July 21 Asian Macro Initial Thoughts Asia +VE open as Dow Futures flat
Covid-19 Globally over 14.6m cases, 607k deaths
Dow Futures opened flat (-30pts) along with S&P and NDX futures.
DOW +0.03%, NDX +2.51%, S&P +0.84%, Russel 2K -0.36% Markets opened lower with the Dow -150pts S&P opened flat and worked slightly higher through the day but the NDX opened higher and continued to rally. Amazon +7.9% had its best day since Dec 2018. IBM +1% in normal hours but +4.6% after hours after better than expected earnings.
Dow member Pfizer +0.7% and BioNTech +3.5% having reported early positive data on a joint coronavirus vaccine candidate.
Traders were watching lawmakers as negotiations for new stimulus measures get underway. Comes as the existing benefits are due to expire
Halliburton +2.5% at its day low posted for Q2 a $1.7bn net loss as it took at $2.1bn write down due to the lack of oil field services work.
Chevron -2.2% as it confirmed its agreement to buy Noble Energy +5.4% in an all stock transaction.
USD was unchanged vs Yen & weaker vs Euro. Bitcoin -0.5% @ 9169.21, VIX -4.8% @ 24.46, US T10 0.606%
OIL Brent +0.35%, WTI +0.54% Slight +VE from a number of +VE vaccine indicators although off-set by the lack of agreement over the EU Recovery fund.
Gold Futures +0.4% highest since Sept 2011, Silver +2.4% a 4yr high, Copper +0.2%
Earnings Ahead from Coca Cola, Philip Morris pre market. United Airlines after market
AHEAD Chicago Fed National Activity Index, Redbook, API Crude Oil Stock Change
DAX +0.99%, CAC +0.47%, FTSE -0.46% Markets opened lower as EU leaders failed to reach agreement over the EU recovery fund but worked better as the talks continued on Monday. Dax rebounded into the green but drifting lower. FTSE hit resistance at Friday’s close with concerns over the UK/China relations. CAC recovered into the green but dipped back into the red
Telco stocks lead but Travel and Leisure remained weak despite news that the Oxford University Vaccine with AstraZeneca +1.5% showed +VE immune response in an early trial.
Synairgen +429% claimed its covid-19 was effective as reducing the number of patients needing intensive care.
GSK -0.7% buys up 10% of German vaccine producer CureVac for £130m
Ubi Banca +14% after Intesa Sanpaolo increased its bid for the smaller lender
Natixis -7.4% on news its owner did not intend to tender an offer for more shares in the bank.
Renault +1.7% 1H sales -35%
M&S -0.2% to cut 950 jobs.
EUROZONE Current Account May Euro -10.5b vs +9.9b Apr (F/cast was +12.1b)
GERMANY PPI Jun 0% MoM vs -0.4% May (F/cast was +0.4%) [Jun -1.8% YoY vs -2.2% May (F/cast was -1.4%)
EUROZONE No data due
GERMANY No data due
FRANCE No data due
UK Public Sector Net Borrowing
JAPAN Expect Nikkei to open higher with focus on Tech. Covid -19 cases still a concern with 168 new cases in Tokyo on Monday. Yen currently 107.25. Pre market data in-line.
Inflation Rate Jun +0.1% YoY vs +0.1% May (F/cast is +0.1%) [Jun +0.1% MoM vs +0% May (F/cast is +0.1%)]
Core Inflation Jun 0% YoY vs -0.2% May (F/cast is +0%)
Inflation Rate Ex Food & Energy Jun +0.4% YoY vs +0.4% May (F/cast is +0.4%)
Govt under pressure to pay travel plan cancellation fees for those in Tokyo after the city was excluded from the national programme.
Shionogi & Co aims to boost production capacity for its potential coronavirus vaccine to produce enough for 30 million people annually by the end of 2021, a company official told Reuters on Monday. +VE
Japan's convenience store sales in June -5.2% YoY but improved MoM on solid sales of hygiene and other items after the lifting of a state of emergency declared over the novel coronavirus, an industry body said Monday. +VE
SoftBank has pulled a more than $500 million investment from Credit Suisse's supply chain finance funds after the Swiss bank reviewed the funds including the Japanese conglomerate's role, according to two sources.
