Aug 14 ASIAN MACRO INITIAL THOUGHTS. US Futures flat
Covid-19 Globally over 20.4m cases, 744k deaths
US futures opened flat
Israel and United Arab Emirates strike historic peace agreement +VE for a reduction in Middle East tensions
DOW -0.29%, NDX +0.27%, S&P -0.2%, Russel 2K -0.22% DOW and S&P opened slightly lower and then traded sideways around flat for most of the day. S&P failed to hit a new again. NDX opened higher and traded higher but sold down into the close. Initial claims were lower than forecast and sub 1m for the first time since March. But investors remain cautious as Republicans and Democrats still have no deal in sight.
Cisco -11.2% after disappointing earnings guidance to lead the Dow lower.
'Back to work' stocks struggled Gap -2.1%, Simon Property -2.7%, American Airlines -1.8% and Southwest -1.6% but Tech slightly +VE as Apple +1.8% hit a new high on a Bloomberg News report that the company was working on a subscription product for digital fitness. Facebook +0.5%, Netflix +1.2%, Amazon flat,
Earnings were in focus too
Lyft -5.4% after the company reported a 61% drop in Q2 revenue for its second quarter. A loss of 86 cents per share and $339 million of revenue for the quarter, both of which beat Wall Street expectations.
Fossil +14.2% after the company reported a smaller loss and more revenue than Wall Street analysts expected,
Micron -4.8% after Deutsche Bank downgraded the stock to hold from buy.
Tesla +4.3% as the stock continued to rise following the company’s announcement that it is enacting a five-for-one stock split.
Tapestry -1% after Q4 results beat Wall Street expectations on the top and bottom lines for the quarter, but executives said on a call with analysts that traffic to physical retail stores is still be pressured by the pandemic, according to a transcript provided by FactSet.
Vroom -18.3% after the company’s quarterly report showed a declining average selling price for the cars on its platform. Vroom did report a smaller-than-expected loss and higher revenue than Wall Street analysts expected, according to FactSet.
Aspen Tech +29% after the company reported better-than-expected earnings and revenue for its fiscal Q4 and delivered guidance above what analysts anticipated, said its maintenance revenue grew by more than 10% year over year.
Initial claims 963k vs 1.191m prior (F/cast was 1.15m)
Jobless claims 4 week ave 1.25275m vs 1.339m revised (F/cast was 1.298m)
Export Prices Jul -4.4% YoY vs -5.1% Jun (F/cast was -4.1%)
Export Prices Jul +0.8% MoM vs +1.2% Jun revised (F/cast was +0.4%)
Import Prices Jul -3.3% YoY vs -3.8% Jun (F/cast was -3.2%)
Import Prices Jul +0.7% MoM vs +1.4% Jun (F/cast was +0.6%)
EIA Gas Report 58 Bcf vs 33 Bcf prior (Consensus was 57 Bcf)
USD flat vs Yen & Euro. Bitcoin +1.8% @ 11,779.54, VIX -0.7% @ 22.13,
US T10 0.717% on good jobless claims number
OIL Brent -1%, WTI -1% as IEA lowered its 2020 oil demand forecast, WTI bounced in after hours to +0.2%
Gold futures +1.1%, Silver +4.6%, Copper -0.5% but weaker in after hours
AHEAD Retail Sales Data, Unit Labour Costs, Non Farm Productivity, Industrial Production, Manufacturing Production, Capacity Utilisation, Business Inventories, University of Michigan Aug Data Prelim (Current Conditions, Inflation Expectations, 5 year Inflation Expectations, Consumer Sentiment, Consumer Expectations), Baker Hughes Total Oil Rig Count.
DAX -0.5%, CAC -0.61%, FTSE -1.5% markets opened lower with caution ahead of the US Initial claims data and news that the Democrats and the Trump administration are “miles apart” on negotiations for the next pandemic relief package. GERMAN Wholesale Prices were better than forecast and the Inflation Rate was inline. FRENCH Unemployment Rate was better than expected.
The fact that US initial claims were better than forecast failed to inspire the. Thyssenkrupp -16.3% after posting a 679 million euro ($800 million) quarterly loss. It said it’s seeing signs of stabilization, however, following the easing of lockdown restrictions and the sale last month of its elevator unit.
Aegon -15.32% after it reported 1H net profit -67%
Carlsberg -5.8% said it expected profit to fall 10%-15% in 2020 due to lockdowns in Europe and China impacting sales, Reuters reported.
