Trump Working With China’s Xi To Resolve ZTE Issue

May 14 18, 07:00 GMT

General Trend

Asian equity markets trade generally higher; Hang Seng again outperforms
US President Trump says he is working with China regarding telecom name ZTE
Australia’s Telstra declines over 3% after giving cautious outlook
China PBoC conducts 1-year medium-term lending facility (MLF) to offset maturing funds
Malaysian assets face selling pressure in first trading session since last week’s elections; later pare losses
Indonesia government bonds rally
US/China trade talks are expected to be held on Tuesday (US financial press)
OPEC expected to be able to offset oil losses from Iran sanctions – press

Headlines/Economic Data

Japan

Nikkei 225 opened -0.2%; closed +0.5%

Topix Real Estate Index +2.9%, Securities +1%. Marine Transportation +0.9%, Iron & Steel +0.9%, Retail trade +0.7%
(JP) JAPAN APR PPI M/M: 0.1% V 0.1%E; Y/Y: 2.0% V 2.0%E
(JP) BoJ Gov Kuroda: Govt has made progress to restore fiscal health; more needs to be done on structural reforms – Parliament comments (Friday after the close)
(JP) Japan PM Abe to consider meeting with North Korea’s Kim, but significant obstacles remain – Nikkei

Korea

Kospi opened +0.2%
(KR) Major South Korea financial firms are getting ready to kick off a massive recruiting effort in H2 of this year – Korean press
(KR) North Korea planning to dismantle nuclear test site in a ceremony scheduled between May 23-25th – Korean press
(KR) South Korea sells KRW650B v KRW650B indicated in 10-year bonds: avg yield 2.785% v 2.62% prior

China/Hong Kong

Hang Seng opened +1.2%, Shanghai Composite +0.1%
Hang Seng Industrial Goods index +2.4%, Property & Construction +1.7%, Financials +1.6%, Info Tech +1.5%
763.HK “President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!” – Tweet from President Trump
(CN) PBoC Adviser reiterates sees no major short-term change in yuan (CNY) rate – Chinese Press
(CN) PBOC CONDUCTS CNY156B V CNY367.5B PRIOR IN 1-YR MEDIUM-TERM LENDING FACILITY (MLF) AT 3.3% V 3.3% PRIOR; CONDUCTS CNY80.1B IN PLEDGE SUPPLY LENDING (PSL) LOANS; the MLF injection effectively rolls over the same amount which is due to mature
(CN) China insurers are said to be channeling funds through shadow lenders to real estate and local government infrastructure projects in a bid to boost returns – financial press
(CN) China PBoC sets yuan reference rate 6.3345 v 6.3524 prior
(CN) China PBoC Open Market Operation (OMO): Skips OMO for the second consecutive day
(CN) China PBOC Quarterly Report: Will properly implement the prudent and neutral monetary policy to create a moderate financial environment for supply-side structural reform and high-quality development – Xinhua
(CN) China Securities Journal comments on MLF operations, noting they have limitations, mainly in terms of the narrow transmission through which liquidity is provided

Australia/New Zealand

ASX 200 opened 0.0%, closed 0.3%
ASX 200 Resources index +1.2%, Energy +1.2%, Financials +0.1%; Telecom -3.1%, Utilities -0.5%
(NZ) New Zealand Apr Performance of Services Index: 55.9 v 58.6 prior
Telstra, TLS.AU Reports Q3 Postpaid handheld ARPU ex. MRO A$65.35 v A$65.92 in H1; Affirmed expects FY18 EBITDA in bottom end of A$10.1-10.6B range, total dividend of A$0.22/share
(AU) Australia PM Turnbull’s lead as preferred PM over opposition leader Bill Shorten also jumped eight points to 46-32% – press
Healthscope, HSO.AU Confirms rival A$2.50/share cash takeover offer from Brookfield Asset Management
Specialty Fashion, [+48%], SFH.AU Completes strategic review: Confirms to sell some brands to Noni B for A$31M cash; To keep its ASX listing and retain City Chic brand
(AU) Australia AOFM launches syndicated tap of June 2039 bond, pricing guidance 35-37bps/10-yr Futures

Other Asia

North America

XRX Confirms it has terminated merger agreement Fujifilm; enters into new agreement with shareholders Icahn and Deason; Under the settlement agreement, John Visentin to be named as Vice Chairman and CEO
XRX Fujifilm: Dispute’s Xerox’s ‘unilateral’ decision to terminate merger transaction; all options are available including legal action

Europe

(UK) Apr Visa Consumer Spending 3M/3M: -1.6% v -1.3% prior (largest fall since July 2017)
(IT) Italy 5-Star Movement and League Party reached consensus around measures that include a universal basic income, a flat tax and roll back of pension reforms from 2011
(UK) According to CIPD, UK employers expect avg 2.1% pay settlement over next 12-months v 1.8% last quarter
(IE) Ireland Apr Construction PMI: 60.7 v 57.5 prior
(NO) Norway Central Bank (Norges) Gov Olsen: Outlook shows it will soon be right to hike key interest rate – Op-Ed

Levels as of 02:00ET

Hang Seng +1.1%; Shanghai Composite +0.5%; Kospi -0.1%
Equity Futures: S&P500 +0.4%; Nasdaq100 +0.4%, Dax +0.2%; FTSE100 +0.1%
EUR 1.1968-1.1941; JPY 109.45-109.21; AUD 0.7565-0.7541;NZD 0.6974-0.6949
Jun Gold -0.1% at $1,319/oz; Jun Crude Oil -0.4% at $70.45/brl; Jul Copper +0.4% at $3.12/lb