HKMA & PBOC Sign Landmark Yuan Deal

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

A good day to our viewers all over China.

You're watching “Asia Market Daily”, co-produced by CCTV Business Channel and CNBC, first in business worldwide. I am Saijal Patel.

Here's a market snapshot of how Asia did in trade today.

Stocks clawing back from Monday's losses but staying cautious on fears that the global recovery is losing momentum.

Overnight topline growth results from IBM and Texas Instruments came in shy of expectations, disappointing investors who were hoping for more earnings surprises.

Asian tech plays, though, held their ground with investors foreseeing stronger growth for the region.

Some analysts feel that US stocks have fully priced in expectations and that Asia has little to worry about in terms of a US or Europe slowdown.

(SOT) Garry Evans, Global Head of Equity Strategy, HSBC:

“The challenge over the next few years is going to be can we have domestic demand driven growth in Asia. And that's certainly happened in last year, e.g. Korea exports increasing to China and they're not sold to US or Europe. So the emerging markets are much more than the case 3-4 years ago, where consumer and particularly where capital goods are being consumed. So even if you have soggy growth in US/Europe, as long as it's not outright recession, I think you'd find that economic growth in Asia is fine.”

In Japan, investors are back from their day off and playing catch-up with last week's Wall Street action. The Nikkei closed down just over 1 percent.

Seoul shares up slightly at 0.3 percent investors are expecting strong results from exporters like Hyundai Motor.

Down under, markets traded up 1 percent higher while the central bank left rates unchanged. Policymakers prefer to await a key domestic inflation report and European banks' stress tests outlook.

With 91 balance sheets at stake, some economists say this Friday's results could mean a shakeup for the sector.

(SOT) Graeme Maxton, Chief Economist, The Insight Bureau:

“This opens the debate up, we're going see perhaps 20 banks fail these tests and that's going to make people in Brussels and Europe begin to realize that we have to do something to change the banking system. It's going to undermine confidence a little bit.”

Over in Hong Kong, a landmark deal on Monday opening up access to yuan funding.

CNBC's Emily Chan gives us an update on how markets reacted today.

The relaxing of restrictions on the use of the yuan in HK, gave our banks a nice boost during trade today.

The People's Bank of China and the HK Monetary Authority, the territory's defacto central bank signed a landmark deal that will allow financial institutions to open mainland banking accounts, which means a transferring of yuan to and from.

In particular, shares of Standard Chartered and HSBC. Both banking giants announced yuan investment products within just hours of the signing of the deal.

StanChart will offer retail and wholesale investments that link yuan deposits with interest rates, foreign currencies, commodities and equity indices. With interest to be paid in yuan.

Over at HSBC, products are meant to enhance yield on yuan deposits, with interest rates to be linked to the foreign exchange performance of the yuan.

Mark McCombe, the Hong Kong CEO for HSBC believes this will further HK as an offshore center for the yuan.

(SOT) Mark McCombe, Hong Kong CEO, HSBC:

I think if you have a market which is liberalizing as it is in the international renmibi market, you always going to have sort of the evolution of market players. I think at the end, our view is as long as the range of investment products are there for retail investors, as long as the services are available for the corporates. Then the market will prevail in the end

McCombe says this is also good news for corporates.

(SOT) Mark McCombe, Hong Kong CEO, HSBC:

“I think with that liberalization, I think now corporates are free to open an accounts, with this sort of growth and settlements that can go on directly with China, we see that will be a big area of developments.”

The deal is expected to boost the circulation of yuan outside of China. With the Bank of China (HK) a key beneficiary, as the appointed only Chinese yuan clearing bank in HK.

Saijal, back to you.

China markets getting a lift today on expectations that China will not tighten anytime soon, given comments from the commerce ministry that export growth is slowing.

On the corporate front, China has urged the US not to politicize a steel deal involving state-owned Anshan Iron and Steel and US startup, Steel Development.

This comes after German firms Siemens and BASF met up with Premier Wen over the weekend.

Both firms have sought a revision in Chinese procurement rules, which now sometimes involve foreign players to transfer intellectual property - and for a level playing field with local "indigenous innovation" firms.

Over in the China property space.

More on-site checks on banks expected, as part of regulatory measures to ensure compliance with loan restrictions.

While June's monthly data showed prices falling for the first time since early last year, Macquarie securities says demand remains fairly strong.

(SOT) Eva Lee, Head of China & HK Property Research, Macquarie Securities:

“I’ve been to a number of cities over the last few weeks, and I can quote you some examples. For example like, ten percent of launches in Shanghai they start to cut prices. as what you mentioned earlier, like Renki, green land, they managed to clean up all their launch units within a week. So I think that is a very important message to the markets. if you manage to sell it, at affordable level, affordable price level, say 15% lower than what the expected prices say, in Shanghai, you can sell it out. and that is a very important message for the other developers, because at the end of the day, what they really worry is they cut prices but volumes are not returned.”

Well, that wraps up today's business highlights.

I'm Saijal Patel from CNBC.

Have a good week!

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