July 16 ASIAN MACRO INITIAL THOUGHTS. China data in focus
Covid-19 Globally over 13.4m cases, 580k deaths
Dow Futures Opened +82pts S&P and NDX slightly +VE.
DOW +0.85%, NDX +0.6%, S&P +0.91%, Russel 2K +3.5% Markets opened higher on the encouraging Moderna +6.9% vaccine results and very good results from Goldman’s +1.4% (off initial high) where trading revenue was +93% QoQ, which off-set concerns about the rising number of covid cases and the potential roll back of ‘re-opening’ plans. Markets saw selling late morning down to flat but then worked higher in the afternoon but closed off the initial highs.
Apple +0.7% but off initial highs after a European Union court annulled a 2016 European Commission order for the tech giant to pay $15 billion in taxes.
Re-opening names United Airlines +14.6%, Delta +9.5%, American +16.2%, Carnival +16.2%, Royal Caribbean +21.2%, Disney +1.9%, GAP +12.6%, Kohls +9.4%, Simon’s Property +7.5%
Stay at home names Facebook +0.2%, Amazon -2.4%, Alphabet -0.3%, Microsoft -0.2%
MBA Mortgage Applications +5.1% vs -0.38% prior
30 yer Mortgage Rate 3.19% vs 3.26% prior
Import Prices Jun +1.4% MoM vs +0.8% May (revised) (F/cast was +0.8%) [Jun -3.8% YoY vs -6.2% May (revised) (F/cast was -4.3%)]
Export Prices Jun +1.4% MoM vs +0.4% May (revised) (F/cast was +0.7%) [Jun -4.4% YoY vs -6.2% May (revised) (F/cast was -5%)]
NY Empire State Manufacturing Jul 17.2 vs -0.2 Jun (F/cast was +6.5)
Industrial Production Jun +5.4% MoM vs +1.4% May (F/cast was +4%) [Jun -10.8% YoY vs -15.4% May (revised) (F/cast was -6.2%)]
Manufacturing Production Jun +7.2% MoMvs +3.8% May (F/cast was +5.4%) [Jun -11.2% YoY vs -16.7% May (revised) (F/cast was -7.6%)]
Capacity Utilisation Jun 68.6% vs 65.1% May (revised) 9F/cast was 67.5%)
EIA Crude Oil Stocks Change -7.493m vs +5.654m prior (Consensus was -2.098m)
EIA Gasoline Stocks Change -3.147m vs -4.839m prior (Consensus was -0.643m)
USD weaker vs Yen & Euro (hit a four month high vs USD). Bitcoin -0.6% @ 9,218.21, VIX -6% @ 27.76,
US T10 0.633% on positive vaccine news posting risk sentiment.
OIL Brent +1.75%, WTI +2.3% on surprise drop in US inventories but upside limited as OPEC+ looking at easing the recent supply cuts at its forthcoming meeting
Gold Futures unch @ $1,813.80, Silver +0.7%, Copper +0.54%
RESULTS ahead due too report pre market: Johnson & Johnson, Charles Schwab, Abbott Labs and Domino’s Pizza
AHEAD Retail Sales, Initial Claims, Continuing Claims, 4 week average claims, Philadelphia Fed Manufacturing Index, NAHB Housing Market Index, Business Inventories EIA Natural Gas Report, Overall Net Capital Flows, Net Long Term TIC flows, Foreign Bond Investment
DAX +1.84%, CAC +2.03%, FTSE +1.83% Markets opened higher on the positive Moderna vaccine news which lifted the Travel and Leisure sector (Compass and RyanAir were the leaders) and offset the poor earnings news from Burberry -5.6%. Sentiment was also encouraged by the very good Q2 earnings from Goldman Sachs.
A slight -VE was the increase in US new covid-19 cases which could result in some States reversing their re-opening policies.
Atlantia +27% rebounding from Monday’s sell off on hopes its latest submission; to sell as majority stake in its motorway’s division, will enable it to retain the national concession.
Inflation Rate Jun +0.1% MoM vs 0% May (F/cast was +0.1%) [Jun +0.6% YoY vs +0.5% May (F/cast was +0.6%)]
Core Inflation Rate Jun +0.2% MoM vs 0% May (F/cast was +0%) [Jun +1.4% YoY vs +1.2% May (F/cast was +1.3%)]
PPI Core Output Jun +0% MoM vs 0% May (F/cast was +0%) [Jun +0.5% YoY vs +0.6% May (consensus was +0.6%)]
PPI Input Jun +2.4% MoM vs +0.9% May (F/cast was +3%) [Jun -6.4% YoY vs -9.4% May (consensus was -6.5%)]
PPI Output Jun +0.3% MoM vs -0.2% May (F/cast was +0%) [Jun -0.8% YoY vs -1.2% May (consensus was -1.3%)]
Retail Price Index Jun +0.2% MoM vs -0.1% May (F/cast was +0.1%) [Jun +1.1% YoY vs +1% May (F/cast was +1%)]
EUROZONE New Car Registrations, Balance of Trade, ECB Interest Rate Decision
GERMANY No data due
FRANCE No data due
UK Unemployment Rate, Average Earnings Inc & Ex Bonus, Inflation Rate, Consumer Confidence Flash
JAPAN Expect Nikkei to open flat with upside limited as Tokyo raises covid alert to highest level. Yen currently 106.93 Investors will be watching for the China data out later for signs of recovery although the more recent covid-19 outbreaks means the data is of limited relevance.