SOUTH KOREA Expect markets to open higher, following US with focus on Tech names after good PPI data PLUS improved sentiment as covid cases drop to single digits for the first time in 2 months.
Data out PPI Jun +0.5% MoM vs 0% May (F/cast was +0.1%) [Jun -0.9% YoY vs -1.7% May (F/cast was -1.5%)].
South Korea’s household debt compared to its economic size has become one of the world’s highest, while its debt grew at one of the fastest paces during the first quarter this year, a report showed Monday. -VE
Naver Corp, said Monday it is moving its overseas data backup center from Hong Kong to Singapore amid privacy concerns in the Chinese territory. -VE for Hong Kong
LG Display said Monday it will begin to mass-produce OLED panels soon at its factory in Guangzhou, China, after a one-year delay due to the new coronavirus outbreak. It is currently producing 8.5 generation OLED panels at the factory on a small scale but will begin mass production soon. +VE
GS25 said Monday the bestselling product from its mobile app for wine and liquor orders was Disaronno, an Amaretto-tasting liqueur. Over 70% of wine orders made via the app were made outside of Seoul, it added. The convenience store chain launched the mobile app Wine25 Plus on July 13, allowing customers to order alcoholic beverages and pick them up from a nearby GS25 store. +VE
Paris Baguette, operated by SPC Group, said Monday it is testing a new subscription business by launching a monthly discount service for its coffee and sandwich menus. +VE
GC Pharma announcing Monday it preemptively began producing plasma-derived COVID-19 treatment drug samples on Friday. +VE
TAIWAN Expect market to open higher after Export orders grew at the fastest rate in 2 years; with Electronics +24% YoY.
No data due
After Market Monday Export Orders Jun +6.5% YoY vs +0.4% May (F/cast was +0.8%)
Survey by Cathay Financial Holding Co on how people planned to use their Triple Stimulus Vouchers found that 42% would buy daily groceries. Other top uses included department store spending (24.2%) and travel (14.6%), while 6.3% of respondents would use them for dining and drinks, and less than 1% plan to use them for arts and culture activities, while 11.6%of respondents said they had not made up their minds, the survey found. Overall slight +VE for Retail.
Taiwan Semiconductor Manufacturing Co yesterday said that it has no plans to build chip foundries in Japan, but would not rule out the possibility.
Taiwan Mobile Co yesterday said that it is providing 5G networks and vehicle-to-everything solutions to Formosa Plastics Transport Corp for its testing of self-driving vehicles, a joint statement said. Formosa Plastics Transport, which operates more than 1,500 trucks, is the nation’s first commercial fleet operator investing in autonomous vehicles. It plans to use Chang Tung Health and Culture Village as a testing ground for its vehicles. +VE
Yeong Guan Energy Technology Group yesterday posted net profit of NT$113 million for last month, or earnings per share of NT$1.07, an increase of 93 percent year-on-year. Revenue rose 13.02 percent to NT$722 million from NT$638 million a year earlier, as shipments increased 20.5 percent year-on-year to 15,600 tonnes, the company said. As wind power customers continue to maintain high orders, and demand for injection molding machines and industrial machinery remains stable, shipments this month would remain at a normal level, Yeong Guan said. +VE
CHINA Expect market to open higher following the US with Team China continuing to remain active and ‘managing the bull market’ especially on news that the Insurance companies can now increase their equity holdings.
No data due
Two potential vaccines to protect against the novel coronavirus - one from Oxford University and AstraZeneca Plc and the other from China's CanSino Biologics - induced immune responses in healthy volunteers without causing dangerous side effects, according to studies published on Monday in The Lancet. +VE
US Commerce Department on Monday added 11 Chinese companies to its blacklist for being implicated in what it called human rights violations in connection with the treatment of Uygurs in Xinjiang. They include Changji Esquel Textile, of the Esquel Group, which produces clothing for Ralph Lauren, Tommy Hilfiger and Hugo Boss. Also blacklisted is Hetian Haolin Hair Accessories, whose products – said to contain human hair from Xinjiang – were seized in the US earlier this month
Britain announced on Monday it would suspend its extradition treaty with Hong Kong in an escalation of a dispute with China over its introduction of a national security law for the former British colony. State Media says that the UK should face public and painful retaliation from Beijing. The Global Times said “But it’s unnecessary to turn it into a China-UK confrontation. The UK is not the US, nor Australia, nor Canada. It is a relative ‘weak link’ in the Five Eyes. In the long run, the UK has no reason to turn against China, with the Hong Kong issue fading out.” Interesting that they feel the Hong Kong issue is fading out! Overall -VE for China/UK relations
Chinese citizens’ satisfaction with the government improved overall from 2003 to 2016, but slowing economic growth since then could dent public opinion, according to a Harvard University study. Shows the pressure that the Beijing is currently under Slight -VE.
