General Trend:
- Hang Seng drops over 1% as trade uncertainty persists, US Senate passed HK bill;
- HK-listed banks generally decline after PBoC rate cuts, the central bank also did not inject liquidity in daily OMO
Chinese banks also decline
- Shanghai IT index outperforms amid PBoC rate cut, China has created a $21.0B investment fund (press)
- Decliners in Japan include the trade-sensitive Marine/Transportation and auto sectors; Japanese banks also track recent declines in Treasury yields
- Westpac declines over 2% in Australia on accusations related to money laundering, weighs on ASX 200 index
- Rio Tinto declines over 1%, there is merger speculation related to Rio Tinto and Glencore (Aussie press)
- Alibaba may price HK IPO at HK$176/share, below the HK$188 maximum price; the final pricing may occur later today
- FOMC Oct meeting minutes to be released later on Wed
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened -0.2%
- GLEN.UK Speculation that Rio Tinto is considering a takeover of Glencore after Glencore CEO Ivan Glasenberg and CFO Steve Kalmin visited Australia – AFR
- ALL.AU Reports FY19 normalized (A$) Net 752.8M v 699.9M y/y; Rev 4.4B v 4.1B y/y
- MET.NZ Has received a highly conditional, non-binding preliminary expression of interest from a credible third party to acquire the company; Suspends share buyback program
- (AU) Australia government plans to accelerate infrastructure projects worth $2.6B, PM Morrison is expected to announce the spending plan later on Wed – US financial press
- (AU) Australia sells A$800M v A$800M indicated in 2.50% May 2030 bonds, avg yield 1.1191% v 1.2603% prior, bid to cover 4.13x v 3.56x prior
Japan
- Nikkei 225 opened -0.5%
- (JP) JAPAN OCT TRADE BALANCE: ¥17.3B V ¥229.3BE; ADJ TRADE BALANCE: -¥34.7B V ¥248.1BE; Exports Y/Y: -9.2% v -7.5%e (largest drop in 3 years and 11th consecutive decline)
- (JP) Japan and South Korea failed to narrow differences in second round of trade talks relating to Japan’s export restrictions – Yonhap
- (JP) Japan major insurers expected to be negatively impacted by the typhoon and flooding damage, Tokio Marine, MS&AD Insurance and Sompo expected to have catastrophe reserves at the end of FY19/20 of ¥385B v ¥538.3B in FY18/19 and -50% from 2 years ago – Nikkei
- (JP) Reportedly Japan FSA council seeks to rejigger Tokyo Stock Exchange’s TOPIX Index into a more selective listing of popular blue chip stocks – Nikkei
- (JP) Japan LDP coalition seeks ¥10T for extra budget [in line with prior statements] – Nikkei
- (JP) Japan PM Abe: Supplemental budget will help farmers hurt by US trade deal – speaking in parliament
- (JP) Japan MoF sells ¥899B v ¥900B indicated in 0.30% 20-year bonds; avg yield 0.266% v 0.245% prior; bid to cover 4.21x v 3.91x prior
Korea
- Kospi opened -0.6%
- (KR) US Defense Sec Esper will not speculate if the US will consider reducing troops in South Korea if a deal cannot be reached with South Korea on cost sharing, after the US walked out of talks – Yonhap
- (KR) South Korea Oct PPI M/M -0.2% v +0.1% prior, Y/Y: -0.6% v -0.8% prior (4th consecutive decline)
- (KR) North Korea again demands that US and South Korea cease all military drills as a precondition to resuming talks
China/Hong Kong
- Hang Seng opened -0.6%; Shanghai Composite opened -0.2%
- (CN) According to Antaike’s senior analyst Shen Lingyan China consumption of aluminum in 2019 will be 36.55Mt, -1.2% y/y (1st decline in 30-years) – speaking from conference at Qingdao city
- (CN) China PBoC sets 1-year loan prime rate (LPR) at 4.15% v 4.20% prior (4.20%e); sets 5-year LPR at 4.80% v 4.85% prior (4.85%e)
- (CN) Fitch affirms China sovereign rating A+; Outlook stable; Recent progress towards reaching a phase 1 trade deal with the US suggests possible postponement or eventual removal of some existing tariffs
- (CN) China PBoC Open Market Operation (OMO): Skips v injects CNY120B prior in 7-day reverse repos prior; Net CNY0B v inject CNY120B prior
- (CN) China PBOC sets Yuan Reference Rate: 7.0118 v 7.0030 prior (weakest fix since Nov 5th)
- (HK) Hong Kong Govt expresses regret of US Senate passing Hong Kong bill, it is ungrounded and unnecessary; bill will have negative impact on US interests
- (CN) China Foreign ministry: Opposes US senate passing of Hong Kong Bill; reiterates will retaliate if bill is passed
- (HK) Growing speculation that Sunday’s Hong Kong district council elections could be postponed due to escalating violence; some polling locations have already been moved from locations including universities – HK press
- (CN) China Stats Bureau (NBS) deputy chief Li: planning to revised economic indicators in line with census result; to revise main economic indicators based on 2018 national economic census results, to publish 2018 GDP revision in coming days
- (CN) Regulators in China are ‘naming and shaming’ certain banks in relation to loan rule violations; banks mentioned include China Construction Bank and Ping An Bank – Chinese press
- 9988.HK May price Hong Kong IPO at HK$176/shr v HK$188/shr max price indicated for HK$12.9B; the final pricing is expected to occur later today – US financial press
North America
- (US) Weekly API Oil Inventories: Crude: +6M v -0.5M v prior
- (US) SEMI: Oct North America Manufacture Billings: $2.11B, +7.7% m/m, +3.9% y/y
- (US) Senate passes the ‘Hong Kong Human Rights and Democracy Act of 2019’ (as expected)
- (US) Commerce Sec Ross: Reiterates we think there’s hope we can get a China deal done; deal is still a work in progress; optimistic we can get something done on China – speaking on Fox
Europe
- (UK) PM Johnson: reiterates UK will leave EU on Jan 31st – comments at election debate
- (UK) General election poll: Tories 36%, Labour 25%, Lib Dems 17%, Brexit 11% – Lord Ashcroft Polls
Levels as of 01:20ET
- Hang Seng -0.7%; Shanghai Composite -0.5%; Kospi -1.2%; Nikkei225 -0.8%; ASX 200 -1.4%
- Equity Futures: S&P500 -0.1%; Nasdaq100 -0.3%, Dax -0.1%; FTSE100 -0.1%
- EUR 1.1070-1.1082; JPY 108.36-108.58; AUD 0.6810-0.6832; NZD 0.6414-0.6436
- Commodity Futures: Gold 0.0% at $1,474/oz; Crude Oil +0.1% at $55.38/brl; Copper -0.2% at $2.65/lb
