Equity markets trade generally higher, Shanghai lags

Asia Market Update: Equity markets trade generally higher, Shanghai lags; China data mixed; RBA in focus for Tuesday

General Trend

- Shanghai Composite ended the morning session lower by 0.3%; Decliners included Consumer firms

- Early gainers in HK include Financial and Tech companies

- Japanese markets trade broadly higher; Topix Marine Transportation, Iron/Steel, Insurance and Pharma indices are among the gainers

- Financials outperform in Australia

- RBA Oct Minutes due on Oct 20th (Tues), RBA Assist Gov (Financial Markets) Kent is also due to speak on the same day; RBA Deputy Gov Debelle is due to speak on Oct 22nd (Thursday)

- China PBOC is expected to leave its loan prime rates (LPRs) unchanged on Tuesday (Oct 20th)

Headlines/Economic Data

Australia/New Zealand

-ASX 200 +0.2%

-Cimic [CIM.AU]: Follow Up: Reaches agreement to sell 50% of Thiess, transaction expected to generate A$1.7-1.9B in cash proceeds

-(AU) Australia Melbourne has loosened its coronavirus restrictions [Victoria was expected to reconsider its restrictions on Oct 19th]; Easing to allow residents to go up to 25 Kilometers from their homes - FT

-(AU) New South Wales (Australia) eases its coronavirus restrictions; To permit more people at restaurants and weddings

-(NZ) New Zealand Ruling Labour Party wins election with large enough margins to rule without a coalition govt, as expected

-(NZ) New Zealand Sept Performance of Services Index: 50.3 v 47.2 prior (first expansion or reading above 50 since July)

-(NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$330M v NZ$230M prior in government bonds as part of QE v NZ$330M sought

China/Hong Kong

- Hang Seng opened +0.7%, Shanghai Composite opened +0.4%

-*(CN) CHINA Q3 GDP Q/Q: 2.7% V 3.3%E; Y/Y: 4.9% V 5.5%E

-*(CN) CHINA SEPT INDUSTRIAL PRODUCTION Y/Y: 6.9% V 5.8%E; YTD Y/Y: 1.2% V 1.0%E

-*(CN) CHINA SEPT RETAIL SALES Y/Y: 3.3% V 1.6%E; YTD Y/Y: -7.2% V -7.4%E

-(CN) China PBOC Gov Yi Gang said China GDP to expand by ~2% in 2020, noted the yuan currency (CNY) was appreciating against the US dollar 'significantly' in the past 3 months [cited interest rate differentials], said this development should be left to market forces - financial press

- Ant Group: China Securities Regulator (CSRC) said to approve Ant Financial IPO in Hong Kong, co. to seek approval for Hong Kong Exchange listing on Monday from the Hong Kong Exchange

-*(CN) CHINA SEPT FIXED ASSETS INVESTMENT (EX-RURAL) YTD Y/Y: 0.8% V 0.9%E

-*(CN) CHINA SEPT PROPERTY INVESTMENT YTD Y/Y: 5.6% V 5.2%E

- (CN) China Sept Surveyed Jobless Rate: 5.4% v 5.5%e

- (CN) China top legislature passes a new export control law which could potentially ban exports of rare earth metals; the law takes effect on Dec 1st 2020; China also passed the biosecurity law aimed at preventing infectious diseases - Nikkei

- (CN) China PBOC sets Yuan reference rate: 6.7010 v 6.7332 prior (Strongest fix since Apr 18th 2019)

- (CN) China PBoC Open Market Operation (OMO): Injects CNY50B in 7-day reverse repos v Injects CNY50B in 7-day reverse repos prior; Net inject CNY50B v Net inject CNY50B prior

Japan

- Nikkei 225 opened +0.6%

- (JP) Bank of Japan (BOJ) Deputy Gov Wakatabe: Not ruling out the use of negative rates, but that should be judged against a backdrop of the Yield Curve Control program; changing the mid-point target for YCC is on the table if the BOJ sees a need to ease more; don't target exchange rates but exchange rates of course are an extremely important component for the economy; Real question surrounding exchange rate movement is not really the movement but impact it has on inflation dynamics (from Oct 16th)

- (JP) BoJ Gov Kuroda reiterated that the central bank has no plan to change inflation target nor forward guidance; reiterates will not hesitate to take additional measures to support the economy - financial press

- (JP) Japan Sept Trade Balance: ¥675.0B v ¥975.6Be; Adjusted Trade Balance: ¥475.8B v ¥854.3Be; Exports Y/Y: -4.9% v -2.6%e (22nd straight decline); Imports Y/Y: -17.2% v -21.5%e

Korea

- Kospi opened +0.6%

- (KR) South Korea sells KRW1.31T in 10-year bonds; Pre-issuance yield 1.535%

Other Asia

- (TW) Follow Up: Taiwan said to strengthen regulation on Tech Transfer rules to China companies – press

- Novatek Microelectronics [3034.TW]: Said to have raised IC design product prices by up to 15%, notes higher prices related to wafer foundries and rising demand for notebooks and TVs - Press

North America

- (US) US House Speaker Pelosi (D) has given the Trump administration a deadline of Tuesday (Oct 20th) to reach a stimulus deal before the election - financial press

- (US) President Trump: Wants bigger stimulus deal than Pelosi's plan - Campaign Rally comments

- (US) Fed Rosengren (hawk, non-voter) affirmed the need for a robust financial supervisory authority for times when low interest rates are used for a long time; Fed Kashkari (dove, FOMC dissenter) said there was a need for more strict regulation to prevent repeated market interventions by the Fed, does not know what the best policy solution is – FT

- Cogeco [CGO.CA]: Receives increased takeover offer from Altice, rejects the revised takeover proposal

Europe

- (UK) BoE Gov Bailey said he expected UK GDP would likely be 10% below pre-crisis level at the end of Q3 [said 7-10% lower than pre pandemic level on Sept 29th]; Negative interest rates work better in wholesale markets, and in a nascent upturn; Targeting exchange rates does not come up in BOE policy discussions. - financial press

- (UK) Moody's cuts United Kingdom (UK) sovereign rating one notch to Aa3 from Aa2; outlook revised to Stable from Negative (from Oct 16th)

- (EU) ECB chief Lagarde said new coronavirus-related restrictions currently being introduced across Europe to add to uncertainty, clear that both fiscal and monetary support have to remain in place for as long as needed; reiterates 'cliff effects' must be avoided - financial press

Levels as of 1:20 ET

- Nikkei 225, +1.2%, ASX 200 +0.9% , Hang Seng +0.6%; Shanghai Composite -0.3% ; Kospi +0.6%

- Equity S&P500 Futures: +0.7%; Nasdaq100 +0.8%, Dax +0.6%; FTSE100 +0.4%

- EUR 1.1725-1.1704 ; JPY 105.50-105.33 ; AUD 0.7109-0.7071 ;NZD 0.6630-0.6601

- Gold flat at $1,905/oz; Crude Oil -0.3% at $41.00/brl; Copper +0.4% at $3.0725/lb