Asian Equity Markets Trade Generally Higher

General Trend:

• Financial shares are among the gainers in Hong Kong
• Banks in Shanghai outperform, second phase of May RRR cut by PBOC took effect today
• Asian chipmakers trade generally weaker after US declines, ongoing Huawei-related concerns
• Samsung said to not expect memory chip recovery until end of 2019 (previously said H2 chip demand improvement seen despite uncertainties)
• Japan Display’s (Huawei supplier) rescue plan faces hurdle
• Tokyo Steel announced price cut for July
• PBOC continues to mix up daily reverse repo instruments amid focus on Baoshang Bank and month-end liquidity conditions
• PBOC confirmed increase to standing lending facility (SLF) for smaller banks
• Most of Baoshang Bank’s corporate creditors said to have received full repayment after bailout, but some interbank creditors said to thus far have received less than 100% (Chinese Press)
• China regulators said to consult with brokers on liquidity risks (Chinese)
• China bond yields decline amid weaker May industrial production data, monetary easing expectations
• Aussie and Australian yields rise ahead of Tuesday’s release of RBA minutes; RBA policy outlook remains unclear following June policy statement
• Decline in Singapore exports to China accelerated in May
• Japan’s MOF is expected to name a new top currency official (press)
• US Fed policy meeting in focus (June 18-19th)
• Bank of Japan (BOJ) due to hold policy meeting on June 19-20th
• US public hearing on $300B in additional tariffs on China starts Monday (June 17th)
• L’Occitane expected to report results after today’s close in Hong Kong

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened -0.1%
• ANZ.NZ Names Antonia Watson acting CEO of ANZ New Zealand after the departure of David Hisco
• (NZ) New Zealand May Performance of Services Index: 53.6 v 51.8 prior
• (NZ) New Zealand Institute of Economic Research (NZIER): Economists now see 2019-20 GDP growth of 2.5% (prior 2.8%)
• VOC.AU AGL Energy stops due diligence, withdraws non-binding A$4.85/shr offer
• FMS.AU Completes internal review to identify best path forward [+36% in session]

Japan

• Nikkei 225 opened -0.1%
• (JP) Japan will not suspend US wheat imports; will no require additional GMO testing on US wheat imports
• 6740.JP TPK Holding withdraws from investment in Japan Display
• 6740.JP Says will still seek up to ¥80B in funds, have interested parties both domestically and overseas in making investment
• 5423.JP Cuts July hot-rolled steel prices 6.8% to ¥69K/t (prior ¥74.0K/t) – first cut in prices in Sept 2016 and first price change since Jan 2018
• (JP) Japan to name Takeuchi a new Vice Fin Min for FX replacing Asakawa, announcement expect mid-July – Japan press

Korea

• Kospi opened -0.2%
• 005930.KR Do not expect memory chips to recovery until end of 2019; Cuts 2019 guidance, DRAM shipments up mid-10%, company shipments to be slightly above overall market estimate of 15% (prior high teens) – South Korean Press
• (KR) North Korea main newspaper Rodong Sinmu, calls for sticking to self-reliance without giving in to sanctions, “hostile forces” are blocking N. Korea from “normal trade activities” and bringing in daily necessities

