Asian Mid-session Update: China targets Micron as potentially its largest acquisition in the US; NAB sees RBA on hold as Business Confidence improves
***Economic Data***
- (CN) CHINA JUN M2 MONEY SUPPLY Y/Y: 11.8% V 11.0%E (4-month high); M1 MONEY SUPPLY: 4.3% V 4.2%E
- (CN) CHINA JUN NEW YUAN LOANS (CNY): 1.27T V 1.05TE; 5-month high
- (CN) CHINA JUN AGGREGATE FINANCING (CNY): 1.86T V 1.40TE
- (CN) CHINA Q2 FOREIGN RESERVES: $3.69T V $3.70TE
- (AU) AUSTRALIA JUN NAB BUSINESS CONFIDENCE: 10 (highest since Sept 13) V 7 PRIOR; CONDITIONS: 11 V 7 PRIOR
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 107.0 v 111.0 prior
- (SG) SINGAPORE Q2 ADVANCED GDP Q/Q: -4.6% V -1.5%E; Y/Y: 1.7% V 2.4%E
- (UK) UK JUN BRC SALES LFL Y/Y: +1.8% V +0.5%E (3-month high)
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +1.4%, S&P/ASX +1.7%, Kospi -0.2%, Shanghai Composite +0.7%, Hang Seng -0.4%, Sept S&P500 flat at 2,093
***Commodities/Fixed Income***
- Aug gold -0.1% at $1,154/oz, Aug crude oil -0.9% at $51.73/brl, Sept copper -0.1% at $2.54/lb
- (CN) PBoC to inject CNY20B in 7-day reverse repos (6th consecutive injection); Offer yield at 2.50%, unchanged from prior
- GLD: SPDR Gold Trust ETF daily holdings rise 1.5 tonnes to 709.1 tonnes; First rise since June 25th
***Market Focal Points/FX***
Asian equity markets are tracking another big days of gains on Wall St, as worries over Grexit and China stocks slump recede. Skeptics do note that there are unresolved issues in both cases. In Greece, there are still many moving parts - namely whether the govt will be able to push through deeply unpopular reforms and whether it can even survive in its current form. China markets are slowly returning to life, even though Shanghai Composite is underperforming today. Over 200 more A-shares resumed trade with the total number of halts now at 785 - down from1,045 yesterday - resulting in more mixed sentiment. Traders are also awaiting tomorrow's GDP, industrial output, and particularly retail sales for evidence of the slump in "wealth effect" due to the recent selloff. In the mean time, China June lending and money supply figures came in a multi-month highs, building the case of recovery implied in yesterday's better than anticipated trade numbers.
Australia's NAB Business Confidence also surprised to the upside, hitting its best mark since September of 2013 despite the soft commodities markets. In its accompanying remarks, NAB maintained its GDP forecast, lowered its projections for peak unemployment and forecasted RBA to remain on hold until well into 2016, at which point its next move would be a rate hike. AUD/USD rose over 20pips on the release above 0.7430.
WTI crude pushed lower by nearly 1% in electronic hours below $52/brl after fresh reports that Iran nuclear deal could be announced as early as Tuesday morning. According to one report, the draft resolution calls for UN access to Iran sites, including military ones. Report adds that if accepted, the deal could be formally adopted next month and exports of Iranian oil could resume by next year.
Singapore GDP came in sharply lower than expected, sending SGD to multi-week lows. Q/Q growth fell 4.6% and y/y growth of 1.7% was well below 2.4% expected. Manufacturing component was particularly soft, falling 14% q/q, while Services was down 2.4%.
Following some notable options activity in the US hours, Micron was reported as a potential takeover target for China's Tsinghua Group in a deal speculated to be $23B or $21/shr. This would mark the largest US takeover target by a Chinese company, although Micron spokesperson has indicated the company is yet to receive a formal offer from the Chinese firm.
***Equities***
US equities / ADRs:
- MU: Tsinghua Unigroup said to offer $23B or $21/shr for Micron - financial press
- NVGN: Pre-clinical Studies Suggest Anisina May Improve Chemotherapy Effectiveness in Childhood Cancer; +6.1% afterhours
- NAVI: Guides Q2 $0.40 v $0.56e; FY15 $1.85 v $2.20e; cites aggressive market pricing for private education loan portfolios; -13.5% afterhours
Notable movers by sector:
- Consumer discretionary: Galaxy Entertainment Group 27.HK +5.4%, Sands China 1928.HK +5.5% (softens ban on smoking)
- Financials: CITIC Securities 6030.HK +0.6% (H1 result); Bohai Leasing Co 000415.CN +10.0% (acquisition); Westpac Banking Corp WBC.AU +1.4% (to sell operations)
- Industrials: China Shipping Development Co 1138.HK +2.1% (H1 guidance); Brilliance China Automotive Holdings 1114.HK -6.7% (H1 guidance); BAIC Motor Corp Ltd 1958.HK -2.3% (Q2 result); Hyundai Motor 005380.KR -0.4% (speculation to cut sales target)
- Technology: Hundsun Technologies Inc 600570.CN +10.0% (CSRC's probe); Shanghai Kingstar Winning Software 300253.CN +8.5% (H1 guidance); Ourpalm Co 300315.CN +10.0% (H1 guidance); Disco Corp 6146.JP +4.5% (Q1 result speculation); Toshiba Corporation 6502.JP +2.2% (majority of board is expected to step down)
- Materials: Sinopec Yizheng Chemical Fibre Co 1033.HK -5.9% (H1 guidance); Sichuan Hebang Corp Ltd 603077.CN +10.0% (to set up private bank); Sedgman SDM.AU +15.6% (FY15 guidance); Evolution Mining EVN.AU -1.7% (speculation for Newcrest to divest interest); Mincor Resources MCR.AU -0.9% (Q2 result); Sony Corp 6758.JP -1.6% (share offering)
- Utilities: Beijing Water Business Doctor 300055.CN +10.0% (H1 guidance)
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