General Trend:
- Early decliners in HK include financials; gaming firms drop amid new social distancing rules, property firms also drop
- Shanghai Composite rose by over 2.5% during morning session, outperforms in Asia; China raised the equity investment cap for insurers, China Life rises by over 9.9% (above avg vol); brokers rise amid continued M&A speculation
- BYD rises over 6% in HK, there was renewed reporting about China’s plan to promote new energy vehicles in rural areas [similar to report from July 14th]
- Declining sectors in Australia include Energy, Telecom, Consumer Discretionary and Financials.
- Real Estate and Transport firms are among the losers in Japan, brokerage and Electric Appliances firms outperform
- Companies expected to report during the NY morning include Manpower
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened +0.1%
- (AU) Australia PM Morrison: Delayed opening of parliament by several weeks citing coronavirus spread in New South Wales and Victoria states – Press
- (AU) Australia Treasurer Frydenberg: Affirms there will be another phase of income support; SME loan extension will keep credit flowing
- (AU) Victoria state reports 275 additional coronavirus cases v 363 prior
- (AU) Australia sells A$2.0B v A$2.0B indicated in 2.25% Nov 2022 bonds, avg yield 0.2651%, bid to cover 3.9x
- (NZ) New Zealand Fin Min Robinson: New Zealand has set aside NZ$14B as a coronavirus response fund; notes must set aside the funds in case of second wave of the coronavirus
- (NZ) New Zealand Jun Performance of Services Index: 54.1 v 37.5 prior
- (NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$390M v NZ$230M prior in government bonds as part of QE v NZ$390M sought
China/Hong Kong
- Hang Seng opened -0.3%, Shanghai Composite +0.9%
- (CN) China Banking and Insurance Regulatory Commission (CBIRC) raised the equity investment cap for insurance cos to 45% of total assets from 30% currently; Regulator also pledged to offer more support to areas impacted by floods – financial press
- (HK) Hong Kong Chief Exec Lam orders new social distancing measures following recent surge in coronavirus cases; Lam says the situation is “really critical” and sees no sign that it is under control
- (CN) Follow Up: China CSRC said to be encouraging M&A activity among domestic brokerage firms and mutual fund houses – China Securities Journal
- (CN) China takes over 9 financial firms for a period of 1 year, cited certain rule violations; China Industry Association reported to open probes into 8 brokerages over its unusually low bond underwriting fee structure – Press
- (CN) CHINA PBOC LEAVES 1-YEAR AND 5-YEAR LOAN PRIME RATES (LPRS) UNCHANGED (AS EXPECTED)
- (CN) China PBOC to connect interbank and exchange bond markets; the move is seen as an attempt to unify bond markets and facilitate the transmission of monetary policy – financial press
- (HK) Follow Up: Bankers have been probing whether their employees have ties to Hong Kong Pro Democracy movement; firms mentioned included Credit Suisse, HSBC, Julius Baer and UBS [among others] – financial press
- (CN) China National Health Commission Coronavirus Update for July 19th: additional cases 22 v 16 prior; Additional deaths: 0 v 0 prior; Xinjiang additional cases 17 v 13 prior
- (CN) China Finance Ministry Official: China will prevent local govt debt risks, Will not relax controls on bond issuance due to virus situation
- (CN) China PBOC sets Yuan reference rate: 6.9928 v 7.0043 prior
- (CN) China PBoC Open Market Operation (OMO): Injects CNY100B via 7-day reverse repos v Injects CNY200B via 7-day reverse repos prior; Net injection CNY50B v Net injection CNY200B prior
Japan
- Nikkei 225 opened +0.3%
- (JP) Japan Jun Trade Balance: -¥268.8B v -¥11.9Be; Adjusted Trade Balance: -¥423.9B v ¥331.1Be; Exports Y/Y: -26.2% v -24.7%e (19th straight decline)
- (JP) Bank of Japan (BOJ) minutes for June 15-16th policy meeting (2 meetings ago): Issues could shift to solvency from liquidity
- (JP) Bank of Japan (BOJ) reported to be setting up a digital currency group to study central bank digital currencies (CBDC) – Press [in line with prior speculation]
- (VN) Vietnam says 15 Japan companies are planning moves from China into Vietnam for production; 6 of the companies are said to be ‘large’ firms – Vietnam Press
USD/JPY: Rose over 0.4% during Asia amid USD strength; some dealers have noted ‘thin’ market conditions and demand from Japan importers [Gotobi demand]
Korea
- Kospi opened +0.4%
- (KR) South Korea sells 20-year treasury bonds: avg yield 1.560 v 1.560% prior
Europe
- (EU) EU said to not yet reach agreement on €750B recovery fund, the issue of grants said to be a sticking point (press)
- (EU) EU ‘frugal four’ said to be prepared to accept €390B in grants for EU Recovery Fund – press
- (EU) ECB Chief Lagarde said it is better for EU leaders to agree to an ambitious financial aid package as opposed to having a quick deal at any cost – financial press
- (SA) Saudi Arabia King Salman reported to be admitted to Hospital in capital for medical checkups – Saudi State Press
Levels as of 1:20 ET
- Nikkei 225, -0.2%, ASX 200 -0.6% , Hang Seng -0.1%; Shanghai Composite +2.6% ; Kospi -0.1%
- Equity S&P500 Futures: -0.5%; Nasdaq100 -0.5%, Dax -0.2%; FTSE100 -0.2%
- EUR 1.1445-1.1412 ; JPY 107.54-107.01 ; AUD 0.7005-0.6972 ;NZD 0.6564-0.6538
- Gold flat at $1,810/oz; Crude Oil -0.7% at $40.45/brl; Copper -0.2% at $2.8973/lb
