July 17 ASIAN MACRO Initial Thoughts Dow futures slight rise
Covid-19 Globally over 13.6m cases, 586k deaths
US FUTURES DOW open flat but have risen 60pts, S&P and NDX also +VE Options Expiry.
DOW -0.5%, NDX -0.73%, S&P -0.34%, Russel 2K -0.72% US Markets opened lower with the Dow -200pts after the weak China data and a poor Initial Claims number although the retail sales number was better. Dow then reversed tested Wednesday close but failed to break above and worked lower for the rest to the day until a small bounce into the close. S&P opened lower and traded sideways and NDX started lower, dipped and then worked better for the rest of the day closing around its highs for the day.
Re-opening stocks weak United -5.2%, Delta -4.7%, American -7.4%, Carnival -9.7%,
But Kohls +2%, GAP +4% however Simons Property -5.6%
Stay at home Facebook +0.3% Amazon -0.3% (around day high), Apple -1.2%, Microsoft -2%
BoA -2.7% earnings beat but it took US$4bn in provisions. Morgan Stanley +2.4% beat on good trading profits. Johnson & Johnson +0.6% after lowering its guidance.
Netflix +0.8% but -10% in after market as Q2 earnings missed and guidance of 2.5m subs for Q3 was weak vs the 5.27m being expected.
Dell Tech +VE on news that it was considering spinning off VMware, its majority-owned cloud computing software division
Retail Sales Jun +7.5% MoM vs +18.2% May (revised) (F/cast was +4.5%) [Jun +1.1% YoY vs -5.6% May (revised) (F/cast was -3%)
Retail Sales Ex Auto Jun +7.3% MoM vs +12.1% May (revised) (F/cast was +4.2%)
Initial Claims 1.3m vs 1.31m prior (F/cast was 1.29m)
Continuing Claims 17.338m vs 17.67m prior (F/cast was 17.7m
4 week average claims 1.375m vs 1.435m prior (F/cast was 1.375m)
Philadelphia Fed Manufacturing Index Jul 24.1 vs 27.5 Jun (F/cast was 17)
NAHB Housing Market Index Jul 72 vs 58 Jun (F/cast was 58)
Business Inventories May -2.3% vs -1.3% Apr (F/cast was -1.8%)
EIA Natural Gas Report 45Bcf vs 56Bcf (Consensus was 47 Bcf)
Overall Net Capital Flows May US$-4.5b vs !21.7b Apr (revised from 125.3b) (F/cast was 200b)
Net Long Term TIC flows May US$127b vs -130.8b Apr (revised from -128.4b)
Foreign Bond Investment May US$-27.7b vs -176.5 bn Apr (revised from -176.7b)
USD was slightly stronger vs Yen & flat vs Euro. Bitcoin -0.7% @9130.04 , VIX +0.9% @ 28, US T10 0.618% slight fall as jobless claims disappoints.
OIL Brent -1%, WTI -1.1% as OPEC + agreed to ease supply curbs from August.
Gold Futures -0.7% to $1,800, Silver -1.2%, Copper -0.24%
AHEAD Housing Starts, Building Permits, Michigan Data Prelim (Consumer Expectations, Current Conditions, Inflation Expectations, 5yr Inflation Expectations, Consumer Sentiment, Baker Hughes Total Oil Rig Count.
DAX -0.43%, CAC -0.46%, FTSE -0.67% European markets opened lower following Asia after the weak China data. They then traded sideways ahead of the ECB rate decision, which left policy unchanged. Before working higher into the close.
Sartorius +10% on raising its FY guidance.
Orphan Biovitrum -8% as Q2 earnings disappoint.
Richemont, weak after posting Q2 sales -47% -VE cross read to Hong Kong Jewellers.
