July 8 ASIAN MACRO INITIAL THOUGHTS Dow Futures flat
Covid-19 Globally over 11.7m cases, 540k deaths
WHO reviewing requests for guidance over possible airborne spread of covid-19
US FUTURES opened +40pts, S&P and NDX slightly +VE at 7:30am HK time
DOW -1.51%, NDX -0.86%, S&P -1.08%, Russel 2K -1.86% Markets opened lower with concerns over US/China tensions rising on news Trump is considering executive orders targeting Chinese manufacturing and immigration, but with no details. Also the rising covid-19 cases overhangs the market although +VE news of late stage trails from Regeneron Pharma +2.2% of a antibody cocktail and China’s Sinovac Biotech of a potential vaccine. Plus the government awarded Novavax +32% a contract to develop a vaccine under the White House’s ‘operation warp speed’. The S&P and NDX initially traded higher as Microsoft -1.2% Apple -0.3%, Facebook +0.2% and Netflix -0.1% hit new intra day highs but then hit resistance at Monday’s closing level. The NDX moved into the green but then reversed and all of the markets sold down into the close.
United Airlines -7.6% warned staff there hadn’t been enough voluntary departures, Delta -5%, America -7%, Carnival -6.7% and Royal Caribbean -4.9%
Skyworks +VE as analyst says it will benefit from export restrictions on Huawei.
FBI Director Christopher Wray on Tuesday urged China-born people in the United States to contact the FBI if Chinese officials try to force them to return to China under a program of coercion that he said is led by Chinese President Xi Jinping. He said Xi has “spearheaded” a program called Fox Hunt aimed at strong-arming people born in China living outside of the country who are regarded as threats to return home in order to silence criticism of Beijing’s political and human rights policies.
US coronavirus task force response coordinator Dr. Deborah Birx said that the United States and other countries could have had a stronger initial response to COVID-19 if China had been more forthcoming about key features of the virus.
Democratic presidential candidate Joe Biden on Tuesday promised to revive U.S. manufacturing so that the country is not dependent on China, taking aim at his rival's promises to revive factories.
Redbook -0.6% MoM vs -0.7% prior (-6.9% vs -5.7% prior)
IBD/TIPP Economic Optimism Jul 44 vs 47 Jun (F/cast was 46)
JOLT’s Job Openings May 5.397m vs 4.996m Apr (F/cast was 4.5%)
API Crude Oil Stock Changes +2m vs -8.156m prior
USD was slightly stronger vs Yen & Euro. Bitcoin -1.1% @ 9241.54, VIX +5.3% @ 29.43, US T10 0.64%
OIL Brent -0.56%, WTI -0.02% as covid-19 cases surge which could limit demand
Gold +0.7% spot close to US$1,800, Silver +0.6%, Copper -0.3% Gold futures break US$1,800 as covid-19 cases surge
AHEAD MBA Mortgage Applications and 30 yr Mortgage Rate, EIA Oil report, Consumer Credit Change
DAX -0.92%, CAC -0.74%, FTSE -1.53% markets opened lower as most of Asia closed lower except China and then European markets drifted lower; after German Industrial Production and French trade data was weak. Also the EU cut its economic forecasts for GDP to -8.3% (from -7.4%) 2020 but +5.8% (vs prior +6.1%) 2021.
UK saw cautious trading; it's due to announce Wednesday the next stage of its economic recovery with many expecting more stimulus.
There were also concerns about rising US covid-19 cases with Greater Miami slow its reopening.
All sectors were weak except Autos
Britain risks throwing away its long-standing relationship with China if it bans Huawei from its 5G networks at the behest of the United States as part of a global battle for technological supremacy, the UK Huawei chairman of the tech group told Reuters.
Angela Merkel is facing criticism in Germany for failing to take a tough line on China over the new national security law it has imposed on Hong Kong, with politicians from both opposition and government parties accusing the chancellor of being too soft on Beijing.
Potential treatments and vaccines in focus on news of late-stage trials on Monday by Regeneron Pharmaceuticals of a antibody cocktail and China’s Sinovac Biotech of a potential vaccine. +VE for sentiment
Micro Focus -19.6% announced 1H loss and bleak outlook for the rest of the year
Bayer -4.9% as US judge questioned part of the German life sciences company’s settlement for claims relating to its weedkiller Roundup causing cancer.
