Asia Mid-Session Market Update: Japan industrial output disappoints as BOJ official warns on inflation target; China top banks' NPLs edge higher
***Economic Data***
- (JP) JAPAN JULY PRELIMINARY INDUSTRIAL PRODUCTION M/M: 0.0% V +0.8%E; Y/Y: -3.8% V -3.0%E
- (AU) AUSTRALIA JULY PRIVATE SECTOR CREDIT M/M: 0.4% V 0.4%E; Y/Y: 6.0% V 6.1%E
- (NZ) NEW ZEALAND AUG ANZ ACTIVITY OUTLOOK: 33.7 V 31.4 PRIOR; BUSINESS CONFIDENCE: 15.5 V 16.0 PRIOR
- (NZ) New Zealand July Money Supply M3 y/y: 6.3% v 5.9% prior
- (SG) Singapore July Money Supply M1 y/y: 1.5% v 1.6% prior; M2 y/y: 5.6% v 4.3% prior
- (KR) SOUTH KOREA JULY INDUSTRIAL PRODUCTION M/M: +1.4% V -0.6%E; Y/Y: 1.6% V 0.4%E
- (KR) South Korea Sept Business Manufacturing Survey: 74 (18-month high) v 71 prior; Non-Manufacturing Survey: 75 v 70 prior
- (UK) AUG GFK CONSUMER CONFIDENCE: -7 V -8E; 6th consecutive negative reading
***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 +0.9%, S&P/ASX -0.9%, Kospi -0.3%, Shanghai Composite +0.3%, Hang Seng flat, Sep S&P500 flat at 2,175
***Commodities/Fixed Income***
- Dec gold +0.1% at $1,318/oz, Oct crude oil -0.1% at $46.31/brl, Dec copper +0.3% at $2.08/lb
- (US) Weekly API Oil Inventories: Crude: +0.9M v +4.5M prior; 2nd straight build
- GLD: SPDR Gold Trust ETF daily holdings fall by 1.2 tonnes from 955.4; 2nd straight decline, lowest since July 28th
- (CN) China MoF sells 2-yr bonds at 2.344%; Sells 7-yr bonds at 2.75%
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6908 V 6.6812 PRIOR; Weakest Yuan setting since July 20th
- (CN) PBOC to inject CNY40B in 7-day reverse repos and CNY10B in 14-day reverse repos
- (AU) Australia MoF sells A$1.0B in 4.25% 2026 bonds, avg yield 1.834%; bid-to-cover 2.08x
***Market Focal Points/FX***
- Asian equity markets are mixed despite the down day on Wall St, as Nikkei225 has led key indices amid fresh selling in JPY. With expectations building for a close Fed decision in September, barring a disappointing non-farm payrolls report this Friday, USD/JPY has tested ¥103 level for the first time in a month, consolidating those gains in Asian hours. In other USD majors, AUD/USD was in a 25pip range above $0.75 level, while NZD/USD was bolstered by stronger ANZ Business Activity Outlook, rising over 30pips above $0.7250 at the high. Shanghai Composite was also modestly higher, with all top China banks now posting H1 results and containing only marginal deterioration in credit metrics.
- In notable economic data, Japan industrial output missed expectations, coming in flat m/m and falling by bigger than expected margin y/y. METI also raised its forecast for Aug m/m growth to +4.1% v +2.3% prior and maintained its overall assessment of the sector. Disappointing industrial production follows a set of better figures from Japan this week, keeping the pressure on the BOJ to accelerate economic recovery and boost inflation. BOJ's Funo reiterated central bank's position that all tools can be mobilized to achieve 2% inflation target, and while he maintained FY17 time frame for achieving that forecast, the risks to achieving that objective are seen as significant. Funo added that private consumption is showing some weakness but maintaining resilience as a trend.
- In China, all 4 top banks have now reported their results with BOC and ICBC disclosing H1 earnings overnight. The trend of marginally higher NPL's has been consistent for the top 4 - ICBC saw a 5bp rise to 1.55%, BOC a 4bp rise to 1.47%, CCB a 5bp rise to 1.63% and AgBank a 1bp increase to 2.40%. Other metrics such as ROE and NIMs for ICBC were lower y/y, sending the stock slightly lower, While those of BoC were more mixed. In notable Chinese press, a report citing CASS researcher forecast property prices and sales growth to correct through H1 of next year, with the risks of a "deep" correction in top-tier cities as the govt renews curbs to slow price appreciation. In China FX, PBoC set Yuan midpoint fix at the lowest level in over a month, though vice fin min Zhu said there was no basis for "continuous" Yuan decline.
***Equities***
US equities / ADRs:
- PRXL: Delays 10K filing due to misappropriation of funds by employee; -3.3% afterhours
- HRB: Reports Q1 -$0.55 v -$0.53e, R$125M v $131Me; -5.0% afterhours
- PANW: Reports Q4 $0.50 v $0.50e, R$401M v $390Me; Announces $500M share repurchase (3.9% of market cap); -5.2% afterhours
- CAL: Reports Q2 $0.46 v $0.51e, R$622.9M v $637Me; -6.8% afterhours
- MDCO: Provides update on Dyslipidemia Programs; MDCO-216 did not meet the upper statistical boundary for efficacy; -6.9% afterhours
- AVAV: Reports Q1 -$0.51 v -$0.15e, R$36.2M v $38.6Me; -12.1% afterhours
Notable movers by sector:
- Consumer discretionary: China Eastern Airlines 670.HK +0.3% (H1 result); Air China 753.HK +1.9% (H1 result); Harvey Norman HVN.AU +3.7% (FY16 result)
- Financials: Evergrande Real Estate Group 3333.HK -6.4% (H1 result); Bank of China 3988.HK +1.2% (H1 result); Industrial and Commercial Bank of China Ltd (ICBC) 1398.HK -0.2% (H1 result); China Galaxy Securities Co 6881.HK -1.5% (H1 result)
- Industrials: Zoomlion Heavy Industry Science and Technology Co 1157.HK -1.6% (H1 result)
- Technology: Ourgame International Holdings 6899.HK -3.3% (H1 result)
- Materials: Independence Group IGO.AU -4.3% (FY16 result); Sandfire Resources SFR.AU +4.1% (upgraded by JPMorgan); Adelaide Brighton ABC.AU -5.0% (H1 result); Atlas Iron AGO.AU +10.0% (FY16 result)
- Healthcare: Mitsubishi Tanabe Pharma Corp 4508.JP -3.7% (FDA accepts new drug application)
- Utilities: Huadian Power International Corp 1071.HK -5.2% (H1 result)