Evergrande’s debt payment deadline in focus

Asia Market Update: Equity indices decline after US losses; Evergrande’s debt payment deadline in focus; LDP elections also focal point; NDRC commented on coal; CN Sept PMIs due on Thursday (Official and Caixin).

General trend

- UST yields pare rise during Asia.

- Australia bond yields rise after earlier gain in US rates.

- BOJ may release bond buying schedule this week [Rinban announcement].

- Japan GPIF shuns yuan-denominated Chinese sovereign bonds.

- Evergrande downgraded by Fitch despite grace period.

- US equity FUTs rose after prior declines, some impact seen from the Evergrande asset sale news; Evergrande also has a $47.5M bond interest payment due on Wed (Sept 29th), relates to the 9.5% Mar 2024 USD bond [any grace period?].

- Chipmakers trade generally lower after Micron results/guidance.

- AU and Japan financials drop following US declines.

- Nikkei lagged ahead of LDP election results.

- Hang Seng index pared decline [Evergrande and Property index rise; TECH index tracks losses on Nasdaq].

- Shanghai Composite declined by over 2% during morning trading [Utilities declined by >3%].

- S&P ASX 200 weighed down by Resources, Energy and Financial indices.

- Crude Oil FUTs have extended declines.

- NZD moved slightly lower amid rise in virus cases; RBNZ is due to hold next Monetary Policy Review (MPR) on Oct 6th (Wed).

- Vietnam reports surprise contraction in Q3 GDP.

- China’s HNA said to have made proposal to holders of CNY unsecured debt.

Headlines/Economic Data

Australia/New Zealand

-ASX 200 opened -0.3%.

- SIQ.AU Receives nonbinding proposal from consortium of TPG Global and Potentia Capital for A$10.35/shr.

- (NZ) New Zealand to double border levy to NZ$43.73, effective Dec 1st.

- (AU) Australia APRA plans on publishing paper on macroprudential policy framework from Sept 24th meeting - Quarterly Statement by the Council of Financial Regulators (CFR).

- (AU) Reserve Bank of Australia (RBA): Excess cash at exchange settlement (ES) accounts at A$371.0B v A$369.3B prior (record high).

- (AU) Australia Treasurer Frydenberg: COVID payments to end when 80% [of population] is fully vaccinated - press.

Japan

-Nikkei 225 opened -1.9%.

- (JP) JAPAN LDP ELECTION RESULTS: KISHIDA 256 TOTAL VOTES; KONO 255 VOTES TOTAL, TO HEAD INTO RUNOFF (AS EXPECTED).

- (JP) JAPAN LDP LEADERSHIP 2ND ROUND ELECTION RESULTS: KONO RECEIVES 39 OF 47 RANK AND FILE VOTES.

- 7201.JP CEO Uchida: On track to reach operating profit margin target announced in turnaround plan, despite part shortages – press.

- (JP) GPIF Official Niroshi Nagaoka: Confirms GPIF will not invest in China Govt bonds for now; To use FTSE WGBI Benchmark without China Debt.

- 6723.JP CEO: Expects chip demand to outpace supply through 2022, cannot foresee end of chip shortages next year.

Korea

-Kospi opened -1.4%.

- (KR) North Korea confirms test firing of new type of hypersonic glide vehicle, fired yesterday.

- (KR) North Korea convenes Supreme People's Assembly meeting without leader Kim – KCNA.

- (KR) Bank of Korea (BOK) may seek to start to give monthly GDP - Korean press.

China/Hong Kong

-Hang Seng opened -0.9%; Shanghai Composite opened -0.8%.

- 3333.HK Has a $47.5M bond interest payment due on Wed (Sept 29th), relates to the 9.5% Mar 2024 USD bond; co. still needs to make a total of ~$547.6M in offshore bond coupon payments by Dec 28th - financial press.

- 2066.HK Evergrande disposes of 1.75B shares in company for CNY10B to Shenyang Shengjing Finance Investment Group [subsidiary of the State-owned Assets Supervision and Administration Commission of Shenyang People’s Government (“Shenyang SASAC”)].

- (CN) China PBOC sets Yuan reference rate: 6.4662 v 6.4608 prior.

- (CN) China considering increasing industrial power prices in order to ease shortages, also considering raising rate for residential users - press.

- (CN) China PBOC Open Market Operation (OMO): injects CNY100B in 14-day reverse repos v CNY100B prior; Net Inject CNY40B v Net inject CNY100B prior.

- (CN) China PBOC to conduct CNY5.0B in 3-month Central Bank Bill Swap (CBS) operation on today's session v CNY5.0B prior.

- (CN) China supports waiver of Intellectual Property for coronavirus vaccines – Xinhua.

- (CN) China State Planner (NDRC): Will strengthen transportation of recently released thermal coal capacity; Will ensure rail capacity for coal transportation.

- (HK) Hong Kong Monetary Authority (HKMA) Chief Exec Yue said examining expanding the usage of the yuan (CNY) in Hong Kong equity trading.

- (CN) China PBOC Gov Yi Gang: No need to purchase assets at this time - article on interest rate system (yesterday after the close).

Other

- (VN) Vietnam Q3 GDP Y/Y: -6.2% v +2.3%e (Lowest level since calculations began).

North America

- MU Reports Q4 $2.42 v $2.33e, Rev $8.27B v $8.11Be; Guides Q1 below consensus; Confirms initiates a quarterly dividend (announced in August).

- TSLA Elon Musk: govts can slow down, but not destroy advances in crypto assets; situation in China will improve next year as COVID lifts, things are going well for Tesla in China - Code Conf comments.

- (US) Weekly API Crude Oil Inventories: +4.1M v -6.1M prior.

- (US) Fed's Bullard (non-voter, hawk): We are past the point of any kind of taper tantrum, see the start of tapering in Nov; see upside risks to inflation.

- (US) Commerce Sec Raimondo: If China does not play by the rules, we will need aggressive measures; We want to do business in China but they must give us access.

- AAPL Delivery times for new iPhone 13 are getting longer due to impact of COVID on suppliers in Vietnam - Nikkei.

Europe

- (FR) France accuses UK of starting a new fishing war, after UK rejected 75% of applications from small French boats looking to fish around UK.

Levels as of 01:15ET

- Hang Seng -0.5%; Shanghai Composite -1.7%; Kospi -1.6%; Nikkei225 -2.0%; ASX 200 -0.9%.

- Equity Futures: S&P500 +0.6%; Nasdaq100 +0.6%, Dax +0.4%; FTSE100 +0.1%.

- EUR 1.1690-1.1679; JPY 111.68-111.35; AUD 0.7254-0.7227; NZD 0.6964-0.6937.

- Commodity Futures: Gold +0.0% at $1,737/oz; Crude Oil -1.4% at $74.22/brl; Copper -0.3% at $4.23/lb.