Wednesday, October 5 2022

Asian Market Update: Stock markets mixed after steep losses on Wall St; CN markets are trading slightly higher amid mixed PBOC rate cuts; The Jackson Hole conference also in the center of concern [Aug 25-26th].

General trend

– Prolonged fall in CNH amid PBOC easing and lower Yuan fixation; Commodity currencies appreciate against the yen.

– NZD supported by RBNZ comments.

– Reserve Bank of New Zealand (RBNZ) Deputy Governor Hawkesby said: There is some uncertainty around the peak in cash rates, which could be as high as 4.25%.

– USD/KRW fell to 1330 for the first time since April 2009; South Korea’s chip exports continue to decline.

– Approval ratings from the Japanese Prime Minister’s Office have reached record highs.

– The HK Mainland Properties index reduced its rise despite the drop in CN’s 5-year LPR.

– Chinese property developers continue to issue profit warnings [Times China, CIFI Holdings, Agile Group, Yuzhou Properties, Logan Property].

– Hang Seng announced index changes [Aug 19th].

– Xiaomi declines after earnings report.

– Australian companies continue to report profits [Reliance Worldwide, Cooper Energy, oOh!Media, NIB Holdings, Adbri].

– Focus on Australian ex-dividends [Aurizon, Magellan Financial, Santos, Steadfast, Vicinity Centres].

– The Nikkei 225 pairs declines.

– Tokyo Steel lowers prices.

– US equity FUTS extend their declines.

– Companies continue to comment on power shortages in Sichuan.

Securities/economic data

Australia/New Zealand

The ASX 200 opened -0.2%.

– (NZ) Reserve Bank of New Zealand (RBNZ) Deputy Governor Hawkesby: Once rates hit 4.0-4.25% they will have a more balanced view of policy outlook, strategy is to secure monetary policy comfortably above.

Reports OML.AU S1 ($A) Net 6.1M v -9.3M y/y; Underlying EBITDA 51.5M vs. 113.1M y/y; Rev 276.1M v 250.1M a/a; announces up to 10% buyback of shares on the market.

– Richardson, member of the Reserve Bank of New Zealand (RBNZ): the recent strong national and international inflationary pressures have been a surprise; bank using all the flexibility of the medium-term inflation mandate, long-term inflation expectations remain well anchored.

– (AU) Australia sells A$300m vs. A$300m shown in 1.75% Bond June 2051: Average Yield: 3.8759%; bid to cover 2.36x.

Japan

Nikkei 225 opened -1.0%.

– (JP) Japanese Prime Minister Kishida tests positive for COVID, symptoms are said to be mild – Press.

– (JP) Japan Cabinet approval rating -16ppt to 36% – Mainichi (record low following cabinet reshuffle).

– 6758.JP “Dragon Ball Super: Super Hero” is the best film at the North American box office with $20.1 million during its opening weekend.

5423.JP Reduced hot-rolled coil price in September to ¥11.5,000/t from ¥12.3,000/t; Holds H-beam prices at ¥12.4,000/t.

– (JP) Japan plans to deploy long-range missiles in response to China – Japanese Press.

– (JP) The Bank of Japan (BOJ) is offering to buy 5 to 10 year JGBs at a fixed rate of 25 basis points; Opens a window to buy unlimited 10-year JGBs at 0.25% [as expected].

7205.JP Discloses additional issues found with engine inspections.

Korea

Kospi opened -1.0%.

– (KR) South Korea August 1-20 Exports Y/Y: 3.9% vs. 14.5% previously; Y/Y imports: 22.1% vs. 25.4% before; Y/Y chip exports: -7.5% vs. +13.2% before.

– (KR) Korea Economic Research Institute (KERI) predicts GDP of 2.4% for 2022 (vs. 2.5% previously) – Yonhap.

– (KR) The Bank of Korea sells KRW900B against KRW1.00T indicated in the monetary stabilization bonds (MSB) 3 months: average yield 2.450% against 2.420% previously.

– (KR) North Korea set to carry out nuclear tests ahead of US midterm elections on November 8 – Yonhap.

China/Hong Kong

Hang Seng opened -1.0%; Shanghai Composite opened -0.3%.

– (CN) China PBOC Monthly Lending Prime Rate (LPR) SETUP: Cuts 1-year and 5-year rates, cuts 1-year lending prime rate by 5 basis points to 3.65% ( less than expected) and cut the 5-year prime lending rate by 15 bps to 4.30% (higher than expected).

– (CN) China’s PBOC sets yuan benchmark rate: 6.8198 vs. 6.8065 previously (lowest since September 2020).

– (CN) China PBOC Open Market Operation (OMO): sells CNY 2.0 billion in 7-day reverse repos against CNY 2.0 billion previously; Net CNY0B against Net CNY0B before.

– (CN) Chongqing, China, has reduced daily shopping mall opening hours due to power cuts – local media.

– (CN) China PBOC sells 25.0 billion yuan vs. 25.0 billion yuan shown on 3-month and 1-year bills in Hong Kong.

Other

– (TW) Taiwan notes China continues military activities near its waters – press North.

Europe

(RU) Russian Finance Ministry may resume currency purchases in September – Russian Press.

– (NL) House price index in the Netherlands in July Y/Y: 14.5% vs. 16.6% before.

– (UK) Lawyers’ poll backs ‘permanent’ strike from 5 September – British press.

CSGN.CH Speculation that up to two-thirds of the investment banking unit could be sold, or will fold parts and put the rest in the wealth management unit – press.

Levels from 01:00 ET

– Hang Seng +0.1%; Shanghai Composite +0.6%; Kospi -1.3%; Nikkei225 -0.6%; ASX 200 -1.0%.

– Equity futures: S&P500 -0.5%; Nasdaq100 -0.5%, Dax -0.3%; FTSE100 -0.3%.

– EUR 1.0046-1.0023; JPY137.43-136.83; AU$0.6906-0.6867; NZD 0.6206-0.6168.

– Commodity futures: gold -0.3% to $1,757/oz; Crude Oil -1.3% to $89.27/brl; Copper 0.0% at $3.67/lb.

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