Asia equities mixed – CN supports Yuan again with intervention and strong fix

Asia market update: JP & AU Mfg PMIs stay in contraction; Asia equities mixed; CN supports Yuan again with intervention & strong fix; 10-yr JGBs extend 9-yr highs.

General trend

- Japan and Australia Manufacturing PMI both stayed in contraction.

- China equities lagged, with the Shanghai Composite -0.5% and the Shanghai IT index down -2%; undoing nearly all of the out-sized gains in the final hour of trading yesterday.

- China PBOC maintained strong Yuan fixing with today’s fix being 1062 pips firmer than financial press estimates – and only slightly less than than yesterday’s record spread of 1105 pips.

- China state-owned banks were again seen buying Yuan (around the 7.29 level).

- Meanwhile the China offshore Yuan HIBOR in Kong Kong eased back from its 5 year high of yesterday.

- Pres Xi missed an important business speech at the BRICS Summit in South Africa overnight, even though he was spotted earlier in the day in fine health. Suggestions online that domestic troubles at home while he is away are demanding his attention.

- A US chip trade group warned that HUAWEI is building a secret network for chips in China, with $30B of China gov't backing, in order to evade US sanctions.

- Japan 10-yr JGB yields rose to 0.679%, extending its 9 year high of 0.660% reached yesterday.

- Singapore July CPI fell -0.2% m/m.

- New Zealand press reported that the NZ gov’t was expected to blow out 35% more in borrowing than was planned 8 months ago.

- US equity FUTs up 0.3-0.4% in Asia during morning trading.

Looking ahead (Asian time zone)

- Wed evening German Manufacturing PMI Flash, US A/H close Nvidia earnings.

- Thu night US Durable Goods and Initial Jobless Claims.

- Aug 24-26, US Fed Jackson Hole Symposium (Night of Aug 25th [Asia time] Fed Chair Powell speech).

- Fri JP Tokyo CPI.

- Fri evening ECB Pres Lagarde Speech.

Holidays in Asia this week

- N/A.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 7,115.

- Australia aug preliminary PMI manufacturing: 49.4 V 49.6 PRIOR (6th straight contraction).

- Australia said to consider outsider for the RBA Dep Gov position.

- Australia RBA , Digital Finance CRC complete CBDC research project.

- Australia sells A$700M v A$700M indicated in 3.00% Nov 2033 bonds: Avg Yield: 4.2172%; bid-to-cover 4.13x.

- New Zealand Q2 Retail Sales Q/Q: -1.0% v -0.4%e.

- New Zealand gov't expected to borrow 35% (NZ$35B) more than planned 8 months ago.

China/Hong Kong

- Hang Seng opens -0.2% at 17,762.

- Shanghai Composite opens -0.1% at 3,116.

- China state-owned banks seen buying Yuan around 7.29 level – traders.

- China Financial Regulator issues notice to further regulate insurance products sold through banks.

- China Finance Ministry said to extend waiver of capital gain tax for Hong Kong Stock Connect until Dec. 31, 2027.

- PBOC said rumors of banks permanently freezing some savings accounts from Aug are false [responded to online rumors].

- HUAWEI.CN said to be building secret network for chips in China - warning from Chip trade group.

- China Foreign Minister Wang: Will actively advance BRIC's membership expansion (overnight update).

- China Pres Xi: Willing to take China/South Africa ties to the next stage - BRICS summit (overnight update).

- China Commerce Ministry (MOFCOM): The lifting of 27 Chinese companies from US restriction list is good news for both nations to help develop normal trade (overnight update).

- US Commerce Sec Raimondo reportedly expected to visit China on Aug 27-30th; China expected to pressure US to ease up on long-standing trade restrictions, especially on semiconductors and high-end tech (overnight update).

- China PBOC sets Yuan reference rate: 7.1988 v 7.1992 prior.

- China PBOC Open Market Operation (OMO): Sells CNY301B in 7-day reverse repo; Net injects CNY2B v net drains CNY93B prior.

Japan

- Nikkei 225 opens -0.4% at 31,717.

- Japan Aug preliminary PMI manufacturing: 49.7 V 49.6 PRIOR (3rd straight contraction).

- Japan PM Kishida reportedly considers gasoline subsidy extension by end of Aug; Wants to mull economic support measures next month, while keeping an eye on inflation (overnight update).

- Hong Kong said to ban sea products from Japan from Aug 24th (overnight update).

- China Foreign Ministry Daily Briefing: Japan made "wrong decision" in Fukushima water release (overnight update).

- Korea says Japan's Fukushima water release plans have no scientific or technical problems (overnight update).

- Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 100bps; Opens window to buy unlimited amount of 10-year JGBs at 1.00%.

- Bank of Japan (BOJ) announcement related to daily bond buying operation.

South Korea

- Kospi opens -0.2% at 2,510.

- South Korea Q2 Short-Term External Debt: $161.9B v $173.7B prior.

- South Korea Business Manufacturing Survey: 69 v 69 prior (overnight update).

Other Asia

- Singapore July CPI M/M: -0.2% v +0.5% prior; Y/Y: 4.1% v 4.2%e.

- Taiwan said to postpone carbon tax by one year to 2025.

- Taiwan July Unemployment Rate: 3.4% v 3.5%e (overnight update).

- Taiwan Ministry of National Defense spokesperson Sun Lifang: No comment on unconfirmed social media reports of a catastrophic Chinese nuclear sub accident in the Taiwan Strait; So far I have not heard any confirmation - press [**Note: traders circulating completely unverified chatter about such incident] (overnight update).

- Philippines Finance Chief Diokno: Confident can cut key rate in Q1 2024.

- Philippines Central Bank (BSP) Gov Remolona: RRR cut is possible this year.

- Thailand Parliament elects Pheu Thai’s Srettha Thavisin as new PM (overnight update).

- Thailand Central Bank Gov: Reiterates interest rates are close to balanced point.

- Former Thai PM Thaksin has been moved to the hospital, said to have suffered from chest pressure.

- Malaysia end-Aug Foreign Reserves: $112.2B v $112.9B prior (overnight update).

North America

- (US) Aug Philadelphia Fed Non-Manufacturing Regional Index: -13.1 v +1.4 prior.

- (US) Aug Richmond Fed manufacturing index: -7 V -10E; volume of new orders: -11 v -20 prior.

- (US) July existing home sales: 4.07M V 4.15ME.

- (US) Fed Discount Rate Minutes: 2 regional boards sought a rate hold in July (New York and Atlanta).

- (US) Fed’s Barkin (non-voter): If inflation remains high and demand gives no signal it is likely to drop, that would require tighter monetary policy.

Europe

- UK Aug CBI industrial trends total orders: -15 V -12E.

- UK Trade talks with India escalate in attempt to remove barriers - FT.

- (EU) Australia’s Woodside Energy (WDS.AU) CEO calls European gas price spike ‘irrational’; Strike talks between the Co. and workers, which have been ongoing since the start of the year, remained “constructive” (overnight update).

Levels as of 01:20 ET

- Nikkei 225 +0.3%; ASX 200 +0.6%; Hang Seng +0.6%; Shanghai Composite -0.4%; Kospi -0.3%.

- Equity S&P500 Futures +0.3%; Nasdaq100 +0.4%, Dax +0.3%; FTSE100 +0.2%.

- EUR 1.0848-1.0863 ; JPY 145.57-145.90; AUD 0.64.21-0.6452; NZD 0.5938-0.5967.

- Gold +0.3% at $1,931/oz; Crude Oil +0.1% at $79.71/brl; Copper +0.4% at $3.7740/lb.