MNI China Daily Summary: Tuesday, October 8

MNI BRIEF: Japan's Sept Sentiment, Outlook Indexes Fall

MNI BRIEF: China Local Govs To Speed Up Fiscal Spending

MNI BRIEF: Brazil Requires Prudent Monetary Policy - Galipolo

MNI: PBOC Net Drains CNY886.9 Bln via OMO Tuesday

MNI: PBOC Sets Yuan Parity Higher At 7.0709 Tues; +4.18% Y/Y

EZ/UK Bond Supply Calendar: UK, DE Auction on Wednesday

MNI: US REDBOOK: OCT STORE SALES +5.3% V YR AGO MO

MNI: US AUG TRADE GAP -$70.4B VS JUL -$78.9B

CANADA: Politics Week: Parliament Opens With Early Election Threats

AUSTRALIA: Albanese Lines Up Budget for May Election

AUSTRALIA: Albanese Lines Up Budget for May Election

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HONG KONG: HKD Fwd Points Could Stay Sticky If IPO Pipeline Firms

HONG KONG
EM BulletAPACHong KongBulletGlobalEmerging Market NewsForeign Exchange BulletsRegionMarkets

We flagged yesterday the potential importance of a Chery Automotive IPO in Hong Kong for the HIBOR curve and the implications for HKD forward points - strong demand and a sizeable sale here could further narrow the HKD forward discount, which has already proved sensitive to a pick-up in capital markets activity in Hong Kong, and China stimulus headlines.

  • Overnight HIBOR generally responds to IPOs closing, rather than opening - leaving longer maturities to provide a better gauge for cash demands into a building IPO pipeline. 3m HIBOR has been marked higher into the Golden Week holiday period (up to 4.15% from mid-September's 3.87%) and this pressure could build further should the Chery plans progress, or if other companies look to an HK listing.
  • Chery's automotive unit is tentatively valued at $7bln - and an IPO would likely be the second largest of the year after Midea Group's $4bln debut last month, a deal that was received very positively and helped trigger firm cash demand into, and out of the deal closing.
  • The HKD 12m forward discount narrowed to 300 points this month for the first time this year - and this narrowing could prove stickier should further fundraising headlines cross, and more material headlines on the Chery deal pick-up.
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We flagged yesterday the potential importance of a Chery Automotive IPO in Hong Kong for the HIBOR curve and the implications for HKD forward points - strong demand and a sizeable sale here could further narrow the HKD forward discount, which has already proved sensitive to a pick-up in capital markets activity in Hong Kong, and China stimulus headlines.

  • Overnight HIBOR generally responds to IPOs closing, rather than opening - leaving longer maturities to provide a better gauge for cash demands into a building IPO pipeline. 3m HIBOR has been marked higher into the Golden Week holiday period (up to 4.15% from mid-September's 3.87%) and this pressure could build further should the Chery plans progress, or if other companies look to an HK listing.
  • Chery's automotive unit is tentatively valued at $7bln - and an IPO would likely be the second largest of the year after Midea Group's $4bln debut last month, a deal that was received very positively and helped trigger firm cash demand into, and out of the deal closing.
  • The HKD 12m forward discount narrowed to 300 points this month for the first time this year - and this narrowing could prove stickier should further fundraising headlines cross, and more material headlines on the Chery deal pick-up.