JULY 23 ASIAN MACRO INITIAL THOUGHTS. JAPAN CLOSED
Covid-19 Globally over 15m cases, 618k deaths
DOW Futures Opened -15pts S&P and NDX little changed
DOW +0.62%, NDX +0.24%, S&P +0.57%, Russel 2K +0.18% Markets opened flat and traded sideways fro most of the day with a small rally in the last hour. S&P traded at a five month high. Sentiment encouraged by talks on the next stimulus package and progress on a vaccine by Pfizer +5.1% and BioNTech +13.7% who will receive $1.95bn to produce 100m vaccines if theirs proves safe and effective.
Market upside checked by news the the US has told China to close is Houston Consulate and ahead of after market earnings
Tesla +4.4% after hours (was +1.5% in normal trading) reported its first full year of GAAP profits, along with second-quarter results Wednesday, although the numbers were a little short of analysis f/casts.
Microsoft -2.2% after hours (was +1.4% in normal trading) despite largely good results its transactional license purchasing continued to slow and that subsidiary LinkedIn was negatively impacted by the weak job market.
MBA Mortgage Applications +4.1% vs +5.1% prior and 30 year Mortgage Rate 3.2% vs 3.19% prior.
House Price Index May -0.3% MoM vs +0.1% revised (F/cast was +0.4%)
Existing Home Sales Jun +20.7% MoM vs -9.7% May (F/cast was +23%
EIA Crude Oil Stocks Change +4.892m vs -7.493m prior (Consensus was -2.088m)
EIA Gasoline Stocks Change -1.802m vs -3.147m (Consensus was -1.386m)
USD was little changed vs Yen & Euro. Bitcoin +1.3% @ 9519.79, VIX -2% @ 24.32,
US T10 0.6% fell on rising tensions between US and China adding to the Covid-19 concerns.
OIL Brent -0.1%, WTI -0.1% as data showed a surprising rise in inventories.
Gold %, Silver %, Copper %
AHEAD Initial Claims, Jobless 4 week average, CB Leading Index, EIA Natural Gas Change, Kansas Fed Manufacturing, 10 yr TIPS Auction
DAX -0.51%, CAC -1.32%, FTSE -1% Markets opened lower and and traded sideways, rising covid-19 cases, especially in the US the big concern. Most sectors closed in the red only banks bucked the trend.
Schibsted +15% after its spin-off Adevinta bought eBay’s classifieds unit for $9.2 billion on Tuesday.
Melrose -19% after reporting Q2 losses and warning of job cuts.
Kingfisher, owner of B&Q, led the FTSE 100 risers after reporting a 21.6% rise in like-for-like sales in the quarter to July 18 +VE TECHTRONICS (669 HK)
EUROZONE Consumer Confidence
GERMANY Consumer Confidence
FRANCE Business Confidence, Business Climate Indicator
UK CBI Business Optimism, CBI Industrial Trends Orders
JAPAN Market closed for Marine Day and will be closed Friday for Health and Sports day and re-open on Monday
No data due
Japan’s government on Wednesday slightly raised its economic view for a second straight month in July, though authorities conceded that the situation remained severe in light of a renewed spike in coronavirus cases in many parts of the world. The government described the world’s third-largest economy as “showing signs of picking up” from the COVID-19-induced recession, underscoring cautious optimism among policymakers as more countries have started re-opening their economies following lockdowns to curb the spread of the virus. SLIGHT +VE
Japan's health ministry has approved dexamethasone, a cheap and widely used steroid, as a second treatment of COVID-19 after a trial in Britain showed the drug reduced death rates in hospitalised patients. +VE
Tokyo governor recommends residents stay at home over 4 day weekend.
Government has decided to begin discussions over easing immigration restrictions with China, South Korea and Taiwan, public broadcaster NHK reported on Wednesday.
Japan launched a national travel campaign on Wednesday that aims to revive a battered tourism industry, but the effort has drawn heavy criticism as major cities have racked up a jump in new coronavirus cases.
