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Ranges (Up till 11.

45am HKT)
Currency

Currency

EURUSD

1.1074-99

EURJPY

136.51-83

USDJPY

123.07-49

EURGBP

0.71155-29

GBPUSD

1.5556-70

USDSGD

1.3658-96

USDCHF
AUDUSD

0.9605-27
0.7257-0.7311

USDTHB
USDKRW

34.835-870
1165.6-1170.6

NZDUSD

0.6601-50

USDTWD

USDCAD

1.3015-43

USDCNH

6.2162-6.2210

AUDNZD

1.0955-1.1013

XAU

1092.8-1095.8

Key Headlines
There are more China experts now than there were 6plus weeks ago. Almost all the major newspapers this
morning has an article on China and the stock market.
Most of them are negative. Some even criticised the
intervention one FT article said the market needs
scary weeks to become more secure. Should swooning
share prices hit consumer sentiment, China has other
levers to boost demand beyond buying stocks. If its
rulers are wise, investors should expect more unsettling
weeks ahead.
Back in 1998, a publication by Chief Executive of
HKMA, Joseph Yam on why HKMA intervened in stocks
during the Asian Financial Crisis. This is a good read
http://www.hkma.gov.hk/eng/key-information/speechspeakers/jckyam/speech_200898b.shtml
Aussie dollars move was a reflection of China stock
market.

FX Flows
Kiwi had a decent move up this morning, hearsay doing
of leveraged names selling AudNzd. NzdUsd rose to
0.6644 and I heard there are sell orders planted up to
0.6655, with some chatter of 0.6650-option barrier and
stops thereafter from system funds. AudNzd reversed
following AudJpy demand in mid-morning.
It seems that there are sell orders scattered above this
1.1100 from Eastern European names (some from
Russia). Euro crawled to 1.1199 and ran into offers.
Heard sellers are at 1.1100, 1.1120 and 1.1160. Euro bids
are reported at 1.1050 from various names. Think the
resistance in Euro during Asia time is 1.1105, thats the
50-day SMA.
Initial buying of UsdJpy, from the twenties, by German
in Tokyo got no further than 123.31. Japanese banks had
left-hand side fixing to do and forced the Usd to back
away. UsdJpy got to 123.07 post fixing and I heard
UsdJpy bids are reported at 123.00; offers are same at
123.80-85. BOJ will not be participating in ETF today.
Break below 122.85 opens up to stop sell orders.

Aussie dollars move was a reflection of China stock


market. Electronic platforms were hitting bids in
AudUsd when Shanghai stock market was about to open,
pushed that pair to 0.7257. Someone mentioned a
0.7250-option strike expires Friday July 31. Shanghai
pared some losses and Aud bounced off the lows. Into
mid-morning, we witnessed good demand in Aud and
suspect it was linked to AudJpy as the cross lifted up to
89.90 from 89.40s. This got the Aud up to 0.73-handle.
Canadian dollar tracked the AudUsd. UsdCad peaked at
1.3043 when Aud was near the days low. The pair has
drifted to 1.3016; seeing good bids at and below 1.3000.

Asians
Almost all the major newspapers has an article on China
and the stock market. Most of them are negative. There
was a report last night in WSJ that the CSRC said
Chinese government will step up its purchases of stocks
in a bid to prop up the equities market. An interesting
observation by FastFT that July 27 fall of 8.4% isnt the
biggest one day fall. Back in 1995 May 23, the index fell
16.39% and there are 9 other times the index dropped
more than 10.3%.
Local mainland guys believe that the semi-officials will
step in to prevent Shanghai Composite Index from going
below 3500. Also speculators are short the A-50 Jul
futures, which expires Thurs and we could see some
squeeze in that too.
And so they said plunge protection team was in buying
Shanghai!
Usd/Asia touch offered from open. PBOC fix at 6.1154
was in line with markets expectations that makes 35
days. Onshore spot USDCNY is stable and Usd sentiment
got USDCNH back into this 6.21-handle.
Good news as South Korea declares an end to MERS
outbreak however Korea Composite Index in red has
prevented much Krw strengthening. Onshore spot
opened at 1167.5, settled down at 1166.5 by end of
morning.
Singapore dollar is probably best performing Asia
currency despite negative STI. UsdSgd opened in the
1.36-ninties and drifted towards low 1.3658. We should
see some support in the 1.3635-area. Singapore General
Elections talk no firm date but highly likely in Sept.
UsdMyr backed off from where we started but overall
still bid. Opened at 3.8420, slowly drifted to 3.8330-50.
Things have shifted in Malaysia. After those remarks
from the Deputy PM, news from Malaysian media this

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.

morning said PM Najib is to reshuffle his Cabinet this


week, dropping five out of the 35-strong slate of
ministers, including his deputy, Tan Sri Muhyiddin
Yassin.