Australia’s iron ore exports to China strong, but weak global demand indicates mixed coronavirus recovery. Rio Tinto reported a 3% rise in total iron ore exports, largely due to stronger demand from China but recovery in demand from the likes of Japan and Europe has yet to begin
China's cash-strapped small lenders are expanding their pile of the riskiest kind of bank debt to shore up their capital levels, bracing against an economic slowdown and rising loan defaults. Smaller lenders including Chongqing Three Gorges Bank, Bank of Rizhao, and Huarong Xiangjiang Bank accounted for more than 70 percent of the issuance. -VE
HONG KONG ADR’s +105pts to open at 25,162 with broad based bounced with only Mobile, Petrochina, CCB, ICBC and BoC ADR’s in the red. Expect an initial squeeze and then for the market to work higher; Tech names connected with the new HSI index in focus (see list below). Also +VE HKEX (388) on news of Ant Group and Didi Chuxing listings.
But the rise in local covid-19 case -VE for sentiment along with more, generally -VE profit warnings although likely to have less impact today
Data due Inflation Rate After Market
After Market Monday Unemployment Jun 6.2% vs 5.9% May (F/cast was 6.3%)
The unemployment rate increased across almost all the major economic sectors, with more distinct increases observed in the decoration, repair and maintenance for buildings sector; import and export trade sector; and warehousing and support activities for transportation sector. Commenting on the latest unemployment figures, the Secretary for Labour and Welfare, Law Chi-kwong said the labour market continued to deteriorate for the second quarter of 2020 as a whole, but the pressure faced by the labour market showed signs of easing towards the end of the quarter as the local epidemic situation abated in May and June. The launch of the Employment Support Scheme also helped counter the headwinds facing the labour market.
WORTH noting that was BEFORE the latest wave of Covid cases -VE
Short Selling HSI Monday 21.3% vs 22.3% Friday
Top Shorts CCB (939) 43%, Hang Seng Bank (11) 38%, Sands China (1928) 38%, Ping An (2318) 38%, Mengniu Dairy (2319) 34%, Sunny Optical (2382) 33%, HSBC (5) 33%, MTRC (66) 32%, Galaxy (27) 30, China Shenhua (1088) 30%, New World New (17) 29%, BoC (3988) 28%, Wharf REIC (1997) 25%
ADTIGER CORP (1163.HK) +VE Positive Profit alert. The Group is expected to record an increase in adjusted net profit (which is a non-HKFRS measurement and is calculated by excluding the effect of one-off listing expenses) of not less than 40% as compared with the adjusted net profit for the six months ended 30 June 2019 (which is a non-HKFRS measurement and is calculated by excluding the effect of one-off listing expenses).
WUXI APPTEC (2359.HK) +VE PROFIT WARNING total operating revenue for the first half of 2020 was expected to grow around 22.68% yearly to RMB7.23 billion. Net profit was expected to rise roughly 62.49% yearly to RMB1.72 billion, and basic EPS up by about 63.04% yearly.
SMOORE INTL (6969.HK) -VE Profit Warning the Group expects that the profit and total comprehensive income for the six months ended 30 June 2020 will decrease by approximately 89.1% to 94.0% compared to that of the six months ended 30 June 2019. On an adjusted net profit basis, the Group expects to record a profit in the range of approximately RMB1.286 billion and RMB1.331 billion for the Period compared to a profit of approximately RMB931 million for the Comparable Period, representing an increase ranging from approximately 38.1% to 42.9%.
MIRAMAR HOTEL (71.HK) -VE Profit Warning, expecting that the revenue and profit attributable to shareholders during the six months ended 30 June 2020 will be significantly reduced as compared with the corresponding period in the year of 2019.
