Aug 12 ASIAN Macro Initial Thoughts Poor China Loan data, US Futures flat
Covid-19 Globally over 20.1m cases, 738k deaths
Russian President Vladimir Putin said the country's health department approved the registration of a COVID-19 vaccine developed by Moscow’s Gamaleya Institute but there were concerns citing the safety and effectiveness of the vaccine as less than 100 people were dosed with the vaccine.
US Futures opened +70pts but have eased back. S&P and NDX slightly +VE
Big day for HK earnings with Tencent, Cathay Pacific, Unicom and others
DOW -0.38%, NDX -1.69%, S&P -0.8%, Russel 2K -0.6% Markets saw continued rotation out of Tech and into ‘Re-opening names’ with banks seeing good interest JPM +3.2% and GS +1% off early highs. Dow opened higher and traded sideways but sold down into the close. S&P opened slightly higher and traded sideways but sold down into the close, having failed to hit a new high and snapped a 7 day winning run. NDX opened lower, saw rebound but then sold down into the close
Sentiment initially +VE as Treasury Secretary Steven Mnuchin said the White House is open to resuming coronavirus aid talks with Democrats and putting more relief money on the table to reach a compromise.
Biden announces his VP will be Sen. Kamala Harris of California
American Airlines -1.9% having opened +6%, Norwegian Cruise Lines +3.4% but off initial highs
Simon Property Group +2.6% but was higher by 5% in early trading on talk of deal with Amazon
Gap shares +2.6% but off early highs
Inovio, Moderna and BioNTech dropped after Russia’s President Vladimir Putin claimed victory in the race to find a Covid-19 vaccine. Russia granted regulatory approval to a medicine developed by Moscow’s Gamaleya Institute based on fewer than two months of clinical testing and will have a product in mass production by the year end, he said.
Facebook -2.6%, Amazon -2.1%, Apple -3%, Netflix -3.4%, Microsoft -2.3%, Alphabet -1.1%
Canada Goose slipped after the winter-wear maker cut production targets and said to expect a significant drop in current-quarter sales, in part due to department store closures.
Tilray, the cannabis grower, slid on weaker than expected second-quarter results following customer stockpiling in March and the closure of Canadian retail stores.
After market Trump said Government would buy 100 million doses of Moderna’s experimental coronavirus vaccine, which is currently in late-stage human trials.
NFIB Business Optimism Index Jul 98.8 vs 100.6 Jun (F/cast was 97)
PPI Jul +0.6% MoM vs -0.2% Jun (F/cast was +0.3%) [Jul -0.4% YoY vs -0.8% Jun (F/cast was -0.7%)]
Core PPI Jul +0.5% MoM vs -0.3% Jun (F/cast was +0.1%) [Jul +0.3% YoY vs +0.1% Jun (F/cast was +0%)]
Redbook -3.4% YoY vs -7.1% prior (+2.5% MoM vs +1.1% prior)
API Crude Oil Stock Change -4.4m vs -8.587m prior
USD was slightly weaker vs Yen & Euro. Bitcoin -4.8% @ 11,300.96, VIX +8.6% @ 24.03,
US T10 0.643% on hopes of a smooth re-opening
OIL Brent -0.8%, WTI -0.79%
Gold -5.3%, Silver -13.8%, Copper -0.75% as vaccine hopes triggers a rotation into re-open equities.
AHEAD MBA Mortgage Applications and 30 year Mortgage Rate, Core Inflation Rate, Inflation Rate, EIA Oil Report, WASDE Report.
DAX +2.04%, CAC +2.41%, FTSE +1.71% with all sectors +VE. Although the UK reported its largest fall in employment in over 10 years. But sentiment +VE on hopes of a new US stimulus plan.
Auto’s strong on good July sales numbers out of China but Travel and Leisure were the best performers as Putin announces that Russia has a vaccine; although there are doubts about its credibility.
Continental and Valeo led the auto parts makers higher after sales growth jumped in China, the world’s biggest car market.
HSBC matched a rally among the bank stocks after Morgan Stanley upgraded to “equal weight” on valuation grounds.
Tui +10% lead the Travel stocks
GVC Holdings +9.6% following news on Monday that IAC, Barry Diller’s internet investment group, had bought a $1bn stake in its US joint venture partner, MGM Resorts.
Vestas Wind Systems +9.5% after missing profit forecasts but restored its full-year guidance.
Carnival +6.4% on news that Costa Cruises will restart vacations from September 6.
Centamin -7% after a downturn in spot gold prices.
