China property prices edge up despite curbs

Asia Mid-Session Market Update: China property prices edge up despite curbs; G20 communique retreats on pledge to fight protectionism

Friday US markets on close: Dow +0.2%, S&P500 +0.3%, Nasdaq +0.4%

- Best Sector in S&P500: Financials

- Worst Sector in S&P500: Utilities

- Biggest gainers: CTAS +4.7%; ADBE +3.8%; WYNN +3.8%

- Biggest losers: AMGN -6.4%; IVZ -4.4%; BEN -3.9%

- At the close: VIX 11.3 (+0.1pts); Treasuries: 2-yr 1.32% (flat), 10-yr 2.50% (-2bps), 30-yr 3.11% (-2bps)

Politics

- (DE) President Trump tweets about meeting with Germany Chancellor Merkel, says Germany "owes vast sums of money to NATO"

- (DE) German Defense Min von der Leyen: "There is no debit account in NATO" - press

- (US) House Speaker Ryan: Feel confident about health bill passing the House this week after changes made provided more assistance to people in their 50s and 60's - press

- (US) President Trump: Meetings on health care bill are going well; North Korea is "acting very badly" - speaking from Air Force One

Weekend US/EU Corporate Headlines

- MBLY: May seek higher offers from other companies - NY Post citing analyst

- SFM: Said to have held preliminary merger talks with Albertsons - press

- DDC: Confirms Washington Companies discloses all-cash proposal to acquire Dominion Diamond Corporation for $13.50/shr

Key economic data:

- (CN) CHINA FEB PROPERTY PRICES M/M: RISE IN 56 OUT OF 70 CITIES VS 45 PRIOR; Y/Y: RISE IN 67 OUT OF 70 CITIES V 66 PRIOR; China avg all-70 new home prices m/m: 0.3% v 0.2% prior; y/y: 11.8% v 12.2% prior

- (NZ) NEW ZEALAND Q1 WESTPAC CONSUMER CONFIDENCE: 111.9 V 113.1 PRIOR

- (NZ) New Zealand Feb Performance Service Index: 58.8 v 59.5 prior

- (KR) SOUTH KOREA FEB PPI M/M: 0.3% V 1.4% PRIOR; Y/Y: 4.2% (5-year high) V 3.9% PRIOR

Asia Session Notable Observations, Speakers and Press

- Asia equity markets are mixed after modest gain on Wall St on Friday, as investor focus turns from central bank statements last week to US policy under Pres Trump. The White House is heading for a busy week, with anticipated House health care legislation coming to the floor and the Senate starting hearings on Supreme Court nominee Gorsuch. In the mean time, there was tension at Trump's meeting with German Chancellor Merkel over the weekend as US leader claimed Germany "owes vast sums of money to NATO", to which German Defense Min replied "There is no debit account in NATO".

- Economic nationalism was also on display at G20, with official Communique affirming commitment against competitive devaluation but also omitting language on promoting free trade thanks to recent threats of more protectionism from US govt. US Treasury Sec Mnuchin urged not to read into the omission, but also maintained that US is now move interested in reducing trade deficits and is prepared to re-examine certain agreements as it transitions to move "fair" trade policies. Elsewhere, US State Sec Tillerson held talks with China on his trip to Asia, discussing North Korea, Taiwan and bilateral trade. Tillerson and Trump remained scornful of North Korea's more aggressive posturing, though China called for restraint and "cool-headed" decisions.

- Economic calendar was very light to start the week, with key data coming from China property sector. House prices rose m/m in 56 out of 70 cities - up from 45 last month - as markets appeared to stabilize in the wake of policy curbing excessive rise of property inflation. Across China's 70 top cities, prices rose 0.3% m/m v 0.2% prior, while y/y rise was comparable at 11.8% v 12.2% prior. China govt continues to make targeted adjustments, particularly in the first tier cities, as regulators raised the downpayment requirement for buyers of 2nd homes in Beijing from 50% to 60% on Friday.