Wirecard will be ejected from Germany’s benchmark DAX index on August 21, after exchange operator Deutsche Boerse announced a change in its selection rules on Thursday.
Wholesale Prices Jul -2.6% YoY vs -3.3% Jun (F/cast was -2.8%)
Wholesale Prices Jul +0.5% MoM vs +0.6% Jun (F/cast was +0.3%)
Inflation Rate Jul -0.1% YoY vs +0.9% Jun (F/cast was -0.1%)
Inflation Rate Jul -0.5% MoM vs +0.6% Jun (F/cast was -0.5%)
Unemployment Rate Q2 +7.1% vs 7.8% Q1 (F/cast was +8.5%)
IEA Oil Report lowered its 2020 oil demand forecast
EUROZONE GDP Growth Rate, Balance of Trade, Employment Change
GERMANY No data due
FRANCE Inflation Rate
UK No data due
JAPAN Expect Nikkei to open lower following the US, Yen currently 106.93 investors remain cautious ahead of the weekend and GDP data due out pre market Monday. Nikkei closed Thursday at its highest level since Feb 21 and could still test those levels in early trades but consolidation more likely.
Data due Foreign Bond and Stock Investment, Tertiary Index
Japan's foreign minister said on Thursday the arrests of Hong Kong pro-democracy activist Agnes Chow and media tycoon Jimmy Lai raised questions over freedom of speech and the press in Hong Kong and Tokyo's concerns over the situation were growing.
Nagashiki Shipping, owner of the vessel behind a major oil spill off Mauritius, said on Thursday it felt its responsibility acutely and intends to take steps towards assessing compensation. -VE
ANA Holdings Inc is in talks with multiple banks to raise capital of up to 500 billion yen ($4.7 billion) in the wake of the coronavirus-driven slump in air travel demand, the Nikkei business daily reported on Thursday.
The billionaire founder of Japanese online fashion store Zozo Inc (3092.T), Yusaku Maezawa, acquired large stakes in two Japanese apparel companies including multi-brand retailer United Arrows (7606.T), regulatory filings showed on Thursday. +VE
RAIL Operators weak as the 19 operators posted consolidate net losses of Y501.5b for April-June quarter -VE
Japan’s maglev project derailed by pandemic and environmental fears Shizuoka's governor is refusing to greenlight crucial work for the whopping ¥9 trillion project, and COVID-19 has caused a reassessment of future demand. -VE
Retail sales of summer goods picking up on later than usual heat wave but reflect consumers more cautious attitude -VE
SOUTH KOREA Expect markets to open flat following the US but Tech still in focus following good export data out Thursday.
Data out Export Prices Jul -5.8 YoY vs -5.7% Jun revised from -6%
Import Prices Jul -9% YoY vs -7.4% Jun revised from -7.3%
Exports of information and communications technology products increased for the second consecutive month in July, latest data showed Thursday. +VE
SK bioscience ties up with Novavax Inc to manufacture a component of the U.S. drug developer’s experimental coronavirus vaccine in a bid to boost its supply. It also announced that it had scaled up its Flu vaccines output this year, expecting an increase in demand +VE
Hanwha Power Systems said Thursday it plans to generate electricity using pressure from gas pipelines; it will develop a system that can transform natural gas decompression energy into electrical energy. +VE
Posco said Thursday it succeeded in developing the world’s first free cutting steel using graphite, and is set for mass production of the eco-friendly steel named PosGRAM. +VE
Unity said Thursday its game engine will check the safety of Doosan’s construction sites inside virtual reality. The companies signed a memorandum of understanding with to verify the safety of construction sites by running a simulation inside a virtual reality built by Unity’s game engine. +VE
TAIWAN Expect market to open flat following the US but expect continued interest in Tech on good local results.
Data due after market GDP Growth Rate
MSCI Inc yesterday lowered Taiwan’s weighting in its two major indices after its latest review, which might prompt an outflow of US$200 million in funds next quarter, the Financial Supervisory Commission (FSC) said yesterday. The index provider trimmed Taiwan’s weighting in the MSCI Emerging Markets Index — which covers more than 800 securities across the large and mid-cap segments in 26 emerging markets — by nine basis points to 12.45 percent, commission data showed. Slight -VE
Quanta Computer yesterday reported Q2 net profit +57% annual growth, saying that it expects robust laptop demand to drive double-digit percentage growth in laptops shipped this year. The company’s growth could be compromised by shortages of key components, the company said. +VE
Pegatron Corp an Apple Inc assembly partner, yesterday said that it would fully absorb metal casing subsidiary Casetek Holdings in a NT$14.5 billion (US$490.93 million) deal to improve the companies’ competitiveness in the phone assembly supply chain. +VE
CHINA Expect market to open lower with investors cautious on US/China on-line meeting at the weekend and the data due out today.