Data due Foreign Bond & Stock Investment
BoJ kept monetary policy on hold but revised down its growth forecasts due to covid-19.
Tokyo raises its covid threat assessment to the highest level after 175new cases are reported in Wednesday.
The Tokyo Olympics may have to be postponed again if the novel coronavirus mutates into a stronger pathogen, Kiyoshi Kurokawa, a prominent Japanese government adviser, said on Wednesday. Slight -VE
Nissan unveils a new electric SUV, the Ariya to compete with Tesla.
Tokyo new condominiums listed for sale in 1H 2020 -44.2% YoY to 7,497 units, the lowest on record.
SOUTH KOREA Expect markets to open higher following the US but upside limited as New Deal already announced.
Data due BoK Interest Rate Decision
The 21st National Assembly is set to begin its official proceedings Thursday, 48 days after the newly elected lawmakers’ terms began on May 30. President Moon Jae-in will address the parliament at the opening ceremony.
LG Chem FT Lex article generally +VE but warns of the risks; high retail concentration recently driving the stock as institutional investors sell, thin profit margins and the risk of rising cobalt prices could hurt. Still good for long term investors but traders beware.
Coupang said Wednesday it has launched Rocket Mobile, through which customers can browse and choose subscription plans offered by mobile carriers. The new platform is an addition to the current sales of smartphone devices, including those made by Samsung Electronics and Apple. Through Rocket Mobile, customers can now choose monthly call plans as they purchase mobile devices, a one-stop service that was initially only available at offline vendors. +VE
Samsung Electronics’ consumer electronics CEO Kim Hyun-suk on Wednesday expressed concerns over trade protectionism in major countries following a downturn in the home appliance market after the COVID-19 pandemic.
Sales of electric vehicles have taken a hit globally as the coronavirus pandemic continues to take its toll on the economy, according to data from market analyst company SNE Research. Global sales of electric cars between January and May this year -20.3% YoY to 710,000 units. Slight -VE
Mastern Investment Management said Wednesday it plans to invite 110 billion won ($91.6 million) in South Korean retail money through its new real estate investment trust (REIT) to take over part of equities in an office building in the suburb of Paris.
TAIWAN Expect market to open higher following the US but upside limited.
No data due
The National Stabilization Fund yesterday said that it would continue to shore up the local bourse, as COVID-19 infections are spiking in many parts of the world and financial markets remain volatile. The decision bucked market expectations after the TAIEX stayed above 12,000 points for the most of this month.
Adimmune Corp plans to conduct phase I clinical trials of its COVID-19 candidate vaccine next month to assess its safety, the firm said yesterday. It expects to receive approval from the Food and Drug Administration (FDA) later this month to start trials, as the review has been going smoothly so far, +VE
Cathay Life Insurance must apply to the Financial Supervisory Commission before it can raise its stake in Indonesia’s Bank Mayapada Internasional Tbk PT beyond 40% the commission said. Slight -VE
Formosa Plastics Group. Opponents of its plans for a US$9.4 billion plastics complex on Tuesday asked a federal judge to stop work at the site in Louisiana. -VE
CHINA Expect market to open higher as Trump decides not a impose more sanctions on Chinese officials for now. But expect caution ahead of GDP and other data due out this morning. SMIC in focus as it debuts on the Shanghai Star Board.
Data due House Price Index on Market open. Then at 10am; GDP Growth Rate, Industrial Production, Industrial Capacity Utilisation, Retail Sales, Unemployment Rate, NDS Press Conference, Fixed Asset Investment (YTD).