China

- (CN) Beijing raised the downpayment requirement for buyers of 2nd homes from 50% to 60% - Chinese press

- (CN) China Financial News: PBoC's increase of reverse repurchase and mid-term lending facility interest rates had the effect of “targeted” measures to prevent property sector risks as developers with high debt are more sensitive to rate hikes

- (CN) PBoC Gov Zhou: China's growth prospects have improved and we are focused on structural adjustment of the economy - G20 meeting

- (CN) US Sec State Tillerson: US and China discussed safeguarding stability in Asia Pacific; agreed North Korea must be convinced to choose a better path

Japan

- (JP) Japan PM Abe: Germany and Japan should continue as free trade champions; countries are signing "Hanover Declaration"

Australia

- (AU) Goldman Sachs strategist: Expect RBA to raise rates in Nov 2017 - Australian press

Korea

- (KR) South Korea Dep PM Yoo: Govt to consider ways to communicate with China about its retaliatory measures in response to THAAD deployment - Korean press

- (KR) South Korea Fin Min Yoo: See the need for preemptive moves on household debt

- (KR) South Korea Defense Ministry spokesperson: North Korea likely made "meaningful" progress in rocket engine test - press

Asian Equity Indices/Futures (00:00ET)

- Nikkei closed, Hang Seng +0.6%, Shanghai Composite +0.1%, ASX200 -0.5%, Kospi -0.5%

- Equity Futures: S&P500 -0.3%; Nasdaq -0.2%, Dax -0.2%, FTSE100 flat

FX ranges/Commodities/Fixed Income (00:00ET)

- EUR 1.0735-1.0765; JPY 112.45-112.75; AUD 0.7690-0.7725; NZD 0.7010-0.7040; GBP 1.2380-1.2395

- Apr Gold +0.3% at 1,234/oz; Apr Crude Oil -0.8% at $48.94/brl; May Copper -0.7% at $2.67/lb

- (SA) China and Saudi Arabia agree to increase cooperation in the oil sector, including Saudi oil exports to China - press

- SPDR Gold Trust ETF daily holdings fall 3.0 tonnes to 834.1 tonnes; 2nd straight decline

- (CN) PBOC SETS YUAN MID POINT AT 6.8998 V 6.8873 PRIOR; 2nd straight weaker setting

- (CN) PBOC to inject combined CNY100B v CNY60B prior in 7,14, and 28-day reverse repos

- (KR) South Korea sells 10-yr bonds at 2.215%

Asia equities/Notables/movers

Australia

- Wesfarmers WES.AU -0.7%; Coles in Western Australia under investigation for asking workers to work for pizza instead of money on a Sunday - NZ press

- Fletcher Building FBU.NZ -10.2%; Cuts FY17 EBIT NZ$610-650M (prior NZ$720-760M); construction division to report an EBIT loss

Hong Kong

- 1088.HK China Shenhua Energy Company Limited +16.0%; Reports FY16 CNY32.0B v CNY25.0B y/y; Rev CNY183.1B v CNY177.1B y/y

- 1184.HK S.A.S. Dragon Holdings Limited +10.3%; Guides FY16 Net +114% y/y or more

- 2488.HK Launch Tech Company Limited +9.0%; Reports FY16 Net profit CNY21.4M v loss CNY93.9M y/y, Rev CNY835M v CNY698M y/y

- 1530.HK 3SBio Inc +4.9%; Reports FY16 Net CNY714.3M v CNY526.2M y/y, Rev CNY2.80B v CNY1.67B y/y

- 819.HK Tianneng Power International +4.0%; Guides FY16 Net +40% y/y or more

- 732.HK Truly International Holdings -3.0%; Reports FY16 Net HK$581.7M v HK$845.4M y/y, Rev HK$22.1B v HK$19.4B y/y

- 1368.HK Xtep International Holdings Limited -9.7%; Reports FY16 Net CNY527.9M v CNY622.6M y/y; Rev CNY5.40B v CNY5.30B y/y