July 14 Asian Macro Initial Thoughts US Futures creeping higher


16 Jul

July 14 Asian Macro Initial Thoughts US Futures creeping higher


Covid-19 Globally over 13m cases, 570k deaths

US Futures opened higher DOW +70pts, S&P +0.25%, NDX +0.34% and have crept slightly higher.

Janus Report estimates covid-19 will mean companies take on an additional US$1tn of debt -VE long term.

Group of Seven finance ministers on Monday called for full implementation of a G20 freeze in debt service payments by all official bilateral creditors, amid growing pressure on China's state-owned banks and enterprises to join the relief effort.



DOW +0.04%, NDX -2.13%, S&P -0.94%, Russel 2K -1.34% US markets opened higher as futures rallied on news of vaccines from BioNTech and Pfizer has received FDA ‘fast track’ designations off-setting the concerns about the rising number of covid-19 cases in the US. Dow was +500pts, S&P was +1% and briefly +VE for the year and the NDX +2% breaking through 11k. Before they all reversed and sold down as California and a number of states rolled back covid easing.

Pepsi +0.3% but off mid morning highs; earnings better than expected kicked off the earnings season.

Corporate Profits are expected to fall 44% in Q2 but the outlook remains clouded. BANKS due to report tomorrow JPM +1.4% CITI +0.8% and WellsFargo +0.2%

TECH stay at home strong Apple -0.5% having tested $400 early in the session. Amazon -3%, Netflix -4.2%, Tesla -3.1%

Analog Devices -5.8% on news if offered to buy Maxim Integrated +8.1% for $21bn all stock deal

Re-Opening plays United Airlines -2.8%, Carnival -5.4% Disney -2.6% (GS & Other brokers Upgrade). All of them had opened positive.

DATA

Consumer Inflation Expectations Jun 2.68% vs +3% May (F/cast was +2.5%)

Monthly Budget Statement Jun $-864b vs -399bb May (F/cast was -975b)

USD was weaker vs Yen & Euro. Bitcoin -0.6% @ 9237.54, VIX +18% @ 32.19, US T10 0.612% it rose slightly on +VE vaccine news

OIL Brent -1%, WTI -1.1% and continued to fall in after hours

Futures Gold +0.4% above 1,800, Silver +3.1%, Copper -1.2%

AHEAD NFIB Business Optimism Index, Inflation Rate, Core inflation Rate, Redbook, API Crude Oil Stocks


DAX +1.32%, CAC +1.73%, FTSE +1.33% Markets open higher following the +VE momentum from Asia and basically traded sideways with all sectors in the green and ticked up into the close. Sentiment helped by news that BioNTech +10.6% and Pfizer +-0.7% said that two of their experimental vaccines for the coronavirus had been granted the US FDA ‘fast track’ designation.

Neles +37.6% on news of a cash bid for the company from Alfa Laval +2.1% for $1.96bn)

G4S +9.3% said 1H earnings will be significantly better than consensus.

DNB +6.8% reported better than expected earnings

Atlantia -15.2% after the Italian PM said its proposals for key motorway projects were ‘unsatisfactory’.

Ubisoft -5% on news its chief creative officers resigned over the weekend in the wake of alleged sexual harassment and bullying .

Nationwide Building Society to re-start 90% First time mortgages +VE Builders

DATA

GERMANY Wholesale Prices Jun +0.6% MoM vs -0.6% May (Jun -3.3% YoY vs -4.3% May)

Decreases in cost of petroleum products (-23.4%), used & residual materials (-13.3%), live animals (-6.9%), grain, raw tobacco, seeds and animal feed (-4%), and data processing equipment, peripheral devices & software (-3.5%). BUT prices tobacco products +4.3%.

AHEAD

EUROZONE ECB Bank Lending, Industrial Production, ZEW Economic Sentiment Index

GERMANY Inflation Rate, ZEW Economic Sentiment Index, Current Conditions

FRANCE No data due

UK Balance of Trade, GDP, GDP 3 month average, Industrial Production, Manufacturing Production, Construction Output, Goods Trade Balance, NIESR monthly GDP Tracker.


JAPAN Expect Nikkei to open lower with concerns over covid cases despite local infections dropping on Monday. Yen currently 103.3
Data due
@ 11:30am Industrial Production & Capacity Utilisation

Tokyo reported 119 new covid cases on Monday -VE

Japan to spend more than 400 billion yen ($3.7 billion) to support the rain-hit Kyushu region where dozens have been killed, PM Abe told reporters on Monday.

Hospitals -VE About a third of Japanese medical institutions are cutting summer bonuses to staff, a trade union said on Monday, as many hospitals and clinics face a cash crunch, having had to delay routine treatments to make room for coronavirus patients. -VE for the sentiment and the economy.

