Japan Stocks Outperform Again, China Markets Down Despite LGFV Debt Relief

Regional equity indices are mixed as we approach the end of the week. Outside of Japan, most regional markets are again weaker. The early positive impetus to US equity futures also wasn't sustained. Eminis last track at 4484, down slightly for the session. Earlier highs were just above 4496.25. Nasdaq futures are still slightly higher, but well off intra-day highs.

• The focus for China and Hong Kong markets remains property market sentiment and local government debt. The HSI is down 0.62% at the break, which is up from lows, but only marginally. The HSTECH index is down by close to 1.90%.
• Not long before the break we had Bloomberg headlines cross that China's Ministry of Finance will help shift $139bn of debt (or around 1 trillion yuan) from LGFV to provinces. Provincial level governments will raise these funds through debt sales to repay debt of LGFVs. The initial market reaction was positive, but not large. Bloomberg notes this is a smaller than a similar scheme, which was launched in 2015, while it is also well below total LGFV debt estimates compiled by the IMF.
• On the mainland, the CSI 300 sits -1.38% lower at the break, with real estate sub-index at -0.43%, which is up from session lows, but still down for the week.
• Japan stocks are outperforming, the Topix and Nikkei 225 both up by 0.80-0.90%. Weaker yen levels and carry over from China recommencing tours to the country remain positives.
• The Kospi and Taiex are close to flat. In SEA Singapore shares are down over 1%. Weaker than expected Q2 GDP revisions have not helping sentiment.