The European Union’s top court ruled Thursday that an agreement that allows big tech companies to transfer data to the United States is invalid, and that national regulators need to more action to protect data privacy
New Car Registrations Jun -22.3% vs -52.2% May (F/cast was -26%)
Balance of Trade May Euro 9.4b vs 2.6b Apr (F/cast was 22.5b)
ECB Interest Rate Decision Unchanged
UK Unemployment Rate May 3.9% vs 3.9% Apr (F/cast was 4.2%)
Average Earnings Ex Bonus May +0.7% vs +1.7% Apr (F/cast was +0.5%)
Average Earnings Inc Bonus May -0.3% vs 1% Apr (F/cast was -0.7%)
After market Consumer Confidence Jul vs -30 Jun (F/cast was -26)
Inflation Rate Jun +0.1% MoM vs +0.1% May (F/cast was -0.1%) [Jun +0.2% YoY vs +0.4% May (F/cast was +0.1%)]
EUROZONE Inflation Rate, Inflation Rate, Construction Output. EU Meeting on Recovery Plan
GERMANY No data due
FRANCE No data due
UK No data due
JAPAN Expect Nikkei Futures are flat expect to open slightly lower, after weak US data, rising covid-19 cases (286 new cases in Tokyo) and the weekend Yen currently 107.28
No data due today but Monday pre market we get Trade data and BoJ meeting notes.
Japan said it will exclude people living or vacationing in Tokyo from a subsidised domestic tourism campaign as record numbers of coronavirus infections there sparked concern that the capital's residents could spread the virus to other parts of the country.
Johnson & Johnson is in talks with the government of Japan and the Bill and Melinda Gates Foundation about locking up allocations of its potential COVID-19 vaccine as it prepares to kick off human trials, the company's Chief Financial Officer Joseph Wolk told Reuters in an interview.
Hitachi Ltd (6501.T) is moving to scrap seniority-based pay says its Chairman. It reflects Hitachi’s transformation from a hardware-focused manufacturer into a services business and highlights the realisation that for many Japanese firms old-school human resources practices aren’t practical.
SOUTH KOREA Expect markets to open lower following the US and to consolidate ahead of the weekend after BoK warned GDP growth likely to be slower this year. Volume on Thursday was high with local and foreign funds selling.
No data due
Smilegate said Thursday a 36-episode drama series based on its first-person shooter game CrossFire will be broadcast in China starting Monday. Launched in 2007, CrossFire is the most popular FPS game in China, with accumulated global revenue of 12.6 trillion won ($10.4 billion). +VE
SK Gas said Thursday it has introduced its first Eco Station, a hydrogen and liquefied petroleum gas charging station equipped with café, unmanned convenience store and premium DIY car washing facility. Slight +VE
Unity, a licensed game engine, is in full throttle in South Korea as the domestic industry is seeking a major shift to the mobile sphere with the engine. According to Unity Technologies Korea, eight mobile games that have been or will be launched in Korea this year are based on its game engine as increasingly more companies here are making mobile versions of their popular PC games.
Jeju Air said Thursday it can now walk away from a controversial 54.5 bn won ($45 mn) merger deal with Eastar Jet after the troubled low-cost carrier failed to meet the deadline to fulfill its prerequisites. +VE
Samsung Electronics Vice Chairman Lee Jae-yong and Hyundai Motor Group Executive Vice Chairman Chung Euisun are expected to meet again to hold a second round of discussions on next-generation electric car battery technology, according to news reports Thursday. +VE
TAIWAN Expect market to open lower following the US but downside limited after good numbers from TSMC.
No data due
The Central Epidemic Command Center (CECC) yesterday reported one new imported case of COVID-19, a Taiwanese woman in her 30s who traveled to the Philippines in late January for work. Also Taoyuan International Airport Corp has constructed two new COVID-19 sample-collection houses outside Taiwan Taoyuan International Airport
TSMC 2Q20 revenue increased 28.9% YoY to TWD310.699 billion. In the quarter, net profit after tax reached TWD120.822 billion, up 81% yearly and beating TWD110.55 billion in consensus. I also said it should have no problem filling the gap left by not being able to supply Huawei. CAPEX also increased +VE
Taiwanese CEOs expect recession due to pandemic; survey showed about 83% of the nation’s chief executive officers expect a global recession and diminished consumer confidence due to the COVID-19 pandemic, a PricewaterhouseCoopers (PwC) Taiwan survey showed. -VE for sentiment.
CHINA Expect market to open lower but we may see some bargain hunting; key will be whether Team China comes in to support the Market. Investors will be watching SMIC on the Star board after its 200% rise yesterday. Concerns over the Governments ability to stimulate the economy remain.
No data due but Monday on the open we get Loan Prime Rate decision
China said Thursday it will stick to the Phase 1 trade deal but warned that it will respond to “bullying” tactics from Washington, as relations continue to deteriorate. -VE
China accused the United States of “gangster logic” after US President Trump ordered an end to Hong Kong’s special status under US.law in response to Beijing’s imposition of new security legislation on the former British colony.
