Asia Summary
Asian equity markets opened higher as North Korea’s Founder’s day passes without another missile launch. The PBOC set the yuan reference rate at 6.4997, the 11th consecutive stronger setting and the longest streak since 2005. The PBOC also again skipped open market operations (OMO) for the 3rd consecutive session and drained a net CNY40B. Offshore yuan 1-day interbank rate rose 78bp to 2.29433%. Over the weekend China August CPI and PPI came in hotter than expected rising 1.8% on the year and PPI 6.3%, Shanghai Composite remained one of the more modest movers in the day.
USD/KRW fell 0.4% as the market waits for fresh sanctions on North Korea by the UN. North Korea warned that there would be retaliation if the UNSC approves harsher sanctions. On Friday, the PBoC announced its plan to remove reserve conditions for yuan forwards trade; to reduce reserve requirements from 20% to zero; effective Monday, Sept 11th. As a result, the offshore yuan declined 0.3% in Hong Kong offshore market in the premarket. This was confirmed in today session.
NZD/USD weakened around 0.2% after August card spending retail fell m/m for the 4th consecutive month. The Kiwi continued to extend its decline falling as low as 0.7225 after NZ Institute of Economic Research (NZIER) lowered inflation forecast for 2017-18; Cuts 2017/18 inflation (CPI) forecast to 1.1% (vs. 1.5 in June), GDP growth forecast to 2.9% (vs 3.1% in June)
Key economic data
(CN) CHINA AUG CPI Y/Y: 1.8% V 1.6%E; PPI Y/Y: 6.3% V 5.7%E (over the weekend)
(NZ) NEW ZEALAND AUG CARD SPENDING RETAIL M/M: -0.2% V 0.5%E (4th consecutive decline); TOTAL M/M: +0.6% V -0.6% PRIOR
(JP) JAPAN JUL MACHINE ORDERS M/M: 8.0% V 4.1%E; Y/Y: -7.5% V -7.8%E
(CN) China Aug Fiscal Rev CNY1.07T, y/y: 7.2% v 11.1% prior; YTD y/y: 9.8%
Speakers and Press
China
(HK) Hong Kong SFC said to consider revising rules in order to monitor initial coin offerings (ICOs) – HK press
(CN) PBOC confirms have removed reserve requirement on FX forward trading due to market environment change
(CN) China PBOC Shenzhen branch said the city saw large increase in consumer loans for individuals recently and part of the loans may flow into the property market – Chinese press
(CN) According to UOB analyst, China’s removal of 20% reserve requirement on fx forwards trading likely to be symbolic as there’s little desire for Chinese companies to buy USD now
Korea
(KR) North Korea says closely following US’ moves with ‘vigilance’; ready and willing to use ‘any form of ultimate means’ – KCNA
(KR) Follow Up: UN to vote on US drafted sanction on North Korea over nuclear tests Monday afternoon
Japan
(JP) Japan Defense Min Onodera: Will seek to add AEGIS Ashore (missile defense) as soon as possible
Other
(SA) Saudi Arabia Energy Min: The oil min Al-Falih discussed with his Venezuelan and Kazakh counterparts the possible extension of the global oil supply cut pact beyond March 2018
Asian Equity Indices/Futures (00:00ET)
Nikkei +1.4%, Hang Seng +1.0%; Shanghai Composite +0.1%, ASX200 +0.8%, Kospi +0.8%
Equity Futures: S&P500 +0.5%; Nasdaq100 +0.6%, Dax +0.1%, FTSE100 +0.4%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.2039-1.1999; JPY 108.56-107.86; AUD 0.8071-0.8033; NZD 0.7266-0.7225
Dec Gold -0.7% at $1,341/oz; Oct Crude Oil +0.8% at $47.88/brl; Sept Copper +0.4% at $3.05/lb
(AU) Australia buys back A$500M in 2018, 2019 bonds
(AU) Australia sells A$500M in 4.5% 2033 bonds; avg yield 2.9089%; bid-to-cover 2.52x
USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.4997 V 6.5032 PRIOR (11TH STRAIGHT STRONGER YUAN SETTING, longest streak since 2005)
(CN) PBOC SKIPS OPEN MARKET OPERATIONS (OMO) V SKIPPED PRIOR (3rd straight skip); DRAINS NET CNY40B
(KR) Bank of Korea (BOK) sells KRW670B in 1-yr monetary stabilization bonds at 1.5% v 1.53% prior
(KR) South Korea sells 10-yr Govt bond at 2.245%
Equities notable movers
Australia/New Zealand
SIQ.AU To acquire Aspire Benefits Management (FY18 EPS accretion of ~12%) and assets of RACV Salary Solutions for combined total of A$40.2M; +6%
TAH.AU Says Tatt’s independent experts are positive on merger transaction, 2.5%
Hong Kong/China
(CN) China considering setting deadline to ban production and sales of fossil fuel vehicles – press (BYD +6%, SAIC 1%, Geely, +1.8%)
1913.HK Reports H1 Net €115.7M v €143Me, EBITA €279.6M, Rev €1.47B v €1.53Be; -11%
South Korea
023530.KR Exec: Considering options for China supermarkets, including sale; +1.8%
