EM ASIA CREDIT: Freeport Indonesia: Grasberg to restart
(FRIDPT, Baa3/NR/BBB)
"*FREEPORT PROVIDES UPDATE ON RESTART PLANS FOR GRASBERG DISTRICT" - BBG
"*FREEPORT P PLANS TO RESTORE LARGE-SCALE PRODUCTION" - BBG
Phased restart of Grasberg mines, guidance update, overall positive for credit.
Freeport Indonesia announced plans overnight for a phased restart of copper and gold production from the Grasberg minerals district. The company expects 2026 production levels to be similar to estimated 2025 volumes, which would be around 1bn pounds of copper and 0.9m ounces of gold. Production is expected to increase through 2026 and 2027, targeting approximately 1.6bn pounds of copper and 1.3m ounces of gold annually over the 2027-2029 period.
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STIR: RBNZ-Dated OIS Pricing Little Changed After Q3 CPI
Q3 CPIs are unlikely to derail any further easing at the 26 November RBNZ meeting after the 50bp this month.
- Headline rose 1% q/q bringing annual inflation to 3.0% y/y from 2.7%, the top of the RBNZ’s target band but there had been fears that it could go above.
- Domestically-driven non-tradeables were slightly higher than the RBNZ expected at 1.1% q/q but the annual rate at 3.5% was in line. Its measure of core will print today at 1500 NZDT/1300 AEDT.
- RBNZ dated OIS pricing is little changed across meetings. 26bps of easing is priced for November, with a cumulative 36bps by February 2026.
Figure 1: RBNZ-Dated OIS: Post-CPI vs. Pre-CPI
Source: Bloomberg Finance LP / MNI
CHINA: Equity Valuations: Onshore Offshore Valuation Gap Widening
A lot of focus has been on the onshore equity rally. The CSI 300 has delivered gains of over +11% over the last 3 months, whilst over the same period the Hang Seng is up +1.7%. The onshore / offshore divergence is a key theme at present, given the divergence in valuations. The P/Es onshore now are elevated on a historical basis, even when compared to the post COVID period. At 17.5x for the CSI 300, forecasts are for a year end close at 15.9x and 2026 a further decline. The Hang Seng by comparison is currently at 11.6x and forecast to rise to 12.2x by year end.
Fig 3: CSI 300 Price to Earnings
Source: Bloomberg Finance LP / MNI
Fig 4: Hang Seng Price to Earnings
Source: Bloomberg Finance LP / MNI
CHINA: Technicals: Major Bourses Break Below Key Technical Levels
Technicals: All major onshore equity bourses remain elevated on a P/E basis, though with falls last week have dipped below the 20-day EMA with Shenzhen near to the 50-day EMA for the first time since June. The Hang Seng by comparison is trade through the 50-day EMA and is near to the 100-day EMA which it last broke below in April.
Fig 5: Hang Seng Index vs 20, 50, 100 and 200-day EMA
Source: Bloomberg Finance LP / MNI
The bond market has for best part of this year seen the 10-Yr trading in a +18bps range, with no signs of a breakout. The move above 1.90% in the CGB 10-Yr at the beginning of the month was short lived with it moderating back to 1.82% at the bottom end of recent ranges. Having had a period of relative consistent liquidity injections via the daily OMO, last week saw two significant withdraws late in the week, which may be contributing to the downward move in yields and could be indicative of things to come. Central Government bond issuance this week is focused on the 5-10 Year maturities, with significant size to be issued.
- China to Sell CNY127 Bn 2028 Bonds
- China to Sell CNY149 Bn 2035 Bonds
- China to Sell CNY55 Bn 91-Day Bills
- China to Sell CNY55 Bn 182-Day Bills
- China to Sell CNY118 Bn 2032 Bonds
- China to Sell CNy129 Bn 2030 Bonds
