Asia Summary
Asian equity markets opened the session mixed. The Nikkei 225 resumed trade slightly higher, following Friday’s holiday.
However, Japanese tech name, Furukawa Electric, has traded lower by over 16%, following disappointing earnings.
Softbank has declined by over 2%, amid reports that T-Mobile and Sprint would end their merger talks. Following this news, Softbank also announced that it was planning to raise its stake in Sprint to less than 85%. The Japanese company owned an ~83% stake as of June 5th, according to Sprint’s proxy statement.
In other tech M&A news, it was reported on Friday that Broadcom was said to consider an ~$103B cash and stock bid for Qualcomm.
Nasdaq Futures are currently lower by over -0.1%. Supplier Foxconn is said to have been asked by Apple to accelerate its production of the iPhone X amid strong sales, said a Taiwanese press report. Samsung and Hynix have declined by over 0.4%, in South Korea.
SK Telecom has declined by over 2%, as Q3 operating profits missed expectations.
South Korean consumer discretionary companies, including Lotte Shopping, are gaining amid speculation that China tourist numbers may rise in 2018. Fast Retailing has gained over 1.5%, as the company reported a 8.9% rise in its Oct domestic SSS. Cathay Pacific has declined over 3%, as Qatar Airways will acquire a 9.6% stake in the company from Kingboard Chemical.
Air China, which owns an over 29.9% stake in Cathay, has declined by over 2%. The overall Hang Seng China Enterprise index has declined by over 1% on the session amid weakness in the property sector. Real estate sales firm Sunac China has dropped over 6%.
Financials in China have also declined, as China’s 10-year bond yield has declined on the session. HNA Holdings Group has declined over 3%. On Friday’s session, China’s NDRC (state planner) announced that it had issued draft guidelines on overseas investment by Chinese companies.
Australia’s Westpac has traded lower by over 2%, as FY earnings missed market expectations. Shares of DBS in Singapore are lower by over 0.5%. The company’s Q3 profit missed market expectations, amid a rise in the allowance for credit losses related to the oil/gas sector. Japanese mega banks are trading lower, as Mitsubishi UFJ and Mizuho have declined by over 0.5%. Both companies are due to report earnings on Monday, November 13th.
In the auto sector, Honda, which reported its earnings last week (Nov 1st) has gained over 1.5%. Shares of Toyota, which is due to report results on Tuesday, are higher by over 0.3%. Isuzu Motor has gained over 2% amid speculation that H1 operating profits may rise by 7%. Meanwhile, Mazda has declined by more than 3% as its quarterly earnings missed expectations. Subaru has dropped over 2%, after cutting its FY forecast.
Japan steelmakers are trading generally lower. Nippon Steel has declined by over 1.5%. Kobe Steel, which gained over 10% last week, is lower by over 2%. There has been speculation on today’s session that certain executives at the steel company could seek to resign amid the recent data falsification issue.
Australian commercial blasting systems manufacturing Orica has declined by over 8% after reporting a drop in FY profits.
Energy companies in Australia are trading generally higher. Santos has gained over 2%, while shares of Woodside Petroleum are up over 1.5%. Brent Crude prices have risen on the session to trade at highs not seen since July 2015.
Over the weekend, it was reported that Saudi Arabia’s Crown Prince ordered the arrest of individuals including members of the royal family, ministers and investors. On Sunday, it was also reported that a Saudi-led coalition intercepted a ballistic missile that was fired towards Saudi Arabia. The Saudi coalition has called the incident a ‘direct Iran military aggression’ and said it would temporarily close all Yemeni crossings.
USD/JPY has risen by over 0.4% to trade at highs not seen since March. Speaking from Japan, US President Trump, who has started his 12-day trip to Asia, said currently trade with Japan is not fair as he noted the US’ trade deficit with Japan. Bank of Japan (BoJ) Gov Kuroda reiterated that the central bank will continue with its ‘powerful easing’ and it is crucial that people actually experience inflation above 2%.
US Long Bond Futures are lower by over 0.1%. NY Fed President Dudley (FOMC voter) is expected to retire before his term expires in Jan 2019, according to a US financial press report.
