Chinese Equities Pare Gain As PBoC Announced RRR Cut

General Trend:

• Chinese financials pare gains as PBOC RRR cut was expected
• IT and Telecom Services indices outperform in Shanghai on talk China wants faster development of 5G
• Chinese automakers supported by broker commentary
• Hang Seng lags amid the reported protests held over the weekend
• Gains in chipmakers support rise in Kospi
• Higher longer-dated Treasury yields support insurers in Japan, trade-sensitive – Marine/Transportation index also rises in Japan
• Nissan Motor declines ahead of possible announcement regarding a new CEO
• Various Japanese companies halt operations due to Typhoon Faxai
• Japan Q2 GDP revised downwards on business investment
• PBOC declines to rollover the entire MLF which is maturing today, speculation continues to mount that the central bank may cut the MLF rate later in Sept
• China continues to announce ways to incentivize higher pork production ahead of upcoming holidays
• AUD/JPY adds to the gains seen on Friday after PBOC’s RRR cut announcement ; Aussie July home loans beat ests, China Aug imports from Australia +32.2% y/y
• Euro trades flat ahead of Thursday’s ECB decision (Sept 12th)
• Gold prices rise in the session as markets anticipate additional easing to support major economies
• China Aug CPI and PPI data due on Tuesday (Sept 10th)

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.5%
• (NZ) NEW ZEALAND Q2 MANUFACTURING ACTIVITY Q/Q: -0.7% V 1.0% PRIOR; MANUFACTURING ACTIVITY VOLUME Q/Q: -2.7% V 2.0% PRIOR
• ALK.AU Confirms significant gold copper mineralization at Boda
• (AU) AUSTRALIA JULY HOME LOANS M/M: 4.2% V 1.5%E; INVESTMENT LENDING: 4.7% V 1.5%E; Owner Occupied Loan Value m/m: 5.3% v 1.0%e

Japan

• Nikkei 225 opened +0.1%
• (JP) JAPAN FINAL Q2 GDP Q/Q: 0.3% V 0.3%E; ANNUALIZED Q/Q: 1.3% V 1.3%E
• 7201.JP Board to meet Monday to start drawing up a list of candidates to replace CEO Saikawa. expected to be Japanese – FT
• (JP) Japan July Current Account Balance (BoP): ¥1.99T v ¥2.05Te; Adj Current Account: ¥1.65T v ¥1.70Te; Trade Balance (BoP): -¥74.5B v -¥24.0Bel; Japan investors bought net ¥2.6T of US bonds (highest level in 3-years)
• (JP) Bank of Japan (BOJ) and FSA are surveying companies for potential foreign assets and collateralize loans (CLOS)
• (JP) JAPAN AUG ECO WATCHERS CURRENT SURVEY: 42.8 V 41.3E; OUTLOOK SURVEY: 39.7 V 43.6E

Korea

• Kospi opened +0.2%
• 005930.KR TV unit head Han Jong-hee: Expect to sell >5.0M QLED TVs this year – speaking from IFA tech show in Berlin
• (KR) According to Bank of Korea (BOK) report: GDP potential is expected to fall at a faster rate than earlier anticipated largely due to the aging of the population that will also lead to a cut in the number of eligible workers

China/Hong Kong

• Hang Seng opened +0.2%; Shanghai Composite opened +0.8%
• (CN) CHINA PBOC CUTS RESERVE REQUIREMENT RATIO (RRR) BY 50BPS TO 13.00% FOR ALL BANKS; effective as of Sept 16th (Friday, after the close)
• (CN) China made proposal in last week’s phone call with the US, to buy a “modest” amount of US agricultural goods, thought to be contingent on US easing export restrictions on Huawei and delaying next tariff increase currently scheduled for Oct 1st – US press
• (CN) China Aug Foreign Reserves: $3.1072T v $3.100Te; Gold reserves: $95.45B v $88.88B m/m
• (CN) China Aug Trade Balance (CNY): 239.6B v 299.3Be; Yuan denominated YTD Trade Balance with US +1.33T v 1.15T prior; Exports to US y/y: -3.7% v -2.1% prior; Imports from US y/y: -23.5% v -24% prior
• (CN) China Aug Trade Balance: $34.8BB v $44.3Be; Imports Y/Y: -5.6% v -6.5%e (4th consecutive decline)
• (CN) “A Forensic Examination of China’s National Account”, submitted to the “Brookings Papers on Economic Activity” alleges that China National Bureau of Stats (NBS) Has exaggerated China’s GDP by on avg 2% from 2008-2016 – SCMP
• (CN) Renewed talk that China PBOC could cut MLF rate this month – China Securities Journal
• 293.HK Air China said to not be interested in acquiring Cathay – SCMP
• (CN) China PBOC sets Yuan Reference Rate: 7.0851 v 7.0855 prior
• (CN) China PBoC Open Market Operation (OMO): Injects CNY120B in 7-day reverse repos v injects CNY40B prior; Net CNY0B injects v injects CNY40B prior
• (CN) China PBOC: Have not conducted Medium Term Lending Facility (MLF), have net drained CNY56.5B through monetary tools today
• (CN) China to subsidize new pig farms with CNY500K to 5.0M to ensure pork supply

Other Asia

• (VN) Vietnam Govt increasing standards for items to qualify as “made in Vietnam” will require locally added value to be 30% or more – Nikkei
• 2317.TW China Labor Watch (CLW) alleges there are ‘harsh’ conditions at Foxconn plant; alleges Apple and Foxconn broke labor law in China regarding iPhone production by using too many temp workers

North America

• (US) President Trump cancels secret meeting with Taliban leaders scheduled at Camp David this weekend after attack in Kabul – his twitter
• WE Follow Up: Valuation of IPO could now be less than $20B, some investors want the company to delay the offering – US financial press
• (MX) Mexico Finance Minister Herrera presents 2020 budget proposal: 2020 budget totals just under MXN6.1T, estimates primary surplus of 0.7%

Europe

• (GR) Greece PM Mitsotakis: Will use bold new reforms to gain stronger credibility with EU; to cut corp tax in 2020 to 24% from 28% currently – speaking at annual trade fair in Thessaloniki
• (RU) Russia and Ukraine swapped 35 prisoners from each side over the weekend, giving hope to a thaw in relations – press
• (UK) Bank of England (BOE) Dir of Financial Stability Brazier: BOE has properly prepared lenders for shock of Brexit, imminent change of Gov will not derail the central bank
• (SA) Saudi Arabia appoints Prince Abdulaziz Energy Min, replacing Khalid al-Falih – local media

Levels as of 01:20ET

• Hang Seng +0.1%; Shanghai Composite +0.5%; Kospi +0.6%; Nikkei225 +0.5%; ASX 200 0.0%
• Equity Futures: S&P500 +0.2%; Nasdaq100 +0.2%, Dax +0.3%; FTSE100 +0.1%
• EUR 1.1015-1.1030; JPY 106.77-107.03; AUD 0.6837-0.6858; NZD 0.6417-0.6438
• Commodity Futures: Gold +0.1% at $1,516/oz; Crude Oil +1.2% at $57.20/brl; Copper -0.2% at $2.62/lb