Data due 10 am House Price Index Jun was +4.9% F/cast is 5%,
NBS Press Conference,
Fixed Asset Investment (YTD) Jun was -3.1% F/cast is -1.2%,
Industrial Production Jun was +4.8% F/cast is +5.5%,
Retail Sales Jun was -1.8% f/cast is +0.5%,
Unemployment Rate Jun was 5.7% F/cast was 5.7%.
After Market Thursday
FDI (YTD) Jul +0.5% YoY vs -1.3% Jun (F/cast was -0.4%)
Considering July only, FDI jumped 15.8% to CNY 63.47 billion.
Reuters reports A sharp escalation in tensions with the United States has stoked fears in China of a deepening financial war that could result in it being shut out of the global dollar system - a devastating prospect once considered far-fetched but now not impossible. Something I have been writing about for a while; it is Trump’s nuclear option and the possibility of him using it I think is rising
Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, vows to improve corporate governance at banks as many of China’s small lenders are facing a reckoning after years of undisciplined balance sheet expansion, fraud and corruption. He said on Thursday that the country’s banks have to deal with 3.4 trillion yuan (US$489.5 billion) worth of non-performing loans in 2020 – flagging a big risk for the banking system in the world’s second-largest economy. The total marks a hefty increase from 2.3 trillion yuan in 2019, and the value of bad loans could be even higher in 2021. -VE
KE Holdings, operator of housing platforms Beike Zhaofang and Lianjia, is open to a secondary listing in Hong Kong or mainland China, after raising around $2 billion on Thursday in the biggest U.S. IPO by a Chinese company in two years.
Shenzhen and Xian have found traces of the new coronavirus in cargoes of imported frozen food, local authorities said on Thursday, although the World Health Organization downplayed the risk of the virus entering the food chain. Slight -VE for sentiment
Yi Gang, the governor of the People's Bank of China, held a meeting with Macau's Chief Executive Ho Iat Seng. During the meeting, they conducted deep discussions about financial cooperation between Mainland China and Macau. +VE
A Sino-U.S. video conference is going to be held soon. The Ministry of Commerce stated that they will publish any confirmed news in real time with regard to this conference. Chinese Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer will have a meeting around this Saturday (15th).
The Ministry of Commerce stated that China has been seriously implementing the first phase of Sino-U.S. economic and trade agreements with relevant departments having completed lots of work for the execution of these agreements. Under the current situation, the two sides need to step up collaboration and go through the difficult time with concerted effort, it emphasised. Slight +VE
China Banking and Insurance Regulatory Commission (CBIRC) revealed that they are going to beef up extensively the medium to long-term funding support for innovative manufacturing and strategic emerging industries, CCTV reported. CBIRC will also enhance coordination among finance, employment, industry and regional policies to achieve the best outcome. +VE
Zhao Lijian, a spokesman for China's Ministry of Foreign Affairs, said at the regular press conference that China will continue opening up to the outside world and proactively foster economic and trade collaboration with other countries, in an effort to boost the global demand as well as international trade development. In 1H20, lots of foreign companies were still expanding their footprints in China with the number of foreign investment projects with a size of over US$100 million reaching 320. China is also resolved to improving the business environment. Little impact
Deutsche Telekom said on Thursday it was diversifying its suppliers of equipment to build its 5G networks as debate continues in Berlin over whether to bar China's Huawei Technologies from the German market. -VE
HONG KONG ADR’s -116pts to open at 25,114 but expect more downside with caution ahead of the China data which will determine the market direction. Expect some weakness in the afternoon with caution ahead of the US data and weekend. HSI index review today with the possible deletion of companies like Swire, CK infrastructure and the addition of Alibaba, Meituan and Xiaomi
Data due after market GDP Growth Rate
NEW SECURITY LAW.
Trump says Hong Kong “can never succeed” under Chinese control and its markets will “go to hell”, in a televised interview on Thursday. He described Hong Kong as having been the beneficiary of billions of dollars in “very expensive incentives”, which the US was now taking back.
-VE for sentiment
EARNINGS Friday in include; Wanda Hotel Development (169), Goldlion (533), Wynn Macau (1128), Sands China (1928), China Gold Int (2099), Aoyuan Healthy Life Group (3662), China Aoyuan Group (3883).
