July 3 ASIAN MACRO INITIAL THOUGHTS


09 Jul

July 3 ASIAN MACRO INITIAL THOUGHTS

Covid-19 Globally over 10.7m cases, 517k deaths
Dr Fauci says the covid-19 might have mutated and become more infectious.

DOW +0.4%, NDX +0.52%, S&P +0.45%, Russel 2K +0.32% Markets opened higher on the very good Payrolls number although the continuing claims was higher than forecast causing some doubts later in the day on the data. They initially worked higher (Nasdaq hit a new intraday high) but then sold down from mid morning as Covid-19 cases in Florida spiked. They then found support and worked sideways for most of the remainder but then sold down into the close.
Boeing +0.3% off initial high after it completed recertification flights for its grounded 737 Max jet.
Re open stocks opened higher but sold down United Airlines -0.9% and American -2.4% Carnival -2.9%, Norwegian Cruise Line -2.7% and Royal Caribbean -2.6%
DATA
Non Farm Payrolls Jun 4.8m vs 2.699m May (F/cast was 2.9m)
Balance of Trade May $-54.6b vs -49.8b Apr (F/cast was -53b)
Initial Claims 1.427m vs 1.482 m prior (F/cast was 1.34m
4 week Ave Claims 1.503m vs 1.621.25m (F/cast was 1.482m)
Continuing Claims 19.290m vs 19.231m prior (F/cast was 18.8m)
Unemployment Rate Jun 11.1% vs 13.3% May (F/cast was 12.3%)
Participation Rate Jun 61.5% vs 60.8% May (F/cast was 61%)
Average Weekly Hours Jun 34.5 vs 34.7 May (F/cast was 34.4)
Average Hourly Earnings Jun +5% YoY vs 6.6% May (F/cast was 5%) [Jun -1.2% MoM vs -1% May (F/cast was -0.7%)]
Exports May $144.5b vs 151.1b Apr (F/cast was 140b)
Imports May $199.1b vs 200.9b Apr (F/cast was 193b)
ISM New York Index Jun 39.5 vs 19.5 May (F/cast was 43.8)
Factory Orders May 8% MoM vs -13.5% Apr (revised from 13) (F/cast was 8%)
Factory Orders Ex Transport May +2.6% vs -8.9% Apr (revised from -8.5%)(F/cast was +4.9%)
EIA Natural Gas Stocks 65Bcf vs 120Bcf prior (Consensus was 78Bcf)
Baker Hughes Oil Total Rig Count 263 vs 265 prior
Total Vehicle Sales Jun vs 12.2m May
USD was slightly stronger vs Yen & Euro. Bitcoin -1.2% @ 9134.54, VIX -3.3% @ 27.68
US T10 0.660% yields fall on job market doubts
OIL Brent +2.6%, WTI +1.4%
Gold +0.3%, Silver +0.5%, Copper +0.49
AHEAD US Markets closed no futures.

DAX +2.8%, CAC +2.5%, FTSE +1.3% Markets opened higher on vaccine hopes and then moved higher on the good US jobs number but sold down in the last hour but ticked up into the close. Eurozone unemployment rose but not as much as forecast.
Meggitt +6% it expressed hopes of a recovery in the aerospace sector, the trading update was +VE thanks to its defence business.
DS Smith -7% after its latest trading update and cancelling its dividend
DATA
EUROZONE Unemployment May 7.4% vs 7.3% Apr (F/cast was 7.7%)
PPI May -0.6% MoM vs -2% Apr (Consensus was -0.5%) [May -5% YoY vs -4.5% Apr (F/cast was -5.2%)
UK BoE Financial Stability Report
AHEAD
EUROZONE Services and Composite PMI
GERMANY Services and Composite PMI
FRANCE Budget Balance, Services and Composite PMI
UK Services and Composite PMI

