Article / 21 June 2016 at 1:52 GMT

Morning Report APAC: Firming 'stay' vote hopes drive mining rally

APAC Sales Trading Desk / Saxo Capital Markets
  • Oil-related currencies performed well with the rally in crude
  • Industrial metals rallied and mining stocks rose to a one-week high
  • Optimism that the UK would vote to stay in the EU drove the mining rally
  • But money managers are still bearish on copper
  • Platinum was the only precious metal to rally overnight

 By Saxo APAC Sales Trading

Economic data of the day (Singapore Time: GMT plus 8 hours)

0930: AUD – RBA August Meeting Minutes
1700: EUR – Germany ZEW Survey Current Situation (Expected 53.0, Previous 53.1)
1700: EUR – Germany ZEW Survey Expectations (Exp. 4.8, Prev. 6.4)


2100: EUR - European Central Bank president Mario Draghi Speaks at European Parliament in Brussels
2200: EUR – Federal Open Market Committee chair Janet Yellen Testifies on monetary policy to Senate Banking Panel

Overnight News

  • EUROPE: Germany’s Constitutional Court will issue a ruling on Tuesday on the constitutionality of the ECB’s Outright Monetary Transactions program



Foreign exchange

GBP continued to rally overnight see below but USDJPY started to selloff during the New York session with funds selling aggressively ahead of ¥105.50, the big resistance.

Oil-related currencies performed well with the rally in crude last night: namely CAD and MYR.
USD/Asia was still fairly well offered.

New York funds have been buying USDJPY downside again, pushing the vol curve higher with the Risk Reversals favouring more downside.




Bond yields fell sharply in the euro area peripheral countries but have jumped in the UK as investors assessed a reduced risk of Bank of England policy easing. The market has priced a little more risk of Fed policy tightening, especially at the September Federal Open Market Committee meeting.

The two-year note yield rallied 4 basis points to 0.733%. The 10-year bond yield is leaping 6.5bps to 1.673%.The US government sold $26bn two year notes with a yield of 0.745%, the lowest at an auction for that tenure since September and in line with pre-sale market levels.








In Europe the Stoxx600 rallied 3.65% for its biggest one-day gain since February, with strong gains seen across all national markets and the FTSE 100 up 3% after weekend poll on EU membership.

US stocks piggybacked a global risk on, with a relief rally but closed off the highs at 0.6% after having been up as much as 1.4% very early in the session. Monday’s rebound was led by gains in consumer discretionary, industrial and technology shares. But as valuations are above the three-year average and profits still under pressure S&P500 may have trouble breaking the 2100 handle.

Boeing advanced 2.3% toward a five-week high contributing to industrials’ longest rally in two months. The company is nearing a $4bn deal with Russia’s largest air-freight company that would help extend the life of the 747 jumbo jet. Federal-Mogul Holdings jumped 9% after Carl Icahn raised his bid for the remaining 18% of the parts maker.

Travel-related companies such as  Expedia, Priceline and TripAdvisor surged with increases of more than 2.5% following an upgrade at Atlantic Equities.



Credit Spreads recovered after peripherals bonds rallied.

Hong Kong equities preview

Analyst views

  • China Vanke (2202 HK): Cut to neutral at Capital Securities.
  • CNOOC (883 HK): Raised to buy at UBS.

Company news

  • Vanke (2202): CR Land(1109) is interested in buying the entire 9.5% stake of company held by a state-owned enterprise in order to be the largest holder  (Standard)...
  • CSRC said to be monitoring co's restructuring dispute (SCMP).
  • China Unicom (762) May net addition of mobile billing subscribers -4.93% MoM to 0.58m; while net addition of 4G subscribers +2.86% MoM to 4.50mln.
  • China Telecom (728) May net addition of mobile billing subscribers -12.4% MoM to 1.34m, while net addition of 4G subscribers +9.1% MoM to 5.03mln.
  • Beijing Ent (392) clarifies not participate in buying Urbaser, the recycling and waste treatment company in Spain.
  • CCB (939) Temasek sold 555m shrs in CCB at at $HK5.01/share on June 16, reducing its stake to 5.66% from 5.88% previously.
  • Samsonite (1910) Capital Group bought 866,600 shrs at avg HK$22.51/shr on June 15.
  • Shimao (813) plans to start luxury housing project in Kowloon and new hotel in 2019 to avoid possible downturn in local property market (Standard).
  • Lenovo (992) to revamp its smartphone manufacturing supply chain and a major global marketing push this year. (SCMP).
  • Railway: NDRC approves 22.6bn yuan highway project In Gansu and 6.65bn yuan Inner Mongolia highway project.
  • Weichai Power (2238) trading suspension to continue for up to five days for possible deal
  • CLP (2) announced its first investment in India’s solar energy sector.
  • Bright Smart (1428) FY revenue +31% YoY to $HK676mln while profit +49% YoY to $HK325mln.
  • HKEX (388) announced that it will work to revise its stock option position limit (SOPL) model.
  • CowelL (1415) says CEO Lee Sun Yong resigned, named Kim Kab Cheol the new CEO.
  • CCT Land (291) and its partner intend to use $HK1.4bn to subscribe CCT Land new shares, upon completion, both parties will own more than 50% stake of CCT.

