CN/HK equities continue correction

Asia market update: CN/HK equities continue correction; CN then hints at more measures; RBNZ cuts further 50bps; Focus on TSM Sept Sales / Q3; US FOMC Minutes.

General trend

- After yesterday’s plunge in HK shares and the halving of Chinese equity levels from their opening prices, overnight NY trading saw FXI down -9.2% and EWH -7.8% as the US markets played catch up. FXI traded 299M shares versus the daily average of 52M.

- Then at the cash open Shanghai Composite opened down and kept falling as much as -6.5%, with CSI300 Real Estate index -9%, while the Hang Seng -3.3% and Hang Seng Mainland Properties -6%. China equities set to suffer their first decline at the close in 11 days.

- Then, shortly before this update was due to be sent, China MOF said it would hold a briefing on "intensifying" fiscal policy and economic development, on Sat Oct 12th at 10am local time (02:00 GMT). Hang Seng and Shanghai Composite continued to pare losses, while commodity currencies Aussie and Kiwi as well as Sterling, Euro and USD/JPY all spiked somewhat higher.

- New Zealand’s RBNZ cut the OCR by a further 50bps down to 4.75%, as expected. Nevertheless the Kiwi dollar soon lost -0.6% to test 61c handle. However, Kiwi bond yields barely moved and in fact moved up 2bps a couple of hours after the decision. Kiwi dollar resumed its fall later to be down -0.9%, slicing through the 61 handle while NZ equities +1.5%.

- Reserve Bank of India kept rates paused, as expected.

- Japan 10yr yields hit 0.93%, highest since the bond yield melt down on Aug 5th.

- South Korea bonds at last confirmed to be included in WGBI index from Nov 2025, with analysts and the Bank of Korea itself estimating between $40-70B of WGBI-related funds to flow into Korean Treasury Bonds (KTBs) as a result.

- India was also added to the FTSE Emerging Markets Government Bond Index (EMGBI), within the 6 month period from Sept 2025.

- Singapore Exchange reported a 75% bump in total Sept volume of trading, adding that broad-based commodity gains lift volume to records, following China's stimulus announcements

- US equity FUTs -0.2% to -0.3% during the Asia session.

Looking ahead (Asian time zone)

- Wed Oct 9th (Wed night US FOMC Minutes).

- Thu Oct 10th RBA’s Hunter (Thu night US Sept CPI).

- Fri Oct 11th NZ Sept Biz PMI, KR Rate Decision, IN Oct Industrial Production (Fri night US Sept PPI, Michigan Oct prelim Consumer Sentiment).

Holidays in Asia this week

- Mon Oct 7th China.

- Wed Oct 9th South Korea.

- Thu Oct 10th Taiwan (US Sept CPI).

- Fri Oct 11th Hong Kong (US Sept PPI).

Headlines/economic data

Australia/New Zealand

- ASX 200 opens flat at 8,178.

- Reserve Bank of Australia (RBA) Asst Gov Kent (Financial Markets): RBA to review TTF (Term Funding Facility).

- Australia sells A$500M v A$500M indicated in 3.25% Jun 2039 bonds; Avg Yield: 4.3927%; bid-to-cover 2.72x.

- (NZ) New Zealand central bank (RBNZ) cuts official cash rate (OCR) BY 50BPS to 4.75%; as expected.

China/Hong Kong

- Hang Seng opens +1.7% at 21,290; Shanghai Composite opens -1.8% at 3,427.

- *China MOF to hold briefing about fiscal policy and economic development on Sat Oct 12th at 10am local time - financial press; Said to brief 'intensifying' fiscal policy adjustment.

- China said to propose to EU a €30K minimum price for EV imports from China; EU rejected that proposal [overnight update].

- Mexico's Dep Trade Min Gutierrez: Mexico wants to curb Chinese imports with help from US firms; Mexico is not a springboard from Asia to US – SWJ.

- China Premier Li Qiang: To strengthen policy coordination; vows measures to support businesses [overnight update].

- China sells 3-year and 7-year bonds.

- China PBOC sets Yuan reference rate: 7.0568 v 7.0709 prior.