Mitsubishi UFJ Financial Group will start lending to Grab users and drivers in Thailand to monetise its $706 mn investment in the ride-hailing firm as growth in its home market slumps, its chief executive said. +VE

SoftBank Group Corp is exploring options including a full or partial sale or public offering of British chip designer Arm Holdings, the Wall Street Journal reported on Monday. The review, on which Goldman Sachs Group is advising, is at an early stage, the report said. Arm currently has management issues/problems with its Chinese operations

Nissen plans to change its emblem for the first time in about 20 years. The new emblem design will be simpler, with its three-dimensional effect restrained.

PROPERTY FT Lex -VE article on Developers as Japanese companies adopt plans for remitting working for staff -VE Mitsu Fudosan, Sumitomo Realty, Tokyu Fudosan and Ichigo whose share prices have already dropped significantly. Personally I think its too early to write off ‘offices’ as most I believe prefer working in offices rather than at home; especially with the Japanese tradition of 'physical office presenteeism’.

Insurers are creating products for a world where virus outbreaks could become the new normal after many businesses were left out in the cold during the COVID-19 crisis. While new pandemic-proof policies might not be cheap, they offer businesses from restaurants to film production companies to e-commerce retailers ways of protecting income.


SOUTH KOREA Expect markets to open flat with concerns over global covid cases but key will be the expected additional stimulus packaged due to be announced with support from Tech. Focus on large cap names again.
No data due
K bank said Monday it has resumed its consumer loan business 
through its mobile apps. The new loan products will be offered either in the form of personal loans for consumers with mid- to high-credit scores or overdrafts. +VE

Nongshim said Monday its US sales totaled about $164 million in the first half of this year, the firm’s highest-ever figure in the country, led by sales of Shin Ramyun.

A new law to fast-track the market entries of regenerative medicines and biologics drugs is to go into effect from next month. Relevant players in South Korea have been hoping the new rules will accelerate their development. Effective starting Aug. 28, the new bio law, nicknamed the “Cheomsaeng” law, seeks to ensure the safety of and support for cutting-edge regenerative medicine and biologics drugs. “Cheom” is short for “cheomdan,” which means “cutting-edge,” and “saeng” is short for “jaesaeng,” meaning “regenerative.” +VE

More companies encourage workers to use paid leave The average number of days South Korean workrs will spend their summer vacation is slightly up from last year to reach 3.8 days, according to a survey of the Korea Enterprises Federation. Slight -VE for sentiment and available cash to support the recovery.

KakaoTalk is testing a new solution specifying intra-office communication, according to sources Monday. Kakao has been developing the platform since May and it is likely to be launched in September. +VE

Amorepacific launched its Premium cosmetic brand Sulwhasoo products in India through local retailer Nykaa’s online e-commerce channel +VE


TAIWAN Expect market to open flat/slightly higher with focus on Tech
No data due.
The National Development Council (NDC) yesterday unveiled a four-year economic development plan
with an aim to pursue GDP growth of 2.6% to 3.4% backed by 5G wireless communication, artificial intelligence and technology supply chain realignment. The council mapped out economic goals that also seek to bring the jobless rate down to 3.5% to 3.8% with increases of 1% to 1.5% in consumer prices.

As of Sunday, about 10.35 million people had applied for government’s Triple Stimulus Vouchers in paper form since orders began on July 1, data compiled by the Ministry of Economic Affairs showed. The government has commissioned the Central Engraving and Printing Plant to print the vouchers, and the number of paper vouchers is expected to reach 17 million on Monday next week. The government is prepared for the high demand, +VE

Taiwan Mobile yesterday said it is working with its e-commerce subsidiary Momo.com Ltd to offer 24-hour delivery and pickup services. The telecom said its pickup services would be available at its 760 brick-and-mortar stores nationwide, and the company aims to cut its normally two-day pickup time to 24 hours after consumers order on Momo.com. +VE

PChome Online and Momo.com announced record-high revenue for last month. The two e-commerce companies are rolling out summer promotions such as flash sales, discounts and cash-back programs. +VE

Publicly listed companies reported combined revenue of NT$2.72 trillion for last month, up 6.05% YoY, the Taiwan Stock Exchange said yesterday. A total of 425 companies experienced revenue growth, while 519 firms experienced declines in revenue, the stock exchange said. The main sectors reporting revenue growth last month were the building materials and construction, finance and insurance, and semiconductor sectors, while the tourism, oil, gas and electricity, and shipping and transportation sectors reported declines in revenue, the exchange said. In the first half of the year, all listed companies reported combined revenue of NT$14.68 tn, down 3.3% YoY

TSMC’s proposal to clear 230 hectares of reforested land for what would become Taiwan’s largest photovoltaic solar farm has generated concerns. New rules curbing solar farms built on agricultural land sparked fierce debate at a packed public hearing at the Legislative Yuan yesterday, with industry representatives saying that the new restrictions would endanger President Tsai Ing-wen’s green energy goals, while agricultural officials emphasized the importance of protecting farmers and the environment.

