Asia Daily Update

North Asia
** China: US Treasury report says China willing to allow yuan appreciation
** China: Sep FDI data due today

CHINA: The US semi-annual treasury report on FX released yesterday said China has indicated some renewed willingness to allow a stronger domestic currency and to reduce intervention. At the same time, it noted that the CNY remains significantly undervalued. It also emphasized the need for China to push forward a market-determined exchange rate.

On the data front, today we get September foreign direct investment (FDI) data at 0200 GMT. The market is looking for another month of 14% y/y decline, unchanged from the month prior. FDI has fallen due to a combination of concerns over the domestic economic outlook and increased regulatory uncertainty as the authorities crack down on competition policy violation, that has impacted some major foreign firms.

September total social financing data may be released this week. The market is looking for a stable increase in TSF by CNY 1.15tn, up from CNY 960bn previously. New yuan loans are expected to remain supportive and increase by CNY 750bn vs CNY 700bn in August.

South/Southeast Asia
** India: Sep exports moderated but still up for the 6th consecutive month
** Singapore: Focus is tomorrow’s NODX; SGD NEER seen stable at +0.5% above mid-point

INDIA: The September trade numbers released late yesterday showed exports up a modest 2.7% y/y from 2.4% previously. Although the 3mma trend has eased back to 4.1% from above 9% in June-July, it has expanded for the past six consecutive months. It could remain under pressure in October owing to the higher base before posting stronger numbers again towards year-end. Imports surged 26% y/y partly on the lower base last September which slumped nearly 19%. The trade deficit subsequently climbed to USD14.2bn from USD10.8bni n August. For the current fiscal year (April to September 2014), exports are up 6.5%, imports up 1.6%, and the trade deficit at USD70.4bn vs USD76.7bn or about 8% narrower than the same period last year. For USD-INR, it rose swiftly yesterday from the opening low of 60.94 to close at 61.42. We should see a supportive tone today despite the USD coming under pressure vs EUR and JPY. We look for it to hold at the upper end of the 60-62 range.

SINGAPORE: August retail sales released yesterday came in firmer than expected at 5.4% y/y (market: 3.9%) from 5.5% previously. Excluding autos, core retail sales was softer at -1.6% (market: 0.5%) from -0.3% previously. The more important release will be tomorrow’s trade numbers where non-oil domestic exports (NODX) are expected to ease to 3% y/y from 6% previously.

- For USD-SGD, it eased back from 1.2790 into the London open yesterday to closed around 1.2720 and is slightly lower this morning. For the SGD NEER, we estimate it at +0.5% above the mid-point for USD-SGD at 1.2710, USD-MYR at 3.2680, and USD-CNY at 6.1260.