Aug 13 ASIAN MACRO INITIAL THOUGHTS. US Futures flat


17 Aug

Aug 13 ASIAN MACRO INITIAL THOUGHTS. US Futures flat

Covid-19 Globally over 20.4m cases, 744k deaths
US Futures opened flat

EARNINGS Tapestry, Applied Materials, Brookfield Asset Management, NetEase, Azek
EARNINGS Hong Kong Swire Pac (19 & 87), Galaxy Ent (27), CP Pokphand (43), Chinese Estates (127), China Everbright Int (257), PAX Global (327), Yue Yuen (551), Value Partners (806), Prosperity Reit (808), Convenience Retail Asia (831), China Mobile (941), Lenovo (992), Towngas China (1083), Ausnutria Dairy (1717), Swire Property (1972), Li Ning (2331), WuXi AppTec Co (2359), BOC Aviation (2588), Beijing Tong Ren Tang (3613), Pou Sheng (3813),


DOW +1.05%, NDX +2.13%, S&P +1.4%, Russel 2K +0.5% Dow traded sideways, S&P rose but still didn’t manage to make a new high and NDX rebounded.
Facebook +1.4%, Apple +3.3% and Amazon +2.6%, Netflix +1.8% and Microsoft +2.8%.
Re-opening names and Banks lagged. Lawmakers continue to haggle over a new stimulus package.
DATA
MBA Mortgage Applications +6.8% vs -5.1% prior
MBA 30 year Mortgage Rate 3.06% vs 3.14% prior,
Core Inflation Rate Jul +1.6% YoY vs +1.2% Jun (F/cast was 1%)
Core Inflation Rate Jul +0.6% MoM vs +0.2% Jun (F/cast was 0.1%)
Inflation Rate Jul +1% YoY vs +0.6% Jun (F/cast was +0.7%)
Inflation Rate Jul +0.6% MoM vs +0.6% Jun (F/cast was +0.3%)
EIA Crude Oil Stocks change -4.512m vs -7.373m (Concensus was -2.875m)
EIA Crude Gasoline Stocks change -0.722m vs +0.419m (Concensus was -0.674m)
WASDE Report.
USD was weaker vs Yen & Euro. Bitcoin +1.6% @ 11,568, VIX -7.3% @ 22.28, US T10 0.673%
OIL Brent +2.1%, WTI +2.6% on larger than expected US inventory drop
Gold +1.4%, Silver +4.3%, Copper +2.3%
AHEAD Export Prices, Import Prices, Initial Claims, 4 week average Claims, EIA Gas Report.

DAX +0.86%, CAC +0.9 %, FTSE +2.04% markets opened mixed UK opened flat but working higher weak data much showed the economy entered a technical recession. But all markets worked higher for most of the day dipping slightly into the close.
Telcos lead the gains but Travel and Leisure fell on covid concerns as globally the cases now exceed 20m. New Zealand announced its first cast in 102 days, and cases in France saw a sharp rise.
ABN Amro +8% as Q2 beat expectations, while also announcing that it would quit its trade and commodity financing operations in a massive corporate bank overhaul.
Sunrise Communications +27% after Liberty Global launched a full takeover bid. Freenet +17%.
ISS A/S -7% and German biotech firm Evotec -7% after 1H earnings reports.
DATA
EUROZONE
Industrial Production Jun -12.3% YoY vs -20.4% May revised (F/cast was -12%)
Industrial Production Jun +9.1% MoM vs +12.3% May revised (F/cast was +10%)
UK
Balance of Trade Jun GBP 5.3b vs 7.7b revised (F/cast was 2.8b)
GDP Growth Rate Q2 -20.4% QoQ vs -2.2% prior (F/cast was -20.4%)
GDP Growth Rate Q2 -21.7% YoY vs -1.7% prior (F/cast was -23%)
Construction Output Jun -24.8% YoY vs -40% revised (F/cast was -20%)
Industrial Production Jun -12.5% YoY vs -20% (F/cast was -14%)
Industrial Production Jun +9.3% MoM vs +6.2% revised (F/cast was +8.7%)
GDP 3 month average Jun -20.4% vs -18.7% revised (F/cast was -20.4%)
Manufacturing Production Jun -14.6% YoY vs -23.1% revised (F/cast was -16.7%)
Manufacturing Production Jun +11% MoM vs +8.3% revised (F/cast was +9.5%)
Business Investment Prelim Q2 -31.4 QoQ vs -0.3% prior (F/cast was -3%)
Business Investment Prelim Q2 -31.3 YoY vs +0.8% prior (F/cast was -8.8%)
Labour Productivity Prelim Q2 -2.5% vs -1.3% prior (F/cast was -6.6%)
Construction Orders Q2 -45% vs -3.3% Q1 revised (F/cast was -6.2%)
Goods Trade Balance Jun GBP -5.12b vs -2.81b May (F/cast was -4b)
NIESR Monthly GDP Tracker Jul -7.9% vs -20.4% Jun revised (F/cast was -18.6%)
AHEAD
EUROZONE No data due
GERMANY Wholesale Prices, Inflation Rate
FRANCE Unemployment Rate, IEA Oil Report
UK No data due

