 prior (17th consecutive contraction, lowest since Feb 2009)
(CN) Analysts expect China PBOC to cut Medium Term Lending Facility (MLF) rates in Sept – China Securities Journal
(CN) China to increase incentives for counties with larger hog outputs; encourages municipalities to utilize potential production as soon as possible; increase insurance coverage; will also increase frequency of subsidies for culling of pigs with swine flu – China Press
(HK) Hong Kong & Macau Affairs Office (HKMAO) spokesperson Yang Guang: Seeing positive changes emerging as stopping violence has gained consensus in Hong Kong; situation remain complex and grim (after the close yesterday)
(CN) China Foreign Ministry spokesperson Geng Shuang: Hong Kong needs constructive dialog and consensus; HK society discussing emergency law; Deploying army will not end the one country – two systems (after the close yesterday)
(CN) US President Trump initially wanted to double tariffs on Chinese goods after China announced it would put tariffs on $75B of US goods – US press
(CN) China PBOC sets Yuan Reference Rate: 7.0878 v 7.0884 prior
(CN) China PBoC Open Market Operation (OMO):Skips for 5th consecutive session; Net CNY60B drain v drain CNY80B prior

Other Asia

(SG) Singapore Aug PMI: 48.7 v 51.0 prior (first contraction since Feb, lowest level since Sept 2012)
(SG) Singapore Central Bank (MAS) Economic Survey: cuts GDP and CPI outlooks
(ID) Indonesia Central Bank (BI): Room for interest rate cut is open; rate cut expected to fuel economic growth
(TH) Thailand Fin Min Savanayana: State enterprises should speed up investment; Thailand is facing slower growth due to economic conditions, but not a recession, affirms 2019 GDP at 3% – speaking in Bangkok

North America

(US) Fed’s Bullard (dove, voter): calls for immediate 50bps cut; Fed policy rate is too high and would be better to get to right point now rather than in smaller steps
(US) Fed’s Rosengren (hawk, dissenter): no immediate Fed action is needed if data stays on track; recession concern is not seen in current stock prices
(US) Pres Trump: we’re doing ‘very well’ in China negotiations; ‘think what happens to China when I win’
(US) AUG ISM MANUFACTURING: 49.1 V 51.2E; PRICES PAID: 46.0 V 46.8E (lowest Manufacturing reading since Jan 2016)

Europe

(UK) PARLIAMENT VOTES ON REBEL CONTROL OF PARLIAMENT AGENDA: 328 IN FAVOR V 301 AGAINST (larger than expected defeat); PM JOHNSON LOSES CONTROL OF PARLIAMENT
(UK) Labour leader Corbyn: will not vote for a general election before extension to leaving EU
(UK) Ireland Fin Min: any future extension of Brexit depends on rationale; would have to be a significant political reason
(UK) UK Treasury: Announces extra $2.4B of Brexit funding, to be spent in H1 of the first year after UK leaves EU
(RU) Russian Energy Min Novak: Energy relations are strong with Saudi Arabia; will visit SA ahead of Putin’s visit; US oil production is now flat, we are watching this

Levels as of 1:20 ET

Nikkei 225, +0.2%, ASX 200 -0.5%, Hang Seng +1.3%; Shanghai Composite +0.3%; Kospi +0.3%
Equity Futures: S&P500 +0.7%; Nasdaq100 +0.8%, Dax +0.6%; FTSE100 +0.5%
EUR 1.0981-1.0968 ; JPY 106.07-105.82 ; AUD 0.6785-0.6751 ;NZD 0.6350-0.6325
Gold -0.2% at $1,552/oz; Crude Oil +0.4% at $54.14/brl; Copper +0.4% at $2.539/lb