Article / 14 June 2016 at 2:16 GMT

Morning Report APAC: Only certainty is volatility amid Brexit risk-off

APAC Sales Trading Desk / Saxo Capital Markets

  • Risk-off continues, triggered by a new Brexit poll and with FOMC coming this week
  • Sell-off in Asian equities on low fixed asset investment in China
  • VIX spikes, with volatility the only certainty this week
  • Gold rallies to four-week high
  • Microsoft to pay $26.2 bn for LinkedIn

By Saxo APAC Sales Trading

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

1230: JPY – Industrial Production MoM (Prev. 0.3%), YoY (Prev. -3.5%)

1630: GBP – CPI MoM (Exp. 0.3%, Prev. 0.1%), YoY (Exp. 0.4%, Prev. 0.3%), Core YoY (Exp. 1.3%, Prev. 1.2%) 

1630: GBP – RPI MoM (Exp. 0.3%, Prev. 0.1%), YoY (Exp. 1.5%, Prev. 1.3%), 

1630: GBP – PPI Input MoM (Exp. 0.9%, Prev. 0.9%), YoY (Exp. -5.1%, Prev. -6.5%) 

1630: GBP – PPI Output MoM (Exp. 0.1%, Prev. 0.2%), YoY (Exp. 0.6%, Prev. 0.5%) 

1700: EUR – Eurozone Indus Prod YoY (Exp. 1.4%, Prev. 0.2%), MoM (Exp. 0.8%, Prev. -0.8%) 

2030: USD – Retail Sales Advance MoM (Exp. 0.3%, Prev. 1.3%), ex-autos (Exp. 0.4%, Prev. 0.8%)

Overnight news

Oil: Opec has kept its estimates for world supply and demand in 2016 unchanged in its monthly market  report. Disruptions in Nigeria reduced the group’s output to 32.36 mln barrels a day last month, a little below the 32.6 mln average required to satisfy estimated demand in the second half.


Foreign exchange


Very volatile overnight to remain more or less unchanged but the risk-off continues, triggered by a new Brexit poll and with FOMC coming this week. USDJPY is almost touching the lows of the year and traded at the 105 handle. USDJPY moved 4.2% lower in June. 

USD is bid against all emerging markets currencies. China's fixed asset investment slowed to a 15- year low, which triggered a flight to safety and a sell-off in Asian equities. 

USDCNH is attempting to break above 6.6000. USDBRL bounced hard from the lows of the year, from 3.4000, to rally 3.6% in two days.

Foreign exchange movements


All volatilities traded higher overnight on risk-off moves, with more uncertainty around the Brexit vote. The overall liquidity is poor and the market is trying to cover anything it can around Brexit. The risk of contagion around the vote is also pushing other volatilities higher, such as EUR and CHF.



US Treasuries have rallied for a fifth session as the market goes for a flight to quality after the risk-off  overnight. The curve is getting flatter, the 2/10 is trading at 90 basis points, the flattest level since 2007. 

In Europe, the spread between Bunds and Peripherals is widening on risk-off sentiment. Italy, Spain and Portugal 10-year yields are respectively up 7.2, 7.4 and 12.4 bps while Greek 10-year yields are up 31 bps.







Shares continued to sell off in the UK and US sessions on Brexit worries following the 3.5% drop in  the Nikkei. The S&P500 has declined for a third consecutive day and bond yields continued to drift lower. 

The VIX, which tracks the implied volatility of the S&P 500 stock index, has spiked up to 20.97 as volatility is the only certainty this week, with FOMC, Bank of Japan and SNB meetings this Thursday. 

Investors have also piled into exchange traded funds such as UVXY, which saw its total assets increase by almost $300mln to $853mln recently. 

In company news, Microsoft is paying $26.2 bn for LinkedIn, as demand for personal computers have been waning and the company moves towards selling software and services over the internet. LinkedIn shares were up 46% on the day to close at $192.21.




Credit spreads are widening globally on risk-off following the lowest level in fixed asset investments in China and a new poll favouring Brexit. 

