Morning Report APAC: More Fed speakers enter the bull ring
- More US Federal Reserve speeches favouring two rate hikes this year
- US Treasury yields have retraced earlier falls
- Main movers in G10 were AUD and NZD, following a 6.7% tumble in iron ore
- Brexit: implied probability of a Remain vote is now 85%
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time – GMT + 8)
1400: EUR – Germany GDP WDA YoY (Exp. 1.6%, Prev. 1.6%), NSA YoY (Exp. 1.3%, Prev. 1.3%), SA QoQ (Exp. 0.7%, Prev. 0.7%)
1400: EUR – Germany Exports QoQ (Exp. 0.5%, Prev. -0.6%), Imports QoQ (Exp. 1.0%, Prev. 0.5%)
1700: EUR – Germany ZEW Survey Current Situation (Exp. 49.0, Prev. 47.5)
1700: EUR – Germany ZEW Survey Expectations (Exp. 12.0, Prev. 11.2)
2200: USD – New Home Sales (Exp. 523k, Prev. 511), MoM (Exp. 2.3%, Prev. -1.5%)
1115: AUD – RBA's Glenn Stevens remarks at business briefing in Sydney
1700: GBP – BoE's Mark Carney, Ben Broadbent, Martin Weale and Gertjan Vlieghe in Parliament
- Fed Speeches: Speeches from the Federal Reserve's James Bullard and John Williams are similar to what we heard before,
favouring two hikes this year and happier with market expectations.
- US: Markit Manufacturing PMI drops from 50.8 to 50.5 (Exp 51.0). A renewed fall in production was the one key factor weighing on the headline index, alongside softer new order growth and further cuts to stocks of inputs. New order growth was slowest of 2016, primarily due to reduced foreign demand. Output contracted for the first time since September 2009.
- Brexit: See below
Hawkish Federal Reserve comments saw US Treasury yields retrace earlier falls, leaving the 10-year yield unchanged at 1.84%, while at the margin the US curve is a little flatter. The difference between yields on five- and 30-year debt narrowed to its flattest on a closing basis since March 15.
Furthermore, Treasuries are prone to repricing and higher yield due to the misalignment between the Fed and the markets' rate hike expectations. Moves in European yields were modest the Bunds one basis point higher at 0.17%.
HK equity preview
- Gome (493 HK): Cut to hold at HSBC
PetroChina (857 HK): Cut to neutral at JPMorgan
BOCHK (2388) is reviewing its business and asset portfolio. No firm decision has been made to proceed on any sale of assets
Ping An (2318) to set up Sino-Israeli Innovation Dev. Fund, with a scale of RMB10bn. The first
phase of the contribution is RMB1bn.
Tencent (700) is said to be in talks to buy majority stake in SoftBank’s Finland mobile game unit Supercell. (WSJ) Tencent also said they have 100m customers in mobile phone games
Alibaba (BABA)’s product UC browser hit 400m monthly active users worldwide
Tsingtao Brewery (168): China tycoon Chen Fashu cut H-share stake to 5.56% from 6.01% on May 18
TSL Jewelry (417) plans to open at least 100 franchises in China in two years. They are prudent in opening shops in Hong Kong but promise no lay-off plan
CH Everbright Intl. (257) is said to be in talks to buy MP & Silva, a London-based sports media company which is valued at US$1.4bn
Shun Tak (242) announced the result of tender for the PPTY in SGP. The company has received the acceptance letter whereby the vendor confirmed that it has accepted the tender at the consideration of S$145m.
CK PPTY (1113) bought back 645,500 shares for HK$29.2m on May 23
Future Land (1030) to pay final dividend of RMB0.05 per share
- SZ Expressway (548)’s Wuhuang Expressway April average daily toll revenue stayed flat. Other expressways showed year over year growth for average daily toll revenue ranging from 1.4% to 49.4%, in which Changsha Ring Rd showed the highest growth
Japan equity preview
- Century Tokyo (8439 JP): Rated new sell at Haitong
Isetan Mitsukoshi (3099 JP): Raised to overweight at Mitsubishi UFJ-MS
Komatsu (6301 JP): Raised to neutral at Nomura
Nabtesco (6268 JP): Raised to outperform at Tokai Tokyo
Accordia Golf (2131 JP): Names Yuko Tashiro president, replacing Ryusuke Kamata
Calsonic Kansei (7248 JP): Nissan to sell Calsonic shrs for >100b yen, Nikkei reports
Daiken (7905 JP): To conduct 1-for- 5 reverse split Oct. 1
Futaba Industrial (7241 JP): Toyota to raise stake to 31.45% from 12.29%
Inpex (1605 JP): Chairman Naoki Kuroda to step down June 28
Isetan Mitsukoshi (3099 JP): Raised to overweight from neutral at Mitsubishi UFJ Morgan Stanley
Isuzu Motors (7202 JP): Raised to overweight from neutral at JPMorgan
Japan Tobacco (2914 JP): Makes $500m bid for Ethiopia monopoly
Oiles (6282 JP): Rated new neutral plus at Iwai Cosmo Securities
Rhythm Watch (7769 JP): To buy back as much as 9.75% of shares for up to 1.5b yen
SoftBank (9984 JP): In talks with Tencent for sale of Supercell stake, WSJ reports (see related story)
Sharp (6753 JP): ISDA rules that extension of maturity of debt due March 31 isn’t credit event
Topy Industries (7231 JP): To conduct 1-for- 10 reverse split
Australia equity preview
- South32 (S32 AU) cut to neutral vs outperform at Credit Suisse
BlueScope Steel (BSL AU) cut to neutral vs overweight at JPMorgan; cut to neutral vs buy at
Lifestyle Communities (LIC AU) cut to hold from buy at Canaccord Genuity
Source: Bloomberg / CIMB
– Edited by Susan McDonald
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