Asian Market Update: South Korea GDP slows; Volatility still compressed ahead of BOJ
***Economic Data***
- (KR) SOUTH KOREA Q1 PRELIMINARY GDP Q/Q: 0.4% V 0.4%E; Y/Y: 2.7% V 2.7%E
- (PH) Philippines Feb Trade Balance: -$1.1B v -$1.5Be; Imports $5.4B v $6.8B prior; Y/Y: 1.2% v 12.0%e
***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 -1.1%, S&P/ASX -0.2%, Kospi flat, Shanghai Composite -0.3%, Hang Seng -0.8%, Jun S&P500 flat at 2,083
***Commodities/Fixed Income***
- June gold -0.2% at $1,237/oz, June crude oil +0.3% at $42.77/brl, May copper -0.7% at $2.24/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 2.3 tonnes to 802.7 tonnes; lowest since Mar 16th
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.4880 V 6.5120 PRIOR; strongest setting since Apr 21st; biggest margin of increase since Mar 18th
- (CN) PBOC to inject CNY140B in 7-day reverse repos
- (JP) BOJ offers to buy ¥450B in 5-10yr JGBs, ¥220B in 10-25yr JGBs, and ¥180B in JGBs with maturity over 25-yr
***Market Focal Points/FX***
- Asian equity markets are down slightly for the 3rd straight session, however declines stayed fairly modest as the 2-month uptrend in emerging markets remains intact. Investors are staying on the sidelines going into Wednesday's FOMC/BOJ double-header, and the dearth of economic data is also keeping sentiment balanced. S&P futures are flat, while oil and copper are retreating from recent highs. In FX, USD/JPY is trading sideways around 111 handle, AUD/USD is in a 20-pip range above 0.77, while NZD/USD is up some 30pips on speculation of a neutral policy statement and a rate hold by the RBNZ. China yuan fix was much firmer, reflecting the uptick in repo rates on Monday.
- China's former PBoC adviser Li Daokui reiterated his cautious outlook that the economic downturn has yet to find its bottom, echoing some of the more cautious rhetoric on growing credit risks overnight. Report from IIF also forecast continued outflows from China economy in 2016, albeit the $538B figure was less than $674B withdrawn in 2015.
- In Japan, there was more speculation over the extent of govt cushioning of the impact of last week's earthquake. A local press report that supplementary budget intended to aid in recovery could reach as high as ¥600B was once again rebuffed by Fin Min Aso, who said the extent of the amount of relief has yet to be determined. Later, Aso clarified that Japan is not considering compiling economic stimulus package right now apart from earthquake relief, reiterating that economic fundamentals are solid. Meanwhile, a Nikkei report noted that Japan's primary pension fund GPIF is looking to tackle appreciating Yen expectations with more hedging programs, while a research note by Morgan Stanley forecast this week's BOJ easing expanded by ¥10-20T and a rate cut deeper into negative territory by at least 10bps.
- South Korea put out its prelim Q1 GDP that slowed to 2.7% y/y and 0.4% q/q from 3.1% and 0.7% respectively in line with expectations. Construction investment growth of 5.9% was overshadowed by the same margin of decline in capital investment and a 0.3% q/q drop in consumption. Korean finance ministry said that 2016 forecasts are facing downside risks after the latest data. Among notable Korean earnings results, chip giant SK Hynix results were largely in line with estimates and outlook for DRAM and NAND shipments was fairly benign, sending shares higher by over 5%. In the final hour, Hyundai Motor Q1 results beat on top and bottom line - Net profit came in at KRW1.69T v KRW1.5Te on Rev KRW22.4T v KRW21.3Te.
***Equities***
US equities / ADRs:
- TCS: Reports Q4 $0.20 v $0.20e, R$232.1M v $228Me; +21.3% afterhours
- SANM: Reports Q2 $0.63 v $0.54e, R$1.61B v $1.58Be (1 est); +8.3% afterhours
- PXD: Reports Q1 -$0.64 v -$0.73e, R$685M v $699Me; +3.2% afterhours
- UTX: *RAISES DIVIDEND 3.1% TO $0.66; implied yield 2.5%; -0.2% afterhours
- ESRX: Reports Q1 $1.22 v $1.23e, R$24.8B v $25.5Be; current CEO Paz to retire, effective May 4th; -2.4% afterhours
- NBR: Reports Q1 -$1.41 v -$0.33e, R$597.6M v $633Me; -5.0% afterhours
- CNI: Reports Q1 C$1.00 v C$0.86 y/y, Rev C$2.96B v C$3.1B y/y; -5.3% afterhours
Notable movers by sector:
- Consumer discretionary: Hisense Kelon Electrical Holdings Co 000921.CN -0.5% (Q1 result)
- Consumer staples: Tsingtao Brewery Co 600600.CN +0.8% (Q1 result)
- Financials: Everbright Securities Co 601788.CN -0.3% (Q1 result); REA Group REA.AU +3.7% (acquisition)
- Industrials: Hitachi Chemical Co 4217.JP +8.2% (FY15/16 result); Nidec Corp 6594.JP +3.6% (FY15/16 result)
- Technology: Hynix Semiconductor 000660.KR +5.3% (Q1 result)
- Materials: Yunnan Copper Co 000878.CN -2.8% (Q1 result); Newcrest Mining NCM.AU +0.2% (Q3 result)
- Energy: China Shenhua Energy Co 1088.HK -0.8% (Mar result)