Oct 12 Asian Market Lunchtime Update
Summary Asian Markets as at 12:50pm HK time
Mixed trading in Asia Japan opened lower and has traded sideways, S Korea opened higher and after initial choppy action now trading sideways around the Thursdays closing level. Taiwan opened higher but drifted back to Thursday’s levels. China and Hong Kong have rallied strongly with PBoC relaxing the rules on FX trading and the unveiling of the Shenzhen pilot.
Pre market data was mixed and the market opened lower and sold down to 23,500 before finding support. Bounced back to just short of the opening level and sold down into lunch 23,543. PM opened lower but bounced to just short of the lunchtime close and trading sideways. Investors cautious as tensions with China rise and they watch for US earnings and China lending data for indicators of how the recovery is unfolding. Currently -0.3% @ 23,546
Pre Market Data
Machinery Orders Aug -15.2% YoY vs -16.2% Jul (F/cast was -15%)
Machinery Ordres Aug +0.2% MoM vs +6.3% Jul (F/cast was -1.5%)
PPI Sept -0.8% YoY vs -0.6% Aug revised from -0.5% (F/cast was -0.3%)
PPI Sept -0.2% MoM vs +0.1% Aug revised from +0.2% (F/cast was +0.1%)
Bank Lending Sept +6.4% YoY vs +6.7% Aug (F/cast was +6.5%).
Due later Machine Tool Orders Sept. Aug was -23.3% YoY F/cast is -15%)
Market re-opened higher following the good profit numbers from Samsung and LG. Only the BoK interest rate due Wednesday and Export/Import prices Friday along with Unemployment. So investors will be watching for US stimulus news and earnings.
Kospi It has effectively has traded sideways in a tight range (2,409 - 2,393). Currently +0.4% @ 2,402
Kosdaq opened higher but sold down first to 871 level (Thursday’s close) and then to 868 level which was Thursday’s support level and then rebounded back to 872 level. Currently +0.1% @ 872
Market re opened higher after the good numbers from TSMC and ahead of the Apple launch on Tuesday. Tension with China seen to be rising as Tsai called for discussion but as equals which China is unlikely to accept. Market has drifted lower finding support at around the 12,900. Currently +0.3% @ 12,923
No data due this week.
Market re-opened building on Friday’s strength. PBOC changed the rules on FX trading making it easier to short and hence easing pressure on Offshore Yuan. That is more a sign of USD weakness which is also benefiting stocks with USD debt. The the onshore yuan was at 6.7224 per dollar, vs below 6.7 last week. The offshore traded at 6.7188 per dollar.
Also China unveiled the implementation of integrated reform for Shenzhen's pilot demonstration area and President Xi is due to visit this week for the 40th anniversary of the special economic zone; all seen as +VE. China CSI 300 closed for lunch +2.4% @ 4,795
Shanghai Comp +74pts (+2.3%) @ 3,346
Shenzhen Comp +317pts (+2.4%) @ 13,606
Data that could be released as soon as today includes
Vehicle Sales Sept. Aug was +11.6% F/cast is +10.5%FDI (YTD) Sept. Aug was +2.6% F/cast is +2.7%New Yuan Loans Sept . Aug was CNY1280b F/cast is 1700bOutstanding Loan Growth Sept. Aug was +13% YoY F/cast is +12.7%Total Social Financing Sept. Aug was 3580b F/cast is 3200bM2 Money Supply Sept. Aug was +10.4% F/cast is 10.3%
Pre Market opened +98pts @ 24,217 vs +97pts ADRs. Handset equipment names were strong as AAC Tech on news of a fund injection. E Commerce names were strong too. Shenzhen concept names in focus too on the unveiling of the implementation of integrated reform for Shenzhen's pilot demonstration area. Market then rallied higher through the morning. News that President Xi would have a private meeting with Carrie Lam was seen as a positive endorsement of Hong Kong importance as a financial centre. Financials strong but Macau names remain weak. A number of smaller China names hitting new highs.
No data due this week but investors will be watching for the China data and expect some caution ahead of US earnings. Closed for lunch +2% @ 24,609
Expect market to flat following the mixed Asian markets. Data due is the German Wholesale Prices executed to have improved MoM but investors will be cautious as US earnings get underway and the fact that there is still no stimulus plan. Covid continues to overhang the markets too.
EUROZONE No data but Speeches by Schnabel and Lagarde
GERMANY Wholesale Prices
FRANCE No data due
UK No data due
Futures opened flat and remain so. Its Columbus Day (Federal Holiday) so expect lighter volumes. No data due. Investors will be watching for news on the stimulus negotiations, with caution ahead of earnings and the Apple launch event Tuesday.