Who said what


PBOC: To pursue prudent monetary policy in H2
PBOC: Some food price rising but overall price stable
PBOC: To hold meeting in August to discuss current
economic and financial situation
PBOC: Will use various monetary tools to maintain
appropriate levels of liquidity in H2
PBOC: Monetary policy will be used to ensure loans
growth at rational pace
PBOC: Will seek to lower financing costs for
companies, maintaining basically stable exchange rate
South Korea President Park: Middle East Respiratory
Syndrome is no longer a major concern
Moodys: South Korea new measures to stem
household debt is credit positive

News & Data


Australia ANZ Roy Morgan Weekly Consumer
Confidence Index up 112.5 from 111.8
Kathimerini: Technical talks begin amid talk of
more measures
Contact between the Greek government and technical
teams representing Greeces lenders began in Athens on
Monday, although the heads of the missions are not
expected in the capital until Thursday. Greece and its
lenders have agreed that the bulk of the technical talks
will take place in the hotel where the inspectors are
staying. The visiting officials will be allowed to visit the
General Accounting Office, the Finance Ministry and the
Economy Ministry. The lenders want to be able to visit
other ministries as well but the Greek side is hoping this
will not be necessary.
http://www.ekathimerini.com/199992/article/ekathime
rini/news/technical-talks-begin-amid-talk-of-moremeasures
Guardian: David Cameron vows to fight against
'dirty money' in UK property market
David Cameron will promise to act against corrupt
foreigners who buy up luxury properties in the UK using
secretive holding companies to hide their dirty money.
The prime minister will use a visit to Singapore to make
an anti-corruption speech on Tuesday in which he will
express concern that some properties, mainly in London,
are being bought by people overseas through
anonymous shell companies, some with plundered or
laundered cash.
http://www.theguardian.com/politics/2015/jul/28/davi
d-cameron-fight-dirty-money-uk-property-marketcorruption?CMP=twt_gu

Nikkei: Japan's Suntory mulling IPO


Suntory Holdings, one of the nation's biggest privately
held companies, will consider going public as early as
2018 to pay down its bulging debt and raise growth
capital, The Nikkei has learned. The company will decide
as early as this year whether to launch an initial public
offering, which will likely value it at some 3 trillion yen
($24.3 billion). It has opened itself up to IPO proposals
from financial institutions. Its brands include Yamazaki
whiskey and Jim Beam bourbon.
http://asia.nikkei.com/Business/Companies/Japan-sSuntory-mulling-IPO
FT: Chinese stock market should find its own
level
Having appeared to backstop the market, there will be a
price to pay should Beijing now step away. By some
estimates, more than RMB3.5trn of debt is linked to
speculation on shares. A few more days like Monday and
the damage to household balance sheets could take a
heavy toll on the economy. There is no way to tell in
advance how much the authorities must buy to stabilise
share prices. Investor confidence premised wholly on
state support vanishes as soon as the government stops
buying. Ceding control to market forces not only sticks
in the communist craw, but goes against the paternalism
that still echoes through Chinese political life. But in the
words of one prominent investor, the market needs
scary weeks to become more secure. Should swooning
share prices hit consumer sentiment, China has other
levers to boost demand beyond buying stocks. If its
rulers are wise, investors should expect more unsettling
weeks ahead.
http://www.ft.com/intl/cms/s/0/1b5aaa1e-3456-11e5bdbb-35e55cbae175.html#axzz3h1fUJuce
WSJ: Chinas Market-Intervention Folly
The biggest drop in Chinese stocks in eight years
Monday is another sign that Beijings efforts to prop up
prices have failed. Moreover, the interventions
themselves have made Chinas equity markets more
volatile and damaged their credibility in the long run.
China needs more professional participants in its
equities markets. But why should institutions buy when
the government can control if and when they can sell?
And ordering state-owned enterprises and brokerages to
buy stocks with borrowed money to shore up prices only
reinforces the notion that the market is rigged.
http://www.wsj.com/articles/chinas-marketintervention-folly-1438039303?mod=wsj_nview_latest
Ambrose Evans-Pritchard in Telegraph: China
losing control as stocks crash despite emergency
measures

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.

Chinese equities have suffered the sharpest one-day


crash in eight years, sending powerful tremors through
global commodity markets and smashing currencies
across East Asia, Latin America and Africa. Mark
Williams, chief Asia strategist at Capital Economics, said
the Chinese authorities appear to have been testing the
waters to see what would happen if they stopped
intervening. The market verdict was swift and brutal.
They have got themselves into a very difficult situation.
They have put a lot of credibility on the line to shore up
prices and this credibility has been badly damaged, he
said. Chinese media reported on Monday night that the
state regulator is ready to intervene with yet more stock
purchases. It has already bought an estimated $250bn of
equities and has borrowing lines for a further $450bn if
necessary. The authorities still have a nuclear trump
card up their sleeve. They could cut the reserve
requirement ratio (RRR) from 18.5pc all the way down to
5pc as in the banking crisis in 1998 or even to zero.
http://www.telegraph.co.uk/finance/chinabusiness/11766449/China-losing-control-as-stockscrash-despite-emergency-measures.html
WSJ: China to Step Up Its Stock-Market Rescue
Moves
The Chinese government will step up its purchases of
stocks in a bid to prop up the equities market, the
spokesman for Chinas top securities regulator said late
Monday night. Zhang Xiaojun, spokesman at the China
Securities Regulatory Commission, said the company
owned by the agency that has been buying up battered
shares didnt exit the market. Rather, Mr. Zhang said,
the company, called China Securities Finance Corp., will
increase its holdings of stocks at appropriate times.
http://www.wsj.com/articles/china-to-step-up-itsstock-market-rescue-moves-1438012429?
mod=wsj_nview_latest

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.