Asian Mid-session Update: Kospi retreats as BOK stands pat with a more neutral view; IPO demand drags down Shanghai Composite
***Economic Data***
- (KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE AT 1.75% (AS EXPECTED)
- (CN) CHINA APR FOREIGN DIRECT INVESTMENT (FDI ) Y/Y: 10.5% V 2.2% PRIOR
- (JP) JAPAN APR CGPI (PPI) M/M: 0.1% V 0.1%E; Y/Y: -2.1% V -2.1%E (biggest decline since Aug 2012)
- (JP) JAPAN MAR LOANS & DISCOUNTS CORP Y/Y: 3.0% V 3.2% RIOR
- (ID) INDONESIA APR TRADE BALANCE: $0.5B V $0.1BE
- (PE) PERU CENTRAL BANK LEAVES REFERENCE RATE UNCHANGED AT 3.25%, AS EXPECTED
- (CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 3.00%, AS EXPECTED
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +0.5%, S&P/ASX +0.4%, Kospi -0.5%, Shanghai Composite -1.4%, Hang Seng +0.4%, Jun S&P500 flat at 2,118
***Commodities/Fixed Income***
- Jun gold -0.1% at $1,220/oz, Jun crude oil flat at $59.73/brl, Jul copper flat at $2.92/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 4.4 tonnes to 723.9 tonnes; lowest since Jan 15th
- SLV: iShares Silver Trust ETF daily holdings fall to 9,976 from 10,035 - update
- USD/CNY: PBoC sets yuan mid point at 6.1085 v 6.1093 prior setting; Strongest Yuan setting since Feb 2014
- (JP) BOJ offers to buy ¥375B in 1-3yr JGBs, ¥375B in 3-5yr JGBs, ¥240B in 10-25yr JGBs, and ¥140B in JGBs with maturity over 25-yr
- (AU) Australia MoF (AOFM) sells A$700B in 2021 Bonds; avg yield: 2.456%; bid-to-cover: 3.15x
- (US) Weekly Fed Balance Sheet Total Assets for week ending May 13th: $4.50T v $4.47T prior; M1 y/y change: 9.1% v 6.7% w/w; M2 y/y change: 5.7% v 5.4% w/w
***Market Focal Points/FX***
- Asian indices are mixed despite strong rally on Wall St, where S&P500 closed at record highs and Treasuries stabilized after softer than expected PPI numbers led to expectations of a more benign Fed. Shanghai Composite is the biggest loser in the region - profit taking after an otherwise impressive week has set in as investors fret that strong demand for IPOs today would dilute the index valuations and detract from other securities. The selling was undeterred despite comments from Premier Li calling for measures to counter downside pressure on economy building from slowing fixed asset investment. Recall this week's data showed property investment growth slowing to a 6-year low.
- Korea's Kospi was also a notable decliner, reversing the opening gains after Bank of Korea policy decision saw no change in rates. BOK reiterated that output gap would persist for some time but was also somewhat more hawkish, noting economy is showing signs of recovery and sentiment has improved. One board member dissented, but BOK Gov Lee expressed more concern over rising household debt that is likely being fuelled by low rates. BOK also noted that weak JPY still poses an impediment to Korean exports.
- Nikkei225 outperformed, tracking weaker JPY with USD/JPY rising about 30pips toward 119.50. With the effect of consumption tax rolling off in May, wholesale inflation fell sharply to -2.2%, which does not bode well for CPI figures in late May. Despite the warning signs, BOJ Gov Kuroda reiterated that no further easing is required at this time, but also noted the central bank will not hesitate to adjust policy. Kuroda added that exports are finally on the rise.
- In other USD majors, the greenback firmed against NZD after reports that Fonterra reduced the volumes of GDT auctions on sliding demand. NZD/USD fell nearly 50pips to $0.7450 on the news, while AUD/USD tracked with a 40pip drop below $0.8050.
***Equities***
Notable US equities / ADRs after-hours:
- BSQR: Reports Q1 $0.15 v $0.03 y/y, R$26.3M v $25.6M y/y; +33.0% afterhours
- AMAT: Reports Q2 $0.29 v $0.28e, R$2.44B v $2.40Be; +3.2% afterhours
- SYMC: Reports Q4 $0.43 v $0.44e, R$1.55B v $1.56Be; Guides Q1 $0.41-0.44 v $0.46e, R$1.50-1.54B v $1.64Be; -2.5% afterhours
- WB: Reports Q1 $0.01 v -$0.03 y/y, R$96.3M v $67.5M y/y; Guides Q2 R$102-105M v $110Me; -3.9% afterhours
- KING: Reports Q1 $0.61 v $0.54e, R$570M v $592Me; -10.3% afterhours
- LOCO: Reports Q1 $0.18 v $0.17e, R$90.4M v $88.4Me; -13.1% afterhours
Asia movers by sector:
- Materials: MTS.AU Metcash +11% (Hires advisor on strategic review and possible IPO of automotive division)
- Consumer Discretionary: 4324.JP Dentsu +13% (FY14/15 results)
- Tech: 7731.JP Nikon -12.7% (FY14/15 results); 6753.JP Sharp -9% (FY14/15 results)