Asia Summary
Asian equity markets have opened generally higher. The Nikkei 225 opened up by over 1.1%, as Japan PM Abe’s ruling coalition won a supermajority in the lower house, following Sunday’s elections. Overall, the LDP/Komeito coalition won at least 312 seats, up from 290 prior.
Automakers, Honda and Nissan have rebounded from the declines seen on Friday’s session. At the same time, the ‘mega-banks’ in Japan are also all trading higher by over 0.7% following the election results.
China Life has risen by over 3%, after reporting an over 90% increase in its 9-month profits, which it said was mostly driven by higher investment returns.
Financials in South Korea are trading lower amid the declines being seen in 3-year bond yields. Following last week’s Bank of Korea (BOK) meeting , where there was a hawkish dissenter, a ruling party official said the odds of a rate hike are ‘rising’. Bank of Korea Gov Lee also told parliament that the direction for future policy is ‘rate increase’, but that the central bank did not have to respond ‘immediately’ after a US Fed rate hike. Besides this, South Korea’s government is said to be planning to hold a meeting to discuss household debt.
Japanese tech firms are trading generally higher. Softbank has gained over 1%. Shares of Canon Inc are also trading higher ahead of its later today earnings report. Taiwan Semi has gained over 0.7%. The company is said to have received an exclusive chip order from Apple, according to a press report. Mediatek has also gained amid press speculation related to a chip order from Alibaba.
South Korean chip makers are trading generally higher. Samsung Electronics may name a new CEO by as early as this week, according to a South Korean press report. Hynix has gained over 2%, ahead of its earnings which are due to be released on Thursday. Other Korean companies due to also report on Thursday include LG Electronics, Posco and Hyundai Motor.
Utilities and power plant services firms in South Korea, including KEPCO Engineering & Construction, are trading lower following the release of an opinion poll showing majority support for a nuclear-phase out policy.
In Singapore, Noble Group has declined by over 2% after saying it expects to report a loss in Q3. The company additionally disclosed the sale of its Americas oil liquids business to Vitol for $582M in net proceeds.
Australian telecom, Telstra, has gained over 1.5%, following a favorable ruling by Australia’s competitor regulator, the ACCC.
Hong Kong listed China Mobile has declined by over 0.3%, despite reporting y/y growth in 9-month profits and revenues. Amid this drop, the overall Hang Seng Index has pared the gains seen at the open. Sportswear retailer Li Ning has declined by over 2%, following a report that its Q2 orders declined y/y. Hong Kong-listed aluminum producer Rusal, has traded lower by over 0.5%, after issuing its Q3 production update. Railway stocks in Hong Kong are declining, as shares of Zhuzhou CRRC Times Electric are lower by over 6%, as its Q3 results missed market expectations.
USD/JPY has risen by over 0.4% following Japan’s election results, as some speculated on whether there would be any implications for stimulus efforts in Japan and BoJ Gov Kuroda, whose first term is scheduled to end April 2018. The Aussie is currently little changed ahead of Wednesday’s release of Australia’s Q3 CPI data.
Foreign exchange traders are also expected to pay close attention to the ECB’s policy decision, which is due to be released on Thursday, Oct 26th.
In fixed income, China is expected to hold investor meetings in Hong Kong on Oct 25th, regarding its first planned US dollar denominated bond issuance since 2004.
In the US, there is press speculation that Cisco is near an agreement to acquire Broadsoft Inc, while in the lumber space Potlatch is said to be close to acquiring Deltic Timber in an all-stock deal. US companies due to report earnings later today include Halliburton, Hasbro, Illinois Tool Works, Kimberly-Clark, Rambus, Seagate Technology, State Street, T-Mobile US, VF Corp and Whirlpool.
Key economic data
(KR) South Korea Sept PPI M/M: 0.5% v 0.3% prior; Y/Y: 3.3% v 3.2% prior
(CN) CHINA SEPT PROPERTY PRICES M/M: RISE IN 44 OUT OF 70 CITES VS 46 PRIOR; Y/Y RISE IN 67 OUT OF 70 CITIES VS 68 PRIOR
Speakers and Press
Japan
(JP) Japan PM Abe’s ruling LDP/Komeito coalition wins supermajority in elections with 312 seats* or ~67.1%(vs. 290 prior)
(JP) Bank of Japan (BOJ) Oct Loan Officer Opinion Survey: Company Loan Demand Index 6 v 3 prior; Govt Loan Demand -2 v 4 prior; Household Loan Demand 8 v 2 prior
(JP) Japan Chief Cabinet Sec Suga: Want to speed up Abenomics, with the economy as top priority
Korea
(KR) South Korea Ruling Party Official: Bank of Korea (BOK) rate hike odds ‘rising’; to meet with government to discuss household debt
(KR) Bank of Korea (BOK) will continue efforts to stabilize markets as volatility can rise on North Korea risks and Fed’s monetary policy normalization
(KR) Bank of Korea (BOK) Gov Lee: Can consider rate hike when economic recovery is ‘solid’ and inflation reaches target; Direction for future policy is rate increase; Need time to judge if recovery continues for rate hike – Parliamentary Comments
China/Hong Kong
(CN) China Minister of Housing and Urban-Rural Development Wang Menghui: property market is expected to continue stabilizing into Q4 – Xinhua
(CN) China 69 SOEs expected to finish restructuring by December – Chinese press
Europe
(ES) Spain PM Rajoy invokes Article 155 of the Constitution: plans to dissolve the Catalonia govt and curb its powers, and call elections within 6 months
Asian Equity Indices/Futures (00:00ET)
Nikkei +1.2%, Hang Seng -0.7%; Shanghai Composite +0.0%; ASX200 -0.0%, Kospi +0.0%
Equity Futures: S&P500 +0.0%; Nasdaq100 +0.0%, Dax +0.0%; FTSE100 +0.0%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.1778-1.1751; JPY 114.10-113.66; AUD 0.7825-0.7802;NZD 0.6968-0.6931
Dec Gold -0.2% at $1,277/oz; Dec Crude Oil +0.5% at $52.09/brl; Dec Copper -0.1% at $3.17/lb
(AU) Australia sells A$700M in 2027 bonds, avg yield 2.8162%; bid-to-cover 3.96x
USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6205 V 6.6092 PRIOR (weakest fixing since Oct 9th)
(CN) PBoC OMO: Injects CNY200B in 7 and 14-day reverse repos v CNY80B injected prior; injects net CNY140B
(KR) Bank of Korea (BOK) Sells KRW500B in 6-month monetary stabilization bonds, avg yield 1.59%
(KR) South Korea sells 20-year bonds, avg yield 2.385%
(AU) Australia buyback A$700M in March and Oct 2019 bonds
Equities notable movers
Australia/New Zealand
WPP.AU Guides FY17 Net profit below prior guidance of mid-single digits growth; -11%
VOC.AU Reports Q1 ARPU for NBN services A$62.60 v A$64.23 end of FY17; AMPU A$19.95 v A$20.26 end of FY17; To sell NZ unit, mulling sale of other assets; +1.8%
GRR.AU Reports Q1 Iron ore pellet sales (DMT) 359.1K v 184Kt q/q, +15.4%
China/Hong Kong
3898.HK Reports 9-month (CNY) Net profit 1.52B v 1.89B y/y, Rev 9.53B v 9.86B y/y; -6.6%
Singapore
NOBL.SG Guides Q3 adj Net loss S$100-50M (total net loss S$1.25-1.1B); Sells Noble Americas Corp to Vitol US for gross consideration of ~$1.42B; -4%
