Asian countries continue to report slower growth in Q3

Asia Market Update: Asian countries continue to report slower growth in Q3; No consensus reached at recent APEC meeting

 

General Trend:

- Asian equity markets trade mixed

- Shanghai Property index rises over 1%, adds to Friday’s gain

- Australian markets weighed down by banks

- Financials decline in Japan while tech names gain ; Softbank rises over 4.5%

- Little reaction from USD/JPY on BOJ Gov Kuroda comments on bank profitability; banking names weaker

- Japan Display declines over 7%, broker issued cautious commentary

- Australia’s Stanmore Coal rises over 17%, received takeover offer

- Japanese insurers plan to invest in the US property market (Japanese press)

- Hong Kong and Thailand report weaker than expected Q3 growth

- APCA summit fails to reach joint communique for the first time in its history due to sparring giants, China and US

- Various HK property developers announce plans to tap the USD bond market

- China Oct bond issuance declines m/m (Xinhua)

- Press highlights US TIC flows, nothing that china has reduced its US Treasury holdings by the most in 8-months

- US Fed Fund Futures are implying lower probability of Dec 2018 rate hike vs last week; Fed’s Harker (non-voter) spoke on Friday

- No confidence vote for UK PM May said to be just 6 votes shy of the required 48 needed

- EU Brexit Chief Negotiator Barnier has floated the idea of extending Brexit transition by 2 years to end of 2022

- Reserve Bank of Australia (RBA) due to release its monetary policy meeting minutes on Tuesday

 

Headlines/Economic Data

Japan

- Nikkei 225 opened flat

- (JP) Japan Oct Trade Balance: -¥449.3B v -¥70Be; Adj Trade Balance: -¥302.7B v -¥48.3Be; Exports to US +11.6%; China 9%; Asia +7.3%; EU +7.7%

- (JP) Bank of Japan (BoJ) Gov Kuroda: Possible changes in risk appetite and risk profile of banks amid low-interest rate environment is an issue central banks are highly attentive too

- (JP) Japan PM Abe: To order a 2nd extra budget after returning to Japan (Friday)

Korea

- Kospi opened +0.2%

- (KR) South Korea affiliates and subsidiaries of South Korea’s top 30 conglomerates spent combined KRW64.9T on acquiring business assets, +10.9% y/y - Korean press

- (KR) Bank of Korea (BoK): Any rapid bond capital outflow may incite market unrest

- (KR) North Korea might have tested a new long-range artillery - financial press (Friday)

- (KR) South Koreans owning more than 2 houses increases 140K in a year, those owning 5 or more homes now tops 110K according to Statistics Korea

- (KR) South Korea sells KRW310B 6-month Monetary Stabilization Bonds (MBSs) at 1.790%

-(KR) North Korea press DPRK: US has forgotten the objectives agreed upon during the Singapore summit; maximum pressure tactic is medieval and will not work - Yonhap

China/Hong Kong

- Hang Seng opened +0.4%, Shanghai Composite +0.1%

- (CN) China former trade min Long Yongtu: targeting US soybeans from the start was a ‘political’ decision that was not properly thought through – SCMP

- (CN) Asia-Pacific Economic Cooperation summit ended without agreement on a joint communique for the first time in its history; escalating tensions between the United States and China dominated proceedings

- (CN) Former PBoC Gov Zhou said officials must fully assess the impact that fintech might have on monetary policy and financial stability - HK Press

- (HK) Property developers in Hong Kong said to have low sales volumes for certain new projects - HK Press

- (CN) South China Morning Post comments on China's recent trade offer to the US: The offer said to include additional purchases of US natural gas, along with improved intellectual property rights protection

- iPhone glass supplier Biel Crystal postpones $1.5B Hong Kong IPO plan, due to current downbeat market conditions – SCMP

- (CN) Negotiators for China and the US have rescheduled talks for G20 Buenos Aires instead of Washington after work level talks between the two sides – SCMP

- (CN) China PBoC Open Market Operation (OMO): v skipped prior (17th straight skip)

- (CN) China PBoC sets yuan reference rate: 6.9245 v 6.9377 prior

-(CN) China Banking and Insurance Regulator (CBIRC) Vice Chairman Zhou: Reiterates financial institutions must support small and private companies; risk in domestic credit market has reduced

Australia/New Zealand

- ASX 200 opened flat

- (NZ) New Zealand Q3 PPI Input q/q: 1.4% v 1.0% prior; PPI Output q/q: 1.5% v 0.9% prior

- (AU) Australia sells A$1.0B v A$1.0B indicated in April 2029 bonds, avg yield 2.6596%, bid to cover 2.56x

- (AU) China Commerce Ministry (MOFCOM): Begins anti-dumping probe related barley from Australia

- Medibank, [-6%], MPL.AU Was not selected as preferred tenderer for Garrison Health contract, worth ~A$5M in H2

- Stanmore coal, [+17%], SMR.AU Golden Investments, Ascend Global Investment Fund SPC and Resources Limited to jointly acquire Stanmore for A$0.95/shr in an off market takeover’ Guides FY19

Other Asia

- (TH) Thailand Q3 GDP q/q: 0.0% v 0.6%e; y/y: 3.3% v 4.2%e (slowest growth since early 2017)

- (TH) Thailand Planning Agency Revises forecast after weaker than expected Q3 GDP data: Sees 2018 GDP growth 4.2% v 4.2-4.7% projected in Aug

North America

- CBS Board could announce merger with Viacom within the next 3-6 months - NY Post

- (US) Fed-Fund Futures are implying a 65% probability of 25bps rate hike in Dec 2018 vs 69% on Friday - US financial press

Europe

- (UK) PM May Monday speech excerpts: Have an intense week of negotiations ahead of us, expect to hammer out full and final details of future relationship framework this week

- (UK) Former Brexit Min Raab: PM May's plan is fatally flawed, but can be saved; EU is bullying UK, its nearly blackmail - financial press

- (UK) PM May: Getting rid of me would risk delaying Brexit, not make talks easier; a delay could also see people try to stop it from happening; as far as I know there is not enough support for a no confidence vote – press

- (UK) 42 Tory MPs submit letters of assurance to not support PM May; 25 have publicly said they have sent no confidence letters and 17 privately; leaves 6 votes shy of triggering a no confidence vote - UK press

- (UK) EU Brexit Chief Negotiator Barnier has floated the idea of extending Brexit transition by 2 years - UK Press

- (UK) Nov Rightmove House Prices m/m: -1.7% v +1.0% prior; y/y: -0.2% v +0.9% prior

- (FR) ECB’s Villeroy (France): Asset purchases probably to end in Dec; outlook for Euro area inflation is firmer

 

Levels as of 12:50ET

- Hang Seng 0.0%; Shanghai Composite +0.5%; Kospi +0.2%; Nikkei225 +0.5%; ASX 200 -0.6%

- Equity Futures: S&P500 -0.4%; Nasdaq100 -0.3%, Dax -0.3%; FTSE100 -0.4%

- EUR 1.1396-1.1421; JPY 112.61-112.85 ; AUD 0.7303-0.7326;NZD 0.6843-0.6874

- Dec Gold -0.3% at $1,219/oz; Jan Crude Oil +1.0% at $57.20/brl; Dec Copper -0.9% at $2.77/lb