Article / 20 September 2016 at 1:42 GMT

Morning Report APAC: Asian markets quiet ahead of policy meetings

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Asian markets opened slightly lower at the start
  • US stocks closed mixed and VIX crept 1% higher ahead of central bank meetings 
  • US NAHB housing market index increased to 65, marking a 10-year high
  • The USD should remain slightly bid until the BoJ and FOMC meetings


By Saxo APAC Sales Trading


Economic data of the day (Singapore Time; GMT+8)
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Speeches

  • 0930 – AUD – Reserve Bank of Australia September Meeting Minutes

Overnight news

 United States

  • US NAHB housing market index increased to 65, this marks a 10-year high. Weak housing investment was a negative drag on Q2 GDP, however the signs now point to a rebound in Q3. The housing outlook looks increasingly positive as low interest rates persist and the market increasingly shifts away from rented accommodation to owned. 

Europe

  • Year-on-year construction output climbed to 3.1% versus 0.6% prior. While the European Central Bank currency account narrowed to €21bn from a revised €29.5bn last month.  


Foreign exchange

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  • It was very quiet overnight but the USD should remain slightly bid until the Bank of Japan and the Federal Open Market Committee meetings. The uncertainty lies in the BoJ meeting with the worries that it might disappoint. There is no consensus from most of the economists for this meeting. EURUSD first stop levels are still below 1.1100.
  • In Emerging Markets, USDMXN remains bid mainly with hedge funds flows with some US banks. The next big move to watch will be after the FOMC meeting.
  • The USD remains bid against most EM currencies ahead of BoJ and FOMC.


Foreign exchange volatilities

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  • The market is now buying the December Fed date for USD calls in most G10 currencies but nothing really significant yet.
  • There is very strong interest from hedge funds to buy USD calls November 09 for USDMXN (US elections).


Rates
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  • US Treasury yields slightly higher across curve strong read on home builder sentiment.
  • While markets are bracing for the BoJ and FOMC to conclude this week, most analysts see potential for UST curve to flatten out from the central bank meetings.


Commodities 

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Equities
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  • US stocks closed mixed and VIX crept 1% higher ahead of central bank meetings this week.
  • Sarepta Therapeutics (+73.9%) surged after the US Food and Drug Administration gave accelerated approval to the first drug – eteplirsen – for the crippling disease Duchenne muscular dystrophy.
  • Stoxx Europe 600 pushed up 1% fuelled by as the oil and gas sector (+1.70%) and basic materials shares (+3.35%).
  • Among oil producers, France’s Total closed up 2.7%, Royal Dutch Shell gained 1.8%, and Italy’s Eni was 1.5% higher, noting that Goldman has recommended investors buy integrated oil companies Total, Shell, Eni and Exxon Mobil.
  • Glencore rose 6.2% as Credit Suisse upgraded its rating to outperform from neutral on optimism over iron ore and coal demand.

Asia-Pacific stocks


Hong Kong

Analyst ratings

- China High Speed (658 HK): Cut to neutral at JPMorgan

- Cosco Shipping (1199 HK): Raised to buy at HSBC

- Datang Telecom (600198 CH): Rated new accumulate at Everbright Secs

- Gohigh Data (000851 CH): Rated new accumulate at Everbright Secs

- Great Wall Motor (2333 HK): Raised to buy at GuoTai JunAn

- Ningbo Shanshan (600884 CH): Rated new outperform at SWS Research

Preview

- Country Garden(2007) posts record contract sales of RMB200bn YTD, +164% YoY

- China Unicom(762) Aug aggregate number of 4G subscribers reached 82.9mln with net monthly addition of 5mln, vs 5.4mln in July and 4.2mln in June.

- PICC P&C(2328) Jan-Aug direct premium income +10.3% YoY to RMB207bn

- PICC(1339) Jan-Aug premium income +15.6% YoY to RMB320.8bn

- Creative China(8368) sells 15% of equity in Yiju Creative to Zhao Wei & Chen Kun

- Sasa(178) has entered into a strategic cooperation agreement with e-commerce platform, Kaola.com, Sasa will set up an official flagship store with them

- China RE(1508)’s subsidiary, China Continent Property & Casualty Insurance, Jan-Aug premium income was RMB20.7bn

- Yuzhou PPT(1628) Aug contract sales +80% YoY to RMB2bn; Jan-Aug contract sales +116% YoY to RMB16.8bn

- Bocom(3328) is proactively preparing for pilot implementation of non-performing assets securitisation

- Phoenix TV(2008) submits application for HK free-to-air TV licence

- Times PPT(1233) wins bid for land in Dong Guan, Guangzhou for RMB1.4bn

- CGN Power(1816) announced Unit 4 of Hongyanhe Nuclear completed all commissioning work and was qualified for commercial operation

- Sitoy Group(1023) will set up directly operated stores in tier 1 cities, and commission agents in tier 2 and 3 cities, hoping the revenue from e-commerce will keep on increasing

- Chinasoft(354) has received a request from a noteholder to convert RMB50 million of its convertible notes. The company will issue 29mln shares, representing 1.33% of issued share capital

 
Japan

Analyst ratings

 - Electric Power Development (9513 JP): Raised to overweight at Mitsubishi UFJ Morgan Stanley

- Info Services (4812 JP): Rated new outperform at Tokai Tokyo

- Nissin Electric (6641 JP): Rated new outperform at Iwai Cosmo

- Ube Industries (4208 JP): Raised to neutral plus at Iwai Cosmo

Preview

- E-Guardian (6050 JP): Plans to pay full-year dividend of 4 yen/share vs 2.33 yen year ago

- FCC (7296 JP): Wins first order from Toyota, will provide clutch assembly

- Japan Tobacco (2914 JP): Aug. domestic cigarette volume +0.8% y/y

- Mito Securities (8622 JP): Plans to pay 1H dividend of 2 yen/share vs 6 yen year ago

- Murata (6981 JP): Raising stake in Shizuki Electric (6994 JP) to 13.65% from 1.98%

- Nintendo (7974 JP): To resume shipments of Pokemon Go Plus device in September

- Sharp (6753 JP): Sharp India (SIL IN) shares surge on plan to consider offer from Sharp

 

Australia

Analyst ratings

 - BHP Billiton (BHP AU) cut to neutral vs buy at Haitong

- Alacer Gold (AQG AU) raised to neutral from underperform at Macquarie

Preview

- TPG Telecom (TPM AU) full-year results

- Sydney Airport (SYD AU) August traffic stats

- Arvida (ARV NZ) plans 1-for-7 rights issue at $NZ1.05/share to fund retirement village purchase

Source: CIMB / Bloomberg


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 Oil prices dropped overnight following comments from the Venezuelan Oil Minister. Photo: iStock 

 
– Edited by Gayle Bryant


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