Asia Summary
Asian equity markets opened generally higher. After hitting multi-year highs on Friday’s session, the Nikkei 225 has continued to gain on today’s session. Japanese technology names, including Toshiba, Hitachi and Softbank have all traded higher following today’s weakness in the yen, Friday’s gain seen on the Nasdaq and the recent earnings guidance out of HP Inc.
Australia’s ASX 200 has gained over 0.5%. Various names including, OZ Minerals, have started to release their Q3 production updates. On tomorrow’s session, iron-ore giant Rio Tinto is expected to release its production report and its shares have gained over 3% on today’s session. On the macro front, the Reserve Bank of Australia (RBA) Oct meeting minutes are due to be released on Oct 17th, while the September employment change figures are due on Oct 19th.
The South Korean Won has gained for the 6th straight day, even as its navy confirmed the start of joint military drills with the US. In Taiwan, solar names have traded broadly higher following a report that the government is planning to fund a new solar company.
In New Zealand, the government formation talks continue to drag on. Earlier today, the head of the ruling National Party English said the government formation process could take until the end of the week, as the First Party continues to decide on a coalition partner. Later this week, New Zealand’s Q3 CPI data is due to be released on Oct 17th.
The Hang Seng has hit highs not seen since Dec 2007 amid over 4% gains in shares of Hong Kong Exchange [0388.HK]. Cheung Kong Property Holdings [1113.HK] has gained over 2%, as there has been press speculation that the company will sell most of its stake in The Center office tower in Hong Kong for a record HK$40.2B. Great Wall Motor [2333.HK] had earlier traded higher by over 9%, but shares have since pared gains. Last week, the company’s shares rose over 12% amid speculation related to a partnership with BMW.
In China, the ChiNext small-cap index has declined and underperformed the broader market. At the same time, the country’s 10-year sovereign bond yield has traded at over 2 year highs.
China’s Sept banking data released over the weekend (M2, M1, New Yuan Loans and Aggregate Financing) all beat market expectations. The inflation data released earlier today was mixed, as CPI was inline while PPI rose more than expected. Looking ahead, China’s twice per decade Communist Party Congress is due to begin on Oct 18th, while Q3 GDP is expected to be released on Thursday, Oct 19th. Ahead of the data, PBoC Gov Zhou was quoted as saying that H2 GDP growth was seen at 7%, which would be ahead of the 6.9% readings seen in each Q1 and Q2.
Separately, Zhou said total debt leverage in China is too high. The latter comments by the Chinese central banker were made at the Group of 30 seminar in Washington D.C. Other central bankers that made comments at this event over the weekend included, Fed Chair Yellen. ECB’s Draghi also made comments on Saturday on the sidelines of the IMF and World Bank meetings, which also occurred in the US capital.
Brent Crude futures are higher by over 1%, amid reports that Iraqi forces have advanced towards Kurdish-held Kirkuk. Recall in late Sept, the Kurdish region held a referendum and there was said to be 90% support for independence.
Meanwhile in Catalonia, today is the deadline imposed by Spain’s central government for the leaders of the region to clarify their independence stance. According to a prior press report, if Catalan President Puigdemont confirmed by today that he has declared independence, he will be given a further 3 days to withdraw the declaration.
Key economic data
(CN) CHINA SEPT NEW YUAN LOANS (CNY): 1.27T V 1.23TE
(CN) CHINA SEPT AGGREGATE FINANCING (CNY): 1.82T V 1.57TE
(CN) CHINA SEPT M2 MONEY SUPPLY Y/Y: 9.2% V 8.9%E; M1 MONEY SUPPLY Y/Y: 14.0% V 13.5%E
(UK) Oct Rightmove House Prices m/m: 1.1% v -1.2% prior; y/y: 1.4% v 1.1% prior
(CN) CHINA SEPT CPI M/M: 0.5% V 0.3%E; Y/Y: 1.6% V 1.6%E; PPI Y/Y: 6.9% V 6.4%E
Speakers and Press
Japan
(JP) BoJ Gov Kuroda: Real interest rates expected to fall further as inflation expectations rise, further enhancing effects of BoJ’s monetary easing
Korea
(KR) South Korea Fin Min Kim: the worst would be soon over with China after the Communist Party Congress in Beijing – financial press
China
(CN) PBOC Gov Zhou: Total debt leverage in China is too high, there is no clear fiscal discipline to constrain local govts
(CN) China Q3 GDP may have grown ~6.8% y/y; Q4 GDP may grow 6.7% and 6.8% in 2017 – Chinese Press
(CN) PBOC Gov Zhou: Sees H2 GDP to reach 7%
Australia/New Zealand
(NZ) New Zealand National Party (ruling) leader English said outstanding issues remain and further talks are needed before government can be formed; government formation could take until end of week – NZ Press
Europe
(UK) UK PM May’s Office confirms she will meet with EU officials Barnier and Juncker
(EU) ECB Constancio says reinvestment policy will continue until further notice
(EU) Some ECB members said to identify €2.5T limit for QE – US financial press
(EU) On Saturday, ECB President Draghi reiterated have to be persistent with our monetary policy
US
(US) Fed Chair Yellen: New normal will be lower interest rates than we’ve seen historically; biggest surprise in the US economy this year has been inflation
(US) Fed’s Rosengren (moderate, non-voter): 3-4 rate hikes next year will probably be appropriate; may need to overshoot on rates if unemployment is below 4% while inflation reaches target
Asian Equity Indices/Futures (00:00ET)
Nikkei +0.7%, Hang Seng +0.9%; Shanghai Composite -0.1%; ASX200 +0.7%, Kospi +0.1%
Equity Futures: S&P500 +0.1%; Nasdaq100 +0.2%, Dax +0.1%; FTSE100 +0.1%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.1823-1.1798; JPY 112.08-111.74; AUD 0.7889-0.7868;NZD 0.7183-0.7166
Dec Gold +0.0% at $1,304/oz; Nov Crude Oil +0.9% at $51.89/brl; Dec Copper +0.6% at $3.15/lb
(CN) China PBOC injects CNY20B in 7-day reverse repos v skipped prior; injection matches maturities
USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.5839 V 6.5866 PRIOR
(CN) PBOC has completed trial runs on the algorithms needed for digital currency supply, taking it a step closer to addressing the technological challenges associated with digital currencies – Chinese press
(KR) Bank of Korea (BOK) sells KRW950B in 1-yr bonds at 1.61%
Equities notable movers
Australia/New Zealand
NEU.AU Confirms Phase 3 plan for Rett syndrome at FDA Meeting; +17.5%
TGA.AU Cuts FY17 Net A$17-20M (prior A$24-26M); Guides H1 Net A$11M; -22%
Korea
000080.KR Operations at four of the six factories halted on Friday, as union decided to stage a strike after failure of negotiations on wage increases – filing; -8%, 6-yr low
006400.KR Said to be selling retirement pension to Samsung Fire & Marine Insurance without going through without competitive bidding – press; -5%
China/Hong Kong
2333.HK Unusual share price movement and trading volume movement: cooperation for vehicles of MINI brand is still at preliminary stage (Friday headline), +10% daily limit for premarket
US
TSLA Said to have fired ~400 employees in the past week as part of its company wide annual review – financial press
