Asian Mid-session Update: China airlines soar on consolidation rumors; Hyundai Motor falls on earnings miss; CBA joins Westpac with mortgage rate hike
***Economic Data***
- (AU) AUSTRALIA Q3 NAB BUSINESS CONFIDENCE: 0 V 4 PRIOR
- (NZ) NEW ZEALAND SEPT ANZ JOB ADVERTISEMENTS M/M: +2.1% V -1.5% PRIOR
- (TW) Taiwan Sept Unemployment rate Y/Y: 3.8% v 3.8%e
- (CN) China Sept YTD State-owned Enterprises (SOE) profits CNY1.74, -8.2% y/y v -6.6% prior, Rev CNY33.1T, -6.1% y/y v -5.9% prior
- (BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 14.25%, (as expected)
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.1%, S&P/ASX flat, Kospi -0.6%, Shanghai Composite +0.2%, Hang Seng -0.8%, Dec S&P500 +0.3% at 2,015
***Commodities/Fixed Income***
- Dec gold -0.1% at $1,165/oz, Dec crude oil +0.5% at $45.44/brl, Dec copper +0.1% at $2.36/lb
- GLD: Goldman Sachs sees Gold prices around $1,000/oz in the next 12 months
- (JP) Japan investors bought net ¥492B in foreign bonds v bought ¥1.1T in prior week; Foreign investors sold net ¥29.3B in Japan stocks v bought ¥524B in prior week
- JGB: (JP) Japan MoF sells ¥2.30T in 2-yr JGBs; Avg yield: 0.011% v 0.010% prior; bid to cover: 4.20x v 3.71x prior
- (CN) PBoC to inject CNY20B in 7-day reverse repos (32nd consecutive injection); Drains net CNY45B this week v drained CNY70B prior (2nd week of drain)
***Market Focal Points/FX***
- Asian indices are mixed in the absence of sweeping macro themes, though several individual company developments are influencing their regional markets. Late in the day, Australia markets are responding to a large ripple from CBA, which followed Westpac's 20bp move by hiking variable mortgage rates by 15bps to help offset the balance sheet impact of higher capital requirements. Investors speculate the RBA would then seek to counteract those steps with a policy easing sometime this year, sending AUD/USD down over 40pips below 0.7190, 3-year bond yield down 3bps below 1.83%, and S&P/ASX to session highs up 0.3% above 5,260.
- Separately in Australia, Q3 NAB Business Confidence came in flat, and resident economist said the "the quarterly survey confirms the trend improvement in current conditions in the non-mining economy, while the outlook is also looking notably better". Also of note down under, NZ Fin Min English said China consumer outlook is positive and will offer tailwinds to New Zealand economy, helping NZD/USD bounce some 70pips above 0.6780.
- China's anticipated SOE reform has long been considered as a positive for the markets in expectation of producing consolidation in key industries. Today, airline stocks are soaring on reports of potential merger between China Southern Airlines and Air China - those names are each up about 7%. Also in China, the PBoC drained liquidity from the system for the 2nd straight week by CNY45B, albeit a smaller move relative to last week's CNY70B.
- In Japan, the BOJ quarterly senior loan officer survey saw household demand index and local govt demand index fall to flat from 7 and 6 respectively. The data follows yesterday's troubling trade figures and further underscores the risk of a technical recession in Japan with another GDP decline in Q3. Japan LDP party tax official also reportedly met with his Komeito counterpart to further discuss the number of items falling into reduced tax rate category when consumption tax is raised to 10% in Apr 2017.
- Korea's Hyundai Motors fell in afternoon trade after Q3 profits missed expectations with Net KWR1.2T v KRW1.5Te and Op profit KRW1.5T v KRW1.57Te. China vehicle sales were especially pronounced, falling 9%, while US sales rose nearly 4%. Hynix also disappointed on Q3 profit with Net KRW1.05T v KRW1.09Te and also lowered 2015 DRAM shipment target to low or mid 20% from mid 20%s.
***Equities***
US equities / ADRs:
- TXN: Reports Q3 $0.76 v $0.67e, R$3.43B v $3.28Be; +9.4% afterhours
- EBAY: Reports Q3 $0.43 v $0.41e, R$2.11B v $2.10Be; +8.4% afterhours
- CIT: Announces Strategic Initiatives Designed to Further Its Transition to a U.S. Commercial Bank; exploring alternative for some assets; +5.1% afterhours
- KORS: Greenlight Capital (Einhorn) takes new position in KORS and UIL - investor letter; +4.3% afterhours
- WFT: Reports Q3 -$0.22 v -$0.11e, R$2.24B v $2.32Be; +4.1% afterhours
- URI: Reports Q3 $2.57 v $2.35e, R$1.55B v $1.56Be; +3.8% afterhours
- LVS: Reports Q3 $0.66 v $0.63e, R$2.89B v $2.97Be; Board raises quarterly dividend 10.8% to $0.65/shr (imp yield 5.6%); +3.5% afterhours
- STX: Raises quarterly dividend by 17% to $0.63 (implied yield 6.8%); +1.3% afterhours
- AXP: Reports Q3 $1.24 v $1.31e, R$8.19B v $8.38Be; -3.8% afterhours
- CYH: Reports prelim Q3 R$4.85B v $4.95Be, Adj EBITDA $661M v $750M y/y, Net income $121M v $133M y/y; -14.1% afterhours
Notable movers by sector:
- Consumer discretionary: Sands China 1928.HK -0.9% (Q3 result); China Southern Airlines Co 600029.CN +7.2%, Air China 601111.CN +6.6% (merger speculation); Wumart Stores Inc 1025.HK +71.3% (parent to buyout)
- Consumer staples: Foshan Haitian Flavoring & Food Co 603288.CN +3.8% (9-month result)
- Financials: WesFarmers Limited WES.AU +0.3% (Q1 result)
- Industrials: BAIC Motor Corp 1958.HK -6.9% (9-month result); Samsung Engineering Co 028050.KR -17.4% (Q3 result, new share sales); Nidec Corp 6594.JP +1.7% (H1 result); IHI Corp 7013.JP -7.1% (H1 result)
- Technology: TCL Corp 000100.CN -0.3%(9-month result); Acer 2353.TW +1.8% (develops new electric vehicle); Hynix Semiconductor 000660.KR -4.0% (Q3 result); FujiFilm Holdings 4901.JP -4.3% (H1 result speculation)
- Materials: China National Building Material Co 3323.HK -4.9% (profit warning); Zijin Mining 2899.HK -4.0% (9-month result); China Minmetals Resources 1208.HK -1.2% (Q3 result); Hyundai Steel Co 004020.KR -1.3% (Q3 result); South32 Limited S32.AU +2.6% (Q1 result)
- Energy: Huadian Power International Corp 1071.HK +1.1% (deal with BP); Oil Search OSH.AU +1.4% (raises guidance); Santos STO.AU +17.1% (rejects Scepter Partners' proposal); APA Group APA.AU +1.5% (affirms guidance)
- Healthcare: Australian Pharma API.AU -2.3% (FY15 result)
- Telecom: China Mobile Ltd 941.HK -3.0% (9-month result)
- Utilities: China Power International 2380.HK +1.9% (9-month power generation)