Aug 10 ASIAN MACRO INITIAL THOUGHTS. Dow futures open -55pts
Covid-19 Globally over 19.75m cases, 729k deaths
DOW futures open slightly lower -55pts S&P futures -0.2% and NDX futures -0.4%.
WHO warns late stage human trials do not mean a vaccine will be available soon
Earnings continue but the key for the market will be the escalation of tensions between the US and China as 11 Chinese and Hong Kong Officials sanctioned.
Trump signs executive orders for new Stimulus +VE although the Democrats on Sunday said the orders were weak and unconstitutional. Regardless +VE for markets Monday and should help get a full deal between the Democrats and Republicans.
Data this week for the US will focus on Inflation (Wednesday) and Retail Sales and Business Inventories (Friday), traders will also be watching how the USD moves. China Monday Inflation and PPI later in the weak New Yuan Loans, Social Financing, Retail Sales and Unemployment
EARNINGS Monday Marriott, Simon Property Group, Occidental Petroleum, Liberty Media, Tilray, IAC/InterActive, International Flavors and Fragrances, Canopy Growth, SeaWorld, Barrick Gold, Duke Energy, Royal Caribbean, DoYou
JAPAN Market closed re-opens Tuesdays Yen closed Friday 105.91 slightly weaker
No data due
New virus cases hit 331 in Tokyo on Sunday but down from over 420 cases on Saturday & Friday -VE for sentiment.
Prime Minister Shinzo Abe on Sunday pledged to make additional efforts to combat the coronavirus so that the government would not have to declare another state of emergency in the future,
Japan and Britain agree in substance on trade pact. They aim to have broad agreement but end of August +VE
The Government Pension Investment Fund, which manages public pension reserves, said Friday that its investment performance in the April-June period this year was a surplus of ¥12.4868 trillion. The rate of return was 8.30%. On a quarterly basis, this is the largest quarterly surplus and rate of return since 2008, when the GPIF started to manage all pension reserves. +VE
Nagashiki Shipping owner and Mitsui OSK Lines operator -VE after the MV Wakashio, struck the reef on Mauritius’ southeast coast on July 25. Fuel started leaking from the cracked vessel on Thursday.
Activist fund Effissimo Capital Management, the biggest investor in Toshiba Corp (6502.T), was kept in limbo by Japan’s government over a key shareholder vote until the day before the industrial conglomerate’s annual meeting, two government sources said. The delayed approval to hold the vote on appointing outside directors to Toshiba’s board illustrates how Japan’s tighter rules on foreign ownership, introduced in June and designed to protect industries critical to national security, may also potentially be used to keep activist shareholders in check. -VE
Takeda Pharmaceutical will manufacture and sell up to 250 million doses of Novavax Inc’s COVID-19 vaccine candidate in Japan every year, the two companies said on Friday. To ramp up production, Takeda will get funding from Japan’s Health, Labour and Welfare ministry, the companies said. +VE
Japan plans to buy AstraZeneca's experimental COVID-19 vaccine. To buy 120 million doses of AstraZeneca Plc's experimental COVID-19 vaccine from early next year, the health minister said on Friday, adding that domestic pharmaceutical firms would help in supplying the drug. The agreement with the British drugmaker comes after Japan announced a deal last week to buy 120 million doses of a COVID-19 vaccine candidate developed by Pfizer Inc and BioNTech SE.
Nippon Steel Corp has filed an appeal against a South Korean court decision last year that would allow for a seizure of its assets to compensate laborers forced to work during World War II, a court official said on Friday.
SOUTH KOREA Expect markets to open flat as US/China tensions rise but sentiment +VE as Trump signs an Executive order for a new stimulus package.
No data due
Thousands of South Korean trainee doctors went on strike on Friday, protesting outside parliament against a government plan to boost the number of medical students in the country, arguing it would be a poor use of additional funding for the sector.
Government said Sunday it plans to recalibrate its subsidy program for electric vehicles as 43% of total grants in the January-June period were for premium Tesla brands. It aims to revise the current calculation system for EV subsidies by October after discussions with municipalities, related experts and concerning associations. High-end EV brands are expected to be removed after consultations. +VE Korea EV’s -VE for Tesla.
Consumers would face higher shopping cart prices this week, due to spikes in wholesale prices of various kinds of produce during the prolonged rainfall over weeks, according to the retail industry on Sunday.
Hanjin KAL Corp. said Friday it will spend 53.6 billion won (US$45.2 million) to buy new shares to be issued by its low-cost carrier Jin Air Co.
