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StreetAccount Summary - Asian Market Recap: Nikkei (2.05%), Hang Seng (1.40%), Shanghai Composite (0.59%) as of 04:10 ET

Aug 25 ,2023

• Synopsis:

  • Asia equities ended lower across the region Friday. MSCI Asia Pac ex Japan index down 1.2% to almost entirely reverse the week's gains. Steep losses for Greater China markets, led by Hang Seng again, Taiwan and South Korea also sharply lower as tech shares sold off. Southeast Asia mostly lower, India extended morning losses. Japan closed at its low of the day. US futures higher, Europe pared opening losses. US dollar higher, Asia currencies relatively flat. Crude blends higher, precious metals lower, industrial metals flat.

  • Risk-off sentiment returning to global equity markets over past 24 hours following yet more mixed messages from the US economy and as nerves grew ahead of Fed Chair Powell's message at Jackson Hole. US jobless claims fell last week to contrast weak flash PMI data, muddying an already confusing US economic picture further. Traders also began to recall last year's 3.4% slide in the S&P 500 following Powell's hawkish comments at the same symposium he is due to address later today. Fed Fund futures now showing greater than 50/50 chance of a hike by November, meaning the market and the Fed's own dot plot finally starting to converge.

  • This led to a stronger US dollar that saw the DXY index move above 104 for the first time in almost three months, pressing on Asia currencies. Little in the way of counter support for Asia equities with Chinese markets shrugging off appeals by Beijing to local brokers to buy local stocks and stop the outflow into foreign instruments. PBOC also issued 'window guidance' to banks to limit Bond Connect outflows, apparently to curb pressure on offshore yuan but which weakened further again today. Tokyo CPI inflation eased but is still outside the BOJ band. Indonesia's central bank said it would replace its very short-term duration bond sales with longer-dated notes to help ease the pressure on the rupiah. Singapore's industrial output fell again albeit at a slower pace than forecast.

  • Sony's (6758.JP) Interactive Entertainment unit has bought audio technology company Audeze for an undisclosed amount. Country Garden (2007.HK) set to finish voting Friday on plan to extend payment schedule on CNY3.9B ($535M) of principal due 2026. Australia's corporate regulator filed a lawsuit against two units of IAG (IAG.AU) saying they had misled customers over loyalty discounts on home insurance products.

• Digest:

  • China issues nationwide guidance on easing home mortgage rules:

    • China's housing ministry, PBOC and NFRA have jointly issued guidance on easing home mortgage rules, which says mortgage rate from commercial banks will depend on the number of homes owned rather than prior mortgage record (Xinhua). Guidance proposed local governments could abandon a rule that disqualifies people who've ever had a mortgage, even if fully repaid, from being considered first-time homebuyers. Local governments will have discretion whether to adopt the policy. Measure was the latest move from authorities in an attempt to save embattled property market and support growth. State-run Economic Information Daily hinted yesterday that a series of property-related measures would be adjusted and optimized, including the policy announced today, as well as repricing of existing home mortgages and reducing downpayment for second home. Hang Seng Mainland Properties index jumped as much as 2% on the news.

  • Bank Indonesia to issue new securities, end short-term bond sales:

    • Bank Indonesia to issue new rupiah-denominated securities to replace reverse repo purchases and expand "Operation Twist" short-term bond sales to shore up foreign investment. BI Governor Perry Warjiyo said new instrument to be issued 15-Sep for first time, will substitute bank's reverse repo operations for bonds with expirations six-, nine-, 12-month tenors. New instrument called SRBI backed by IDR1,100T in BI government bond holdings, will offer more attractive rates through variable tender auctions; will be tradable by domestic, overseas investors. Warjiyo said BI also working on similar forex-based security. New security to underpin rupiah that is vulnerable to outflow when US interest rates rise. Bloomberg quoted analysts saying new securities will attract more foreign investors, boost currency, and replenish Indonesia's dollar reserves. Instruments likely to offer high carry with little duration risk but unlikely to affect long-end of curve.

  • China asks financial institutions to increase stock investments:

    • CSRC asked China's pension funds, some large banks and insurers to boost stock investments at a seminar on Thursday amid a recent selloff streak made benchmark CSI300 among worst global performers in August. Financial institutions attended, without being named, vowed to help stabilize stock market and boost economic development. Meeting emphasized need for long-term investing, to establish evaluation mechanism with a time frame of at least three years. Bloomberg noted authorities have taken a series of other measures trying to boost market confidence, including guiding mutual funds to buy their own products, asking companies to increase share buybacks and mutual funds to avoid dumping stocks. Multiple brokerages also announced trimming stock handling fees. Meanwhile, Reuters reported PBOC has asked domestic banks to limit outward investments via Bond Connect scheme via window guidance, which would tighten offshore yuan liquidity to raise financing costs by restricting yuan from flowing to offshore market.

  • Japan Tokyo inflation eases:

    • Core CPI rose 2.8% y/y in August, below consensus 2.9% and follows 3.0% in the previous month. Core inflation continues to moderate from its January peak of 4.3%. Still, ex-fresh food & energy held at 4%, remaining that a post-1982 high. Energy drags increased on sharper declines in electricity and gas prices. Relatively benign developments elsewhere with higher accommodation offset by mild deceleration in household durables, non-fresh food, and leisure durables. Immediate implication points to similar softening in nationwide figures, though main dynamics were already present in July. Recall nationwide takeaways highlighted a pickup in service prices which rose 2% for the first time in 40 years outside of the 1997 consumption tax hike. This has been an area of focus among BOJ board members monitoring the breadth of price hikes. Tokyo service price inflation edged up to 2.0% from 1.9%. Separately, latest service PPI unexpectedly picked up to 1.7% y/y in July vs consensus 1.3% and revised 1.4% in June.

  • Japan FY24 budget requests set to top $750B for third straight year:

    • Consistent with prior reports, Nikkei reported FY24 general budget requests will exceed JPY110T ($750B) for the third straight year as debt servicing and defense outlays stand to expand by 10% alongside growing welfare costs. Article noted the possibility the final amount could break the record JPY111.7T in FY22 on a proposal basis. Defense agency seeking a record JPY7.7T, up JPY1T from FY23. Higher debt servicing costs were tied to MOF's upward revision to its long-term bond yield assumption reported earlier. Health ministry proposing an increase of ~1.8% from last year to JPY33.7T. FY24 also to include JPY1.4T out of a total JPY2T to fund the Green Transformation program with the remainder to be procured over the next three to five years. Story also suggested higher debt servicing costs could negate growth in tax revenues. Recall that ruling coalition moving to extend energy relief measures though entirely funded by existing reserves. Prime Minister Kishida has pledged to consider extra stimulus in September.

  • Notable Gainers:

    • +9.5% 5254.MK (Boustead Plantations): Kuala Lumpur Kepong proposes to acquire 739.2M Boustead Plantations shares for MYR1.55/share

    • +5.6% 1833.HK (Ping An Healthcare & Technology): reports H1 net income attributable (CNY244.6M) vs StreetAccount (CNY201.6M)

    • +3.0% 4588.MK (UMW Holdings): Sime Darby to acquire PNB's 61.2% stake in UMW for MYR3.57B in cash or MYR5/share

  • Notable Decliners:

    • -15.6% 2688.HK (ENN Energy Holdings): reports H1 revenue CNY54.11B vs StreetAccount CNY57.48B

    • -10.7% 9923.HK (Yeahka): reports H1 net income attributable CNY33.2M vs year-ago CNY75.1M

    • -6.7% 9999.HK (NetEase): reports Q2 revenue CNY24.01B vs FactSet CNY24.85B

    • -4.1% 6666.HK (Evergrande Property Services Group): reports H1 net income attributable CNY781.3M, +43% vs year-ago CNY546.1M

    • -3.3% 3969.HK (China CRSC): reports H1 net income attributable CNY1.82B, (6%) vs year-ago CNY1.93B, revenue CNY16.67B, (9%) vs year-ago CNY18.38B

    • -1.3% 6758.JP (Sony): Sony Interactive Entertainment to acquire audio technology brand Audeze; terms undisclosed

    • -0.2% 500325.IN (Reliance Industries): reportedly could divest a further 8-10% of Reliance Retail Ventures

• Data:

  • Economic:

    • Japan August

      • Tokyo core CPI +2.8% y/y vs consensus +2.9% and +3.0% in prior month

        • CPI excl. fresh food & energy +4.0% y/y vs +4.0% in prior month

        • Overall CPI +2.9% y/y vs consensus +3.0% and revised +3.2% in prior month

  • Markets:

    • Nikkei: (662.93) or (2.05%) to 31624.28

    • Hang Seng: (255.79) or (1.40%) to 17956.38

    • Shanghai Composite: (18.17) or (0.59%) to 3064.07

    • Shenzhen Composite: (28.57) or (1.49%) to 1882.66

    • ASX200: (66.90) or (0.93%) to 7115.20

    • KOSPI: (18.54) or (0.73%) to 2519.14

    • SENSEX: (261.71) or (0.40%) to 64990.63

  • Currencies:

    • $-¥: +0.11 or +0.07% to 145.9480

    • $-KRW: (4.44) or (0.33%) to 1323.9000

    • A$-$: +0.00 or +0.02% to 0.6420

    • $-INR: +0.09 or +0.11% to 82.6740

    • $-CNY: (0.00) or (0.01%) to 7.2768