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Late Session Selling

HONG KONG
HONG KONG: Despite ongoing images and videos of unrest in Hong Kong, the HKD
remains stable, with markets showing little signs of stress via both spot and
NDF outrights.
- The HKMA CEO spoke at the beginning of the week, warning that protests have
impacted business activities, but reiterated that the Hong Kong monetary system
has remained stable and is continuing to run smoothly.
- Echoing the move in spot, the implied vol curve has eased in recent sessions,
pressing the 1m vol contract to the lowest levels since late August. Near-term
vols, however, remain pinched by the absence of Chinese and Hong Kong equity
markets this week, which are suspended for National Day holidays up until
Friday.
- Options markets have been equally becalmed, but a few larger call options
crossed in Asia-Pac hours, the most notable being trades consistent with a large
7.83/7.85 calendar call spread (near leg expiring Jan'20, far leg Jun'20).
- Retail sales due tomorrow are expected to show further downside for HK
economy, with sales volumes seen falling 17.8% and values falling 14.0%.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com