HDC Hyundai Development Co. has agreed to face-to-face negotiations with Kumho Industrial to prevent the rupture of the deal to acquire Asiana Airlines, according to a statement released by HDC on Sunday.
Hanwha Q Cells, a leading solar power solutions provider, said Friday that it will buy U.S. energy software company Geli to further its standing in the industry. The deal is subject to Cfius approval. +VE
KT said Friday its operating profit increased by 18.6% though its sales dropped during the same period in the second quarter this year. Operating income of KT in the second quarter reached 207.6 billion won ($175 million), compared to 203 billion won last year, according to a regulatory filing Friday. Improved earnings from business-to-business units helped the company’s latest performance along with cost cutting +VE
Genexine‘s COVID-19 treatment candidate GX-17 was given the Korean drug authority’s grant to proceed to phase 1 human trials, Friday. With the addition of GX-17, South Korea now has 13 treatment researches and two vaccine researches ongoing to tackle COVID-19. +VE
Celltrion posted a record-setting second quarter report on Friday, citing Truxima’s rapid market uptake in the US and increased productivity at its reinforced plant No. 1 in Songdo, Incheon. Celltrion’s second quarter revenue reached 428.8 billion won ($361.7 million), up 82.5 percent on-year, and operating profit hit 181.8 billion won, up 118 percent on-year. Both are the highest numbers Celltrion has reported in any quarter. +VE
LG U+ on Sunday unveiled a 5G solution that can control up to 50 self-driving forklift trucks simultaneously. +VE
LG U+ said it’s Q2 operating profit +59.2% YoY , the fastest growth rate for three consecutive quarters among local mobile carriers. In the meantime, quarterly sales for LG U+ went up by 5.1 percent on-year to reach 3.2 trillion won ($2.7 billion) during the April-June period, the company added. LG U+ explained its recent performance has been due to increased subscribers to its wireless business. +VE
TAIWAN Expect market to open flat after the weakness in the US NDX on Friday. But downside limited by the good trade data released after market Friday and news the Trump has signed an Executive order for new stimulus.
No data due
After Market Friday Balance of Trade Jul $5.37b vs 4.84b Jun (F/cast was 4b)
Exports Jul +0.4% YoY vs -3.8% Jun (Consensus was -0.22%)
Imports Jul -6.8% YoY vs -8.6% Jun (Consensus was -3.1%)
Tension with China likely to rise over the funeral of Taiwan’s former leader Lee Teng-hui depending on the attendees, especially from the US. Also whether the event is acknowledged internationally.
US Health Sec arrived in Taiwan Sunday the highest level US official since 1979
The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. +VE
Three government incentive programs launched early last year to attract investments from Taiwanese businesses have accrued NT$1.072 trillion (US$36.32 billion) in investment pledges from 595 companies, the Ministry of Economic Affairs said on Friday. The programs, which provide participating companies with assistance for financing, taxation, land, utilities and labor, are estimated to create 89,153 jobs, the ministry said in a statement. Another 58 companies are waiting for approval to invest in the nation, the ministry said. +VE
Sino-American Silicon Products Inc’s shares rallied 6.75% in early trading Friday after the company announced its NT$3.5 billion (US$118.59 million) equity investment in compound semiconductor supplier Advanced Wireless Semiconductor. Seen as a ‘win win situation’: The companies plan to collaborate in developing products with gallium nitride to supply key components used in 5G devices and high-power products. +VE
WATCH General Interface Solution Holding as Yuanta expects its rally to continue as benefits from the transfer of orders from Chinese O-Film Tech that was added to the US ‘entity list’ last month and it has moved into the mini-LED iPad and MacBook supply chain +VE
Domestic diesel prices are this week to increase NT$0.1 per liter, but gasoline prices are to remain unchanged even though international crude oil prices increased last week, CPC Corp, Taiwan and Formosa Petrochemical Corp announced separately Sunday.
CHINA Expect market to open lower after Trump sanctioned members of the Hong Kong Administration and Chinese representatives; traders will watch for Beijing’s reaction. Also sentiment cautious ahead of the Inflation and PPI data.
Data due Inflation Rate Jul (Jun was +2.5% YoY (F/cast is +2.7%). (Jun -0.1% YoY F/cast is +0.6%).
