Asia equities rebound amid chip-relateds, CN support and JP cabinet’s “big-boned” spending plan

Asia market update: Asia equities rebound amid chip-relateds, CN support and JP cabinet’s “big-boned” spending plan; US follows through on CA tariffs; Oracle’s faces extra $7B for Wisconsin data center; US-IR strikes continue for 10th night. General trend and developments - Nikkei up +2.6 on return from holiday and the yo-yo Kospi led Asia +4.0% as chip-relateds saw strong gains (Advantest +6%, Hynix +5% and Samsung +6.5% as the chip and memory maker followed through on plans to develop its robotics division to report directly to the CEO and with R&D bases in the US, China and Japan. - The cheer rubbed off on US Nasdaq FUTs, +1% off US session lows and nearly back to the highs. - Japan’s cabinet approved as expected its ("big-boned") 'Honebuto' economic framework policy document. BOJ autonomy on Monetary Policy confirmed but deferred a decision on the sales tax. Japan yield curve belly and long-end steepened somewhat. - Following on from yesterday’s headlines and ahead of the China memory-maker CXMT blockbuster IPO on July 27th (likely to be the largest CN IPO since 2010) as well as Zhipu / Z.AI losing -50% over the last 5 trading days, bounced back +25% today as it plans to build a 1GW data center made from ONLY Chinese chips and as Chinese authorities pull out all the stops to keep its technology market bouyant amid significant recent volatility. - China’s CSRC last night discussed boosting listed firms’ dividend payouts while the China State Planner N DRC called on increasing development of the private economy and the service sector . Alongside the verbal commitments, concrete, state-backed capital injections and specific company actions were rolled out to defend the market. State-backed investors injected approx CNY60B (~$9B) yesterday (Monday) to aggressively buy equities and shore up market liquidity . Meanwhile many companies as well as prominent state-owned enterprises (SOEs), including CRRC and SDIC Power , explicitly announced proposals for shareholder stake increases, share buybacks, and investor dividends. Major domestic fund managers, such as Bosera , announced they would directly invest their own capital into their equity funds . The CSRC signaled a stern stance against firms using AI for market manipulation and warned companies against capitalizing on "tech hype" in stock-picking. The CSRC also detailed draft revisions to refinancing guidelines for listed companies, allowing multiple private placements with a single registration to help firms raise capital quicker and with less market shock. - In USMCA trade, the White House followed through on recent Trump threats over the Canada wildfires to impose additional 50% tariffs on certain Canadian goods within 30 days over alleged trade discrimination. - A light touch from the White House on AI as an exec order from Pres Trump said US companies could host Chinese models if they can guarantee security and take liability if it were breached. [This is inline with recent comments by top leadership at OpenAI, Anthropic and SpaceXAI that the AI industry should do a better job self-regulating AI to avoid the alternative of heavy-handed and slow-moving government rules]. - Oracle, already under the strain of BBB- ratings from S&P, may face $7B in collateral costs on its Wisconsin data center to the State of Wisconsin’s Public Service Commission as the commission attempts to protect households from rising electricity costs. Could cost Oracle >$100M per year. This may be a pattern repeated in other states increasingly unfriendly to data centers in what has become a politically charged issue. -10th consecutive night of heavy US attacks on Iran’s military assets continued overnight, however crude oil is slightly lower than yesterday’s gap up at the Monday open as reportedly a 10-day cessation has been proposed between the two sides amid trying to find ways to revive the Iran-US interim deal. - Came as Yemeni-based Houthis announced a “sea-navigation ban” on Saudi Arabia in the Red Sea. However, the Saudi-led coalition in Yemen said it will respond to the threats to ships in the Bab El-Mandeb Strait with 'force'. - South Korea exports for first 20 days of July again showed chips supporting exports, +181% y/y. - New Zealand Q2 CPI slightly higher than expected, but the non-tradeable was inline (i.e. ex-oil and supply shock-induced price increases). RBNZ sectoral factor inflation figure for Q2 also was flat vs Q1, with analysts noting the RBNZ still has some room to breathe after its first hike in more than three years earlier this month. - Amid heightened China-Philippine tensions there has been another damaged vessel and an injury to a Philippine sailor from a further altercation over the Second Thomas Shoal in Philippine waters. US Sec of State Marco Rubio now traveling to Manila to attend the ASEAN Post-Ministerial Conference, the East Asia Summit Foreign Ministers' meeting, and the ASEAN Regional Forum Foreign Ministers' meeting, - Recently resigned UK Defense Minister