Japan equities preview

Analyst views

  • Daikin (6367 JP): Raised to outperform at Macquarie; added to conviction buy list at Goldman.
  • Harmonic Drive (6324 JP): Added to conviction buy list at Goldman.
  • Hitachi Construction (6305 JP): Raised to neutral at Goldman.
  • JTEKT (6473 JP): Cut to sell at Goldman.
  • Mitsubishi Corp. (8058 JP): Cut to A2 at Moody’s.
  • Nippon Express (9062 JP): Raised to neutral at UBS.
  • Panasonic (6752 JP): Reinstated buy at Bof AML.
  • Sumitomo Electric Industries (5802 JP): Lowered to neutral from outperform at SMBC Nikko Securities.
  • THK (6481 JP): Cut to sell at Goldman.
  • Yaskawa Electric (6506 JP): Removed from conviction buy list at Goldman
  • Mitsubishi Motors (7211 JP): Credit rating downgraded to BBB- from BBB at R&I, with view to further cut.

Company news

  • Asahi Co. (3333 JP): Parent op. profit for 1Q ended May 20 rose 12.6% y/y to ¥2.7bn.
  • AWS Holdings (3937 JP): Begins trading on Mothers after IPO priced at ¥2,490.
  • Citizen Holdings (7762 JP): Co. has ability to produce new mechanical watch mechanism, in process of deciding whether to make it in Japan or in Switzerland, CEO Tokura tells Le Temps.
  • Daiichi Sankyo (4568 JP): To buy back 4.1% of shrs for as much as ¥50bn.
    Daiwa House (1925 JP): Reposts earnings data originally given May 13 to correct cash flow figures.
  • Fancl (4921 JP): May consolidated net sales rise 11.6% y/y.
  • Hitachi Chemical (4217 JP): Co. fined $3.8mln by a California court on anti-trust issue.
  • Kansai Electric Power (9503 JP): Nuclear Regulation Authority grants 20-year extension on co.’s Takahama reactors, Chairman Tanaka says.
  • Kao (4452 JP): Agrees to acquire U.S.’ Collins Inkjet Corp. and Spain’s Chimigraf.
  • Next (2120 JP): Invests in Jimoty; terms not disclosed.
  • Nippon Electric Glass (5214 JP): Signs MOU to acquire some of PPG Industries’ ops.
  • Strike (6196 JP): Begins trading on Mothers after IPO priced at ¥3,440.
  • Toyota Motor (7203 JP): Says Brexit may lead to 10% levies on its UK-built cars.

Australia equities preview

Analyst views

  • Westpac (WBC AU) raised to buy vs hold at Shaw & Partners.
  • Metcash (MTS AU) cut to neutral vs overweight at JPMorgan.
  • GPT Group (GPT AU) raised to neutral vs underweight at JPMorgan.
  • Boral (BLD AU) cut to underweight vs equalweight at Morgan Stanley.
  • Dexus (DXS AU) cut to underweight vs neutral at JPMorgan.

Company news

  • Tegel Group (TGH NZ) FY NPAT rises to $NZ11.3 mln.
  • Perseus Mining (PRU AU) plans equity raising up to A$A102mln.
  • Growthpoint (GOX AU) considering divestment of industrial properties.
  • Highfield Resources (HFR AU) names Peter Albert as MD/CEO.



 Most industrial metals made gains on optimism that Britons would vote to remain in the European Union, but money managers are still bearish on coppe . Photo: iStock


– Edited by Robert Ryan

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