Commerzbank +0.7% on broker upgraded due to ongoing strategic changes.
GERMANY Industrial Production May +7.8% vs -17.5% Apr (F/cast was +11.6%)
FRANCE Balance of Trade May Euro -7.1b vs -5.1b Apr Revises (F/cast was -3.8b)
Current Account May Euro -8.5b vs -5.8b Apr Revised (F/cast was -1b)
UK Halifax House Price Index Jun -0.1% MoM vs -0.2% May (F/cast was -0.6%) [Jun +2.5% YoY vs +2.6% May (F/cast was +2%)]
Labour Productivity Final Q1 -1.3% QoQ vs +0.2% prior (F/cast was -1.1%)
GERMANY No data due
FRANCE No data due
UK No data due
JAPAN Expect Nikkei to open lower with concerns over covid-19 cases and flooding and the weakness in US markets. Yen currently 107.54
Data due Current Account, Bank Lending, Eco Watchers Survey Outlook and Current
Government Tuesday warned of more heavy rain on the southwestern island of Kyushu and bolstered rescue operations as the death toll in flood-hit areas rose past 50 with about a dozen people reported missing. -VE Insurers
Ministry of Economy says supply chains need re-vamp as virus takes it toll. The white paper said hold-ups in shipments of auto parts and electronic components from China had halted factory production in Japan, and called for diversifying procurement routes in order to mitigate future risks.
AGC (5201.T) proposed acquisition of Molmed (MLMD.MI) in doubt as Italy said it would apply special vetting powers on the planned acquisition -VE as sources say Rome could ask AGC to agree to certain conditions for the takeover, but would not halt the offer, which is set to cl’s ose on July 24.
Sharp and New Energy & Industrial Tech Development designing a system to allow EV’s to run with solar power.
JR EAST considering ’time of day’ fare in response to falling passenger numbers.
SOUTH KOREA Expect markets to open lower following weakness in US and Europe and worries over rising covid-19 cases
No data due
A US envoy arrived in South Korea on Tuesday in an effort to renew stalled nuclear talks with North Korea, hours after it issued a statement saying it has no intention of sitting down with the United States and told South Korea to "stop meddling”.
LG Electronics on Tuesday announced its preliminary earnings for Q2 of this year, beating forecasts by market watchers over concerns about sales falls during the COVID-19 outbreak. According to the earnings guidance, LG is expected to have posted 12.8 trillion won ($10.7 billion) in revenue -17.9% YoY and 493.1 billion won -24.4% YoY in operating profit for the April-June period. +VE
Samsung Electronics on Tuesday announced its earnings guidance for Q2 which hinted at an earnings surprise despite the impact of the COVID-19 pandemic on major products. The company forecast it would post 8.1 trillion won ($6.8 billion) in operating profit for the April-June period, +22.7% YoY and +25.6% QoQ. But Q2 revenue is estimated at 52 trillion won, -7.36% YoY and 6.02% QoQ due to decreased sales of consumer products such as smartphones and home electronics. +VE
Korean Air Lines said Tuesday it plans to sell its inflight meal catering and duty-free units to local private equity firm Hahn & Co.
NCSoft continued to perform strong at the stock market, briefly entering the top 10 market capitalization list on Monday, nudging out top automaker Hyundai Motor. But Hyundai Motor managed to recover its 10th place as of Tuesday, though the gap between NCSoft remained at 76.1 billion won ($63.6 million).
Hyundai Motor Group Executive Vice Chairman Chung Euisun on Tuesday met SK Group Chairman Chey Tae-won at SK Innovation’s electric vehicle battery plant in Seosan, South Chungcheong Province, to discuss future partnerships and next-generation EV technologies including lithium-metal batteries. +VE
Global new orders of ships fell to a historic low in the first half of the year amid the coronavirus pandemic, industry sources said Tuesday. By country, Chinese shipbuilders clinched new orders totaling 3.51 million CGTs, or 145 ships, in the January-June period, taking up 61% of the total, trailed by South Korean shipbuilders with 1.18 million CGTs, or 37 ships, and Japanese players with 570,000 CGTs, or 36 ships.