Social media-fueled rumors about banks collapsing are popping up at an unprecedented frequency in China, forcing regulators and even the police to step in to calm depositors. In the past month, worried savers have descended on three banks to withdraw funds amid rumours of cash shortages that were later dismissed as false. Over the weekend customers rushed to a bank in the northern Hebei province to take out money, prompting local regulators to publicly vouch for the soundness of its lenders as the police halted the run. -VE
Argentina has temporarily suspended exports to China from six meat packing plants after cases of the novel coronavirus were found among their employees, the president of Argentina's food quality and safety body Senasa said on Wednesday. -VE
US Sec of State Pompeo said US would impose visa restrictions on Chinese firms like Huawei Technologies Co Ltd that he accused of facilitating human-rights violations. -VE. He also said that the US will support countries that believe China has violated their maritime claims in the South China Sea but suggested it would do so through diplomatic rather than military means. -VE
US Senate committee is likely to vote next week on a bill that would ban federal employees from using social media app TikTok on government-issued devices. -VE
Shenzhen announced new home purchase restrictions in order to try and curb recent prices rises. Its government said only people who have lived in Shenzhen, have residency permits and made tax or social security contributions for three years are eligible to buy. Previously, anyone with a residency permit could buy.-VE
HONG KONG ADR’s +44pts to open at 25,525 (Futures +0.3%) expect some initial upside as recent shorts cover some exposure and cautious trading ahead of China data due at 10am.
Yesterday’s T/O dropped 20% DoD so watch the early T/O levels for signs of Team China’s presence.
No data due
Short Selling HSI Wednesday 20.3% vs 17.7% Tuesday
Top Shorts Wharf REIC (1997) 56%, Hang Seng Bank (11) 47%, MTRC (66) 40%, BoC HK (2388) 34%, China Shenhua (1088) 33%, CCB (939) 33%, HSBC (5) 30%, China Res Land (1109) 29%, CITIC (267) 28%, PetroChina (857) 28%, HK & China Gas (3) 28%, NWD New (17) 28%, SHKP (16) 27%, Mengniu Dairy (2319) 26%.
IPO's CBHB (9668.HK), DEBUT opened at $4.8, flattish with the listing price, and closed at $4.79 in gray market, down 1 cent or 0.2% against the listing price of $4.8, on volume of 10.8 million shares, PhillipMart data showed.JIAXING GAS (9908.HK), DEBUT opened at $12, up 20% against the listing price $10, and last stood at $15.5, up 55% against the listing price, on volume of 51,000 shares, PhillipMart data showed.
FENGXIANG CO (09977.HK), DEBUT opened at $3.5, up 5.1% against the listing price $3.33, and last stood at $3.65, up 9.6% against the listing price, on volume of 1.94 million shares, PhillipMart data showed
BANKCOMM (3328.HK) intends to increase the capital of Bank of Communications (Hong Kong) Limited by phases with a total amount of not more than HK$30 billion. The capital injection plan had been reviewed and approved at the shareholders' meeting.
EASYKNIT INT'L (1218.HK) said that it had through its subsidiary Ace Winner acquired on market a total of 220,000 shares of BABA-SW (9988.HK) for an aggregate purchase price of approximately HK$53.752 million.
WHEELOCK (20.HK) the privatisation scheme was sanctioned without modification by the High Court. The reduction of the share capital of the Company involved in the scheme was also confirmed by the High Court on the same day. Subject to the scheme becoming effective on Thursday, 23 July, the listing of shares on the Stock Exchange is expected to be withdrawn at 9:00 a.m. on Monday, 27 July.
ANTA SPORTS (2020.HK) retail sales WARNING (in terms of retail value) of ANTA branded products for the second quarter of 2020 recorded low single-digit negative growth compared to the same period of 2019. -VE
CHINA LILANG (1234 HK) WARNING expects to see a 30-35% YoY drop in its net profit. -VE
CHINA OVERSEAS LAND (688 HK) has named its project at Kai Tak as One Victoria, which is expected to be completed in the first quarter of 2023 and offer 1,059 units.
HENDERSON LAND (12 HK) +VE as The University of Hong Kong bought the rest of Novum West in Sai Ying Pun, developed by Henderson Land, for HK$459 million last month, after it acquired part of the commercial project for HK$504 million in 2018. The property is said to be purchased for teaching and research purposes.
Top international brands are planning to ax shops and staff to cut costs, local press reports amid a pandemic that is underlining their bottom lines in red. That came despite fashion house Burberry saying mainland sales growth in June surpassed the 30% growth rate in January before the outbreak had escalated. -VE for sentiment.
Thailand's largest mobile carrier Advanced Info Service (AIS) disclosed that Huawei is one of the five firms bidding for its 5G core network project. The other bidders included Ericsson, Nokia, ZTE (00763.HK) -0.800 (-3.131%) Short selling $29.37M; Ratio 6.166% and Samsung.
Google, Amazon Web Services, and Microsoft have turned down a proposal giving Hong Kong's Securities and Futures Commission (SFC) access to customer banking records, reported Financial Times. Since 2019, these tech firms have been in talks with the SFC on providing access to financial data stored on their cloud platforms. However, the national security law has made signing up to the proposal "politically impossible", given potential sanctions from the US Congress, an insider said.