Halister News

(Bloomberg) -- Latest PBOC developments could continue to dampen the prospects of achieving the widely-expected growth trajectory for Macau gaming revenue in 2017, which has seen significant upward revisions over the past 2-3 months, Daiwa analyst Jamie Soo writes in note.

• Consensus expectation for high GGR growth in 2017 is "difficult to justify" given the looming incremental policy tightening, including those related to money flows from China
• GGR may remain "buoyant" as a result of the spillover impact of rushed capital outflow over the next few months, prior to the enforcement of this new framework
  • New law, which comes into effect from July 1, means that all “large sum” and “suspicious” transactions are required to be reported to PBOC and its supporting divisions for further supervision and investigation
• Daiwa sees further tightening measures to be progressively introduced over the course of 2017
• BI Macau (China) Gaming Market Index down 1.7%, after earlier falling as much as 3.2%
  • MGM China -5.6% after rallying 8.9% on Friday, SJM -1.6%, Galaxy Entertainment -1.6%, Sands China -0.7%
  • Earlier stories: Macau Casinos Fall After December Data, Analysts Stay Upbeat; New China FX Measures May Hurt Insurers, Macau Gaming: CS
• NOTE: Jan. 2, PBOC’s Ma Says New Cash Transaction Rules Not Capital Controls; Dec. 30, China Tightens Anti-Money Laundering Regulations for Banks

To contact the reporter on this story: Lisa Pham in Hong Kong at lpham14@bloomberg.net

(Bloomberg) -- Bond market now factoring in a 25bps repo rate cut in February, with possibility of more cuts based on inflation trajectory, says Harish Agarwal, Mumbai-based fixed income trader at FirstRand.

• Spread between 6.97% 2026 debt and 7.61% 2030 now at 28bps versus 38bps end-2016
• NOTE: Govt lowers borrowing target for fiscal 2017 by 180b rupees
• NOTE: Banks slashed key lending rates after Prime Minister Modi urged lenders to move beyond traditional priorities, given surge in deposits following high-value currency ban

(Bloomberg) -- Government plans to sell 660b rupees ($9.7b) of debt during rest of this FY, RBI says in statement late Monday; that compares with earlier plan to borrow 840b rupees in the period.

• Amount of 660b rupees to be borrowed via six weekly auctions of 110b rupees each, with last sale for this FY in week of Feb. 6-10: statement; auction size was 140b rupees in previous plan
• Revision comes after “reviewing the cash position” of central government: RBI statement
• “This is clearly a surprise to the market and will support government bonds,” says Nagaraj Kulkarni, senior rates strategist at Standard Chartered in Singapore. “There seems to be a positive surprise on the govt’s revenue side”
• Borrowing in 10-14 year segment cut to 50b-60b rupees per week from 70b-80b rupees; bond sales for 15-19 year bucket cut to 10b-20b rupees versus 20b-30b earlier
• Reduction is larger in the 10-14 year segment as most issuance was in that segment: Kulkarni
• Forecasts 10-year yield at 6.20% by end-March; last 6.41%

(Bloomberg) -- Kumar Palghat, the incoming global head of fixed income at Janus Henderson Global Investors, comments in interview with Bloomberg Television from Sydney.

• Doesn’t think the U.S. is going to go into recession in 2017
• Says stronger dollar to hamper U.S. exports, but they are a small portion of nation’s GDP
• Stronger dollar may present headwind, but U.S. fiscal and tax policy may be more stimulative, meaning the Fed doesn’t have to do as much “heavy lifting” as it has in the past, he says
• Favors floating-rate assets over fixed-rate assets
• Prefers corporate bonds to sovereigns
• “The key for 2017 in fixed income is how do you not lose capital, yet at the same time at the end of the year, how do you get a higher coupon in your portfolio,” he says. “The bull market in bonds is coming to an end, we know that for a fact, the question is how quickly do rates rise and how much pain does it cause. I think it’s going to be slow and steady.”
• Treasury selloff will continue, but the pace of selloff that we’ve seen over past six months won’t be repeated over next six months, according to Palghat
• 10-year Treasuries have to yield at least 3% or 3.5% to warrant locking in money for that period, he says
• NOTE: Link to related story on Janus, Henderson merger