ZEW Economic Sentiment Index Aug 64.0 vs 59.6 Jul (F/cast was 62)
ZEW Economic Sentiment Index Aug 71.5 vs 59.3 Jul (F/cast was 62)
Current Conditions Aug -81.3 vs -80.9 Jul (F/cast was -70)
Employment Change May -220k vs -126k Apr (F/cast was -280k)
Unemployment Rate Jun 3.9% vs 3.9% May (F/cast was 4.2%)
Average Earnings Ex Bonus Jun -0.2% vs +0.7% May (F/cast was 0%)
Average Earnings Inc Bonus Jun -1.2% vs -0.3% May (F/cast was -1%)
EUROZONE Industrial Production
GERMANY No data due
FRANCE No data due
UK Balance of Trade, GDP Growth Rate, GDP, Construction Output, Construction Orders, Industrial Production, Manufacturing Production, Business Investment, Labour Productivity, Goods Trade Balance, NIESR Monthly GDP Tracker.
JAPAN Expect Nikkei to open flat after the US sell off; on recovery hopes after Putin’s announcement of a vaccine. Yen currently 106.46
Data due at 2pm Machine Tool Orders
Japan's top government spokesman voiced "grave concern" over the situation in the Hong Kong regarding the arrests in the highest-profile bust since the national security law entered into force on June 30.
Japan has signed a 36.6 billion yen ($345 million) loan agreement with Vietnam to provide the Southeast Asian country with six patrol boats to boost its maritime law enforcement capabilities, as Beijing steps up its claims in the South China Sea.
SoftBank Group Corp. Chairman and CEO Masayoshi Son said Tuesday that selling its British chip design unit Arm is an option and talks have already started. It recorded a profit of nearly $12 billion in the April-June quarter as gains from disposing former unit Sprint Corp. helped it bounce back from the worst year in its history.
Sekisui House teams up with Marriot to open hotels in 25 prefectures next to Michi-no-eki roadway rest stations. +VE
Mitsubishi Motors Corp. hopes to increase its operating profit in its main market of Southeast Asia to a record ¥100 billion per year after fiscal 2025, CEO and Representative Executive Officer Takao Kato said in an interview with The Yomiuri Shimbun.
SOUTH KOREA Expect markets to flat after US sell off. Key for the Kospi will be holding above 2,400. Hopes of a covid vaccine likely to off-set the US sell-off.
Data due Unemployment Jul 4.2% vs 4.35 Jun (F/cast was 4.1%)
Jeju Air Co., South Korea's biggest low-cost carrier, on Tuesday announced a revised Q2 earnings report, which showed the company posted larger net losses than initially estimated due to the unsuccessful acquisition of debt-ridden Eastar Jet Co. -VE
Samsung Biologics on Tuesday announced its plans to invest 1.74 trillion won ($1.46 billion) and hire 1,800 new employees for a massive fourth plant in Songdo, Incheon, by 2023. +VE
LG U+, said Tuesday that the company has commercialized the world‘s first 5G-based augmented reality glass solutions. The glasses, which are to be connected to users‘ smartphone via USB, can project a display as wide as 254 centimeters. Users can project multiple applications from their smartphones, while using the smartphone as their remote controller. +VE
HDC Hyundai Development Co. which was poised to acquire Asiana Airlines said Tuesday it will hold talks with the majority shareholder Kumho Industrial to revive the stalled deal.
Hyundai Motor Co and auto supplier Aptiv PLC have named their self-driving joint venture Motional, the companies said Tuesday.
TAIWAN Expect market to open lower following the US sell off with tech under pressure, although local results remains +VE.
