ASIA STOCKS: Hong Kong & China Equities Mixed, Chinese Prop Names Get Boost
Hong Kong & Chinese equities are mixed today, Chinese property stocks are performing well after Shenzhen, Guangzhou & Shenyang follow Shanghai in easing requirements for home down payments and mortgages. There is has been little else of note in the region this morning.
- Hong Kong equities are lower today, HK listed property names are lagging their Chinese listed peers, although outperforming the rest of the market, with the Mainland Property Index down 0.85%, the HS Property Index down 1.28%, HSTech Index is down 1.40%, while the HSI is down 1.13%. China onshore markets are higher today, the CSI300 Real Estate Index is up 0.90% although well off opening highs, small-cap indices are down about 0.65%, while the CSI 300 is up 0.50%.
- (MNI): China Press Digest May 29: Yuan, Housing, Consumption - (See link)
- (MNI): IMF China 2024 GDP Growth Revised Up - (see link)
- In the property space, Major cities in China, including Shanghai, Shenzhen, and Guangzhou, have reduced downpayment requirements and mortgage rates to stimulate the property market, following government initiatives aimed at aiding the struggling sector. This move is anticipated to improve market sentiment and sales, although concerns persist over falling property values and incomplete developments. Some Country Garden Creditors Got 4.8% Yuan Bond Payment.
- Money managers increased investments in exchange-traded funds tracking Chinese stocks for the second consecutive week, with China recording the largest inflows across emerging markets, amounting to $610.3 million. This surge follows government measures to bolster market confidence, particularly in the property sector, and signals renewed investor interest in Chinese assets amid broader emerging market inflows.
- Looking ahead: China PMI and Hong Kong Retail Sales of Friday
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AUSSIE BONDS: Slightly Richer But Sydney Session Lows, Light Local Calendar, No Cash US Tsy Trading
ACGBs (YM +2.0 & XM +2.5) are holding a slight uptick, though they currently hover around Sydney session lows. With no domestic data released today and the closure of cash US tsys due to a public holiday in Japan, local market participants have pared earlier gains. This cautious approach may stem from lingering concerns following last week's unexpectedly high Q1 CPI figures.
- Cash ACGBs are 2bps richer, with the AU-US 10-year yield differential 2bps lower at -17bps.
- Swap rates are 2-3bps lower.
- The bills strip has bull-flattened, with pricing flat to +3.
- RBA-dated OIS pricing is little changed. A cumulative 4bps of easing is priced by year-end from an expected terminal rate of 4.48% (Sep-24).
- The local calendar will see Private Sector Credit and Retail Sales data tomorrow.
ASIA STOCKS: Asian Equities Head Higher As Tech Rallies On Strong US Earnings
Asian markets have tracked US markets higher, Japan is closed today for a public holiday. There has been very little in term of headlines over the weekend and a slow day for economic data today. Local market equity flows have been mixed recently, Taiwan and South Korean have seen a pick up late in the week as tech rallied on the back of strong earnings, while Indonesian equities continue to see outflows. Focus in the region today will largely be on the JPY, with the currency making new multi-decade lows earlier.
- South Korean equities are higher, tech stocks are the top performing sector. Nasdaq futures are also testing Friday highs, a break higher could help drag the local market up further. The Kospi is up 0.66% at 2,672.74, holding back above the 20-day EMA, we have ticked above 50 on the 14-day RSI, while decreasing red bars for the MACD indicating buyers are in control. Looking ahead this week on Tuesday we have Industrial Productions with consensus at 3.8% falling from 4.8% y/y, Wednesday we have Trade Balance data consensus is a drop to $600m from $4.28b in March and finally on Thursday CPI is expected with consensus at 3% falling from 3.1% in March.
- Taiwan equities are higher today, local markets have benefitted from strong US tech earnings last week with the Taiex trading back above the 20,000 mark, and has now bounced 5.20% from the lows made during the Israel/Iran conflict, the index now trades back above all moving averages, the RSI is back above 50 while the MACD indicator is around 50 and up 1.20% for the day.
- Australian equities are higher today, largely tracking global markets. Most sectors are in positive territory day, with financials leading the way. Looking ahead, Tuesday we have Private Sectors Credit and Retail Sales, Wednesday we have Trade Balance and Building Approval data. The ASX200 closed on the 100-day EMA on Friday and have this morning bounced right off it trading up 0.46% at 7,610. The 20 & 50-day EMAs trade at 7,680/7,690 and are initial resistance.
- Elsewhere in SEA, New Zealand Equities are up 0.30%, jobs filled data showed an increase from the prior month to 0.4% from 0.3% in Feb, Malaysian equities are up 0.25%, Philippines equities are up 0.22% while Singapore Equities are down 0.45%.
AUSTRALIA: Stronger Q1 CPI Mainly Missed April Bloomberg Survey
Bloomberg’s April survey of Australian economists showed little change in their expectations but the survey was taken between April 18 and 24 and the higher-than-expected Q1 read printed on April 24 and so is unlikely to be included in most of the responses. Consensus still expects a 25bp rate cut in Q4 with 75bp over 2024. This may be revised in the next survey.
- There is some change in the timing of rate cuts with the 50bp expected in Q1 2025 in the previous survey revised to one 25bp in Q1 with another following in Q2.
- The growth outlook is unchanged at 1.4% in 2024 picking up to 2.2% in 2025. Q1 2024, released on June 5, is forecast to rise 0.3% q/q.
- 2024 inflation is still expected to ease to 3.3% before falling below target next year averaging 2.8%. Wages are still forecast to rise by 3.8% this year and then 3.4% in 2025. The May 14 budget should give some indication of what the government is expecting for the July 1 minimum wage rise.
- Unemployment rate forecasts were revised down 0.1pp for 2024 to 4.2% with Q4 still 4.5%. 2025 remains at 4.6%.
- The budget deficit expectations have widened 0.2pp in 2024 to 0.5% of GDP with 2025 unchanged at 0.7%.
- A large pickup in housing starts is projected for 2025 with growth at 10.5% y/y revised up from 6.4% and following a 2.5% drop this year.