Hotels and travel agencies last month saw their revenue pick up significantly from a month earlier, signaling that the negative effects of the COVID-19 pandemic are tapering off. However, on an annual basis, sales still left much to be desired, as lingering border controls continue to curtail inbound and outbound travel. +VE Formosa International Hotels, FDC International Hotels,Farglory Hotel and affiliate Farglory Ocean Park, Lion Travel Service, Richmond International Travel and Tours

The BIO Asia-Taiwan International Conference and Exhibition is to combine on-site and virtual presentations when it opens on Wednesday next week, the organizers said yesterday. The pharmaceutical and biotechnology trade fair is expected to bring together industry executives and investors from Taiwan and abroad, with about 500 exhibitors at 1,100 booths, said the Taiwan Bio Industry Organization, one of the organizers.


CHINA Expect market to open flat with Team China looking to support the market key should be this mornings trade data. Yesterday saw concerns over Covid-19 and US trade relations largely ignored but they could prompt more caution today.
Data due 
@ 10am Balance of Trade Jun (May was $62.93b F/cast is 60B) Exports Jun (May was -3.3% F/cast is -1.4%),

Imports Jun (May was -16.7%, F/cast is -12%)

China announced “corresponding sanctions” against the United States on Monday after Washington penalised senior Chinese officials over the treatment of minority Uighur Muslims. Targeting Senators Ted Cruz and Marco Rubio, US. Representative Chris Smith, Ambassador at Large for International Religious Freedom Sam Brownback and the US Congressional-Executive Commission on China. -VE

The United States on Monday rejected China’s disputed claims to offshore resources in most of the South China Sea, a move that is likely to further sour relations. China has offered no coherent legal basis for its ambitions in the South China Sea and for years has been using intimidation against other South Asian coastal states, U.S. Secretary of State Mike Pompeo said in a statement. “We are making clear: Beijing’s claims to offshore resources across most of the South China Sea are completely unlawful, as is its campaign of bullying to control them,” said Pompeo, He said the US was aligning itself with a landmark 2016 tribunal ruling which rebuked China over its claims to waters inside the so-called “nine-dash line” that encompasses roughly 85% of the South China Sea. -VE for sentiment

Sweden said on Monday it supported Franco-German efforts for a robust response to China's new security law on Hong Kong, joining Denmark and the Netherlands in pushing the European Union to consider countermeasures on Beijing. -VE

The European Union (EU) is preparing counter-measures on China in response to Beijing’s new security law on Hong Kong, the bloc’s top diplomat said on Monday, but envoys stressed the likely steps will not amount to economic sanctions.

SCMP reports Britain toughens stance on China as it eyes US. Concerns about alleged espionage by Chinese firms and human rights abuses have given rise to demands for complete rethink of UK’s position. Beijing might put London in ‘diplomatic doghouse’ after expected 5G ban on telecoms giant Huawei.  It also says Top advisers to US President Donald Trump have ruled out undermining the Hong Kong dollar’s peg to the US currency as they seek to punish China for infringing on the city’s political freedoms, according to people familiar with the matter. A slight +VE but I think that until we see Trumps formal response sentiment in HK will remain weak.

HUAWEI Mobile phone and consumer division strong off-setting weakness in telecoms equipment. It increase sales to Rmb454bn ($64.9bn). Sales growth slowed to just over 13% vs 23% 1H 2019, but the privately owned Huawei said its profit margin had improved from 8.7% to 9.2% and that all three of its main divisions had shown growth. Slight -VE for sentiment

Vietnam has agreed to resume commercial flights to and from China after months of closure due to the coronavirus pandemic, the country’s ministry of transport said on Monday, noting the frequency and timing of flights was still being discussed.

Lonza Group said on Monday that China’s Junshi Biosciences has licensed the Swiss contract drug manufacturer’s technology to help produce a neutralizing antibody against COVID-19. Lonza said Junshi’s first neutralizing antibody against the new coronavirus was created using the Swiss company’s gene expression system, called GS Xceed. The antibody, JS016, has entered clinical trials in China.

China's pork price started to rally in June, reaching RMB53.15/kg on average for the week ended 12 July, according to Ministry of Agriculture and Rural Affairs.  The price advanced 15.6% for the sixth straight week, yet still being RMB6.49/kg below the mid-February peak.