JAPAN Expect Nikkei to open higher following the US rally Yen currently 106.85
Data due
PPI
Hitachi Ltd. said Wednesday that the firm and a subsidiary of Canada's Bombardier Inc. will supply 23 high-speed trains to an Italian railway operator for services in Spain +VE
JGC Holdings Corp. said Wednesday that it has won a contract to renovate a refinery in Iraq. +VE
Toshiba Corp. reported Wednesday a net loss of ¥11.35 billion ($106 million) in the April-June period due to sluggish performance in its storage device segment hit by coronavirus-trigged disruptions.
Japanese bank lending hit a record high in July as regional lenders continued to boost loans to small firms hit by the coronavirus pandemic, central bank data showed on Tuesday. But the annual pace of increase in major banks' lending slowed as funding demand from big firms eased, suggesting that the wall of money printed by the Bank of Japan has helped address immediate corporate funding strains.


SOUTH KOREA Expect markets to open higher following the US rally
No data due
LG Electronics signed a deal Wednesday with local partners to develop 6G 
telecommunication technologies, the company said. South Korea's No. 2 tech firm partnered with the Korea Research Institute of Standards and Science, and the Korea Advanced Institute of Science and Technology to develop technologies for the next-generation wireless communications system.
Hanwha Q Cells said Wednesday it has received a prestigious award in Germany, taking the first place in the electrical industry category, topping major local players including R. Stahl and Dehn und Söhne.
KT on Wednesday announced the launch of its subscription-based game service that streams computer and console games on smartphones. The streaming service will be up against rivals SK Telecom and LG U+, who have joined hands with Microsoft and Ndivia, respectively, for a similar service.
Agricultural produce prices have surged as the monsoon season continued for nearly 50 days, according to data by the Ministry of Agriculture, Food and Rural Affairs. The ministry said it will implement measures to stabilize supplies of vegetables that are consumed the most during the summer and autumn seasons such as Chinese cabbage, radish, zucchini and perilla leaves.


TAIWAN Expect market to open higher follow the US rebound in tech names.
No Data due
Hon Hai Precision Industry said Q2 financial results met the company’s expectations 
and forecast that Q3 revenue would be higher than the Q2, but lower than a year earlier.
Net profit was NT$22.88 billion (US$774.5 million) last quarter, +998% QoQ and +34% YoY .That translated into earnings per share of NT$1.65, up from NT$0.15 in the first quarter and NT$1.23 a year earlier. Chairman Young Liu said it’s gradually adding more capacity outside of China, the main base of production for gadgets from iPhones to Dell desktops and Nintendo Switches. The proportion outside the country is now at 30 percent, up from 25 percent last June.That ratio will rise as the company -- known also as Foxconn -- moves more manufacturing to Southeast Asia and other regions to avoid escalating tariffs on Chinese-made goods headed to US markets, Liu told reporters after his company reported financial results. +VE
Sercomm Corp yesterday said that net profit last quarter +34% YoY as remote study and work-from-home trends amid the COVID-19 pandemic boosted Internet use. The growth momentum is expected to magnify in the second half of the year, as the world is still trying to contain the pandemic, Sercomm said, adding that it expects revenue to grow this quarter and next quarter. +VE
Compal Electronics yesterday said net profit last quarter rose 3.28 times from a quarter earlier, benefiting from work-from-home and remote learning trends amid COVID-19 lockdowns. Net profit NT$1.99 billion (US$67.37 million) last quarter, compared with NT$605 million in the prior quarter and up 11 percent from NT$1.79 billion a year earlier. Earnings per share (EPS) rose to NT$0.46 from NT$0.13 a quarter earlier and NT$0.41 a year earlier. +VE
Wistron Corp, which makes laptops and Apple Inc iPhones, yesterday said net profit last quarter rose to NT$2.85 billion from NT$1.25 billion a year earlier, with EPS increasing from NT$0.44 to NT$1.01 over the period. In the first half of this year, net profit expanded 59 percent to NT$3.57 billion from the prior year, with EPS of NT$1.27. Wistron’s board of directors approved an investment of US$45 million in a Malaysia unit, Wistron Technology (Malaysia) Sdn Bhd, to cope with business expansion there. +VE

CHINA Expect market to open higher but investors remain cautious about US/China relations
No data due
US to make China’s Confucius Institutes register as ‘foreign missions’ 
meaning that they are then bound by the rules that govern embassies and consulates.
Tencent’s drama based on CrossFire game reflects rising popularity of e-sports CrossFire, a Chinese television series based on the video game of the same name, racked up 980 million views in less than four weeks. China’s booming e-sports industry grew by almost 55% in the first half of the year
Hong Kong International Airport said on Thursday that passengers from mainland China would be able to transit through Hong Kong to other destinations from Aug. 15 until Oct. 15, in a boost for its dominant carrier Cathay Pacific.