Canadian convenience store operator Alimentation Couche-Tard Inc , Japanese peer Seven & i Holdings Co and private equity firm TDR Capital are preparing to submit rival bids this week for Marathon Petroleum Corp's gas station network Speedway, Reuters reported.
SOUTH KOREA Expect markets to open lower with poor GDP data and concerns over covid cases. I would expect the market to see further consolidation today. Expect slight lighter trading volumes with Japan closed.
Data out Adv GDP Growth Rate Q2 -3.3% QoQ vs -1.3% prior (F/cast was -2%)
Adv GDP Growth Rate Q2 -2.9% YoY vs +1.4% prior (F/cast was -1.5%)
A small South Korean survey of people with no history of COVID-19, but living in a city with the most cases, showed that roughly one in 13 had antibodies to the novel coronavirus, indicating the virus may have spread more widely than thought.
Samsung Electronics, is expected to rank third in terms of 5G smartphone production this year, its estimated at 29 million units, placing the company in third place globally, according to market researcher TrendForce. "Samsung has been experiencing setbacks in the Chinese market in recent years," it said. "Although these setbacks have not seriously affected its global market share and revenue, they have considerably slowed Samsung's growth in the 5G smartphone market."
China's Huawei was forecast to lead 5G smartphone production this year with 74 million units, followed by U.S. tech titan Apple with 70 million units in 2020, TrendForce added.
LG Electronics’ design-focused Velvet smartphone has become available in the United States, providing US consumers a new 5G device choice, according to the company on Wednesday.
Hanwha Energy and Korea Midland Power (Komipo) said Wednesday they signed a deal in Nevada to supply electricity generated by solar power to 36,000 households. +VE
A Chinese giant panda at South Korea’s Everland amusement park has given birth to a cub, the zoo said on Wednesday, the first baby panda born in the country and a rare event for an endangered species.
TAIWAN Expect market to open slightly higher with focus on tech and to trade sideways.
Data due After market Industrial Production and Retail Sales
Unemployment rate last month fell to 3.96% from 4.07% in May, ending four consecutive months of pickup, as fewer people quit or lost their jobs to business downsizing and closures, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. +VE
Foreign nationals can start visiting Taiwan for medical treatment from Saturday next week, the Central Epidemic Command Center (CECC) said yesterday, as it also loosened travel restrictions on overseas students. Although Taiwan has recorded a number of imported COVID-19 cases over the past few months, as of yesterday, it had not reported any new local case for 101 days, Minister of Health and Welfare Chen Shih-chung who heads the center, told a regular news briefing in Taipei.
The Chung-Hua Institution for Economic Research yesterday raised its forecast for Taiwan’s GDP growth this year to 1.77 percent, from a previous estimate of 1.03 percent, as private consumption might stage a comeback fueled by the government’s Triple Stimulus Vouchers. +VE
Wistron Corp, one of Apple Inc’s iPhone assemblers, yesterday said that it would subscribe to 3 billion yuan (US$429 million) of Luxshare Precision Industry common shares to double down on its strategic partnerships with the maker of Apple’s iPod earbuds. Slight +VE
CHINA Expect market to open lower in reaction to the new of the Chinese Consulate in Houston being fired to close, which came after market. I still think thought we will see Team China ready to give some support to the market.
Flood concerns remain high with news of more evacuations. Longer term +VE for Resources and Equipment makers like Sany and Zoomlion; especially as there are calls to test many of China’s ageing dams (it has over 94,000).
No data due
Analysts will be watching for signs of change from next weeks 25-member Politburo meeting
US Senate panel unanimously approves ban on TikTok on government devices now goes forward to the full senate for approval. Slight -VE along with the news that a group of US investors is trying to buy the app from its Chinese owners.
HONG KONG ADR’s +7.5pts to open at 25,064 but expect downside as Covid-19 cases continue to rise in Hong Kong Along with tensions between the US and China. After the significant sell off yesterday expect some early margin call selling.
No data due
Short Selling HSI Wednesday 16.9% vs 18.5% Tuesday
Top Shorts China Res land (1109) 41%, CCB (939) 31%, Want Want (151) 31%, Ping An (2318) 29%, BoC HK (2388) 29%, China Shenhua (1088) 28%, Country Garden (2007) 26%, Wharf REIC (1997) 25%.