JAPAN Expect Nikkei to open higher and work higher. Yen currently 107.50. Investors will be watching the PMI data which is expected to have improved and there remain concerns over the covid-19 outbreak in Tokyo.
Data due Jun Services (May was 26.5 and F/cast is 42.3) and Composite PMI (May was 27.8 and F/cast is 37.9)
Japan is watching events in Hong Kong with "great interest", Chief Cabinet Secretary Yoshihide Suga said on Thursday, as police in the city made more arrests after China imposed a new national security law.
Tokyo confirmed 107 new coronavirus infections on Thursday, its highest daily tally in two months, but Japan's chief cabinet secretary said there was no need to reintroduce a state of emergency.
Government will start full-scale negotiations as early as this month with Taiwan and Southeast Asian countries, where novel coronavirus infections are in a stable situation, to ease entry restrictions. Following Vietnam and Thailand, both with which the government already began similar negotiations, Japan hopes to at first resume business travel.
Sharp Corp (6753.T) has indicated that its laptop making unit may go public this year instead of 2021, the Nikkei Asian Review reported on Thursday.
Softbank The convertible bonds that were part of a complex transaction that allowed Japan's Softbank to buy a stake in now-collapsed payments company Wirecard and then de-risk the transaction have been put up for sale in an auction.
Toyota Motor Corp. will expand its teleworking program to cover not only all office workers but some professionals, starting in September, company officials said Thursday.
Japan is looking to suspend or close as many as 100 older, inefficient coal-fired power plants by about 2

SOUTH KOREA Expect markets to open higher and work higher on the positive jobs US jobs report. Volumes increased yesterday expect focus on Tech to continue.
Data out
Foreign Exchange Reserves Jun $410.75b vs 407.31b May (F/cast was 411.7b)
Hyundai Motor Co. and its affiliate Kia Motors Corp. said Thursday their sales in the United States fell 19% in June from a year earlier as the new coronavirus continued to affect vehicle sales. -VE
GS Caltex is expanding an upcycling method that goes further than simply recycling plastic waste and creates new value by mixing materials. The firm said it plans to increase the production of compounded resin made from recycled plastic waste to streamline resources and reduce carbon emissions. Compound resin is a functional plastic widely used as a raw material for automotive and home appliance parts. +VE
KT CEO Koo Hyun-mo stressed that the fifth-generation network would allow telecommunication firms to create new business opportunities across various industries, the company said Thursday. “If the telecommunications firms used to center on business-to-consumer services in the past, the industry will be involved more in the business-to-business sector in the future,”
South Korean and European business experts held an online forum Thursday to discuss ways to jointly respond to challenges in the wake of the pandemic and strengthen cooperation in areas such as future mobilities, secondary batteries and bio-health.
Jeju Air's Eastar takeover of smaller budget carrier Eastar Jet Co. appears to be on the brink of falling through as Jeju Air asked Eastar Jet to settle all of its debts by mid-July to proceed with the deal.

TAIWAN Expect market to open slightly higher after the good US jobs report focus remains on Tech.
No Data due

The Central Epidemic Command Center (CECC) yesterday announced one new confirmed case of COVID-19, a man in his 50s who returned from Mexico the previous day, while identifying 23 people who have had close contact with the person.
EVA turns to cargo to offset virus losses : Revenue from EVA’s passenger business in the first five months of the year -54%, while its cargo sales were +57.9%. Yesterday it said that it aims to bolster its cargo capacity in expectation that revenues from its robust cargo business would offset losses from its passenger business due to COVID-19 travel restrictions. +VE
Life insurers The nation’s major life insurers this month are continuing to cut the declared interest rates for interest-sensitive products, due to falling bond yields amid a low-interest rate environment, the companies said yesterday.
Taiwanese banks’ total pretax earnings in May -17.8% YoY to NT$27.23 billion (US$920.4 million), due to the persistent effects of the COVID-19 pandemic on economic activity, the Financial Supervisory Commission (FSC) said on Tuesday. However, pretax profits at the banks’ offshore banking units and their branches in China grew by 3.4% and 35.6% YoY respectively, commission data showed.
Property transactions recovering but there are more than 20 hotels that are looking to leave the market, but they cannot find a buyer, due to pricing differences, rather than a lack of interest, an analyst said

CHINA Expect market to open higher and continue to recent run with support from Team China. Investors will watch the Caixin data but with recent data beating f/cast I would expect the Caixin to show the same.
Data due
@ 9:45am Jun Caixin Services (May was 55 F/cast is 53.6) and Composite PMI (May was 54.5 and F/cast is 52.9)
US Congress urges Trump administration to get tougher More than 75 U.S. senators and House members on Thursday urged the Trump administration to take a tougher stance on China over its crackdown in that country’s Xinjiang province and make a formal determination whether its treatment of Muslim Uighurs and other groups constitutes an atrocity, including genocide.
Vietnam and the Philippines on Thursday criticised China's holding of military drills in a disputed part of the South China, warning it could create tension in the region and impact Beijing's relationship with its neighbours.
Australian Prime Minister Scott Morrison signalled on Thursday  his government may follow Britain in offering visas to Hong Kong citizens after China imposed a new security law on the city.
Greater Bay Area factories struggling as coronavirus takes bite out of 2020 orders. Almost three quarters of manufacturers in China’s Greater Bay Area see a negative impact on their business due to the coronavirus, Standard Chartered survey shows. The pandemic’s impact on demand was the biggest concern, with more than half forecasting orders would fall an average 12.4 per cent this year -VE