CHI KAN HOLDINGS (9913.HK), whose shares will be listed today closed at $0.47 in gray market, down 5 cents or -9.6% against the listing price of $0.52, on volume of 13.7mn shares and $6.35 million, PhillipMart data showed. That was an improvement from earlier. It had opened +vbe then dropped to -19%.
Short Selling HSI Thursday 18.9% vs 18% Wednesday
Top Shorts HK & China Gas (3) 46%, China Res Land (1109) 44%, CLP (2) 44%, CCB (939) 43%, Sino Land (83) 43%, Shenzhou (2313) 42%, Mengniu Dairy (2319) 41%, Petrochina (857) 38%, Hang Lung PPTY (101) 36%, Bank of China (3988) 33%, ICBC (1398) 30%, Sinopec (386) 30%, NWD (17) 30%, MTRC (66) 29%, Hengan (1044) 26%, Ping An (2318) 25%.
LEE'S PHARM (950.HK) PROFIT ALERT +VE anticipating that the net profit attributable to the shareholders for the six months ended 30 June 2020 will increase by about 150% on a yearly basis. The improvement of the group’s interim results was mainly due to an one-off compensation income recognised by the company upon the early termination of the product license of Zanidip; and the absence of considerable intangible assets impairment during the period under review. +VE
SWIRE PACIFIC A (19.HK) and SWIREPROPERTIES (1972.HK) Chairman Merlin Swire stressed that he would stay optimistic about Hong Kong's future with considerable commitment and investment. The group has no plan to sell its Hong Kong operations, added Swire. Although the city is experiencing turmoil, the company holds a long-term vision that the assets it is holding in the city are of high quality and that it will maintain its focus on China and Hong Kong.
The company had committed to providing rental support to its tenants for up to twelve months and will continue doing so in the future, Guy Bradley, Chief Executive of SWIREPROPERTIES (1972.HK) said, adding that he is confident tenants will renew their contracts. It is now moving forward again with the medium-term residential property market development in Hong Kong; it has 3-4 residential development projects in the pipeline, which will debut in next 3-4 years. +VE but HSI review may drop then so expect cautious trading
CHINA MOBILE (941.HK) has a solid mobile subscriber target this year, anticipating net addition of over 100 million 5G package customers and narrower mobile ARPU slide, said the CEO Dong Xin at the conference call. Also they expected the company to build 300,000 5G base stations this year, providing commercial services at all above-prefecture-level cities nationwide. He also hoped to put the guidance made at early year on hold, and maintained a sturdy DPS this year. +VE
TOWNGAS CHINA (1083.HK) interim results ended June 2020. Net profit amounted to HK$581 million, down 23.1% yearly. EPS equaled HK20.23 cents. No dividend was declared.
LENOVO GROUP (992.HK)'s Chairman cum CEO Yang Yuanqing said, in response to US restrictions imposed upon TikTok and TENCENT (700.HK)'s WeChat, that the business development of multinational companies would be affected by strained Sino-U.S. relations. Yet, Yang is not worried about the related risk because the group's diversified businesses cover many countries. The group has no intention to spin off its U.S. operations in order to avert risk. Quarterly results of the group beat estimates, reflecting the pandemic's impact has sort of dissipated, Yang also pointed out.
The Hong Kong Monetary Authority published the results of the tenders of the People's Bank of China RMB bills. 86% over-subscription in terms of value for three-month RMB bills was recorded with an average accepted coupon rate of 2.58%. 1.5 times over-subscription in terms of value for the one-year RMB bills was recorded with an average accepted coupon rate of 2.45%.
NTES-S 2Q Net Income of Continuing Operations at RMB4.5B; Non-GAAP Net Income of Continuing Operations at RMB5.2B
GALAXY ENT (27.HK)'s third and fourth phases of the new project would proceed as planned given that it was no easy task to change the project schedule, Chairman Lui Che Woo said at a press conference. The company will continue to maintain its solid financial position and look out for overseas business development opportunities, including Japan, Lui also mentioned. Slight +VE but travel access more important as a driver
The White House is turning a blind eye to facts by requesting Hong Kong imports to bear a "Made in China" tag, which does not comply with the WTO's guidance on product origin introduction, said Edward Yau, HK Secretary for Commerce and Economic Development. While there are no immediate tariff impacts therefrom, tariff adjustments may be inevitable in the future subject to Washington's policies, added Yau, who stressed corresponding actions will be taken under the WTO practice framework.