US Department of State confirmed that it notified China to shut down its consulate in Houston in three days as the US must protect her intellectual property and information in wake of aggravated tensions between the two countries, Reuters reported. China condemned vigorously to the decision of the US, threatening to revenge. It was known that China is considering to close the US consulate in Wuhan City.
BISON FINANCE (888.HK) announced that during the period from 17 June 2020 to 22 July 2020, the Trustee purchased a total number of 5 million Shares on the market for the purpose of the Share Award Scheme, involving $1.5256 million.
Shanghai Municipal Government held a contract signing ceremony today for foreign capital projects for the city, by which HSBC (China) inked a cooperation with Lingang New Zone, Shanghai, cs.com.cn reported. HSBC Bank (China) President and Chief Executive Officer Wang Yunfeng said the bank plans to establish a fintech services company in Shanghai, as the latest move of sequential investment in China, and an onset of digital-empowering wealth planning services, to provide technology and data services to the group's licensed financial institutions.
AAC TECH (2018.HK) announced that its subsidiary AAC Communication (engaging in optical business) introduced four strategic investors, namely Hubei Xiaomi Changjiang Industrial Fund (its controlling shareholder was Xiaomi Industry Investment Management Co., Ltd., ultimately controlled by XIAOMI-W (1810.HK) Chair Jun Lei), OPPO Guangdong Mobile Communication, Shenzhen Huiyou Haochuang Technology Investment and Nanjing Huarui Ruijun Entrepreneurship Investment Center. The parties agreed that the Strategic Investors will make a capital increase of RMB1.15 billion in aggregate to AAC Communication. The Strategic Investors will obtain a total of approximately 9.58% of the enlarged equity interest in the Target Company after the Capital Increase.
3SBIO (1530.HK) announced that the Proposed Spin-off Listing of Sunshine Guojian on the STAR Market and the Offering have been completed; and the dealings in the ordinary shares of Sunshine Guojian on the STAR Market commenced on 22 July 2020.
Empire Group, HK FERRY (50.HK) and HENDERSON LAND (12.HK) , released its first price list for phase one of Seacoast Royale, involving 123 standard units with saleable area of 207-548 sq.ft.. Prices on the list range $3.098-6.982 million. Deducting the maximum discount of 6%, the selling prices range $2.9121-6.5631 million, i.e. $13,578 per sq.ft. on average. The General Manager of Sales (1) Department at Henderson Land, said he remains slightly bullish on 2H20 property market, which may tend to stabilise. When asked about the tender for Tai Po residential site, the company stated that it is interested in all land parcels rich in potentials, subject to the price level.
Centaline Property, said the price list of Seacoast Royale Phase 1 represents 15% discount to the leftover first-hand units from the same districts for coronavirus factors. The project is very competitive as there are only 18 private homes priced below $3 million in Hong Kong now, according to Centaline's findings.
Midland's Residential Division Chief Executive. Said that being discounted by over 10% to the market level, the new project is set to be a new benchmark and spotlight, opined Po.
CATHAY PAC AIR (293.HK) announced in its rights issue circular that a + or - 5% in price of jet fuel would have increased/ decreased the Cathay Pacific Group’s other equity components by approximately HK$620 million. This is on the assumption that all other variables remain constant. The scale of reduced flights due to the COVID-19 pandemic means that the Cathay Pacific Group is in an over-hedged position with respect to expected fuel consumption. The marked to market losses as at 31 December 2020 could be significant. Despite all measures to produce cash savings, the drop in passenger revenue to around only 1% of prior year levels meant that Cathay Pacific was initially losing cash at the operating level at a rate of HK$2.5 to 3 billion per month as it serviced a high level of customer refunds. This has subsequently reduced and is expected to remain at a rate of approximately HK$1.5 billion per month whilst minimal passenger services are in place. While such passenger capacity cuts and cost management measures have helped to reduce expenditure, many costs are unavoidable regardless of the number of flights mounted. Accordingly, such measures will not fully offset the contraction in passenger revenue.