Hong Kong equity preview

Analyst views:

  • Shimao Property (813 HK): Cut to neutral at UBS  
  • Tonghua Dongbao (600867 CH): Rated new outperform at Macquarie  
  • Future Land (1030 HK): Outlook raised to stable by Moody’s

    Equity preview:

  • CH Mobile (941) signed €1.36bn one-year agreement with Nokia. CH Mobile to deploy Nokia’s  AirScale station while Nokia to deliver mobile, fixed, IP routing, optical transport and customer experience management tech. 
  • Ping An (2318) Jan-May life insurance premium RMB144.2bn, PPTY insurance premium RMB69.9bn. 
  • CH Pacific Insurance (2601) Jan-May Life insurance premium RMB68.7bn, PPTY insurance premium RMB41.5bn. 
  • Yanzhou Coal (1171)’s unit to buy Jiutai Energy stake for RMB1.84bn. 
  • Great Wall Motor (2333): 4.1mln H-shares bought by Capital Group on Jun 8. 
  • Greenland (337) Jan-May contracted sales up 45% YoY to RMB7.03bn. 
  • CR Land (1109) May contracted sale RMB8.15bn. They have acquired three land parcels in May, total consideration RMB1.68bn. 
  • Vanke (2202) to submit restructuring plan before Jun 18. Its A-shares to resume trading as early as early July (Bloomberg). 
  • MTR (66) entered an agreement for HK$25bn loan syndication. 
  • Zoomlion (1157) plans to buy back no more than RMB1bn A-shares at no more than RMB5.21 per share. 
  • Baidu (BIDU) cut second-quarter revenue to US$2.807bn-US$2.823bn, due to a reduction of spending from medical customers. 
  • Alibaba Pictures (1060) to invest RMB1bn in nurturing generation Z movie professionals.

Japan equity preview

Analyst views:

  • Canon (7751 JP): Issuer rating cut to Aa3 from Aa1 at Moody’s. 
  • COMSYS Holdings (1721 JP): Cut to underperform from neutral at SMBC Nikko.
  • Hitachi Chemical (4217 JP): Cut to neutral from overweight at Mitsubishi UFJ Morgan Stanley. 
  • Oji Holdings (3861 JP): Raised to buy at Okasan. 
  • Suruga Bank (8358 JP): Downgraded to neutral from outperform at SMBC Nikko.

Equity preview:

  • Kobe Bussan (3038 JP): Raises full-year operating profit forecast 3.3% to ¥9.3bn, cuts net income target 60% to ¥2.1bn. 
  • NTT (9432 JP): MOF to sell 59mln of NTT shares today, NTT to buy back 68mln. 
  • Shoei Foods (8079 JP): 1H operating profit ¥2.73bn vs co. forecast ¥2.45bn.

Australia equity preview

  • OZ Minerals (OZL AU) raised to outperform vs sector perform at RBC


Gold rallied to a four-week high following the rsik-off mood overnight. Photo: iStock

– Edited by Susan McDonald

This report was compiled by the Saxo APAC Sales trading team in Singapore – the home of social trading. Follow the team on @SaxoStrats or post your comment below to engage with Saxo Bank's social trading platform. 

All material contained herein is provided for your general information. The information and commentaries are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Saxo Capital Markets Pte. Ltd. (“SCM SG”). Any expression of opinion (which may be subject to change without notice) is personal to the presenter and/or author; they do not reflect the view or opinion of SCM SG or its affiliates, neither do they constitute an endorsement of SCM SG’s view or analysis of the same.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. SCM SG does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment based on any commentaries or information provided here.
For further information, please click here.  

Saxo Capital Markets Pte Ltd ("Saxo Capital Markets") is a licensed subsidiary of Saxo Bank A/S, an online trading and investment specialist. Saxo Capital Markets serves as the APAC headquarters and holds a capital markets services licence under the Monetary Authority of Singapore; and a commodity broker licence issued by the International Enterprise Singapore. Clients can trade Forex, CFDs, Stocks, Futures, Options and other derivatives via SaxoWebTrader and SaxoTrader, the leading multi-asset online trading platforms.
Trading risks are magnified by leverage - losses can exceed your deposits. Trade only after you have acknowledged and accepted the risks. You should carefully consider whether trading in leveraged products is appropriate for you based on your financial circumstances. Please consider our Risk Warning and General Business Terms before trading with us. Please see full General Disclaimer.

Thousands of serious traders receive free news and analysis from Saxo Capital Markets each day. Saxo Capital Markets never sends these emails unsolicited; they are sent following acceptance of your membership and subscription request by Saxo Capital Markets at If you do not wish to receive any emails from Saxo Capital Markets in the future, please reply to this email with the word "UNSUBSCRIBE" in the subject header.

Copyright | Disclaimer | Risk Warning | Privacy Policy | Contact Us
Samsung Hub | 3 Church Street | # 30-01 | Singapore 049483
Company No. 200601141M



The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail