Yen Remains Supported Amid Global Growth Worries

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Asian Market Update: Equity markets are trading mixed, Chinese markets are lagging; Weaker PMI data from Asia; The yen remains supported amid global growth concerns.

General trend

– AU yields rise ahead of RBA decision [Aug 2nd].

– TWD and CNH decline amid focus on Pelosi and PMIs.

– HK Mainland Property Index remains under pressure; Evergrande released an update on the restructuring; TECH Index Drops on Alibaba Worries; Electric vehicle companies surge on Chinese cabinet statement.

– The Shanghai Banks Index lagged during morning trading.

– HSBC beat the ESTs.

– Big Japanese names fall after posting earnings (Hitachi, Komatsu, Sony), additional earnings in sight for today (Kyocera, Shionogi, Ana, Japan Airlines).

– US equity FUTs traded slightly lower.

Securities/Economic data

Australia/New Zealand

The ASX 200 opened +0.1%.

– UMG.AU reduced underlying FY22 EBITDA (A$) from 100 to 108 M excluding SaaS (115 to 140 M previously); guides FY23 underlying EBITDA between A$140m and A$160m.

– (AU) Australia ACCC orders LNG exporters to divert gas to domestic markets to avoid domestic shortages, noting Australia could face a 2PJ shortfall.

– (AU) Australia Jul Corelogic House Price Index M/M: -1.4% vs. -0.8% before.

(AU) Australia Jul Melbourne Institute Inflation H/M: 1.2% vs. 0.3% before; Y/Y: 5.4% versus 4.7% before.

Japan

Nikkei 225 open +0.0%.

(JP) Japan panel expected to seek minimum wage increase of at least ¥30, may be finalized on Monday (Aug. 1) – Press.

(JP) Japan June Final Manufacturing PMI: 52.1 vs. 52.2 preliminary (confirms 18th month of expansion).

– (JP) The Bank of Japan (BOJ) is offering to buy 5 to 10 year JGBs at a fixed rate of 25 basis points; Opens a window to buy unlimited 10-year JGBs at 0.25% [as expected].

Korea

Kospi opened -0.3%.

(KR) Bank of Korea (BOK) report to the National Assembly: “Appropriate” to raise its key interest rate in small increments of 25 basis points in the future as long as inflation trends and growth do not deviate much from the expected trajectories.

– (KR) South Korea’s trade balance in July: -4.7 billion dollars against -4.4 billion dollars (4th consecutive deficit).

(KR) South Korea July manufacturing PMI: 49.8 vs. 51.3 before (1st contraction in 22 months).

– (KR) South Korea sells 30-year bonds: average yield of 3.135% vs. 3.525% previously.

China/Hong Kong

Hang Seng opened -0.6%; Shanghai Composite opened -0.2%.

(CN) July Chinese manufacturing PMI (Government official): 49.0V 50.4E (back to contraction territory; 4th contraction is 5 months away).

9988.HK Continue to monitor market developments, striving to maintain its listed status on both NYSE and HKEX.

(CN) China JUL CAIXIN Manufacturing PMI: 50.4V 51.5E (2nd consecutive month of expansion).

– (CN) Shanghai, China reports no local covid cases; Beijing 1 case out of quarantine for July 31.

(CN) Chinese government plans to seize undeveloped land from struggling developers to fund frozen projects – press.

(HK) Macau Jun Casino Rev (MOP) 0.4B v 2.48B front; Y/Y -95.3% vs. -62.1% before.

– (CN) Worst-Case Chinese Banks Face $350 Billion in Mortgage Losses [notes issues related to stalled property projects and mortgage boycotts] – American financial press.

(CN) China CSRC: undertakes to avoid abnormal market fluctuations.

– (HK) Macau is expected to allow catering services, reopen gyms, bars and beauty salons from August 2 (Tuesday).

– (CN) The Chinese PBOC sets the reference rate for the yuan: 6.7467 against 6.7437 previously.

– (CN) China PBOC Open Market Operation (OMO): sells CNY 2.0 billion in 7-day reverse repos against CNY 2.0 billion previously; Net drain CNY3.0B v Net drain CNY1.0B front.

– (CN) Liang Tao, Vice Chairman of the China Banking and Insurance Regulatory Commission (CBIRC): Shadow banking risks have fallen significantly, down 26T CNY at the end of June from their all-time high – the press.

5.HK Reports Q2 Net $5.49B v $3.39B y/y, adj Pretax $5.97B v $5.56B y/y, Rev $13.14B v $12.52B y/y; further share buybacks this year unlikely, intends to relaunch quarterly dividends in 2023.

— (CN) China State Media: China will use effective investment to help the economy recover and not resort to flood-type stimulus (comments after cabinet meeting Friday, update).

Other

– (TW) Taiwan Jul PMI Manufacturing: 44.6 vs. 49.8 before (lowest since May 2020).

North America

– (US) House Speaker Pelosi reportedly plans to travel to Taiwan via the US Clark Air Force Base in the Philippines on August 4 and meet with Speaker Tsai Ing-wen in Taipei – French radio.

Europe

– (UK) West eases efforts to restrict Russian oil trade; EU delays plan to block Russia from Lloyd’s of London marine insurance market – FT [update].

Levels starting at 1:15 a.m. ET

– Hang Seng -0.1%; Shanghai Composite +0.1%; Kospi +0.1%; Nikkei225 +0.6%; ASX 200 +0.7%.

– Equity futures: S&P500 -0.4%; Nasdaq100 -0.4%, Dax -0.8%; FTSE100 -0.6%.

– €1.0242-1.0205; JPY133.57-132.09; AU$0.7000-0.6968; NZD 0.6303-0.6272.

– Commodity futures: gold -0.3% to $1,776/oz; Crude Oil -1.4% to $97.31/brl; Copper -0.9% to $3.56/lb.

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