Looking ahead, the Reserve Bank of Australia (RBA) is expected to hold its monetary policy meeting on Tuesday’s session. Wednesday is the tentative release date for China’s Oct Trade Balance. The Reserve Bank of New Zealand (RBNZ) is due to meet on Thursday’s session, while’s the RBA’s Quarterly
Monetary Policy Statement and economic forecasts are due to be released on Friday.
Key economic data
(JP) Japan Oct PMI Composite: 53.4 v 51.7 prior (5-month high); Services:53.4 v 51.0 prior (26-month high)
(NZ) NEW ZEALAND Q4 2-YR INFLATION EXPECTATION: 2.0% V 3.2%E
(NZ) New Zealand Oct ANZ Commodity Price m/m: -0.3% v 0.8% prior
(JP) Bank of Japan (BOJ) Sept 20-21st Policy Meeting Minutes: momentum towards price goal is being maintained
Speakers and Press
Japan
(JP) Bank of Japan (BOJ) Gov Kuroda: Reiterates BOJ will continue with powerful easing; Price moves weak compared with improvement in the economy
Korea
(KR) South Korea, US and Australia to conduct joint naval drills near Jeju
Australia
(AU) Fitch: Australia major banks will face earnings pressure in FY18
China/Hong Kong
(CN) PBOC Gov Zhou: The market should play a "decisive role" in allocating financial resources, but also needs to be stronger regulation and Communist Party leadership in guiding financial reform – Chinese press
(CN) Moody’s Report: Property developers in China face record bond maturities in 2018
Outside Asia
(JP) During President Trump’s visit to the country, Japan to tell US it will strengthen sanctions against North Korea – Japanese Press
(US) NY Fed President Dudley (FOMC voter) to retire before term expires in Jan 2019; could leave as soon as the Spring of 2018 – financial press
(SA) Saudi-coalition calls weekend missile incident a ‘direct Iran military aggression’; to temporarily close all Yemeni crossings
(SA) Saudi Arabia’s Crown Prince ordered the arrest of individuals including members of the royal family, ministers and investors – financial press
Asian Equity Indices/Futures (23:00ET)
Nikkei -0.0%, Hang Seng -1.0%; Shanghai Composite -0.1%; ASX200 -0.1%, Kospi -0.8%
Equity Futures: S&P500 -0.2%; Nasdaq100 -0.2%, Dax -0.1%; FTSE100 -0.2%
FX ranges/Commodities/Fixed Income (23:00ET)
EUR 1.624-1.1596; JPY 114.74-113.96; AUD 0.7659-0.7638;NZD 0.6914-0.6887
Dec Gold +0.1% at $1,269/oz; Dec Crude Oil +0.2% at $55.76/brl; Dec Copper +0.8% at $3.14/lb
(AU) Australia buys back A$400M in Oct 2018, 2019 bonds
(AU) Australia sells A$400M in 2037 bonds; avg yield 3.0580%; bid-to-cover 2.54x
(CN) PBoC OMO: Skips OMO v skipped prior (3rd consecutive skip); Net drains CNY160B
USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6247 V 6.6072 PRIOR
(KR) Bank of Korea (BoK) sells KRW270B in 6-month monetary stabilization bonds at 1.55% v 1.59% prior
Equities notable movers
Australia/New Zealand
WBC.AU Reports FY17 (A$) Cash Earnings A$8.06B, +3% y/y; Net A$7.99B v A$7.45B y/y; Rev A$21.8B, +3.9% y/y; -2.4%
ORI.AU Reports FY17 (A$) Net profit 386.2M, -0.7% y/y; EBIT A$635M, -1% y/y; Rev 5.04B, -1% y/y; -8.1%
MEA.AU Guides FY18 EBITDA not likely to reach A$16.6M (below expectations); initial plan is to cut expenses by A$5M/year; -14%
Japan
2371.JP Reports H1 Net profit ¥7.14B v ¥6.98B y/y, Op profit ¥10.5B v ¥10.1B y/y, Rev ¥21.7B v ¥20.8B y/y; +7.6%
5801.JP Reports H1 Net ¥21.7B v ¥6.7B y/y, Op ¥21.8B v ¥13.3B y/y; Rev ¥457.5B v ¥397.6B y/y; -16.5%
US
S Announces strategic MVNO agreement with Altice USA; financial terms not disclosed
TMUS T-Mobile and Sprint End Merger Discussions
S Softbank announces its intention to raise stake through open market transactions or otherwise, subject to market conditions and other factors