PPI Jul (Jun was -3% F/cast is -2.4%)
After market Friday
Foreign Exchange Reserves Jul $3.154tn vs 3.112t Jun (F/cast was 3.12t)
China said Saturday that it received reports of 31 new confirmed coronavirus patients in the mainland Friday, including 25 locally infected. Of the local patients, all were reported in Xinjiang
The Standing Committee of the National People’s Congress (NPCSC) would be reportedly discussing the Legislative Council power vacuum in Hong Kong in its four-day meeting starting Sunday.
In 2019, China's per capita gross national income (GNI) grew to US$10,410, the first time to top US$10,000, as National Bureau of Statistics wrote in an article on Friday.
Huawei said production of its most advanced smartphone chips would stop in September due to US sanctions, causing a “huge loss”. Huawei does not have the capacity to manufacture the Kirin 9000 chips required for the high-end smartphone.
Press reports that China on Saturday called for frank dialogue and closer cooperation in reaction to news that Trump administration officials had urged the U.S. president to delist Chinese companies that trade on US exchanges and fail to meet its auditing requirements by January 2022. -VE for sentiment
Authorities in a city in the Chinese region of Inner Mongolia issued a warning after a patient who had bubonic plague died of multiple organ failure, state media reported on Saturday. Slight -VE
Canadian canola prices spike to two-year high as shippers find back door to China. Chinese authorities blocked shipments since March 2019 by two Canadian exporters, after Canadian police detained a Huawei Technologies executive in late 2018. The dispute however, has not spoiled China’s appetite for canola, which is mainly processed into vegetable oil. While China is buying less from Canada directly, it has bought canola oil instead from Europe and the United Arab Emirates, with some of that oil made from Canadian canola, traders said. Slight -VE for Chinese Economy.
SCMP reports that the US’s John Deere has a heavy presence in the western Chinese region, where dominant entities face US sanctions over alleged human rights abuses. Trade records show that the United States has sold nearly half a billion dollars’ worth of heavy-duty cotton-harvesting equipment to Xinjiang since 2017, helping the region produce one-fifth of the world’s cotton.
HONG KONG ADR’s -146pts to open at 24,385 but expect more downside as investors worry about latest US sanctions and possible Chinese response; which so far has just been statements. Also expect some early margin call selling after Friday’s significant sell-off. Plus a number of profit warnings over the weekend.
Trumps signing of an executive order on stimulus +VE for some exporters.
No Data due
After market Friday
Foreign Exchange Reserves Jul $450b vs 445.9b Jun (F/cast was 447.5b)
EARNINGS Hysan (14), Guotai Junan International (1788), Shandong Chenming Paper Holdings(1812), Lifestyle China (2136), Prudential (2378),
Short Selling HSI Friday 14.8% vs 17.9% Thursday
Top Shorts Hang Seng Bank (11) 48%, CLP (2) 47%, MTRC (66) 37%, HK & China Gas (3) 36%, China Mobile (941) 34%, Petrochina (857) 33%, China Res Land (1109) 33%, Sunny Optical (2382) 32%, Mengniu Dairy (2319) 31%, CK Assets (1113) 30%, Swire Pac A (19) 29%, CCB (939) 28%, China Shenhua (1088) 28%, Power Assets (6) 28%,CKI (1038) 28%, Bank of China (3988) 27%, Ping An (2318) 25%.
BAWANG GROUP (1338.HK) PROFIT WARNING but loss to narrow expects that the Group will record a net loss of RMB5 million during the six months ended 30 June 2020, when compared with net loss of RMB18.6 million recorded for the same period last year.
PETRO-KING (2178.HK) PROFIT WARNING -VE expects to record a loss of not more than HK$15 million for the six months ended 30 June 2020 as compared to a profit of HK$8 million for the corresponding period in 2019.
MAOYAN ENT (1896.HK) PROFIT WARNING -VE revenue of the Group for 1H2020 is expected to range between RMB200 million and RMB230 million, down 88%-90% yearly; the net loss for 1H2020 is expected to range between RMB390 million and RMB440 million, while it recorded a net profit of RMB262 million for the six months ended June 30, 2019.
SSY GROUP (2005.HK) PROFIT WARNING -VE for the six months ended 30 June 2020 was expected to record a drop ranging from 50%-60% as compared with that of the same period of 2019.
CANGNAN INST (1743.HK) PROFIT WARNING -VE. The Group expected a -55% to -70% YoY drop in the net profit for the six months ended 30 June 2020 -VE
CHINACOMSERVICE (552.HK) PROFIT WARNING -VE announced that the total revenue and the profit for the six months ended 30 June 2020 are expected to decrease as compared to the same period of last year, and such decrease is expected to be no more than 5% and 10%, respectively.
