Morning Report APAC: SoftBank to buy ARM, Turkey purge widens
- Turkey's President Erdogan expanded his post-attempted coup purge
- Sell-off in NZDUSD continues after RBNZ flags new measures for property lending
- Netflix shares plunge 15% in after-trading session after missing subscriber targets
- Japan's SoftBank will buy Britain's most valuable technology company, ARM
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time)
0500: KRW – PPI YoY (Act. down 2.7%, Prev. down 3.1%)
0930: AUD – RBA July Meeting Minutes
1630: GBP – CPI MoM (Exp. 0.2%, Prev. 0.2%), YoY (Exp. 0.4%, Prev. 0.3%), Core YoY (Exp. 1.3%, Prev. 1.2%)
1630: GBP – RPI MoM (Exp. 0.2%, Prev. 0.3%), YoY (Exp. 1.5%, Prev. 1.4%),
1630: GBP – PPI Input MoM (Exp. 1.1%, Prev. 2.6%), YoY (Exp. down 0.8%, Prev. down 3.9%)
1630: GBP – PPI Output MoM (Exp. 0.2%, Prev. 0.1%), YoY (Exp. down 0.5%, Prev. down 0.7%)
1700: EUR – Germany ZEW Survey Current Situation (Exp. 51.8, Prev. 54.5)
1700: EUR – Germany ZEW Survey Expectations (Exp. 9.0, Prev. 19.2)
2030: USD – Housing Starts MoM (Exp. 0.2%, Prev. down 0.3%)
2205: GBP – BOE Deputy Governor Ben Broadbent testifies on blockchain
New Zealand: RBNZ may impose nationwide lending restrictions on property investors. No more than 5% of bank lending to residential property investors across the nation would be permitted with a loan-to-value ratio of greater than 60%, a consultation paper showed.
Turkey: Moody's warned it could cut Turkey to junk as President Erdogan expanded his post-coup purge to close to 20,000 officials. The country's central bank is meeting today. Market expectation is for a 25 basis points rate cut from 9.00% to 8.75%. The coup could push the central bank to cut even more to stabilise the markets.
ECB: The ECB published its corporate-bond holdings for the first time, showing that it bought debt issued by more than 150 companies under a five-week-old stimulus program. Issuers included Danone and Glencore. Deutsche Lufthansa and Telecom Italia notes graded junk by at least one rating company were also acquired.
UK: Theresa May will make her first trip to the continent this week since becoming Britain’s PM, meeting with Angela Merkel on Wednesday and Francois Hollande on Thursday. With May giving mixed signals as to when Brexit negotiations will begin, some EU members are exploring whether they can force the UK out.
The sell-off in NZDUSD continues after RBNZ said they would introduce new measures for property lending (see above). We are now trading at the main support around 0.7000. This move helped the dramatic squeeze higher in AUDNZD all the way up to the 200-day moving average at 1.0798. We saw many buyers of AUDNZD two weeks ago until major stops occurred and the pair broke 1.0400. It feels that the market is now being caught short AUDNZD on the way up.
USDJPY continues to rally and the news that the Japanese company Softbank bought the UK chip-manufacturer ARM for £23.4 bn was confirmed. The next big event now for USDJPY will come from the Bank of Japan on July 29 and they will need to deliver or USDJPY is back at 100.
USDTRY is back higher after Moody’s expressed risks of cuts for the country and is settling close to the highs just under 3.0000. Expect some volatility today with the central bank meeting due.
Foreign exchange movement
NZDUSD volatilities are still bid with the continued drop of the currency.
USD/Asia vols are very soft, in particular USDCNH and USDSGD, with the risk-off dissipating. Some hedge funds are cutting their long USDCNH calls with the forward points not moving higher.
The Dow Jones Industrial Average ticked up 16.50 points to 18,533.05. The S&P 500 added 5.15 points, or 0.24%, to 2,166.89. The Nasdaq climbed 26.20 points, or 0.5%, to 5,055.79.
In London the FTSE 100 firmed 26.18 points, or 0.4%, to 6,695.42. Companies with exposure to Turkey, and particularly those in the tourism space, notably underperformed. Turkey’s BIST 100 index plunged 7.1%.