John Healey's surprise appointment as UK Chancellor was a major surprise to financial markets, which had heavily anticipated Shabana Mahmood for the role (prediction markets also had Mahmood at 92% ), causing government borrowing costs to hit a two-month high and weakening the Pound. While viewed as a safe pair of hands, Healey represents an unknown quantity regarding broad economic strategy compared to the fiscally conservative approach expected from Mahmood. Both the incoming Prime Minister Andy Burnham and Healey moved quickly to reassure investors that the government would stick to its fiscal rules , though markets remain on edge ahead of his upcoming autumn budget. [PM Burnham to set out cost of living measures later today]. - US equity FUTs +0.4% to +0.9% during Asia trading. Looking ahead (Asian-weighted focus, using Asian time zone) - Wed July 22nd: KR Jun PPI, JP Jun Trade Balance, UK Jun CPI & PPI, ID Rate Decision. - Thu July 23rd: KR Prelim Q2 GDP , AU Jun Jobs, SG Jun CPI, TW Jun Industrial Production, (Thu night, EU Rate Decision , EU Prelim July Consumer Confidence). - Fri July 24th: Global Prelim July PMI’s , JP Jun CPI , UK Jun Retail Sales, (Fri night US Prelim July S&P PMIs , US Jun New Home Sales). Holidays in Asia this week - Mon July 20th: Japan. Headlines/economic data Australia/New Zealand -(AU) ASX 200 opens -0.5% at 8,752. -(NZ) New Zeland Q2 CPI Q/Q: 1.5% V 1.4%E; Y/Y: 4.1% V 4.0%E; CPI Tradeable Q/Q: 2.7% v 2.5%e; CPI Non-Tradeable Q/Q: 0.6% v 0.6%e; Higher petrol prices accounted for almost a quarter of the 4.1% annual increase; Together, petrol and diesel accounted for almost two-thirds of the 1.5% quarterly increase. -(NZ) Reserve Bank of New Zealand (RBNZ) Q2 Sectoral Factor Model Inflation Index Y/Y: 2.7% v 2.7% prior. -(AU) Australia Foreign Min Wong: Principal strategic relationship is with US, but not only one; Australia must (also) engage with China, too important not to. -(AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 75.6 v 75.3 prior. -(NZ) New Zealand Fin Min Willis: It is 'unwelcome' to see global oil prices rising and expects that will impact pump prices domestically - to reporters in Wellington. -(NZ) New Zealand Foreign Min Winston Peters: New Zealand and Philippines form comprehensive partnership. China/Hong Kong -(CN) Shanghai Composite opens +0.4% at 3,812; (HK) Hang Seng opens 'little changed' at 25,151. -(CN) Support for the equity market in China is gathering pace [follows Monday’s announcement from the CSRC] – Shanghai Securities News . -(CN) Follow up: China said to consider tighter export controls on AI models and chips - FT. -(CN) China State Planner NDRC said to call on increasing development of private economy; look to unleash the potential of the service sector [EU market close]. -(CN) China Coast Guard: Permitted the Philippine side to transfer the injured personnel from grounded warship in South China Sea on Tuesday. -(CN) China said to have room to cut rates , including RRR in Q3 - Shanghai Securities News. -(CN) Defaulted China company’s [Wuhan Dangdai Science & Technology Industries] creditors win chance to case more assets – US financial press. -(HK) 2513.HK Zhipu shares rise as much as 19% in Hong Kong after the AI model maker completed construction of a data center using only Chinese-made chips; Zhipu, creators of GLM, just brought a massive data center online They officially started operating a 1GW data center containing ONLY Chinese-made chips to train next-gen GLM models without the need for Nvidia chips. -(CN) China PBOC sets the yuan mid-point at 6.7917 v 6.7948 prior. -(CN) China PBOC Open Market Operation (OMO): Sells CNY253B in 7-day Reverse Repos; Net injects CNY17B v injects CNY175B prior. Japan -(JP) Nikkei 225 reopens +0.4% at 64,359. -(JP) Japan cabinet approves its ("big-boned") 'Honebuto' economic framework policy document, citing BoJ autonomy, however, lacking sales tax decision. -(JP) Japan Defense Min Koizumi: China and Russia navies are conducting exercises inside of Japan's Exclusive Economic Zone (EEZ) - press [EU market close]. -(JP) Japan PM Takaichi: Will guide economic, fiscal policy with due heed to fiscal sustainability, need to maintain market trust. -(JP) Japan GPIF to make first in-house ¥20B investment in Japan-focused PE fund - statement. -(JP) Japan Chief Cabinet Sec Kihara: Japan will strengthen UK relations under new government. -(JP) Japan Econ Min Kiuchi: Decline comment on daily moves, outlook for FX yields. -(JP) Japan Jun Tokyo Condominiums for Sale Y/Y: -4.7% v +12.3% prior. -(JP) Japan FTC considers more SME protection against IT giants - Yomiuri. -(JP) Japan Health Min Ueno: We're mindful of GPIF's (pension fund) long-term impact on market. -(JP) Japan Trade Min Akazawa: Many unknowns around Saudi naval blockade; Deterioration in Mideast situation is concerning. Korea -(KR) Kospi opens +0.6% at 6,554. -(KR) South Korea Dep Fin Min Moon Ji-sung (FX chief): Won likely to rise further; BOK rate hike to stabilize FX; Won remains weaker than fundamentals. -(KR) South Korea July Exports 1-20 Days Y/Y: 