Asia Summary
Asian equity markets opened the session mixed. Chinese equity markets have traded somewhat lower as GDP in Q3 met expectations. Recall, there were some expectations that the figure could be better than expected.
The Nikkei 225 opened higher, as the index attempts to gain for the 13th straight session, which would be the longest winning streak in over 20 years.
Japanese banks have traded broadly higher amid the recent gains in government bond yields and earlier rise in some of the larger US banks. Australian banks are also generally trading higher.
Australian energy company quarterly updates were in focus. Santos has gained after raising its FY production forecast, while Woodside Petroleum has declined after reporting lower Q3 revenues and naming a new CFO.
In terms of technology, Taiwanese companies that supply Apple are generally lower following a press report that the US tech firm is said to have cut iPhone 8 orders for Nov and Dec. Also, South Korean chip makers are once again trading lower on today’s session. LG Electronics has gained over 5% on reports that the company will partner with Qualcomm on self-driving auto components.
Chinese telecom ZTE Corp has declined by over 3%, despite reporting y/y growth in its 9-month net profits and revenues.
In describing China’s GDP data, the Stats Bureau said in the Jan-Sept period consumption contributed 64.5% to GDP. It also expects the domestic economy to maintain improving momentum. Amid the data, China’s 10-year bond yield has declined.
Australia’s 3-year bond yield has risen by over 4bps, after the September employment change beat expectations, while the unemployment rate unexpectedly fell. Yields have also moved higher following the gains seen in US Treasury yields on Wednesday’s session amid comments from influential NY Fed President Dudley. Dudley said the Fed is on the path to achieve 3 rate hikes in 2017 (implying one more rate increase this year). Recall when Dudley previously spoke on Oct 6th, he did not comment on the timing for rate hikes.
At the longer end of the curve, earlier today, Japan’s 20 and 30-year JGB yields hit highs not seen since July. Bank of Japan (BoJ) official Nakaso said the central bank will adjust the shape of the yield curve as needed. He added that the BoJ can achieve the same rate with smaller amount of JGB purchases.
Meanwhile, in South Korea the 10-year bond yield has risen over 3bps, as even though the Bank of Korea (BOK) left rates unchanged (as expected), there was a hawkish dissenter at today’s policy meeting, who voted for a rate hike. The central bank additionally raised its 2017 GDP growth and inflation forecasts as it believes the impact of souring trade relations with China will ease in 2018.
In foreign exchange, the PBoC’s Sept Net Forex Purchase Position saw its first m/m rise since Oct 2015. The data comes amid other signs of easing capital outflows from China. PBoC Gov Zhou said the yuan’s trading band (currently 2%) is not too important and the expansion of it is not a current focus.
The Aussie traded toward session highs following the better than expected Sept employment change. However, the currency has since pared gains after the in line China GDP data. The Kiwi has traded lower, as the government formation process in New Zealand continues. On yesterday’s session, a NZ First Party official said an announcement was expected during this afternoon.
Looking ahead, US companies due to report earnings today include Bank of NY Mellon, Intuitive Surgical, Nucor, PPG Industries, PayPal, Philip Morris and Verizon.