- China PBOC Open Market Operation (OMO): Injects CNY61B in 7-day reverse repos; Net drains CNY136B v net drains CNY887B prior.

Japan

- Nikkei 225 opens +1.2% at 39,385.

- Former BOJ Exec Dir Maeda: BOJ's next hike likely to be in January.

- Seven & i: Couche-Tard said to send new buyout offer to the co. worth ¥7.0T (~$47B); New proposal is for $18.19/shr vs prior 14.86/shr in cash.

- Japan sells ¥3.5T vs. ¥3.5T indicated in 6-Month Bills; Avg Yield: Avg Yield: 0.0702% v 0.0867% prior, bid-to-cover: 3.21x v 3.42x prior.

- Japan Economy Min Akazawa: Leave monetary policy measures to BOJ; Can't take any risk of deflation returning; Want to judge exit of deflation using various data [overnight update].

Korea

- Kospi closed for holiday.

- Korea Finance Ministry: Expects $56B of inflows due to WGBI inclusion.

- South Korea bonds confirmed to be included in WGBI index by FTSE Russell; effective Nov 2025.

- Korea Finance Ministry: To monitor markets for volatility following inclusion in WGBI bond index - financial press.

Other Asia

- India central bank (RBI) leaves repurchase rate unchanged at 6.50%; as expected; changes stance to neutral.

- Thailand Dep Fin Min Paopoom: "Highly possible" for Bank of Thailand (BOT) to cut rates this year.

- (IN) India added to FTSE Emerging Markets Government Bond Index (EMGBI); Effective in the 6 month period from Sept. 2025.

North America

- Google: US DOJ outlines potential remedies in Google search antitrust case that would limit the co's use of contracts and 'monopoly' profits and other tools to control distribution channels; cites court filing - financial press.

- Boeing (BA): *says offer to union 'withdrawn'; Union confirms offer from Sept 23rd has been withdrawn.

- (US) Fed's Jefferson (voter): Job market cooling is modest but noticeable.

- US Dept of Energy: Awards contracts to six companies to develop highly-enriched reactor fuel.

- (US) Sept NFIB Small Business Optimism: 91.5 v 92.0e.

- (US) Reportedly Biden administration has in recent weeks grown increasingly distrustful of what the Israeli govt says about its military and diplomatic plans in the multi-front war it is fighting - Axios.

- (US) Aug trade balance: -$70.4B V -$70.5BE.

- (US) Weekly Redbook LFL Sales w/e Oct 5th: +5.4% y/y; Sept MTD: +5.3% y/y.

- (US) Treasury's $58b 3-year note auction results: draws 3.878% v 3.440% prior, bid-to-cover ratio: 2.45 v 2.66 prior and 2.58 over the last 8 auctions.

Europe

- ECB's Stournaras (Greece): Sees case for two more 25bp cuts in Eurozone this year and further easing in 2025 - FT.

- (RU) Russian oil firms said to be discussing diesel export ban for non-producers - Russian press.

- (EU) ECB’s Centeno (Portugal, dove): Inflation in Euro-Area has converged towards goal; Easing cycle will be faster than thought in June.

- (PL) Poland Central Bank (NBP) Janczyk: Hope for 100bps of rate cuts in 2025.

- (SE) Sweden Central Bank (Riksbank) Dep Gov Bunge: More confident that high inflation is behind us.

- (LY) Libya National Oil Company (NOC): Daily production reaches 1.13M bpd.

Levels as of 01:20 ET

- Nikkei 225 +0.1%, ASX 200 +0.1%, Hang Seng +0.7%; Shanghai Composite -4.0%; Kospi -0.8%.

- Equity S&P500 Futures: -0.2%; Nasdaq100 -0.3% Dax -0.1%; FTSE100 -0.1%.

- EUR 1.0962-1.0982; JPY 148.01-148.55; AUD 0.6723-0.6761; NZD 0.6076-0.6144.

- Gold +0.1% at $2,638/oz; Crude Oil +0.7% at $74.06/brl; Copper +0.4% at $4.4915/lb.