Netflix Inc. reported second-quarter EPS of $0.09 on revenue of $2.11bn with market estimates at 2.11bn. Net subscriber was worrying, totalling 1.7m and missing consensus estimates at 2.5m. The stock plunged 15% in after-trading session. Hasbro slumped 7% to a three-month low, gapping down below its 50-day moving average as the toy maker's second-quarter results signalled slowing growth in the boys' toys division. Hasbro closed at $79.82.
Japan's SoftBank (9984.T) will buy Britain's most valuable technology company, ARM, for $32bn in cash, an audacious attempt to lead the next wave of digital innovation with a chip designer that powers the global mobile phone industry. Led by the charismatic Japanese investor Masayoshi Son. The Apple chip supplier closed at $66.17, up 40.55%.
Bank of America Corp. posted higher profit in each of its four main businesses as bond-trading revenue increased more than analysts' estimated and expenses fell. The second-biggest US bank by assets led financial stocks higher on Monday after reporting earnings per share of 36 cents, beating the 33c average estimate of analysts. Net income dropped 21% to $4.23bn as the company booked a roughly $1 bn accounting charge, Bank of America said in a statement.
Asia Pacific Stocks
- Bank of East Asia (23 HK) cut to neutral at Macquarie
- SJM (880 HK) cut to sell at China Merchants
- Wynn Macau (1128 HK) raised to buy at China Merchants
Bank of East Asia (23 HK): Says it’ll vigorously oppose Elliott’s petition
Bank of Jinzhou (416 HK): Soars after six-month profit outlook report
Cathay Pacific (293 HK): 1H performance below expectations, CEO says
China Coal (1898 HK): June commercial coal sales volume rises 13.6% y/y
Chow Tai Fook to shut up to eight shops in Hong Kong by year end: SCMP
Esprit (330 HK): Expects to break even for full-year results
Everbright Bank (601818 CH): Says Everbright Group to buy at least 10m of its shares
Greenland Holdings (600606 CH): 1H net rises 16.6% y/y to 4.59bn yuan
Hengtou Securities (1476 HK) expects 1H net to drop 83% on year
Huadian Power (600027 CH): 1H on-grid electricity sold rises 6.1% y/y
Minsheng Bank (600016 CH): Vice Chairman Lu boosts A-share stake to 5.69%
Parkson Group (3368 HK): Says two units involved in litigation
Road King (1098 HK): Unit gets CSRC approval for up to 2.5bn yuan of bonds
Sa Sa International (178 HK): Three-month sales drop 5.7% year on year
Sihuan Pharma (460 HK) spends HK$85.7m to buy back 50.2m shares on Monday
Weichai Power (2338 HK) to subscribe 5.93m Kion shares for €275.6m
- Yanzhou Coal (1171 HK): Controlling holder pledged 378m A-shares
- Goldman on insurers:
MS&AD Insurance (8725 JP): Cut to neutral
T&D Holdings (8795 JP): Raised to buy
- Nintendo (7974 JP): Cut to hold at Deutsche Bank
- Shimachu (8184 JP): Downgraded to neutral from overweight at Mitsubishi UFJ Morgan Stanley
Aderans (8170 JP): Q1 operating loss widens to ¥402m vs ¥339m loss a year ago
- Japan Tobacco (2914 JP): June domestic cigarette volume down 4.6%
Pasona (2168 JP): Full-year operating profit ¥3.86bn vs company target ¥3.7bn, forecasts ¥4.3bn for current fiscal year
SoftBank (9984 JP): ADRs fell after the company agreed to pay $32 billion for ARM Holdings
- Toho (9602 JP): Q1 operating profit up15% to ¥12.8bn
Tatts Group (TTS AU) cut to neutral from buy at UBS
- Tower NZ Ltd (TWR NZ) CFO Brett Wilson resigns
CSL (CSL AU): CSL Behring’s Berinert drug gets FDA approval for use in children
Paladin Energy (PDN AU) quarterly uranium oxide sales 1.8m lb; company reviewing FY17 guidance
Rio Tinto (RIO AU) Q2 production report
Infigen Energy (IFN AU) executive addresses the Large Scale Solar conference, Brisbane
Metals of Africa (MTA AU) shareholder meeting
Source: CIMB / Bloomberg
Netflix shares plunge 15% in after-trading session after missing subscriber targets. 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. Follow us on @SaxoStrats on Twitter
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