Asia Summary
Asian equity markets opened mostly to the downside as tension on the Korean peninsula brought back risk aversion and a flow to safe haven assets after North Korea foreign minister declared that the N. Korea can shoot down US warplanes flying in international airspace and described Trump’s recent comments as a declaration of war. Commodities continue to rise being led by copper. Korean banks remain under pressure as South Korea FSC announced financial reforms for retail customers, including changes to interest rates on overdue loan payments. Chinese real estate names came off yesterday’s lows on fresh curbs announce over the weekend.
The yuan declined to the lowest level against its currency basket in nearly 4-weeks as the PBOC weakens the daily fix. In an SCMP piece it is noted that China could be heading towards a free-floating currency after a group of economists, including officials from PBoC suggested the time was ripe for such a move.
As expected late yesterday Japan PM Abe called for a snap election. Japan Fin Min Aso said that should call for election if planning big changes to taxes. He also warned that it will be difficult to meet the FY20 primary surplus goal. NZD/USD continued to be weaker after its rapid decent yesterday on election results.
Key economic data
(NZ) NEW ZEALAND AUG TRADE BALANCE (NZD): -1.24B V -0.83BE; YTD: -3.2B V -2.91BE
(KR) South Korea Sept Consumer Confidence: 107.7 v 109.9 prior (5-month low)
(JP) JAPAN AUG PPI SERVICES Y/Y: 0.8% V 0.6%E
(NZ) New Zealand Aug RBNZ New Residential Mortgage Lending y/y: -16% v -24% prior
Speakers and Press
China/Hong Kong
(CN) China could be heading towards a free-floating currency after a group of economistds, including officials from PBoC suggested the time was ripe for such a move – SCMP
Korea
(KR) South Korea Financial Services Commission (FSC) Chairman Jong-Ku announces financial reforms for retail customers, including changes to interest rates on overdue loan payments
Japan
(JP) Bank of Japan (BOJ) Jul Meeting Minutes: Most: Vital for Japan that BOJ achieves 2% target
(JP) Japan Economic Revitalization Min Motegi: Japan not at the point to consider sales tax above 10%, most important issue it to raise Japan potential growth
(JP) Moody’s: Japan elections unlikely to have implications for sovereign rating; refreshed mandate for reform would be credit positive
New Zealand/Australia
(NZ) New Zealand Shadow Board: See little urgency for RBNZ to raise rates
(AU) ASX will likely suspend most of Australian listed gold sector if WA government budget with new gold royalty increase is passed –
Australian
(AU) Australia Treasurer Morrison: Final budget outcome A$4.4B better than forecasted, final budget A$33.2B
US
(US) Fed’s Kashkari (dove, voter): Do not see signs of economy overheating; do not see inflation taking off no need to tap breaks; Fed should not be under any pressure to raise rates
Asian Equity Indices/Futures (00:00ET)
Nikkei -0.4%, Hang Seng -0.1%; Shanghai Composite +0.1%, ASX200 -0.1%, Kospi -0.2%
Equity Futures: S&P500 -0.1%; Nasdaq100 -0.0%, Dax -0.2%, FTSE100 +0.0%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.1862-1.1846; JPY 111.80-111.50; AUD 0.7948-0.7922;NZD 0.7277-0.7236
Dec Gold +0.4% at $1,316/oz; Nov Crude Oil +0.2% at $52.34/brl; Dec Copper +0.9% at $2.96/lb
(AU) Australia sells A$150M in 2030 indexed bonds; avg yield 1.0024%; bid-to-cover 3.34x
(CN) PBOC OMO: To inject CNY50B in 14 and 28-day reverse repos v injected CNY200B in 14 and 28-day reverse repo prior; drains net CNY80B
USD/CNY (CN) China PBOC sets yuan reference rate at 6.6076 v 6.5945 prior
(JP) Japan MoF sells ¥499.4B v ¥500B in 0.90% 40-yr bonds; avg yield 1.015%; bid to cover: 3.24x (highest bid-to-cover since 2015)
Equities notable movers
Australia/New Zealand
KMD.NZ Reports FY17 (NZ$) Net 38.0M v 33.5M y/y; EBIT 57.0M v 56Me; Rev 445.3M v 425.6M y/y; +7.5%
Japan
8303.JP Anbang ends talks to acquire stake in Shinsei – FT
South Korea
023530.KR Trading to be halted effective Sept 28th before being relisted as Lotte Holdings; +8%
010140.KR Awarded KRW1.12T contract for containership for Europe; +7%