China/Hong Kong

• Hang Seng opened +0.5%; Shanghai Composite opened flat
• (HK) In response to mass street protests Hong Kong Chief Executive Carrie Lam says will delay extradition bill indefinitely; says the bill has ’caused a lot of division
• (CN) CHINA MAY RETAIL SALES Y/Y: 8.6% V 8.1%E
• (CN) CHINA MAY INDUSTRIAL PRODUCTION Y/Y: 5.0% V 5.4%E (weakest reading since 2002) (Friday after the close)
• (CN) China NDRC spokesperson: Will study and roll out relevant policies on rare earth as soon as possible; Willing to satisfy global demand for rare earth; will research rare earth more and promote high quality development of rare earth sector; will oppose anyone’s attempt to use China rare earth products to suppress China’s development
• (CN) China PBoC: Aim to increase liquidity support to medium-sized and small banks; to keep liquidity ample; Increases rediscount quota by CNY100B to help increase liquidity in smaller banks; To increase Standing Lending Facility (SLF) by CNY100B (Friday after the close)
• (HK) In response to mass street protests Hong Kong Chief Executive Carrie Lam says will delay extradition bill indefinitely; says the bill has ’caused a lot of division’ – press
• (CN) China PBOC: Regulators have completed debt repayment and transfer for Baoshang Bank’s big institutional and interbank clients as of June 7th; net asset outflows from Baoshang were less than expected
• HUAWEI.CN Preparing to see a decline of 40-60% in overseas phone shipments – press
• (CN) China PBoC sets yuan reference rate: 6.8940 v 6.8937 prior
• (CN) China PBoC Open Market Operation (OMO): Injects CNY150B in 14-day reverse repos v CNY100B in 28-day prior; Net CNY120B injected v CNY100B drain prior
• (CN) Reminder China PBOC second phase of RRR cut went into effect today, releasing CNY100B of funds
• (CN) China PBOC to offer CNY5.0B of bonds in Hong Kong on June 20th

Other Asia

• (SG) SINGAPORE MAY NON-OIL DOMESTIC EXPORTS M/M: 6.2% V 4.9%E; Y/Y: -15.9% V -18.7%E; Electronic Exports Y/Y: -31.4% v -19.3%e ; Exports to US +0.2% y/y; Europe -10% y/y; China -23.3% y/y
• (IN) India to levy retaliatory tariffs on 28 US goods in response to US Pres Trump suspending India’s GSP – Financial Press

Americas

• (US) Commerce Sec Ross plays down the chances of a US China trade deal reached at G20 – financial press
• (US) US said to ask WTO to pause China IP investigation until Dec; follow up: WTO dispute panel: US and China have agreed a suspension of legal proceedings in intellectual property dispute until Dec 31st (Friday after the close)
• (IR) Sec of State Pompeo: The US does not want to go to war with Iran, but will take every action necessary, including diplomacy, to guarantee safe navigation through vital shipping lanes in the Middle East – press
• (AR) Blackout in Argentina left tens of millions without power, also cut power to parts of Uruguay and Paraguay and closed down YPF’s La Plata refinery
• (US) Holders of Puerto Rico ‘valid’ constitutional debt and creditors reach agreement on restructuring, the plan supports agreement covering about $35B in claims – US financial press
• (BR) Brazil Foreign Min: South America is very close to signing trade deal with EU – FT

Europe

• LHA.DE Updates guidance to make €340M provision for tax risk: Guides FY19 Rev “low single digit growth” (prior “mid single digit growth); adj EBIT €2.0-2.4B; adj EBIT margin 5.5-6.5% (prior 6.5-8.0%)
• (DE) Mayor runoff vote in the German town of Goerlitz (considered a marker for state elections in Saxony and Brandenburg Sept 1) goes to Merkel party Christian Democrat (CDU) candidate beating out anti-immigration Alternative for Germany party
• (EU) ECB Nowotny said ECB still has instruments to support euro zone economy in case of a recession or deflation risk, additional instruments are not needed in foreseeable future – German press (update)
• (EU) ECB De Guindos says ECB will act if inflation expectations are de-anchored – financial press
• (SA) Saudi Energy Min Al-Falih: hope to get oil market into balance before 2020; hope OPEC agrees to extend production cut at expected meeting in early July – speaking from sideline of a G20 energy and environment ministerial meeting

Levels as of 01:20ET

• Hang Seng +0.9%; Shanghai Composite +0.2%; Kospi -0.2%; Nikkei225 +0.6%; ASX 200 -0.2%
• Equity Futures: S&P500 +0.3%; Nasdaq100 +0.5%, Dax +0.2%; FTSE100 +0.3%
• EUR 1.1208-1.1225; JPY 108.47-108.70; AUD 0.6871-0.6885; NZD 0.6490-0.6511
• Commodity Futures: Gold +0.02% at $1,344/oz; Crude Oil +0.2% at $52.87/brl; Copper +0.4% at $2.64/lb