HONG KONG ADR’s -17pts to open at 25,107 Expect the market to continue to trade higher, and shorts to be squeezed. Investors will watch the Caixin data which I expect to be good. KEY will be if we see yesterday’s significant increase in T/O continue. It suggests mainland money is actively seeking the push the market higher as China seeks to demonstrate that the new security law is good for Hong Kong.
No data due

Short Selling HSI Thursday 18.9% vs 17.5% Tuesday
Top Shorts Hang Seng Bank (11) 45%, Ping An (2318) 35%, China Shenhua (1088) 35%, Galaxy (27) 34%, Hang Lug PPT (101) 33%, Sunny Optical (2382) 32%, Wharf REIC (1997) 32%, CLP (2) 30%, CCB (939) 30%, HKEX (3887) 27%, Petrochina (857) 26%, Bank of China (3988) 25%, Country Garden (2007) 25%.

IPO HYGIEIA GROUP (1650.HK), debut  last traded in gray market at $0.235, -6% against the listing price, $0.25 on volume of 18 million shares, PhillipMart data showed.

BUYBACKS/INSIDER DEALING Li Ka-shing and Victor T K Li further acquired shares of CK ASSET (1113.HK). Through a wholly-owned subsidiary of Li Ka Shing (Global) Foundation, they acquired a total of 2.6045 million shares in CK Asset at the average price of HK$47.5525, HK$47.3462, HK$46.6933 and HK$46.1828 per share on 24 June, 26 June, 29 June and 30 June 2020 respectively.

NEW LAW IMPACT A pro-democracy restaurant in Shau Kei Wan says it was warned today by the police to remove its “Lennon Wall. Police allegedly said that displaying such promotional materials and accessories runs the risk of breaching the national security law, RTHK reports. The police said they came after receiving a complaint. Local councillor Chui said it seems a cultural revolution has arrived Hong Kong, and people may start reporting things they do not like to the authorities.

WATCH
Wheelock Properties news conference,
The first price list of KOKO HILLS was unveiled, involving 83 units (one- to three-bedroom flats and specialty flats), said Wheelock Properties Managing Director Ricky Wong. Pricing in all discounts, the prices would be $7.872-16.027 million, with an average floor price of $19,264-21,596 per sq.ft.. Chairman Stewart Leung stated that at least three new projects are coming in the second half of the year after the company had during the first half generated roughly $8.2 billion in sales revenues.
Leung assumed the property market to grow at least 5% during the second half of the year.
BOC HK (2388) raising its Mortgage rate by 0.1% for loans below HK$6m to Hibor plus 1.5% and the cash rebate has been cut from 0.5% to 0.2%. It follows a similar move by HSBC
RF PROPERTIES (2777) Jun contracted sales +37% MoM to 14.51bn Yuan ALSO FITCH downgraded its Long Term foreign and local currency issuer rating and its senior unsecured rating to B+ from BB- with a stable outlook.
BABA-SW (9988.HK) built China's first digitalized organic fresh corn base in Wanquan District, Zhangjiakou City, aiming to exclusively sell at least RMB100 million of corn per year, reported Chinese media.
Centa Valuation Index (Major Banks) (CVI) last printed at 56.12, -4.56 pts WoW Resurgent social unrest had brought CVI down from its peak of 90 to around 50, down 33.98 pts in five weeks. They believe the index will struggle aloft 50 in near term, foretelling an unchanged uptrend development.
Patent Protection Association of China reported that a total of 3,924 blockchain-related patents had been authorized globally as of 14 May, with the US accounting for the biggest share (39%), followed by South Korea (21%) and China (19%), cited by Chinese media. Alibaba's Alipay owned 212 authorized blockchain patents during the period, taking top spot worldwide. It was followed by IBM (136) and Coinplug (107).


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