Trump Working With China’s Xi To Resolve ZTE Issue

Trump Working With China’s Xi To Resolve ZTE Issue

General Trend

  • Asian equity markets trade generally higher; Hang Seng again outperforms
  • US President Trump says he is working with China regarding telecom name ZTE
  • Australia’s Telstra declines over 3% after giving cautious outlook
  • China PBoC conducts 1-year medium-term lending facility (MLF) to offset maturing funds
  • Malaysian assets face selling pressure in first trading session since last week’s elections; later pare losses
  • Indonesia government bonds rally
  • US/China trade talks are expected to be held on Tuesday (US financial press)
  • OPEC expected to be able to offset oil losses from Iran sanctions – press

Headlines/Economic Data


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Nikkei 225 opened -0.2%; closed +0.5%

  • Topix Real Estate Index +2.9%, Securities +1%. Marine Transportation +0.9%, Iron & Steel +0.9%, Retail trade +0.7%
  • (JP) JAPAN APR PPI M/M: 0.1% V 0.1%E; Y/Y: 2.0% V 2.0%E
  • (JP) BoJ Gov Kuroda: Govt has made progress to restore fiscal health; more needs to be done on structural reforms – Parliament comments (Friday after the close)
  • (JP) Japan PM Abe to consider meeting with North Korea’s Kim, but significant obstacles remain – Nikkei


  • Kospi opened +0.2%
  • (KR) Major South Korea financial firms are getting ready to kick off a massive recruiting effort in H2 of this year – Korean press
  • (KR) North Korea planning to dismantle nuclear test site in a ceremony scheduled between May 23-25th – Korean press
  • (KR) South Korea sells KRW650B v KRW650B indicated in 10-year bonds: avg yield 2.785% v 2.62% prior

China/Hong Kong

  • Hang Seng opened +1.2%, Shanghai Composite +0.1%
  • Hang Seng Industrial Goods index +2.4%, Property & Construction +1.7%, Financials +1.6%, Info Tech +1.5%
  • 763.HK “President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!” – Tweet from President Trump
  • (CN) PBoC Adviser reiterates sees no major short-term change in yuan (CNY) rate – Chinese Press
  • (CN) PBOC CONDUCTS CNY156B V CNY367.5B PRIOR IN 1-YR MEDIUM-TERM LENDING FACILITY (MLF) AT 3.3% V 3.3% PRIOR; CONDUCTS CNY80.1B IN PLEDGE SUPPLY LENDING (PSL) LOANS; the MLF injection effectively rolls over the same amount which is due to mature
  • (CN) China insurers are said to be channeling funds through shadow lenders to real estate and local government infrastructure projects in a bid to boost returns – financial press
  • (CN) China PBoC sets yuan reference rate 6.3345 v 6.3524 prior
  • (CN) China PBoC Open Market Operation (OMO): Skips OMO for the second consecutive day
  • (CN) China PBOC Quarterly Report: Will properly implement the prudent and neutral monetary policy to create a moderate financial environment for supply-side structural reform and high-quality development – Xinhua
  • (CN) China Securities Journal comments on MLF operations, noting they have limitations, mainly in terms of the narrow transmission through which liquidity is provided

Australia/New Zealand

  • ASX 200 opened 0.0%, closed 0.3%
  • ASX 200 Resources index +1.2%, Energy +1.2%, Financials +0.1%; Telecom -3.1%, Utilities -0.5%
  • (NZ) New Zealand Apr Performance of Services Index: 55.9 v 58.6 prior
  • Telstra, TLS.AU Reports Q3 Postpaid handheld ARPU ex. MRO A$65.35 v A$65.92 in H1; Affirmed expects FY18 EBITDA in bottom end of A$10.1-10.6B range, total dividend of A$0.22/share
  • (AU) Australia PM Turnbull’s lead as preferred PM over opposition leader Bill Shorten also jumped eight points to 46-32% – press
  • Healthscope, HSO.AU Confirms rival A$2.50/share cash takeover offer from Brookfield Asset Management
  • Specialty Fashion, [+48%], SFH.AU Completes strategic review: Confirms to sell some brands to Noni B for A$31M cash; To keep its ASX listing and retain City Chic brand
  • (AU) Australia AOFM launches syndicated tap of June 2039 bond, pricing guidance 35-37bps/10-yr Futures

Other Asia

  • Hon Hai [2317] rises over 3% on capital reduction plan

North America

  • XRX Confirms it has terminated merger agreement Fujifilm; enters into new agreement with shareholders Icahn and Deason; Under the settlement agreement, John Visentin to be named as Vice Chairman and CEO
  • XRX Fujifilm: Dispute’s Xerox’s ‘unilateral’ decision to terminate merger transaction; all options are available including legal action


  • (UK) Apr Visa Consumer Spending 3M/3M: -1.6% v -1.3% prior (largest fall since July 2017)
  • (IT) Italy 5-Star Movement and League Party reached consensus around measures that include a universal basic income, a flat tax and roll back of pension reforms from 2011
  • (UK) According to CIPD, UK employers expect avg 2.1% pay settlement over next 12-months v 1.8% last quarter
  • (IE) Ireland Apr Construction PMI: 60.7 v 57.5 prior
  • (NO) Norway Central Bank (Norges) Gov Olsen: Outlook shows it will soon be right to hike key interest rate – Op-Ed

Levels as of 02:00ET

  • Hang Seng +1.1%; Shanghai Composite +0.5%; Kospi -0.1%
  • Equity Futures: S&P500 +0.4%; Nasdaq100 +0.4%, Dax +0.2%; FTSE100 +0.1%
  • EUR 1.1968-1.1941; JPY 109.45-109.21; AUD 0.7565-0.7541;NZD 0.6974-0.6949
  • Jun Gold -0.1% at $1,319/oz; Jun Crude Oil -0.4% at $70.45/brl; Jul Copper +0.4% at $3.12/lb
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