Article / 15 September 2016 at 1:28 GMT

Morning Report APAC: Asian markets weaker on oil slide

APAC Sales Trading Desk / Saxo Capital Markets

  • Asian markets opened weaker on a mixed finish in the US and oil falls
  • Presidential nominee Donald Trump is leading Hillary Clinton in some polls
  • Most currencies recovered slightly against the USD except EM currencies
  • US rates dropped 3 to 4 basis points following demand from Japanese investors
  • Apple surged 3.6% after news of high pre-orders for the iPhone 7 

By Saxo APAC Sales Trading

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


Overnight news

United States

  • Import Prices declined 0.2% (Exp. minus 0.1%) led by Industrial prices and auto prices. Prices of goods exported from the US dropped 0.8%, the most since January, on broad-based declines. The report reflects slumping commodity costs as well as price cuts by producers to make goods more competitive overseas. Agriculture exports fell 3.4%, the most in three years. 

US elections

  • In the latest poll from The Los Angeles Times, Donald Trump was leading 46.7% to 42% against Hillary Clinton. In the swing state Ohio, the latest poll shows Trump ahead 48% against 43% for Clinton. 

Foreign exchange



  • It was a very quiet day in FX overnight despite the 3% drop in oil overnight. Most currencies recovered slightly against the USD except EM currencies like MXN and BRL (see below).
  • In Emerging Markets, USDMXN rallied 2.5% in two days to trade very close to the record high of 19.50 following the lead of Trump in some polls. The drop in oil is also not helping the currency as it represents one-third of the government revenues. Growth is forecasted to show at 2.2% this year from 2.5% with a budget definit of 3.5% of GDP. Mexico has a $60bn trade surplus with the US and this number could really get affected if Trump wins (Remember he wants to build a wall at the border and have Mexico pay for it).
  • The rest of the Latin region is of course affected by this MXN selloff and USDBRL rallied 4.8% in one week to reach the 100d MA.

Foreign exchange volatilities


  • EUR/Cross volatilities such as EURAUD and EURCAD are bid for upside strikes from 1 Month to 3 Months. There has been an interest from banks to buy those since last Friday.  
  • USDCNH Risk Reversals are still bid from Real Money investors between 3M and 1 year. The forward points remain well supported.


  • US rates dropped 3 to 4 basis points with demand from Japanese investors in the US Treasuries across the 5-year to 30-year part of the curve. The curve is steepening a lot in the long end of the curve with the 5yr-30yr trading at 124 bps up from a low of 103 bps at the beginning of the month.
  • European bonds rallied as well and gilt found a breather after the strong rally in yields the past two weeks.






  • US stocks extended their losses from the previous day, with S&P500 falling 0.06% and retesting its 100-DMA of 2,121. Energy sector (down 1.15%) was the worst performing, while technology sector (up 0.58%) claimed most gains.
  • Apple surged 3.6% after the four major US wireless carriers, except No.1, Verizon Communications, said pre-orders for the iPhone 7 have been higher in volume than previous models. Investors are eyeing signs of early enthusiasm for the iPhone 7 after two quarters of declining sales for Apple’s flagship device.
  • Aerie Pharmaceuticals jumped 61% to $34 in the extended session after its eye-drug study yielded promising results.
  • Bayer edged higher 0.3% as the German pharmaceuticals and chemicals giant clinched Monsanto with an improved $66 billion bid, marking the largest foreign corporate takeover ever by a German firm.
  • Cie. Financière Richemont SA, parent of Cartier, dipped 3.93% after warning that operating profit for the six months through September may fall around 45% from the previous year, hurt by weaker demand in Asia and a drop in tourism in Europe. S&P Global cut its rating on Richemont to sell.