SING TAO (1105.HK) PROFIT WARNING -VE expecting a loss of approx HK$61.4 million for the six months ended 30 June 2020 (2019 loss after tax: approx HK$7.6 million).
HEVOL SERVICES (6093.HK) PROFIT ALERT +VE It is expected that the Group’s net profit for the six months ended 30 June 2020 will increase by more than 500% as compared with that for the six months ended 30 June 2019.
FIH (2038.HK) interim results for the six months ended 30 June 2020. The loss deepened to US$101 million from US$84.08 million over a year ago. LPS was US1.2 cents. No dividend was declared. -VE
NEW CONCEPTS (2221.HK) audited annual results for the year ended 31 March 2020. The loss expanded to $296 million from $92.66 million over a year ago. LPS equaled 51.61 cents. No dividend was declared. -VE
CHINA NEW TOWN (1278.HK) unaudited interim results announcement for the six months ended 30 June 2020. The net profit -60.7% yearly to RMB34.92 million. EPS was 0.36 fen. No dividend was declared. -VE
KE Holdings Inc, a China-based real estate services provider backed by Tencent (0700.HK), said on Friday it will aim to raise up to $2 billion in its US initial public offering. It owns real estate brokerage brand Lianjia and housing transactions platform Beike, said it would offer 106 million American depositary shares (ADS), priced between $17 and $19 a piece, and will list on the NYSE under the symbol “BEKE”.
Wilfred Wong, President of SANDS CHINA LTD (1928.HK) said the 2Q20 loss was well expected given Macau's lockdown in early year. The hotel and facilities of The Londoner Macao are geared to open, Wong said. Yet due to low hotel occupancy rate, the company will not set the grand opening date until tourist arrivals in Macau increase significantly.
CATHAY PAC AIR (293.HK) results of rights issue. Valid acceptances and applications in respect of 3.43 billion Rights Shares were received, representing 137% of the total number of Rights Shares. Accordingly, the Rights Issue became unconditional. Dealings in Rights Shares in their fully paid form on the Stock Exchange are expected to commence on 11 August 2020. Upon completion, the shareholding of SWIRE PACIFIC A (19.HK), AIR CHINA (753.HK) and Qatar Airways in CATHAY PAC AIR remained intact at 45%, 29.99% and 9.99%.
NASDAQ-listed Baozun, a Chinese e-commerce service provider, intends to float on Hong Kong stock market as second listing as soon as September, raising approximately US$500 n, Bloomberg cited sources. The company is in talks with Citigroup, CMBI and Credit Suisse for the listing, sources said. BABA-SW (9988.HK) is the substantial shareholder of Baozun with a 14% stake, whilst SoftBank's Tsubasa Corporation holds 10.6%.
GAC GROUP (2238.HK) announced that in July, the production and sales
volume of the company hiked 21.6% and 16.4% yearly to 202,400 vehicles and 183,900 vehicles.
SHK PPT (16.HK)'s Regency Bay sold 150 units, representing over 92% of the available units, to cash in nearly $1 billion. The average transacting price exceeded $18,510 per sq.ft. The developer unveiled the 4th price list at the same price today, involving 38 flats measuring 254-514 sq.ft.
Empire Group and Hong Kong Ferry (50) sold all 185 units offered in the third and fourth price lists at Seacoast Royale in Tuen Mun having been 50x oversubscribed
Centaline reported 14 secondary transactions on 10 major estates +180% WoW as some vendors cut asking prices.
LINK REIT (823) to waive management and air con charges for all tenants in August and September along with other measures estimate to double its support scheme for tenants taking the cost to HK$600m
ByteDance expressed that it is astounded by US President Donald Trump's latest executive order, which it claims not to be executed under legal procedures, and that it will file a lawsuit in the US in case of any unfair treatment. Trump has recently signed an order, beginning in 45 days, to ban transactions of US companies with TikTok's parent ByteDance and TENCENT (700.HK)'s WeChat.
TENCENT (700.HK) is looking at the latest executive order signed by US President Trump, which will in 45 days ban transactions of US companies with TikTok's parent ByteDance and WeChat, said a spokesperson. On the news, TENCENT -5.04% Friday to $527.5 at close.
Centa-City Leading Index (CCL) last printed at 180.74, down 0.52% weekly. The index shed 0.57% in two weeks.