Government and ruling party are scrambling to roll out measures to curb real estate prices, faced with mounting criticism that the Moon Jae-in administration’s related polices have failed.
TAIWAN Expect market to open lower after weak trade data and weakness in US and Europe. Also concerns of China’s actions in Hong Kong
No data due but after market Tuesday
Balance of Trade Jun $4.84b vs 4.72b May (F/cast was 4b)
Exports Jun -3.8% YoY vs -2% May (Consensus was -3%)
Imports Jun -8.6% vs -3.5% May (Consensus was -5.25%)
Inflation Rate Jun -0.76% YoY vs -1.21% May (F/cast was -1%) [Jun +0.39% MoM vs -0.14% May (F/cast was -0.1%)]
Wholesale Prices Jun -10.36% YoY vs -11.6% May (F/cast was -10%)
Exports down as poor shipments of mineral, chemical and plastic products eclipsed record semiconductor sales.
Imports fell as local firms cut back on imports of raw materials and capital equipment by
Taiwan does not need Beijing’s opinions on its partnerships with other countries, the Ministry of Foreign Affairs (MOFA) said yesterday amid protests from China and Somalia over Taiwan’s decision to exchange representative offices with Somaliland. China firmly objects to Taiwan and Somaliland establishing official agencies, Chinese Ministry of Foreign Affairs spokesman Zhao Lijian said on Monday, adding that the Democratic Progressive Party administration is acting like “a drowning person clutching at straws.” Taiwan is not part of the People’s Republic of China, which has never ruled Taiwan for a single day, MOFA spokeswoman Joanne Ou told a news briefing in Taipei yesterday, when asked about the remarks.
Taipei has condemned new regulations under the Hong Kong national security law empowering its police to demand information from groups outside its jurisdiction as a violation of Taiwanese freedoms which will sabotage relations with the city. This is tantamount to a dictatorial regime’s unlimited expansion of its rights to censor even the thoughts of [our people] Taiwan’s Mainland Affairs Council. Taiwanese Premier Su Tseng-chang called the new law draconian, saying it was absurd for Beijing to try to use the legislation to penalise everyone in the world. “We will not help [mainland] China as its accomplice.”
Genius Electronic Optical (supplies camera lenses for Apple Inc’s iPhones), yesterday Consolidated revenue +8.14% MoM +29.33 YoY beating estimates. That was the highest monthly revenue this year and Q2 revenue +14% QoQ and +47 % YoY to NT$3.07 billion. Overall, 1H revenue +79.91% YoY to NT$5.77 billion, the company said. With the launch of new iPhone models later this quarter, Genius could benefit from a potential sales boom in the second half, analysts said. +VE
United Renewable Energy yesterday said that it has formed a solar energy venture with Taiwan Life Insurance, Shin Kong Life Insurance and a venture capital unit of Shin Kong Financial Holding Co. The new venture is to build and operate solar power plants in Taiwan, the statement said.
CHINA Expect market to open flat despite weakness in US but it really depends on Team China rather than fundamentals.
No data due today but out Tuesday AFTER MARKET
Foreign Exchange Reserves Jun $3.112tn vs 3.102tn May (F/cast was 3.12tn)
Slightly below forecasts amid a stronger yuan and an increase in asset prices. Meanwhile, the value of gold reserves increased to USD 110.76 bn from USD 108.29 bn in May.
China must become an “unbeatable rival” if it is to peacefully coexist with the United States in a new cold war, according to a Chinese state media outlet.
China’s anti-corruption watchdog sets out details of ‘decadent’ and ‘corrupt’ lifestyle of fallen Interpol chief Meng Hongwei. A document circulated by the Central Commission for Discipline Inspection accuses the former Interpol president of using military officers as his personal servants and ‘chasing after lust and pleasure’
China’s exporters turn to the domestic market, but can it offset coronavirus demand shock? Beijing is hopeful its 1.4 billion consumers can help plug the gap caused by a plunging overseas demand for products
The United States on Tuesday said it was deeply concerned about China’s detention of Xu Zhangrun, a law professor who has been an outspoken critic of the ruling Communist Party, and urged Beijing to release him.
China is forging ahead in the race to develop a vaccine to help control the COVID-19 pandemic, with Sinovac Biotech’s (SVA.O) experimental vaccine set to become the country’s second and the world’s third to enter final stage testing later this month.
