Ahead Today
G3: US NFIB Small Business Index
Asia: China NDRC Press Briefing on the economy, Taiwan exports
Market Highlights
Markets in Asia will focus on a press briefing held by the China’s National Development and Reform Commission at 10am Singapore time, amidst geopolitical tensions, rising oil prices, and paring back of Fed rate cut bets after last week’s strong US labour data. Details were somewhat nebulous, with the statement saying China’s officials will provide an update on the “comprehensive implementation of a package of incremental policies to robustly promote upward economic momentum, optimize structural development, and sustain a positive growth trajectory”, with a media Q&A thereafter. Markets will be watching closely for details on any sizeable fiscal stimulus, and this briefing also comes on the back of the salvo of monetary stimulus by the PBOC, coupled with the unequivocal statement by the Politburo on supporting the economy.
Today is the first day of trading just after the Golden Week holiday, and among other things we will get a sense of Chinese equity market sentiment together possibly some data on how the Chinese economy fared during the holiday. On that note, there were reports by CCTV news that visits by prospective homebuyers to showflats climbed at least 50% from a year earlier during the break, with Beijing for instance seeing expressions of intent to buy new homes double in the 1st three days of October. In Shenzhen, sales of new homes jumped more than 10 times in the 1st six days while used home transactions more than tripled according to Cailian citing Shenzhen Centaline Property figures. Meanwhile, real estate agents in Shanghai reportedly rolled out a “no closing hour” policy after visitors increased. Meanwhile, the number of account openings at major brokers hit a record high while five leading ETFs in Chinese equities received about US$4.9bn in inflows last week, the most on record.
Regional FX
All this is not to say that geopolitical tensions, rising oil prices, and higher US yields do not matter. Asian FX markets have generally been on the backfoot on the back of the stronger Dollar as geopolitical tensions rose, with KRW (-1.5%), THB (-1%), MYR (-1.4%) and IDR (-1.6%) all softening meaningfully following a good run the past month. There were some signs that Asian central banks are turning more concerned about FX volatility, with Bank Indonesia saying it is intervening in the spot, domestic NDF and bond markets to maintain market confidence, while RBI likely also intervened to keep USD/INR below the 84.00 levels. Nonetheless, the evolution of Chinese stimulus will also be crucial for Asian currencies - to the extent that global (and Asia’s) growth expectations are buttressed moving into 2025, Asian currencies can still strengthen as growth aspect of the Dollar smile takes over from the Fed notwithstanding risks from the US Elections. Meanwhile, Thailand’s Finance Ministry plans to propose a higher inflation target of 1.5%-3.5% for next year, adding pressure on the central bank to cut its key interest rates, according to a news article by Bloomberg. The ministry is due to hold talks with BOT later this month to finalise the price band and comes on the back of repeated attempts by the government to clamour for rate cuts, with latest inflation data also modest at 0.6% in September.