Key economic data
(CN) CHINA Q3 GDP Q/Q: 1.7% V 1.7%E; Y/Y: 6.8% V 6.8%E
(JP) JAPAN SEPT TRADE BALANCE: ¥670.2B V ¥556.8BE; ADJ: ¥240.3B V ¥367.3B PRIOR
(AU) AUSTRALIA SEPT EMPLOYMENT CHANGE: +19.8K V +15.0KE; UNEMPLOYMENT RATE: 5.5% V 5.6%E
(AU) Australia Sept RBA Govt FX Transactions (A$): -762M v -581M prior
(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.25%; AS EXPECTED
(CN) CHINA SEPT FIXED ASSETS EX RURAL YTD Y/Y: 7.5% V 7.7%E
(CN) CHINA SEPT RETAIL SALES Y/Y: 10.3% V 10.2%E; YTD Y/Y: 10.4% V 10.3%E
(CN) CHINA SEPT INDUSTRIAL PRODUCTION Y/Y: 6.6% V 6.5%E; YTD Y/Y: 6.7% V 6.7%E
(CN) China PBoC Sept Net Forex Purchase Position (CNY): +0.9B m/m (first rise since Oct 2015)
Speakers and Press
Japan
(JP) Japan PM Abe Cabinet approval rating declines 2 pct points to 38% – Asahi Poll
(JP) BoJ Nakaso: Will adjust shape of yield curve as needed; BoJ can impact rates even if JGBs to buy become scarce
South Korea
(KR) South Korea Finance Ministry: While North Korean tensions have persisted, financial markets have been stable and the impact on the economy has been limited – statement ahead of parliamentary audit due Oct. 19-20
China/Hong Kong
(CN) China Economist sees China avg annual GDP growth at 5% from 2020-2035 – Chinese press
(CN) PBOC Yi Gang: Price stability not equal to financial stability -speaking at 19th Party Congress
(CN) China Banking Regulatory Commission (CBRC) Guo: China to deepen reform, opening up banks – speaking at 19th Party Congress
(CN) China Wind data shows Q3 performance forecast reports from China’s listed companies have beaten market expectations – Xinhua
USD/CNY (CN) PBOC Gov Zhou: Yuan trading band is not too important, band expansion is not a current focus
(CN) China FX Regulator SAFE Chief/PBoC Pan: China FX market supply and demand basically balanced
(CN) China Stats Bureau (NBS) Xing: Jan-Sept consumption contributed 64.5% to GDP growth, 32.8% for capital formation and 2.7% for net exports; Domestic economy to maintain steady and improving momentum
Australia/New Zealand
(NZ) New Zealand National Party Leader English: Does not know whether NZ First will support National; Will present to caucus the ‘broad parameters’ of agreement with NZ First and will seek their support
Asian Equity Indices/Futures (00:00ET)
Nikkei +0.4%, Hang Seng -0.2%; Shanghai Composite -0.4%; ASX200 +0.0%, Kospi -0.4%
Equity Futures: S&P500 -0.0%; Nasdaq100 -0.1%, Dax -0.1%; FTSE100 -0.1%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.1816-1.1792; JPY 113.09-112.88; AUD 0.7871-0.7841;NZD 0.7171-0.7123
Dec Gold -0.1% at $1,281/oz; Nov Crude Oil -0.1% at $51.98/brl; Dec Copper -0.1% at $3.17/lb
(NZ) New Zealand sells NZ$200M in 2.75% 2025 bonds; avg yield 2.7545%; bid-to-cover 2.66x
(CN) China PBOC injects CNY140B in combined 7-day and 14-day reverse repos v CNY300B prior; injects net CNY100B v CNY270B prior
USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.6093 V 6.5991 PRIOR
(JP) Japan MoF sells ¥1,78T in 5-yr JGBS; avg yield -0.0820% v -0.110% prior; bid-to-cover 4.24x v 4.07x prior
Equities notable movers
Australia/New Zealand
RCR.AU Awarded gas-fired power plant contract with PT Kartanegara Energi Perkasa in Indonesia worth ~A$75M; +6%
PEN.AU To divest 74% stake in South Africa Karoo projects through an active process; -4.8%
Korea
047810.KR Will not to put co. under evaluation for possible delisting, trading resumes; +14.3%
China/Hong Kong
763.HK Reports 9-month (CNY) Net 3.91B v 2.86B y/y, Op 5.29B v 952M y/y, Rev 76.6B v 71.6B y/y; -5%
US
AAPL Said to cut orders for iPhone 8 and Plus by around 50% for Nov and Dec to 5-6M units/month – Taiwanese Press; -0.9% after hours
