Asian Mid-session Update: China property prices recover further; Gold plunges to 5-year lows
***Economic Data***
- (CN) CHINA JUN HOME PRICES M/M: FALL IN 34 OUT OF 70 CITIES VS 43 PRIOR; Y/Y: FALL IN 68 OUT OF 70 CITIES V 69 PRIOR
- (NZ) NEW ZEALAND JUNE PERFORMANCE SERVICES INDEX: 58.2 V 58.1 PRIOR
- (UK) UK JULY RIGHTMOVE HOUSE PRICES M/M: 0.1% V 3.0% PRIOR, Y/Y 5.1% V 4.5% PRIOR
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 closed, S&P/ASX -0.1%, Kospi -0.1%, Shanghai Composite +0.6%, Hang Seng flat, Sept S&P500 flat at 2,119
***Commodities/Fixed Income***
- Aug gold -2.3% at $1,105/oz, Sept crude oil -0.2% at $51.12/brl, Sept copper -0.7% at $2.48/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 11.6 tonnes to 696.3 tonnes; biggest decline since Dec 2014 and lowest since Sept 2008 - update
- GLD: Aug gold falls below $1,100; 5-year lows
- (KR) South Korea Finance Ministry sells 10-yr bonds at average yield of 2.48%
- USD/CNY: PBoC sets yuan mid point at 6.1197 v 6.1192 prior setting; weakest Yuan setting since Jun 8th
- USD/CNY: (CN) Chinese Academy of Social Sciences (CASS) researchers suggest removing Yuan fixing - Chinese press
***Market Focal Points/FX***
- China property prices continue to rebound as policymakers' easing of the curbs are taking hold. June home price declines were in 34 cities, down from 43 prior, while the number of risers was up to 27 from 20. Across top-70 cities, prices were up 0.4% v 0.2% prior, and y/y the decline slowed to -4.9% v -5.7% prior. Stats Bureau noted the trend of polarization was evident, with top-tier cities seeing the most pronounced demand. Among first tier cities, new home prices in Shenzhen recorded the highest monthly and annual growth of 7.1% and 15.7% respectively. Separately in China, researchers forecasted H2 GDP at 7%, which would assure the economy would meet the annual target of 7%. Pres Xi also remarked economic growth outlook remains promising despite downward pressure, and Fin Min Zhu was confident China can sustain 7-8% growth in next 5 years.
- Ahead of this week's RBNZ decision, local press reports stating analysts are now unanimous in expectation for RBNZ to cut rates by 25bps to 3.00%, with conversation now shifting to the likelihood of a 50bp move and mention of a subsequent easing next month as well. NAB economists see NZD falling as low as $0.60. NZD/USD and AUD/USD were right around their 6-year lows today, testing $0.65 and $0.7330 respectively.
- Australia's bank regulator (APRA) announced widely anticipated capital requirement adjustments for residential mortgages, raising avg risk weighting on mortgages to at least 25% v 16% currently. Change is effective in mid-2016 and will be the equivalent of increasing minimum capital requirements for the major banks by approximately 80 basis points or around A$11B across the big four banks. Banking shares were not greatly impacted, however all of Australia's top names revealed the extent of impact on their CET1 ratios.
- Nikkei225 was closed for holiday, with traders gearing up for more active earnings activity this week. Political risk is closely monitored after the administration pushed through the controversial defense legislation last week. Subsequently, local press saw PM Abe's approval rating fall to record low 35% from 42%.
- Greek banks are set to reopen today, allowing repayment of the ECB loan from higher ELA funding. German chancellor Merkel reiterated her opposition to any debt forgiveness for Greece, but added Germany is open to some flexibility on debt repayment schedule. Fin Min Schaeuble acknowledged there were differences of opinion with Merkel on Greece, and that he was prepared to resign if forced to go against personal convictions, though latest commentary also indicated he will remain on his post regardless.
- Diminished possibility of Grexit has played out in the precious metals markets - Aug gold fell sharply by 3.5% to 5-year lows below $1,090. Note that on Friday, SPDR gold trust also announced ETF daily holdings falling 11.6 tonnes to 696.3 tonnes - the biggest decline since Dec 2014 and lowest since Sept 2008. Meanwhile, China's PBoC had reportedly boosted its holding for the first time since Apr 2009 to 53.31M troy oz vs. 33.89M prior (end-May).
***Equities***
US equities / ADRs:
- UTX: Lockheed Martin said to acquire Sikorsky unit for over $8B - financial press
Notable movers by sector:
- Consumer discretionary: Genting Singapore Plc 678.HK +7.8% (H1 guidance); China ZhengTong Auto Services Holdings 1728.HK -2.2% (possible spin-off)
- Consumer staples: A2 Corp ATM.NZ -2.6% (FY16 guidance)
- Financials: Macau Legend Development 1680.HK -2.5% (H1 guidance); Commonwealth Bank of Australia CBA.AU +0.1%, Westpac Banking WBC.AU -0.3%, ANZ Bank ANZ.AU +1.0%, National Australia Bank NAB.AU -0.1% (APRA to raise requirement for residential mortgages)
- Industrials: Weihai Guangtai Airport Equipment 002111.CN +1.7% (H1 result)
- Technology: Hithink Flush Information Network Co 300033.CN +0.4% (internet banking guidelines)
- Materials: Sinofert Holdings 297.HK +7.3% (H1 guidance); Perseus Mining PRU.AU -10.2% (Q4 result); Ramelius Resources RMS.AU +2.2% (FY15 guidance);
-Utilities: China Power International 2380.HK -3.7% (H1 result)
- Telecom: China Mobile 941.HK +1.2% (June operation data)
-Healthcare: Sonic Healthcare SHL.AU -3.8% (FY15 guidance)