China property prices slowly bottoming

Asian Mid-session Update: China property prices slowly bottoming; New Zealand announces more housing measures; BHP falls on S32 spinoff

Economic Data

- (CN) CHINA APR HOME PRICES M/M: FALL IN 48 OUT OF 70 CITIES VS 50 PRIOR; Y/Y: FALL IN 69 CITIES V 70 PRIOR

- (JP) JAPAN MAR MACHINE ORDERS M/M: 2.9% (first increase in 3 months) V 1.5%E; Y/Y: 2.6% V -6.0%E

- (JP) JAPAN MAR FINAL INDUSTRIAL PRODUCTION M/M: -0.8% V -0.3% PRELIM; Y/Y: -1.7% V -1.2% PRELIM

- (AU) AUSTRALIA APR NEW MOTOR VEHICLE SALES M/M: -1.5% (first decline in 3 months) V 0.5% PRIOR; Y/Y: 2.8% V 4.4% PRIOR

- (NZ) NEW ZEALAND APR PERFORMANCE SERVICES INDEX: 56.5 V 57.6 PRIOR

- (TH) THAILAND Q1 GDP Q/Q: +0.3% V -0.6%E; Y/Y: 3.0% V 3.4%E

- (SG) SINGAPORE APR ELECTRONIC EXPORTS Y/Y: -3.8% V -6.7%E; NON-OIL DOMESTIC EXPORTS M/M: -8.7% V -14.4%E; Y/Y: 2.2% V -5.0%E

- (UK) UK MAY RIGHTMOVE HOUSE PRICES M/M: -0.1% (first decline in 5 months) V 1.6% PRIOR; Y/Y: 2.5% (2-year low) V 4.7% PRIOR

Index Snapshot (as of 02:30 GMT)

- Nikkei225 +0.4%, S&P/ASX -0.7%, Kospi -0.1%, Shanghai Composite +0.2%, Hang Seng -0.6%, Jun S&P500 -0.1% at 2,116

Commodities/Fixed Income

- Jun gold -0.2% at $1,222/oz, July crude oil flat at $60.56/brl, July copper flat at $2.93/lb

- (IR) Iran deputy oil minister: OPEC unlikely to cut production at June meeting - financial press

- (JP) BOJ offers to buy ¥400B in 5-10yr JGBs and ¥20B in inflation-indexed JGBs

- (KR) South Korea Finance Ministry sells 10-yr bonds at average yield of 2.52%

- USD/CNY: PBoC sets yuan mid point at 6.1079 v 6.1085 prior setting; strongest Yuan setting since Feb 2014

Market Focal Points/FX

- China indices are mixed to start the week, tracking some of the uncertainty created by weak consumer sentiment and industrial output in the US on Friday. Although Wall St was also directionless, treasuries rallied on implications of a more patient Fed reacting to datapoints that remain unconvincing of the need to raise rates. Yield on the US 10-year fell by 10bps below 2.15%, a 1-week low. US focus this week will turn to Monday's NAHB housing data followed by Building Approvals / Starts figures on Tuesday.

- Asia calendar was highlighted by property figures for April on the mainland. While there were some signs of bottoming out - all-70 new home prices m/m stopped falling for the first time in 12 months - progress was generally deemed as too slow given the amount of stimulus being pumped in by the central bank on the monetary front and reversal of property curbs by regulators. Top developers Vanke, Wanda, and Poly were all down 1-2%. Also of note in China, CSRC chairman said IPO acceleration weighs little on stock movements. Recall that Friday's selloff was attributed to expectations of dilution and higher valuations due to strong demand for the latest batch of IPO offerings.

- In key FX movers, NZD was lower by over 20pips from the get-go after NZ PM Key announced new property tax measures to help cool the housing market. Just like the RBNZ's macroprudential steps on Auckland unveiled last week, beginning in October, property owners who sell their residence owned for less than two years will be subject to a capital gains tax. Investors continue to interpret the housing moves as allowing the RBNZ to lower rates, since it has been widely assumed that the risk of a property bubble is the key deterrent for monetary policy adjustment. NZD/USD traded as low as 0.7416, down nearly 40pips from Friday's close, in today's session.

- AUD/USD opened the day little changed around 0.8040 but moved as low as 0.8004 after comments from RBA Dep Gov Lowe, who said RBA still has the scope to cut rates if needed. Lowe then added "it doesn't mean we're going to, but we have scope if we need to." Lowe also voiced support of lower exchange rate, noting weaker AUD would help economic transition which is suffering from softer than expected non-mining investment. In tomorrow's session, traders will tune in to the latest RBA meeting minutes which should reveal the extent of the dovish bias accompanying this month's anticipated policy easing to record-low 2%.

Equities

US equities/ADRs:

- PRE: Axis Capital not consider raising bid for PartnerRe - financial press

- ADM: Grows sweetener business in China with agreement to purchase Meiweiyuan Biotechnology; financial terms not disclosed

- DB: Co-Chief Executives will not step down from their jobs - German press

Notable movers by sector:

- Consumer discretionary: APN News APN.AU +1.1% (News Corp receives approval to buy stake); Intime Department Store Group 1833.HK +9.7% (appoints new Chairman); Li Ning Co 2331.HK +3.3% (new store plan)

- Financials: Mitsubishi UFJ Financial Group 8306.JP +2.7% (FY14/15 results); Dai-Ichi Mutual Life Insurance 8750.JP +10.0% (FY14/15 results); China Vanke 000002.CN -1.9%, Dalian Wanda Commercial Properties 3699.HK -1.0%, Poly Real Estate Group 600048.CN -2.0% (China April propriety prices)

- Technology: Sumitomo Electric Industries 5802.JP +7.4% (FY14/15 results)

- Telecom: China Mobile 941.HK -2.0%, China Telecom 728.HK -1.2%, China Unicom 762.HK -1.8% (cuts data plan prices); NTT 9432.JP +1.6% (FY14/15 results)

- Healthcare: Takeda Pharmaceutical Co 4502.JP -3.9% (FY14/15 results); Pharmaxis PXS.AU +45.5%(Boehringer Ingelheim acquisition)

- Industrials: Elders ELD.AU +5.0% (H1 results); Dulux Group DLX.AU -5.2% (H1 results)

- Materials: Aluminum Corporation of China 601600.CN -7.1% (clarification on rare earth business); BHP Billiton BHP.AU -6.8% (South32 to be listed, cuts drilling costs); Rio Tinto RIO.AU -0.5% (speculation to sell aluminum assets)