Asian Market Update: China property price rebound continues; PBoC sets Yuan at 2016 highs
***Economic Data***
- (CN) CHINA FEB PROPERTY PRICES M/M: FALL IN 15 OUT OF 70 CITIES VS 24 PRIOR; Y/Y: FALL IN 37 OUT OF 70 CITIES V 45 PRIOR
- (NZ) NEW ZEALAND FEB ANZ JOB ADVERTISEMENTS M/M: +0.9% V -3.2% PRIOR
- (KR) South Korea Feb PPI Y/Y: -3.4% v -3.3% prior; 19th consecutive decline
- (US) NORTH AMERICA FEB SEMI BOOK/BILL RATIO: 1.05 V 1.08 PRIOR; 2nd straight month above parity
- (CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE UNCHANGED AT 3.50%; AS EXPECTED
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 -1.3%, S&P/ASX +0.3%, Kospi +0.2%, Shanghai Composite +1.9%, Hang Seng +0.7%, Jun S&P500 flat at 2,030
***Commodities/Fixed Income***
- Apr gold flat at $1,265/oz, Apr crude oil +0.3% at $40.30/brl, May copper +1.0% at $2.31/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 11.9 tonnes to 807.1 tonnes; 3rd straight increase; highest since July 2014
- USD/CNY: *(CN) PBOC SETS YUAN MID POINT AT 6.4628 V 6.4961 PRIOR; strongest setting since Dec 16th
- (CN) PBOC to inject CNY110B in 7-day reverse repos; Injects net CNY85B this week v drained CNY205B prior
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥420B in 3-5yr JGBs, ¥260B in 10-25yr JGBs, ¥180B in JGBs with maturity over 25-yr, and ¥1.75T in T-bills
- (AU) Australia MoF (AOFM) sells A$800M in 5.75% 2022 Bonds; avg yield: 2.30%; bid-to-cover: 3.04x
***Market Focal Points/FX***
- Asian equity markets are generally higher with the exception of a selloff in Tokyo, where sentiment was soured by more Yen strength in the wake of a dovish FOMC statement overnight. Shanghai Composite is leading the main indices, helped by continued strength in the property space along with a very firm Yuan fix by the PBoC - also in response to continued selling of the greenback. In commodities, gold has consolidated overnight gains but WTI crude oil concluded pit trading above $40/brl for the first time since early December. In FX, USD/JPY sold off about 60 pips to 110.80s but recovered above 111.20 headed toward close. AUD/USD traded 30pips on both sides of 0.7650, while NZD/USD traded about 20pips on both sides of 0.6750.
- China property prices m/m rose for the 10th month at 0.4% v 0.3% prior, while y/y price increase was 5th straight at 3.6% - well above 2.5% of the prior month. Out of 70 cities featured in survey, prices fell y/y in 37 out of 45 prior and rose in 47 v 38 prior. Recovery in the property sector was also evidenced in strong FY15 earnings out of China Overseas Land, with profits growing 22.5% and Rev up 7%. Separately in China, PBoC paced post-FOMC USD weakness with the strongest Yuan fix since Dec 2015 along with an open market operation of over CNY100B, bringing the weekly net injection to CNY85B.
- With cracks in Abenomics becoming more evident, a Japanese press report speculated the cabinet might consider delaying the 2nd round of consumption tax increase set for Apr 2017 by another 1-2 years. Subsequent comments from cabinet spokesperson Suga denied that consideration is taking place. Recall just this week BOJ Gov Kuroda said the next round of sales tax increase would have only half the impact as the first, which Fin Min Aso reiterated his opposition to delaying the hike. Today, Fin Min Aso also remarked the govt is closely watching FX market, with JPY strength accelerating since the dovish FOMC statement this week. BOJ policy meeting minutes from January, when the central bank first announced negative interest rates, revealed that all members believe that negative rates can be taken deeper if needed and most members noted risks from the rise in global market volatility to business sentiment in Japan.
***Equities***
US equities / ADRs:
- SCVL: Reports Q4 $0.21 v $0.14e, R$233.7M v $233Me (2 est); +7.1% afterhours
- ADBE: Reports Q1 $0.66 v $0.60e, R$1.38B v $1.33Be; To raise FY16 guidance; +6.0% afterhours
- CPGX: Acquired by TransCanada for $25.50/shr for $13B in all-cash deal; +5.3% afterhours
- JPM: Authorize $1.9B share buyback increase (0.9% market cap); +0.9% afterhours
- CBAY: Announces positive Pilot Phase 2 Clinical Study results of MBX-8025 in patients with Homozygous Familial Hypercholesterolemia; -7.1% afterhours
- ARO: Reports Q4 -$0.14 v -$0.15e, R$498M v $521Me; authorizes management to explore strategic alternatives; -43.8% afterhours
Notable movers by sector:
- Consumer staples: DaChan Food Asia 3999.HK -1.3%(guidance)
- Financials: Bank of Jinzhou 416.HK +3.3% (guidance); Japan Post Bank 7182.JP -0.4% (rejects workers request for base rise); Cheung Kong Holdings 1.HK +1.0% (FY15 result); Cheung Kong Property Holdings 1113.HK -4.6% (FY15 result); FlexiGroup FXL.AU +2.5% (shortly increase guidance)
- Industrials: Hankook Tire Worldwide Co 000240.KR -0.9% (Q4 result)
- Technology: Tencent 700.HK +3.2% (Q4 result); Pegatron Corp 4938.TW -1.4% (FY15 result); MediaTek 2454.TW +1.0% (Q2 result speculation); Toshiba Corporation 6502.JP +2.8% (to conduct stress test to determine whether Westinghouse writedown is needed)
- Materials: Aluminum Corporation of China 601600.CN +3.0% (FY15 result); Rio Tinto RIO.AU +1.9% (CEO to retire)
- Energy: Kunlun Energy Co 135.HK -1.6% (FY15 result)
- Healthcare: Primary Healthcare PRY.AU -1.2% (China's Jangho Group discloses stake)
- Telecom: Telstra Corp. TLS.AU -0.7% (network outage)