Asia Pacific stocks

Hong Kong

Analyst ratings

  •  HSBC (5 HK): Cut to neutral at UBS
  • Ping An Insurance Group (601318 CH): Raised to buy at HSBC


  • Ping An(2318) Jan-Aug total premium income was RMB322.8bn, +21% YoY; life insurance premium income was RMB199.3bn, +33.4% YoY
  • China Taiping(966) Jan-Aug total premium income was RMB84.8bn,+20.4% YoY; life insurance permium income was RMB70.1bn, +21.3% YoY
  • CKP(1113) wins residential land in Kau To Shan at $1.95bn (or HK$8,001psf) land price is 33% above estimates
  • China Southern Air(1055) Aug passenger capacity +7.2% YoY
  • HSBC(5) SFC has reprimanded and fined HSBC $2.5mln for regulatory breaches and internal control failings
  • China Coal(1898) Jan-Auf commercial coal sales -1.6% YoY to 89.2mln tons
  • Powerlong(1238) JV of Powerlong unit acquired land use right in Qingpu district in Shanghai for RMB1.88bn
  • EB Intl(257) announced that the group has recently obtained two projects, namely Tianjin Jixian Biomass Project and Henan Xiayi Biomass & Waste-to-energy Integration Project, involving total investment of about RMB778mln
  • TCL Comm(2618) says privatisation plan approved by independent shareholders, last trading day will be on September 22
  • BE Clean Energy(1250) to acquire photovoltaic power plant for RMB469mln
  • PAX Global(327) buys back 5mln shares on market for HK$29.3mln Wednesday
  • Tech Pro(3823) HK freezes executive’s assets after short-seller attack
  • Fosun(656) Banco Comercial executive committee to expand talks With Fosun


Analyst ratings

  •  Jefferies real estate rating changes:
    – Mitsubishi Estate (8802 JP), Mitsui Fudosan (8801 JP) Cut to hold
    – Sumitomo Realty (8830 JP): Cut to underperform

  • Chubu Electric (9502 JP): Raised to neutral at Goldman
  • Denso (6902 JP): Cut to hold at Jefferies
  • Hirata (6258 JP): Rated new buy at BNP Paribas
  • Hokkaido Electric (9509 JP): Cut to neutral at Goldman
  • Kose (4922 JP): Rated new neutral at Mizuho
  • Kyushu Electric (9508 JP): Cut to sell at Goldman
  • Leopalace21 (8848 JP): Cut to neutral at Storm Research
  • Nabtesco (6268 JP): Rated new hold at BNP Paribas
  • Pola Orbis (4927 JP): Rated new buy at Mizuho
  • Rakuten (4755 JP): Cut to neutral at Macquarie
  • Resona (8308 JP): Rated new buy at Haitong
  • Rinnai (5947 JP): Cut to underperform at Credit Suisse
  • Screen Holdings (7735 JP): Cut to sell at UBS
  • Shikoku Electric (9507 JP): Cut to neutral at Mitsubishi UFJ Morgan Stanley


  • Enigmo (3665 JP): 1H oper. profit 821m yen vs 41m yen loss year ago
  • Hulic REIT (3295 JP): Seeks up to 15.3b yen in public share sale
  • Nippon Electric Glass (5214 JP): Forming venture with Dongxu Optoelectronic
  • Nippon Kasei (4007 JP): Mitsubishi Chemical (4188 JP) offers 0.21 share for each share of Nippon Kasei in takeover; worth 126.17/share vs Nippon Kasei’s Wed. close of 120 yen
  • SanBio (4592 JP): 1H oper. loss 610m yen vs 55m yen loss year ago


Analyst ratings

  • Commonwealth Bank (CBA@AU) raised to buy vs neutral at Goldman Sachs
  • APA Group (APA@AU) cut to underperform from neutral at Credit Suisse


  • Myer (MYR@AU) full-year results
  • JB Hi-Fi (JBH@AU) halted for rights issue to fund Good Guys buy
  • ACCC due to announce decision on Seven West Media (SWM@AU)’s proposed buy of News Ltd titles in Western Australia
  • Flight Centre (FLT@AU) buys 49% stake in Ignite Travel Group
  • Aurizon (AZJ@AU) says coal train derailment on Sept. 11 damages rail line

Source: CIMB / Bloomberg


 Oil extended its losses overnight as data showed large weekly builds in US petroleum products offset a surprise draw in crude stockpiles. Photo: iStock

– Edited by Gayle Bryant

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