HONG KONG ADR’s +192pts to open at 25,436 expect some initial short coving after increased shorting yesterday. Results in focus

EARNINGS Hong Kong due include Swire Pac (19 & 87), Galaxy Ent (27), CP Pokphand (43), Chinese Estates (127), China Everbright Int (257), PAX Global (327), Yue Yuen (551), Value Partners (806), Prosperity Reit (808), Convenience Retail Asia (831), China Mobile (941), Lenovo (992), Towngas China (1083), Ausnutria Dairy (1717), Swire Property (1972), Li Ning (2331), WuXi AppTec Co (2359), BOC Aviation (2588), Beijing Tong Ren Tang (3613), Pou Sheng (3813).

No data due
Short Selling HSI Wednesday 18% vs 17.3% Tuesday 

Top Shorts Hang Lung PPTY (101) 54%, CCB (939) 42%, Ping An (2318) 41%, CLP (2) 35%, Sino Land (83) 35%, Sunny Optical (2382) 33%, WH Group (288) 32%, NWD (17) 32%, China Res Land (1109) 30%, Hengan (1044) 29%, Hang Seng Bank (11) 28%, China Mobile (941) 27%, HK & China Gas (3) 26%, Mengniu Dairy (2319) 25%.

WATCH
TENCENT Interim Non-IFRS NP +29% YoY to RMB57.232B, In Line but Interim NP +21% YoY to RMB62.003B, Beat
Forecasts
Q2 net profit +37% YoY and +15% QoQ to RMB33.107 billion. During the period, online games revenues rose 40% yearly to RMB38.288 billion.
Waiting for the briefing more more details and the potential impact of sanctions on WeChat.
CATHAY PAC AIR (293.HK) posted a monthly loss of $1.5 billion at the moment and the company won't be sustainable if this situation persists, Chairman Patrick Healy said at a press conference. It is necessary to proceed with restructuring with the optimal operating scale and model expected to be proposed at the Board in 4Q20. The airline is not excluding any possibility though no decision has been made. Healy also believed business performance in 2H20 would be better than that in 1H20.
On cargo freight volume it saw a record high in the month of May with slight drop afterwards, said Ronald Lam, Group Chief Customer and Commercial Officer, adding that he believed strong demand for cargo freight will still be seen during the peak season. He is optimistic about the cargo yield. Chairman Patrick Healy, on another note, said the airline has not changed its hedging policy but the hedging volume has reduced along with usage reduction.
CHINA UNICOM (00762.HK) interim results ended June 2020. Profit +10.1% to RMB7.569B. EBITDA -0.1% YoY to RMB49.45 billion, in-line with RMB47.3-50.7 billion in consensus. 1H20 5G CAPEX amounted to RMB12.6 billion. The Chinese telecom carrier expected FY20 5G CAPEX to reach RMB35.0 billion.
The high-net-worth citizens in Hong Kong have already mapped out exit routes, opened offshore bank accounts and obtained overseas passports, although actual actions are yet to be taken, as Bloomberg learnt from an executive from an Asian wealth manager. Actual capital outflux from the city has been minimal since the national security law came into effect on 30 June 2020, partly because the wealthy are still assessing how are the sourer measures of Chinese government on Hong Kong going to affect the asset prices and long-term business environment of the city.
China's state-owned banks that have operations in Hong Kong are now trying to comply to sanction measures imposed by the US upon Chinese and Hong Kong officials in an effort to secure access to USD capital and ensure overseas operations won't be disrupted, Bloomberg reported. Large-scale Mainland Chinese banks that have businesses in the U.S. include BANK OF CHINA (3988.HK), CCB (939.HK) and CM BANK (3968.HK). As at the end of 2019, the four largest state-owned Chinese banks were in possession of US$1.1 trillion of USD capital, it was reported.
Sinopec Group entered into a strategic cooperation framework agreement with the People's Government of the Hubei Province yesterday (11th). The two sides are going to foster high-quality development along the regions in proximity to Yangtze River and step up investments in Hubei, with an aim to inject huge momentum into economic development in Hubei after the pandemic subsides.
Centa-Salesman Index (CSI) last printed at 44.81, +1.47 pts weekly, said Centaline Property. The 5-week losing streak for CSI came to an end. At the same time, the index stood firmly around 45 for three weeks, meaning market sentiment had stopped turning bleaker. With more vibrant second-hand deals amid easing COVID-19 situations, Wong believed CSI will bounce back to challenge 50 next week.

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