CCL Mass sagged 0.8% weekly to 183.52.
CCL (small-and-medium units) sank 0.71% weekly to 181.03, reflecting the new anti-plague measures for the week as in mid-July.
CCL (large units) climbed 0.47% weekly to 179.24, setting a 36-week high.
Friday’s Closing Data
DOW +0.17%, NDX -0.87%, S&P +0.06%, Russel 2K +1.59% Dow & S&P traded sideways for most of the day with an uptick into the close. NDX traded lower for most of the day but did reverse in the late afternoon to close off the lows. US jobs report was encouraging but the stand-off on the new stimulus package and increased US/China tensions capped the upside.
On the new stimulus the $600-per-week enhanced federal unemployment benefit that expired at the end of July is the sticking point. Democrats want to extend the benefit for the same amount while Republicans want a reduced weekly rate.
Amazon -1.8%, Netflix -2.8%. Microsoft -1.8%, Apple -2.3% and Alphabet -0.4%
Trump announced sanctions on Hong Kong’s CEO Carrie Lam and a number of other key members of the administration -VE for sentiment.
Non Farm Payrolls Jul 1.763m vs 4.8m Jun (F/cast was 1.62m)
Unemployment Rate Jul 10.2% vs 11.1% Jun (F/cast was 10.5%)
Ave Hourly Earnings Jul +4.8% YoY vs 4.9% Jun revised (F/cast was +4.5%)
Ave Weekly Hours Jul 34.5 vs 34.6 Jun revised (F/cast was 34.4)
Participation Rate Jul 61.4% vs 61.5% Jun (F/cast was 61.5%)
Wholesale Inventories Jun-1.4% vs -1.2% May (F/cast was -2%)
Baker Hughes Total Oil Rig Count 247 vs 251 prior
Consumer Credit Change Jun $8.95b vs -18.28b May (F/cast was +10b)
USD was stronger vs Yen & Euro. Bitcoin -0.3% @ 11,563.75, VIX -1.9% @ 22.21,
US T10 0.566% yields climb on good jobs number
OIL Brent -1.7%, WTI -1.6% on demand concerns
Gold -1.1%, Silver -3%, Copper -4% but gold still above $2000, some weakness as USD rebounds and standoff over new US stimulus.
EARNINGS Marriott, Simon Property Group, Occidental Petroleum, Liberty Media, Tilray, IAC/InterActive, International Flavors and Fragrances, Canopy Growth, SeaWorld, Barrick Gold, Duke Energy, Royal Caribbean, DoYou
AHEAD Jolts Job Openings, Consumer Inflation Expectations
DAX +0.66%, CAC +0.09%, FTSE +0.09% Markets opened around flat, some initial weakness but then worked slightly better for the rest of the day. Helped by good European data and an encouraging US jobs report. But upside capped by increased US/China tensions as Trump issues a ban on TikTok and WeChat. Telco’s lead the gains whilst Basic Resources were the laggards.
Hikma Pharmaceuticals +10.9% after 1H profit jump and it raised its sales outlook.
TP ICAP -7-7% after its first-half earnings report, in which the London-listed brokerage cautioned of a weak start to the second half.
British Airways announced more than 10,000 workers are being made redundant, about 6,000 are voluntary redundancies.
Balance of Trade Jun Euro +15.6b vs +7.0b May (F/cast was +1.4b)
Industrial Production Jun +8.9% MoM vs +7.4% May (F/cast was +7.5%)
Exports sa Jun +14.9% vs +8.9% May revised (Consensus was +13.3%)
Imports sa Jun +7% vs +3.6% May revised (Consensus was +10.9%)
Current Account Jun Euro 22.4b vs 7b May revised (F/cast was 14.0b)
Industrial Production Jun +12.7% MoM vs +19.9% May (F/cast was +11.1%)
Balance of Trade Jun Euro -8b vs -7.5b May revised (F/cast was -2.3b)
Current Account Jun Euro -8.4b vs -8.2b May revised (F/cast was -2.4b)
Private Non Farm Payrolls Q2 -0.6% QoQ vs -2.5% prior (F/cast was -7.1%)
Halifax House Price Index Jul +1.6% MoM vs -0.1% Jun (F/cast was +0.3%) [Jul +3.8% YoY vs +2.5% Jun (F/cast was +2.3%)]
EUROZONE No data due
GERMANY No data due
FRANCE No data due
UK No data due