Trump’s limits on international visas unnerve Chinese students in US. A suspension of foreign work visa programmes and a new bar on foreign students at schools with online classes are just the latest restrictions
HONG KONG ADR’s -85pts to open at 25,890 but key will be the actions of Team China. Watch the pre market volumes. Most ADR’s weaker except Petro, HK EX and AIA. Concerns about the impact on media and wider business continue to work investors.
No data due but Tuesday AFTER MARKET
Foreign Exchange Reserves Jun $445.9b vs 442.4b May (F/cast was 448.8b)
IPO MBV INTL (1957.HK), debut last stood at $0.405, -49% vs the listing price $0.80,
HEPALINK (9989.HK) debut listing price of $18.4, and last stood at $18.42, up 0.1%
Short Selling HSI Tuesday 17.5% vs 18.9% Monday
Top Shorts Wharf REIC (1997) 52%, Ping An (2318) 36%, MTRC (66) 36%, China Res Land (1109) 35%, Hang Lung PPT (101) 35%, Henderson Land(12) 34%, Galaxy (27) 32%, CK Asset (1113) 25%
TENCENT (700.HK) Executive Director cum President Lau Chi Ping Martin unloaded 300,000 and 200,000 shares of the company respectively on 30 June and 3 July to cash in approximately $254 million in aggregate, as disclosed by the Stock Exchange. Upon completion, Lau's shareholding dropped to 0.57% from 0.58%.
REGINA MIRACLE (2199.HK) announced that Chairman Hung Yau Lit had on 6 July purchased an aggregate of 2 million shares, involving approximately $4.4928 million.
NATIONAL SECURITY LAW Teresa Cheng warns lawmakers that privileges and immunity enjoyed by them in legislature will not cover breach of new law. She declines to comment on reports of Indian-born judge being removed from recommended list because of non-Chinese ethnicity.Microsoft and Zoom join pause on Hong Kong government data requests
Press reports 450 flats for sale this weekend CK Asset (1113) will launch the third batch of Sea to Sky flats and Wheelock will offer 165 flats at Koko Hills
AGILE GROUP (3383.HK) June 2020, the aggregated presale value RMB14.89 billion with corresponding gross floor area (GFA) of 1.306 million sq.m.. The average selling price is RMB11,405 per sq.m.
CHINA OVERSEAS (688.HK) contracted property sales for June 2020 amounted to RMB57.561 billion, +32.3% YoY From January to June 2020, the accumulated contracted property sales amounted to RMB172.013 billion, +4.2% YoY
The Lands Department issued seven pre-sale consents for residential developments in the second quarter of 2020. The seven pre-sale consents for six residential developments (of which four are phased developments) involve a total of 1,314 residential units.
Cushman & Wakefield reviewed the 2Q20 performance of grade A office and shop leasing markets in Hong Kong, pointing out a steeper office rent decline. Of which, the availability of grade A offices rose to 10.7%, continuously weighing on office rent for 2H20. They projected the overall office availability to climb to around 12% at end-2020. Overall rent will edge down by roughly 8% in 2H, with a 20% slide at Central District for FY20.
MTR (66 HK) Profit Warning Estimates Interim Loss to Range $200-700M. It expected a net loss of approximately HK$400 million (representing the midpoint of the estimated loss range of between HK$200-700 million) for the six months ended 30 June 2020, compared to a net profit of HK$5.5 billion for the same period in 2019.
HANG SENG BANK (11.HK) has introduced a youngsters-targeting fund investment platform, where seven investment funds will be available. No monthly fee will be collected from accounts with net asset value below $5,000.
As USD/ HKD triggered the Strong-side Convertibility Undertaking during Hong Kong trading hours, the HKMA undertook a selling order of US$1.05 bn to inject HK$8.138 bn in the market. The balance of the banking system of Hong Kong will increase to HK$146.933 billion this Thursday (9 July).
Court acquits Hong Kong man accused of pushing policeman during protests. The magistrate ruled he had been coerced into making a confession. The magistrate said her conclusion was supported by the evasive attitude of Constable Wong Ka-chun, who took the caution statement from Kwong, as he had deliberately omitted important details of the case in his own testimony.