US Burger King and a car manufactured by a General Motors (GM) JV were picked out for criticism on Thursday by China’s state television station in its high-profile annual show on consumer rights. The programme cited a Burger King outlet in Nanchang, southeast China, where it alleged employees only put two pieces of cheese on the burger when there should be three. Burger King China said on its official Weibo account that the outlet was managed by a sub-franchisee, and apologised for management mistakes given the practices were a departure from its “consumer is king” motto. Seems rather a shot in the foot!
Wall Street is scrambling to regulate Chinese companies listed on US equity markets SCMP reports to avoid intervention by US lawmakers, who have expressed bipartisan frustration over the lack of financial transparency the firms have offered even as they seek investors on American exchanges. US securities watchdogs have been in a continuing struggle with China over inspecting the audits of the country’s US-listed companies, and Beijing has refused to comply, citing state secret laws.
Kweichow Moutai, -VE was -7.9% Thursday after a state media unit devoted to promoting information on President Xi Jinping accused the company of reaping the benefits of corruption.
HONG KONG ADR’s +152pts to open after a 2% for the HSI Thursday. Expect an initial short squeeze and then some margin call selling. Key remains whether Team China comes in. Normally one would expect the market to consolidate ahead of the weekend. The record 67 covid-19 cases yesterday -VE for sentiment.
Data due after market Business Confidence
Short Selling HSI Thursday 19.1% vs 20.3%Wednesday
Top Shorts Wharf REIC (1997) 51%, SHKP (16) 33%, Hang Seng Bank (11) 32%, CCB (939) 31%, Bank of China (3988) 30%, Ping An (2318) 29%, Henderson Land (12) 28%, BoC HK (2388) 28%, HSBC (5) 27%, MTRC (66) 26%, NWD New (17) 26%, China Res Land (1109) 25%, HK & China Gas (3) 25%.
EDVANTAGE GROUP (382.HK) will see the end of the second semester of the 2019/2020 school year within this month, while students will gradually return to schools starting from end August to early October, revealed Chief Operating Officer Wenqi Liu. Liu expected the 2020/21 full-time student enrolments to grow to roughly 38,300 from about 34,800 a year ago, up by around 3,500 students.
COSCO SHIP ENGY (1138.HK) +VE PROFIT WARNING expects to record a net profit for the six months ended 30 June 2020 in the range of RMB2.81 billion to RMB3.01 billion, as compared to approximately RMB470 million net profit for the same period of 2019.
The Hong Kong Jockey Club stated that the local betting turnover of local horseracing -8.3% QoQ to $93.2 billion during the year of 2019-20.
SHK PPT (16.HK) unveiled the first price list for its Tuen Mun residential project, Regency Bay, involving 88 flats measuring 261-437 sq.ft. each. The units comprise of 21 open studios, 43 one-bedroom flats and 24 two-bedroom flats. The project priced each flat at $6.0113-9.158 million. With a maximum 22% discount, the selling prices ranged $4.6888-7.1432 million, i.e. $17,377 per sq.ft. on average. Subscriptions being Saturday and sales could start next week.Centraline MD said Regency Bay, the first project to unveil price list amid the 3th wave of COVID-19 outbreak, was launched with down-to-earth pricing as its developer aimed to sound out market response, The total selling prices are enticing despite aggressive price per sq.ft. for the first batch, he added.
KERRY PROPS (683 HK) has launched the sales arrangements for a 2,846-sq-ft house and a 1,760-sq-ft duplex apartment at Mont Rouge, Lung Kui Road, and will open the sales by tenders for two hours from 10am to 12am on Sunday.
Deutsche Bank's new Asia CEO will be based in Singapore, instead of Hong Kong, Bloomberg reported. Alexander von zur Muehlen will take office as Asia CEO in Singapore, in replacement of Werner Steinmueller who will be retired at end-July, said a spokesperson.
Centa Valuation Index (Major Banks) (CVI) at 46.09, -6.90 pts WoW
The steeper slide in reading hinted at banks' proactive efforts in controlling credit risks amid unfinished social conflicts and their ongoing prudence to mortgaging due to the community outbreak of novel coronavirus. Home prices may go on jumbling in a near term, rather than turning around into a fall, unless the index busts below the critical level 40. The fresh round of anti-pandemic measures rolled out this week and the deprival of Hong Kong privileged treatment by the U.S. may reflect on CVI in the coming two weeks.