No data due
Yageo Corp yesterday reported Q2 earnings surged to the highest level in about one-and-a-half years, thanks to rising demand for high-capacity passive components used in 5G smartphones, servers and computers. Net profit +40% to NT$3.3 billion (US$111.75 million) during the April-to-June period, compared with NT$2.35 billion in the first quarter and NT$1.42 billion a year earlier. +VE
FocalTech Systems yesterday posted the steepest increase in quarterly net profit in about three years, benefiting from robust demand for integrated driver and controller (IDC) chips used in tablets and laptops amid the COVID-19 pandemic. FocalTech expects the momentum to extend into the second half of this year, as infection rates rise around the world and demand for chips used in smartphones recovers due to seasonal factors. +VE
Taishin Financial yesterday announced that it is to purchase Prudential Life Insurance Co of Taiwan for NT$5.5 billion (US$186.24 million) and would consider selling 300 million shares in state-run Chang Hwa Bank to fund the deal. +VE
Chunghwa Telecom on Monday reported net profit -6.71% to NT$2.78 billion (US$94.14 million) last month, from NT$2.98 billion in June, ending four consecutive months of growth. Earnings per share (EPS) dropped to NT$0.36 from NT$0.38. However, Chunghwa Telecom’s revenue +2% MoM to NT$16.3 billion from NT$15.98 billion. Slight -VE
Taiwan Mobile net profit last month edged lower to NT$1.028 billion, from NT$1.03 billion a month earlier, with EPS of NT$0.35. Revenue -2.07% to NT$10.38 billion last month from NT$10.67 billion in June. Taiwan Mobile said that its performance in the first seven months was in line with its expectations, as net profit -1% annually to NT$7.39 billion, or EPS of NT$2.63. Slight -VE
CHINA Expect market to open lower with concerns over the new yuan loans
After Market Tuesday
New Yuan Loans Jul CNY 992.7b vs 1810b Jun (F/cast was 1290b)
Outstanding Loan Growth Jul +13% YoY vs +13.2% Jun (F/cast was 13.3%)
Total Social Financing Jul CNY 1690b vs 3430b Jun (F/cast was 1950b)
M2 Money Supply Jul +10.7% YoY vs 11.1% Jun (F/cast was 11.2%)
Household loans, mostly mortgages, fell while corporate loans dipped M2 money supply rose less than expected and after rising the most for over three years during the April-June period. The PBOC announced unprecedented emergency measures early in the year to support the economy hit by the coronavirus pandemic, but a stronger-than-expected rebound in activity during the second quarter reduced the need for more stimulus. Although the recent resurgence of cases may be a concern.Total Social Financing dropped as the Government continues to keep tighten the sector which may be bad news to the SME’s who don’t have access to the main banks.
In July 2020, China's domestic handset shipment -34.8% YoY to 22.301 million units, data from China Academy of Information and Communications Technology (CAICT) revealed. In the first seven months of 2020, handset shipment -20.4% yearly to 175 million.
NIO unveiled second-quarter net loss of RMB1.208 billion, -63.6% from the same period of 2019 and down 29.9% from the first quarter of 2020. The carmaker expected to deliver 11,000 to 11,500 vehicles in the third quarter.
Polestar, the premium electric vehicle maker owned China's Geely and Volvo Cars, would like to eventually be publicly listed, but the immediate focus is on successfully launching the new Polestar 2 electric sedan, the startup's chief executive said on Tuesday.
China's Sinovac Biotech Ltd launched a late-stage human trial on Tuesday that will involve as many as 1,620 patients in Indonesia for a COVID-19 vaccine candidate that it is developing with Indonesian state-owned peer Bio Farma.
Authorities in China have found the novel coronavirus on the packaging of imported frozen seafood that arrived from the port city of Dalian, which recently battled a surge of cases, a local government said on Tuesday.
The Indian government is planning to attract foreign investments to boost the manufacturing of certain products in a bid to beef up India's share in the global market, foreign news media reported. Nitin Gadkari, who heads India's ministry for SME, said it is a high time for his country to win over China's market slice.
HONG KONG ADR’s -122pts to open at 24,767 with most ADR’s weak only Mobile and HSBC (Morgan Stanley upgraded the stock) closed in the green. Earnings in focus with Tencent, Cathay Pacific, Unicom and others due to report. Sentiment weak after the poor China loans data.
No data due
Short Selling HSI Tuesday 17.3% vs 13.1% Monday
Top Shorts Ping An (2318) 41%, Mengniu Dairy (2319) 35%, CCB (939) 35%, Hang Lung PPTY (101) 34%, China Res Land (1109) 34%, CLP (2) 33%, MTRC (66) 28%, Bank of China (3988) 28%, Sino Land (83) 27%, HK & China Gas (3) 26%, NWD (17) 26%, Hang Seng Bank (11) 26%, Country Garden (2007) 25%
The Standing Committee of the National People's Congress of the PRC has unanimously voted for a bill that will allow lawmakers in the 6th Legislative Council of Hong Kong to hold office for at least one more year. While the 6th Legislative Council will run on after 30 September 2020, the 7th Legislative Council will run for a term of four years after its term commences lawfully.
Chinese Manufacturers' Association of Hong Kong, responding to the US request of naming Hong Kong imports as "Made in China" instead of "Made in Hong Kong", said a flurry of US sanctions against Hong Kong is not only an irrational ignorance of the international economic and trade principles, but also a ruthless intervention in Hong Kong's affairs. The Association expressed extreme regret towards the move. The Association voiced hope that Hong Kong authority could file a complaint at the World Trade Organization, and that Chinese department could coordinate on the matter of "Certificate of Origin”.
