Asia Market Update: Higher yields support financials, but weigh on REITs and Telecoms; Some expect BoJ’s Sept policy decision to be a ‘close call’; China may introduce trade stabilization measures

 

General Trend:

- Asian financials supported by higher longer-dated government bond yields

- Hang Seng rises over 1%, financials gain amid higher yields and plan by China to remove QFII and RQFII quotas

- Kospi rises as US President Trump fired John Bolton as National Security Adviser; South Korea’s Aug unemployment rate unexpectedly hit 6-yr low; early Sept exports rose on wireless communications devices and autos, Chip exports -33% y/y

- Banks help drive Japanese equity markets higher amid BoJ speculation

- Shanghai lags in early trading; IT and Telecom Services firms decline as bipartisan group of US Senators said to warn that China might gain access to sensitive technology through HK

- Chinese financials rise, China announced plan to remove QFII and RQFII quota limits in order to further open its financial markets

- Iron-ore miners rise in Australia

- Australia Westpac Consumer Confidence declined in Sept, NAB revised RBA rate call; Aussie supported by China trade news

- RBA reiterates stance regarding non-conventional monetary policy measures

- Japan’s Q3 BSI indices improved, BoJ Tankan Survey due on Oct 1st (Tuesday)

- There continues to be press speculation that Japanese companies might scale down operations in SK amid ongoing spat between Japan/South Korea

- US 30-year T-Bond Futures rise in Asian trading after losses on Tuesday

- US Soybean Futures rose over 1% on Tuesday; Reportedly, China expected to agree to buy more US agricultural products in hopes of getting better terms in a trade deal (SCMP)

- PBOC continues to conduct bill swaps amid recent press coverage of bank bailouts



Headlines/Economic Data

Australia/New Zealand

-ASX 200 opened +0.1%

- WPL.AU CEO: Seeking to reduce stake in Scarborough gas field and Kitimat LNG project in Canada for capital and risk management issues

- SIV.AU Received conditional proposal from Next Capital of A$0.74-0.79/share for hospitality unit, that board will need to consider

- (AU) Australia Sept Westpac Consumer Confidence Index: 98.2 v 100 prior; M/M: -1.7% v 3.6% prior

- (AU) NAB now sees RBA cutting rate to 0.5% by Feb 2020 (prior 0.75%); See a chance for another 25bps rate cut mid-2020 if there is no meaningful fiscal stimulus

-(AU) Reserve Bank of Australia (RBA): Reiterates unconventional policy not likely, would consider if warranted; goal of any unconventional policy to reduce risk free rate - written response to lawmakers questions

Japan

- Nikkei 225 opened +0.4%

- (JP) Japan Trade Ministry: welcomes WTO ruling on pneumatic valves case; demands South Korea halt its 'unjust' measures against Japanese companies

- (JP) JAPAN Q3 BSI LARGE ALL INDUSTRY Q/Q: +1.1 V -1.0E; LARGE MANUFACTURING Q/Q: -0.2 V -10.4 PRIOR

- (JP) Bank of Japan (BOJ): policy makers said to be less confident on pickup in global growth and might be open to additional easing measures - financial press

- 7181.JP Japan regulator expected to start investigation today - Japan press

-(JP) Japan LDP Policy Chief Kishida: Smooth sales tax hike important for Japan's future

-(JP) Japan announces Cabinet Reshuffle, no major surprises, Suga, Aso remain in posts, while the others reshuffle

-(JP) Japan MoF sells ¥1.9T v ¥1.9T prior in 0.1% coupon 5-year JGB: avg yield: -0.3080% v -0.314% prior, bid to cover: 3.61x v 4.68x prior

Korea

-Kospi opened +0.6%

- 037620.KR Confirms to acquire 15 luxury hotels from China's Anbang, no terms disclosed (speculated in the press to be worth $5.8B)

- (KR) South Korea to file WTO complaint against prior announced Japan export curbs today

- (KR) South Korea Sept 1-10th Exports y/y: +7.2% v -22.1% prior; Electronics Exports y/y: -33% v -30.7% prior; Imports y/y: +3.3% v -13.2% prior

- (KR) Follow Up: North Korea leader Kim said to have oversaw the 2 missile launches reported yesterday, it was a "super large" multiple missile rocket test fire - Korean press

- (KR) South Korea Aug Unemployment Rate: 3.1% v 4.0%e (lowest level since 2013)

- (KR) South Korea Fin Min Hong: Seeing clear signs of job recovery in August data

China/Hong Kong

- Hang Seng opened +0.4%; Shanghai Composite opened +0.3%

- (CN) China State Administration of Foreign Exchange (SAFE): Will remove quotas on the dollar-dominated qualified foreign institutional investor (QFII) scheme and its yuan-denominated sibling, RQFII

- (CN) China PBoC Open Market Operation (OMO): Injects CNY30B in 7-day reverse repos v injects CNY80B prior; Net CNY30B injects v injects CNY80B prior

- (CN) China PBOC sets Yuan Reference Rate: 7.0843 v 7.0851 prior

- (CN) China PBOC to conduct CNY5.0B 3-month 2.35% v 2.35% prior in Central Bank Bill Swap (CBS) operation on Sept 11th; fee 0.10% v 0.10% prior (note prior was Aug 9th)

-(CN) China Global Times Editor: China will introduce important measures to ease negative impact of trade war, measures will help China and US companies

- (CN) Reportedly China expected to agree to buy more US agricultural products in hopes of getting better terms in a trade deal – SCMP

- (CN) US Senators warn that China might gain access to sensitive tech via Hong Kong – FT

- (CN) China Securities Regulatory Commission (CSRC) Chief Yi Human: Financial risk prevention is a higher priority; to accelerate capital market opening - China People's Daily

- (CN) China to take measures to reduce the use of credit cards to purchase real estate - China press

- (CN) According to Jin Canrong of Renmin University of China in Beijing: US must concede final 20% of demands to end trade war with China, as far back as May China and US had agreed to 80% of the deal – SCMP

North America

- SCHW Expected to announce layoffs totaling 600 (3% of workforce) next week - US financial press

-(US) State of California passes employment bill on gig workers, as speculated (expected to impact app based jobs)

- (US) PRES TRUMP FIRES NATIONAL SECURITY ADVISER JOHN BOLTON; Nat Sec Adviser Bolton tweets: "I offered to resign last night and President Trump said, 'Let's talk about it tomorrow.'"

Europe

- (IR) Two UK nationals have been detained in Iran - UK press

-(UK) PM Johnson reportedly reiterated to cabinet today he won't negotiate Brexit delay in Brussels in mid-Oct and that his Brexit goal is unchanged by the law passed in Parliament - UK press

 

Levels as of 1:20 ET

- Nikkei 225, +1%, ASX 200 +0.1%, Hang Seng +1.7%; Shanghai Composite -0.1%; Kospi +0.7%

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

- EUR 1.1056-1.1037 ; JPY 107.78-107.49 ; AUD 0.6885-0.6848 ;NZD 0.6439-0.6407

- Gold -0.1% at $1,498/oz; Crude Oil +0.8% at $57.88/brl; Copper +0.6% at $2.637/lb

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