Guangdong's Animal Epidemic Disease Prevention and Control Center confirmed the outbreak of foot-and-mouth disease among pigs in the city of Leizhou on 11 July, announced by Ministry of Agriculture and Rural Affairs. The disease has infected 39 of the 131 pigs, killing one of them. -VE


HONG KONG ADR’s -191pts to open at 25,581 but expect more downside as the HK administration introduces new lock down measures to combat the rise in local cases.
No data due
Short Selling HSI Monday 17.9% vs 20.4% Friday
 

Top Shorts Hang Seng Bank (11) 42%, Wharf REIC (1997) 40%, NWD-New(17) 37%, MTRC (66) 36%, China Shenhua (1088) 31%, Ping An (2318) 31%, HK & China Gas (3) 30%, CCB (939) 30%, China Overseas (688) 29%, CNOOC (883) 28%, China Res Land (1109) 28%, Want Want (151) 25%, Sunny Optical (2382) 25%.


NEW LOCK DOWN MEASURES -VE because the administration is introducing these strict measures because they don’t know why the recent spike in cases has arisen.


WATCH
HISENSE HA (921.HK)  announced that, on 13 July, it subscribed for the 2020 Hua Xia Bank Eighth Wealth Management Product 
in the subscription amount of RMB300 million (equivalent to approx HK$332 million) through Refrigerator Marketing Company, the non-wholly owned subsidiary of the Company. -VE

The SFC has completed an enquiry re shareholding of RITAMIX (1936.HK) The findings suggested that, as at 3 July 2020, a group of 15 shareholders held an aggregate of 91.092 million shares, representing 18.22% of the issued Shares. Such shareholding, together with an aggregate of 375 million shares (representing 75.00% of the issued Shares) held by 2 substantial shareholders of the Company, represented 93.22% of the issued Shares as at 3 July 2020.  Therefore, only 33.908 million shares (representing 6.78% of the issued Shares) were held by other shareholders

ESPRIT (330 HK) Board battle as Karen Lo increases her stake to 18.18%.  The stock was -17% yesterday to HK$1.22  at the lower end of its 5 year range.  5 year low was HK$0.54 back in April.  Stock rallied last week to HK$1.47 difficult to see what the objective is. CEO and CFO are likely to be pushed out.

CATHAY PAC AIR (293.HK) held an Extraordinary General Meeting Monday concerning the Rights Issue and the Preference Share Subscription Agreement. Both of the resolutions were passed with more than 99.9% of votes. The carrier proposed a capital restructuring plan worth about $39 billion in early June.

GREATWALL MOTOR (02333.HK) announced that, during 16 November 2019 and 30 June 2020, the Group received RMB496 million of revenue-related government subsidies.

Macau Statistics and Census Service (DSEC) indicated that the Tourist Price Index (TPI) for the second quarter of 2020 dropped by 4.97% year-on-year to 121.70.  The decrease was mainly attributable to lower hotel room rates and falling prices of clothing; yet, dearer prices of jewellery and higher airfares offset part of the decrease.

Macau's health authorities have allowed all Hubei residents to visit the city's casinos, in accordance with evaluation results for the epidemic situation in the province, reported Macao Daily News.  The restrictions were lifted as the Hubei province has reported zero COVID-19 cases for a fairly long period of time. -VE

VINCENT MED (1612.HK) +VE PROFIT WARNING expected to record profit for the six months ended 30 June 2020 of not less than HK$80.0 million, as compared to that of HK$13.7 million for the six months ended 30 June 2019. The surge in profit was mainly attributable to a 105.8% jump in the Group’s total revenue.
SA SA INT'L (178.HK) sales update for the first quarter from April to June, where the Group's retail and wholesale turnover -67.9% YoY to HK$590 mn. In Hong Kong and Macau, the Group's turnover -74.3% YoY to HK$406 mn, while same store sales -71.9% annually.
NCI (1336.HK) accumulated gross premium income for the period between 1 January 2020 and 30 June 2020 was RMB96.879 billion, +30.9% yearly.

PICC P&C (2328.HK) original insurance premium income for the period from 1 January 2020 to 30 June 2020 totalled RMB245.639 billion, +4.4% YoY

PICC GROUP (1339.HK) aggregate premiums income as derived from its operating subsidiaries for the period from 1 January 2020 to 30 June 2020

PICC P&C RMB245.639 billion +4.4% YoY

PICC Health RMB22.173 billion +45.7% YoY

PICC Life RMB67.233 billion -5.1% yearly.

Q TECH (01478.HK) June total sales volume of camera modules 31.863 mn units -1% YoY



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