Seems strange to me that HK should file the complaint but China then co-ordinate, sure that undermines their argument?
Apple Daily saw increased sales of its print edition as Hong Kong people bought copies in an apparent move to support Jimmy Lai and others arrested under Hong Kong’s new security law.
New World Development (17) won the bid for a site in Shanghai for 4.11 billion yuan (HK$4.59 billion). The prime commercial site, in Huangpu district, has a ground area of about 17,170 square meters and a maximum gross floor area of 128,683 sq m.
HKR International (480) sold four flats at Poggibonsi in Discovery Bay Monday for a total of HK$46 million. The four flats, measuring between 551 sq ft and 763 sq ft, are priced at HK$8.71 million to HK$14.87 million.
WH GROUP (288.HK) Wan Long, Chairman & CEO said he is not quite optimistic about the situation in 2H20 under the floods influence in China on aquaculture sector. Given the current internal and external environment, the company has not had any M&A plans or targets for now. The CFO Guo Lijun forecast Chinese pork price to remain high in short term, before turning around at the year end or early next year. The average hog price approximated RMB33 in 1H20, being a relatively high level.
NEXT DIGITAL (282.HK) announced that it noted the recent fluctuations in the price and trading volume of the shares of the Company. It is not aware of any reasons for these price and volume movements or of any information which must be announced to avoid a false market in the Company’s securities or of any inside information that needs to be disclosed.
PRU (2378.HK) announced that it decided to pursue the full separation and divestment of Jackson to enable the Group to focus exclusively on its high-growth Asia and Africa businesses. This would result in two separately listed companies with distinct investment propositions, which the company believed would lead to improved strategic outcomes for both businesses. The Group would have primary listings in both London and Hong Kong and secondary listings in Singapore and the US. Jackson is expected to be solely listed in the US.
PICC GROUP (1339.HK) said that its original premiums income +4.24% YoY to RMB370.942 billion in the month of July.
PICC P&C (2328.HK) original insurance premium income for the period from 1 January 2020 to 31 July 2020 aggregated RMB276.634 billion, +4.3% yearly.
SUNNY OPTICAL (2382.HK) July shipment volume of handset lens sets +25% YoY and vehicle lens sets +16% YoY to 136 million units and 4.745 million units, which was mainly due to the reduced impact from overseas epidemic.
GIORDANO INT'L (709.HK) in 1H20, inventory turnover ratio increased but 70%-80% of the stock are basic items which could be sold over a long period of time and therefore there's no urgency to clear the stock; management revealed during an online conference. The company is confident that inventory level in 2H20 would be more satisfactory as compared with that recorded at the end of 1H20. The company will try to attract local spending by product diversity despite the grim outlook about Hong Kong's retail market for 2H20.The company is currently operating more than 60 shops in Hong Kong and there are around 10 shops with pending lease contract renewal in 2H20, Chairman and Chief Executive LAU Peter said if they could not get 50%-60% of rental reductions, they might consider closing down the relevant stores and focusing resources on locations like Taiwan, South Korea and Thailand where performance recovery is more evident than in Hong Kong.
PRU (2378.HK) interim net profit -74.2% YoY to US$512 million on actual exchange rate basis, with EPS of US19.7 cents. The company announced the first interim DPS of US5.37 cents, representing one third of the current expectation for the 2020 full-year dividend under the new dividend policy.
CHINA LIT (772.HK) interim results ended June 2020. Loss was RMB3.296 billion, against RMB393 million profit a year ago. LPS equaled RMB3.3. No dividend was declared. Non-IFRS net profit amounted to RMB21.679 million, -94.4% yearly.
WH GROUP (288.HK) interim results ended June 2020. Net profit before biological fair value adjustments amounted to US$550 million, +18.8% YoY of which EPS equaled US3.73 cents. Net profit after biological fair value adjustments amounted to US$317 million, -44.3% YoY, of which EPS equaled US2.15 cents. Interim DPS was HK$0.05, flattish yearly.
CHINA LONGYUAN (916.HK) interim result ended June 2020. The net profit amounted to RMB3.21 billion, up 4% yearly. EPS was 39.94 fen. No interim dividend was declared.
HUA HONG SEMI (1347.HK) Q2 results ended June 2020. Revenue -2% YoY to US$225 million. Net profit amounted to US$17.826 million, -58.9% YoY. EPS equaled US$0.014. Gross margin was 26%, +4.9 ppts quarterly.