General Trend:
- US Senators comment on possible China sanctions regarding HK national security bill, Trump said the US will announce actions on China by the end of the week
- China’s NPC is expected to vote on the HK national security proposal on Thursday (May 28th); Offshore yuan (CNH) hits record low vs HKD
- Tech and HK bank shares are among the decliners in Hong Kong
- Australian equities outperform as energy and financial sectors rise; NAB rises over 8%, increased the size of its share purchase plan by A$750M to A$1.25B
- IT and Telecom Services firms are among the early decliners in Shanghai
- Sectors moving higher in Japan include Securities, Iron/Steel and Transports; Japanese real estate firms lag after gains during prior session
- MSCI to reduce its licensing agreement with the Singapore Exchange, signed new licensing pact with Hong Kong Exchanges
- Japan to issue additional JGBs worth ¥31.9T for 2nd extra budget
- China PBoC: Recent liquidity injections via reverse repo operations were done in order to counteract impact from government bond issuance
- South Korean logistics center sees rise in coronavirus cases
- Bank of Korea (BOK) is due to hold policy meeting on Thursday, ~63% of analysts expect a 25bps rate cut (poll)
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened -0.1%
- (AU) AUSTRALIA Q1 CONSTRUCTION WORK DONE Q/Q: -1.0% V -2.0%E
- (NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: Significant part of economic challenges are still ahead of us; more room for mortgage rates to fall
- (NZ) Reserve Bank of New Zealand (RBNZ) Financial Stability Report: Financial system will benefit from supporting economic recovery, working on a number of initiatives to support the flow of lending and functioning of the financial system
- (NZ) Reserve Bank of New Zealand (RBNZ) Deputy Gov Bascand: Bank liquidity is currently quite strong, boosted by deposit flows, increase in bank liquidity is likely to be temporary
- (NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$400M v NZ$400M prior in government bonds as part of QE v NZ$400M Sought
- (AU) Australia sells A$2.0B v A$2.0B indicated in 2.50% May 2030 bonds, avg yield 0.8919%, bid to cover 3.39x
- (AU) Reserve Bank of Australia (RBA) skips offering to buy bonds for 9th consecutive session
Japan
- Nikkei 225 opened -0.1%
- (JP) Japan Govt said to increase FY20/21 total issuance to ¥210T, cites second extra budget; to increase monthly issuance of 1-30 year JGBs starting in July – press
- 9984.JP Reportedly Softbank Vision Fund is exploring sale of Osisoft stake – press
- (JP) Japan PM Abe: Japan to provide ¥140T in financial support to companies; 1st and 2nd extra budgets combined fiscal spending ¥120T, total size of packages ¥230T
- (JP) Japan Govt speculated to spend >¥30T in 2nd extra budget, economic impact of measures seen at >¥100T – Press
- (JP) Japan Govt Official: 2nd Extra budget will involve additional JGB issuance of ¥31.9T
- (JP) Japan Chief Cabinet Suga: Govt added ¥10T in extra budget for flexible response; Japan wants to support airline companies cash flows
Korea
- Kospi opened -0.1%
- (KR) South Korea May Business Survey – Manufacturing: 49 v 50 prior (12-year low); Non-Manufacturing: 56 v 50 prior
- (KR) South Korea official confirms China has shared info on proposed Hong Kong security law via diplomatic channels – Yonhap
China/Hong Kong
- Hang Seng opened +0.6%; Shanghai Composite opened 0.0%
- (CN) China National Health Commission Coronavirus Update for May 26th: 1 additional case (1 imported v 7 prior) v 7 prior; Additional deaths: 0 v 0 prior; Additional Asymptomatic cases: 28 v 29 prior
- (CN) China PBoC Open Market Operation (OMO): Injects CNY120B in 7-day reverse repos v injects CNY10B in 7-day reverse repos prior; Net injection CNY120B v CNY10B prior
- (CN) China PBoC: Recent liquidity injections via reverse repo operations were done in order to counteract impact from government bond issuance, keep banking liquidity reasonably ample
- (CN) China PBOC sets Yuan reference rate: 7.1092 v 7.1293 prior (stronger setting after 2 consecutive multi-year weaker settings)
- (CN) China PBoC Open Market Operation (OMO): Injects CNY120B in 7-day reverse repos v injects CNY10B in 7-day reverse repos prior; Net injection CNY120B v CNY10B prior
- (CN) China Apr Industrial Profits YTD Y/Y: -27.4% v -36.7% prior
- (HK) China’s proposed resolution for a national security law in Hong Kong was amended on Tuesday, the move is said to have expanded the scope of the measure to ban activities that would seriously hurt national security – SCMP
Other
- (SG) Singapore Fin Min Heng: To introduce S$33B supplementary budget; to focus on creating jobs and protecting the livelihood of workers (yesterday after the close)
North America
- (US) Pres Trump: we are doing something about China over Hong Kong legislation (declines to give any details); US will announce actions on China by the end of the week
- TWTR US President Trump: Twitter is now interfering in 2020 presidential election and stifling free speech (reminder Twitter now includes a ‘fact check’ of Pres Trump tweets about mail-in ballots on his Twitter page)
- DPZ Reports prelim Q2 8-week US SSS +14.0% y/y; seeing a tailwind as consumer behavior across the restaurant industry has shifted toward delivery and carryout; nearly all of the Company’s U.S. stores remain open
- NTES Hong Kong IPO expected to raise HK$15.6-23.4B ($2-3B) which it launches next week (bigger than the prior speculated HK$7.8-15.6B) – HK press
- (CA) Bank of Canada Gov Poloz (outgoing): if further monetary stimulus is needed to reach inflation targets, we have tools available to deliver that stimulus
- BA Union: Boeing accepted 1.3K engineers for buyouts; Will begin cutting jobs in Seattle area this week
- (HK) US Senator Marco Rubio (R-FL): If China’s rubber stamp legislature moves forward on Thursday with blowing up “One Country, Two Systems” in Hong Kong, the US State Department will have no potion but to certify that Hong Kong is no longer autonomous and Sanctions should follow – Tweet
Europe
- (DE) Germany federal govt and state premiers reach agreement to extend social distancing rules until June 29th
- (UK) Chancellor of the Exchequer (Fin Min) Sunak plans to announce a ban on companies from adding more employees to the furlough program – FT
Levels as of 1:15ET
- Hang Seng -0.6%; Shanghai Composite -0.0%; Kospi +0.1%; Nikkei225 +0.6%; ASX 200 +0.3%
- Equity Futures: S&P500 +0.6%; Nasdaq100 +0.7%, Dax +0.8%; FTSE100 +0.4%
- EUR 1.0992-1.0952; JPY 107.61-107.36; AUD 0.6660-0.66631; NZD 0.6204-0.6179
- Commodity Futures: Gold -0.6% at $1,696/oz; Crude Oil -0.5% at $34.17/brl; Copper -0.1% at $2.41/lb