Didi Chuxing, a ride-hailing company in China, plans to ignite an IPO in Hong Kong as fast as this year, according to the sources of chinastarmarket.cn. The company is now in talks with investment banks for the IPO with a target valuation of approximately US$80 billion, equivalent to over HK$600 billion, which is likely to become one of the biggest IPOs in Hong Kong in recent years.
Alipay's owner Ant Group (formerly known as Ant Financial) today announced to kick-start the simultaneous IPO plan on the Main Board of HKEX (388.HK) and Sci-Tech Innovation Board of Shanghai Stock Exchange. Under which, Ant Group looks to ramp up domestic consumption by underpinning digital upgrades for the service industry. The group also seeks sustainable development through stronger global team-up and support for its technological R&D and innovation. +VE for HK EX (388 HK)
Hang Seng Indexes Company announced that it will launch the Hang Seng TECH Index on 27 July 2020 (Monday). This new index will track the 30 largest technology companies listed in Hong Kong that pass the index’s screening criteria.
1 ｜BABA-SW (9988.HK ｜8.53%
2 ｜TENCENT (700.HK) ｜8.52%
3 ｜MEITUAN-W (3690.HK) ｜8.33%
4 ｜XIAOMI-W (1810.HK) ｜8.11%
5 ｜SUNNY OPTICAL (2382.HK) ｜8.02%
6 ｜SMIC (981.HK) ｜5.96%
7 ｜ALI HEALTH (241.HK) ｜5.08%
8 ｜JD-SW (9618.HK) ｜4.84%
9 ｜KINGDEE INT'L (268.HK) ｜4.47%
10 ｜PA GOODDOCTOR (1833.HK) ｜3.98%
PROPERTY Hong Kong Interbank Offered Rate fell for a seventh consecutive trading day to a near four-year low, as a survey showed that more than a third of Hongkongers expect home prices to pick up in the second half; although that was before the current wave of infections.
Goldin Financial's (0530) chairman Pan Sutong has borrowed over HK$600 million from Bank of Communications (Hong Kong) by pledging his luxury house at 75 Deep Water Bay Road. This came after the company revealed plans last week to raise HK$8.7 billion to settle subsidiary debts, as well plans to sell a land plot in Kai Tak. Meanwhile, the Industrial and Commercial Bank of China (Macau) has acquired a security interest in 1.97 billion shares, or 28.18 percent of the company's stake last week. Those shares were reported to have been pledged by Pan, who holds a majority 70.86 percent stake in the company.
CHINA TELECOM (728.HK) June, the mobile subscribers numbered 343.47 million with a net increase of 2.27 million, among which 5G package subscribers had a net increase of 7.79 million, slackening from 8.35 million in May.significantly reduced as compared with the corresponding period in the year of 2019.
CHINA UNICOM (762.HK) aggregate number of mobile billing subscribers amounted to 309.5 million in June 2020, representing net addition of 783,000 for the month. During the month, the aggregate number of 4G subscribers neared 261 million, representing net addition of 2.503 million for the month vs 1.905 million for May.
MACAU’s Statistics and Census Service (DSEC) indicated that there were 22,556 visitor arrivals in June 2020, a decline of more than 90% YoY. Same-day visitors and overnight visitors totalled 13,205 and 9,351 respectively. In the first half of 2020, number of visitor arrivals reduced by 83.9% YoY to 3.2689 million.
ESPRIT (330 HK) Karen Lo Ki-yan, an heiress of Vitasoy International (0345) and the wife of veteran investor Eugene Chuang Yue-chien, increased her stake in Esprit for the fourth time this month. She now holds 19.51 percent from 18.8 percent, with increased holdings of 13.5 million shares.
FULUM GP HLDG (1443.HK) has been notified by Centre for Health Protection that four patients diagnosed with novel coronavirus had on 11 July been to Fulum Restaurant at Tuen Mun Central Square. In order to guarantee the health and safety of staff and customers, the eatery group has shut down the said branch for four days with immediate effect for throughout disinfection and sterilisation until 24 July. Slight -VE
HSBC Insurance, CEO said online insurance applications have indeed burgeoned during the COVID-19 epidemic, citing a sharp increase in online applications for insurance coverage in the first three months of 2020 and the first half of year. The insurer believed this trend should persist even after the pandemic eases.