Asian equities gain as yuan fixed stronger than expected

Asia Market Update: Asian equities gain as yuan fixed stronger than expected, China trade data beats ests; Kospi outperforms as Japan partially eases export restrictions on Korea

General Trend:

- Chip-related firms in Japan rise on the South Korea news

- Chinese brokerage firms gain on plan by China to ease funding charges

- China Mobile reports decline in H profits, EBITDA rose

- RBA Gov Lowe is due to appear before Australia House of Representatives Standing Committee on Economics on Aug 9 (Friday)

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened -0.1%

- (NZ) Reserve Bank of New Zealand (RBNZ) Official Hawkesby: Even at a low rate level, monetary policy is still effective

- (NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: Reiterates that in the absence of consumer, business or govt spending as expected we will have to lower rates further

- (AU) Reserve Bank of Australia (RBA) Assistant Gov Bullock: when the financial sector is doing its job of facilitating a smooth flow of funds in the economy to support economic growth - speech Financial Stability Through the Lens of Business

- AMP.AU Reports H1 (A$) underlying Net 309M v 495M y/y; Rev 6.25B v 7.17B y/y; to sell life unit to Resolution Life for A$3.0B (2.5B cash and 500M equity)

- RFF.AU Issued response to report from short selling firm Bonitas: Rejects the 'unfounded' allegations; Hires Ernst and Young to independently investigate the matters raised by Bonitas Research

Japan

- Nikkei 225 opened +0.1%

- (JP) Japan govt reportedly preparing to approve exports of some semiconductor materials to South Korea; would be first such approval since Japan tightened export controls in July – Nikkei

- (JP) Japan said to consider holding extra parliamentary session in Oct which could focus on revision of Japan's corporate law to require large companies to have outside board directors - Japanese Press

- (JP) Japan Fin Min Aso: Closely watching impact of US/China trade conflict; volatility in exchange rates not desirable for economy

- (JP) JAPAN JUNE PRELIMINARY TRADE BALANCE (BOP BASIS): ¥759.3B V ¥691.4BE

- (JP) JAPAN JUNE PRELIMINARY ADJUSTED CURRENT ACCOUNT: ¥1.94T V ¥1.74TE; CURRENT ACCOUNT BALANCE: ¥1.21T V ¥1.149TE; Japanese bought ¥279.5B v sold net ¥39.2B of Italy bonds prior (highest since 2005)

- (JP) Japan Q2 Housing Loans Y/Y: 2.2% v 2.4% prior

- 6740.JP Announces entry into amended agreement to receive ¥80B bailout, to borrow an additional ¥20B from INCJ

- 4004.JP Reports H1 Net ¥65.8B v ¥58.0B y/y, Op ¥85.5B v ¥77.9B, Rev ¥475.5B v ¥455.9B y/y; Cuts outlook

- (JP) Japan MoF sells ¥400B in 10-year inflation-linked JGBs: highest yield: -0.3290%, bid to cover 4.84x

Korea

- Kospi opened +0.9%

- (KR) South Korea PM Lee: Confirms that Japan has granted first approval of high-tech materials since export curbs were put in place in July; approval was for EUV photoresistors

- (KR) Bank of Korea (BOK) reiterates to maintain accomodative policy stance on slowing economic growth; expect economic growth to be slow and inflationary pressure to be low - Parliament report

- 005935.KR Japan likely to allow the export of resist polymers to Samsung - Japan Press

- 005930.KR Mobile Unit Head: Prolonged Japan curbs could affect phone parts - Korean press

China/Hong Kong

- Hang Seng opened flat; Shanghai Composite opened +0.6%

- (CN) CHINA PBOC SETS YUAN REFERENCE RATE: 7.0039 V 6.9996 PRIOR (weakest fix below 7 since April 2008)

- (CN) CHINA JUL TRADE BALANCE: $45.1B V $42.7BE; Exports Y/Y: +3.3% v -1.0%e, Imports Y/Y: -5.6% v -9.0%e; July Trade Surplus with the US: $27.9B v $29.9B prior

- (CN) CHINA JULY TRADE BALANCE (CNY): 310.3T V 310.0BE; Exports Y/Y: 10.3% v 7.0%e; Imports Y/Y: +0.4% v -3.3%e; YTD Trade Balance with US 1.15T; Imports from US -24% y/y; Exports to US -2.1% y/y

- (CN) China reportedly considering new measures to stabilize trade - Chinese Press

- (HK) China has warned Hong Kong that it will intervene if situation gets worse - financial press

- (CN) China PBoC Open Market Operation (OMO): Skips for 12th consecutive session; Net CNY0B drained v CNY0B drained prior

- (CN) According to Institute of International Finance (IIF) China household debt is so high that any Govt stimulus targeted to boost consumer spending is likely to be ineffective - SCMP

- China Mobile, 941.HK Reports H1 (CNY) Net 56.1B v 65.6B y/y; EBITDA 151.1B v 145.9B y/y; Rev 389.4B v 391.8B y/y

- (CN) State Administration of Foreign Exchange (SAFE) Chief Economist Chugying: US decision to label China "a currency manipulator" totally deviates from the facts and doesn't have a leg to stand on; FX market has been running smoothly in general - Xinhua

- (CN) CHINA JULY FOREIGN RESERVES: $3.104T V $3.105TE (1st decline in 3 months) (overnight yesterday)

Other Asia

- (PH) Philippines Q2 GDP Q/Q: 1.4% v 1.5%e; Y/Y: 5.5% v 5.9%e

- TATA.IN Reports Q2 (INR) Net 6.93B v 19.4B y/y, EBITDA 55.3B v 56.5Be; Rev 359.5B v 372.8Be

North America

- NTES Reports Q2 $4.09 (adj) v $3.40 y/y, Rev $2.73B v $2.73Be y/y

- (CN) Fox Business's Lawrence: China trade sources say China expects that 10% tariff to go to 25% because China will stand firm and not buy US Agriculture

- (US) Fed Evans (dove, voter): sees mid-cycle adjustment has the Fed aiming for 50bps below Neutral rate, rather than 50bps above; The inflation outlook alone calls for more accommodation - comments to reporters

Europe

- (UK) JULY RICS HOUSE PRICE BALANCE: -9% V -1%E

- (UL) US Sec of State Pompeo: US is ready to sign UK-US trade agreement after Brexit

Levels as of 1:20 ET

- Nikkei 225, +0.5%, ASX 200 %, Hang Seng +0.5%; Shanghai Composite +0.9%; Kospi +1%

- Equity Futures: S&P500 +0.5%; Nasdaq100 +0.6%, Dax +0.4%; FTSE100 +0.9%

- EUR 1.1214-1.1196 ; JPY 106.30-105.99 ; AUD 0.6783-0.6746 ;NZD 0.6469-0.6433

- Gold -0.6% at $1,511/oz; Crude Oil +2.9% at $52.57/brl; Copper +0.2% at $2,591/lb