52.3% v 60.4% prior; Imports Y/Y: 20.0% v 23.2% prior; Chip exports +180.6% y/y. -(KR) South Korea's President Lee: Reiterates strange to see the Dollar-Won rate hovering KRW1,500-1,600/USD - Cabinet Meeting. -(KR) Korea Exchange activates sidecar following Kospi FUTs rising by 'more than' +5%, programme trading halted for five-minutes. -(KR) South Korea Court revokes decision to terminate Homeplus rehabilitation proceedings - Media. Other Asia -(PH) US State Department issues statement on China, Philippines Navy. -(PH) Philippine Foreign Minister: There is grave concern on developments in the Middle East. -(TW) Taiwan Econ Min Kung Ming-Hsin: Taiwan's 2026 GDP growth may exceed 10% - speaks in an event. -(ID) House Speaker: Indonesia Parliament passes International Financial Centre (IFC) bill into law. -(IN) India CDSCO: Approve's India's first Dengue vaccine. North America -(US) US Pres Trump signs EO on aluminum imports; Will take further action to adjust the imports of aluminum into the US [US market close]. -(US) White House considered implementing an executive order saying U.S. companies could only host Chinese models if they could guarantee security and take liability if it were breached; The source described leading AI labs or their allies approaching the administration every 3-5 months with an idea to ban open-source models - Axios [US market close]. -(CA) US White House: Will be imposing additional 50% tariffs on certain Canadian goods over alleged trade discrimination, beginning in 30 days. -(CA) Canada PM Carney issues statement on US intention to impose tariffs; Canada ready to engage intensively to address issues with US. -(US) US Pres Trump signs EO on securing critical mineral defense supply chain; Threatens defense companies with loss of contracts if they fail to replace foreign risky supplies [US market close]. -(US) Pres. Trump: I had a very good conversation with the new Prime Minister of the United Kingdom, Andy Burnham. We discussed many subjects, including the outstanding relationship we have had with the UK. - post on Truth Social. -(US) ORCL Said to face $7B collateral bill for its Wisconsin data center from the state's Public Service Commission - FT (update). -(US) White House Press Sec Leavitt: The dignified transfer is no longer taking place tomorrow. The exact day and time are still being finalized. - post on X. -(US) Jun leading index: -0.2% V -0.1%E [US market close]. -(CA) Canada Jun CPI M/M: -0.4% V -0.2%E; Y/Y: 2.8% V 2.9%E [US market close]. -(CA) Canadian Ontario Premier: Canada should impose retaliatory tariffs against the US. -(DRC) Democratic Republic of Congo: Number of confirmed Ebola cases rises to 2,423 (v 1,406 prior), including 967 (v 438 prior) deaths - (update). Europe -(UK) PM Andy Burnham: Will set out cost of living measure from tomorrow; Measure will be costed; We will introduce a new political model and a new economic model - first speech as PM [EU market close]. -(UK) John Healy appointed as UK Chancellor of the Exchequer [US market close]. -(UK) Announces additional ministerial appointments: -(PT) Portugal Jun PPI M/M: 0.8% v 1.0% prior; Y/Y: 5.0% v 5.1% prior [EU market close]. -(CZ) Czech Central Bank Chief Aleš Michl warns against joining Eurozone too early - FT. Middle East -(IR) US State Dept issues "worldwide caution" for Americans due to "heightened tensions" in the Middle East - statement. -(IR) Reportedly mediators have proposed a 10-day cessation of strikes to find ways to revive the Iran-US interim deal - press [US market close]. -(IR) Pentagon has asked for $80B to help cover war cost's - US financial press. -(SA) Houthis announces 'sea navigation ban' (maritime embargo) on Saudi Arabia from today, July 20th - press [EU market close]. -(IR) Axios' Ravid: Trump is focused on making Iran pay for their violations of the MOU and their continued acts of terrorism in the Strait of Hormuz; Talks continue - X [US market close]. -(IR) Iranian press reports that an Industrial city in Central Iran's Khomein City was attacked by the US - press [EU market close]. -(IR) US State Dept issues "worldwide caution" for Americans due to "heightened tensions" in the Middle East - statement. -(IR) CENTCOM: US finishes latest strikes against Iran - post on X. -(IR) Interior Sec Burgum: Spoke to Saudi Arabia, UAE about pipelines recently - interview on Fox Business. -(IR) Iran Army launched missiles at Camp Arifjan in Kuwait; More blasts heard in [Southern] Iran's Chabahar and Konarak - IRIB. -(IR) UKMTO receives report of incident 8NM Northeast of Limah, Oman. -(IL) Israel Jun Unemployment Rate: 2.9% v 2.8% prior [EU market close]. -(IL) Israel July 12-month CPI Forecast: 1.9% v 1.8% prior [EU market close]. Levels as of 01:20 ET Nikkei 225 +2.7% ; ASX 200 -0.2%; Hang Seng -0.1%; Shanghai Composite +0.9%; Kospi +3.4%. Equity S&P500 Futures +0.4%; Nasdaq100 +0.9% ; DAX -0.2%; FTSE100 -0.7%. EUR 1.1420-1.1409; JPY 162.54-162.43; AUD 0.7010-0.6993; NZD 0.5873-0.5832. Gold +1.1% at $4,051/oz; BTC +2.3% at $65,601; WTI Crude Oil -0.2% at $82.32/bbl ; Copper +1.2% at $6.4190/lbs.