Aug 19 ASIAN MACRO INITIAL THOUGHTS Dow futures flat, HK T9 still up
Covid-19 Globally over 22m cases, 777k deaths
US Markets wobbled in early trading as Walmart said consumer spending eased as the stimulus cheques ceased
S&P new all time high confirms the start of a new bull market.
US Dow futures opened +18pts S&P and NDX slightly +VE
HK Typhoon signal 9 still in force but likely to be lowered in the next couple hours to T8 which means trading could be delayed.
If T8 lowered before 7am Trading takes place as normal
If it comes down after 7am but before 9am Pre open session cancelled
If it comes down after 9am but before 11am AM session cancelled but PM session takes place as normal
If it comes down after 11am but before 11:30am then the PM session start delayed until 1:30pm
If it comes down after 11:30am but before 12 noon then the PM session start delayed until 2pm
If it comes down after 12 noon the PM session is cancelled
DOW -0.24%, NDX +0.73%, S&P +0.23%, Russel 2K -1% Markets initially traded higher on strong Housing numbers and the S&P hit a new intraday high but then reversed as Walmart said consumer spending eased as the stimulus cheques ceased; prompting fears that if the new stimulus packages was not agreed the recovery would be compromised. After 40 minutes of selling the markets found support and gradually worked higher into lunch. For the afternoon Dow trended lower, S&P traded sideways with a small dip into the close but closed at a new all time high of 3,390. NDX worked higher with a small dip into the close but hit a new record.
Re opening stocks weak American Airlines -0.2%, United Airlines -1.2%, Carnival -1.8%,Simons Property -4.5% (FT article about it buying retail names out of bankruptcy) GAP -2.8%.
Stay at home Facebook +0.5%, Apple +0.8%, Netflix +2%, Microsoft +0.6%, Alphabet +2.6%
Boeing -1% offering a second voluntary redundancy package
Oracle +2.2% but off initial highs on news its looking at buying TikTok
Amazon +4.1% adding 3,500 jobs in six major cities to expand its hubs, including 2,000 in New York who will work in the historic 5th Avenue building that once housed retailer Lord & Taylor. Which it purchased from WeWork for a price reported to be more than $1 billion.
Walmart -0.7% despite its e-commerce sales +97% as customers had packages shipped their homes and used curbside pick-up. But no financial outlook guidance. Also said that consumer spending eased when stimulus cheques ceased. -VE
Home Depot -1.1% despite beating with revenue above F/casts and SSS +23.4%,
Kohls -14.7% despite loss was less than market had expected; it gave a bearish outlook
I think the numbers from Home Depot and Kohls along with the strong housing data suggest there should be a +VE cross read to Techtronics (669 HK)
Housing Starts Jul +22.6% MoM vs +17.3% Jun (F/cast was +2.3%)
Building Permits Jul +18.8% MoM vs +3.5% Jun (F/cast was +2.8%)
Redbook +2.8% MoM vs +2.5% prior (-2.8% YoY vs -3.4% prior)
API Crude Oil Stocks Change -4.3m vs -4.4m prior out at 4:30pm NY Time
USD was weaker vs Yen & Euro. Bitcoin -2.6% @ 12,022.29, VIX +0.8% @ 21.51, US T10 0.67%
OIL Brent -0.8%, WTI -0.84% ahead of the API inventory numbers;
Gold +0.55%, Silver +0.26%, Copper +2.38% Gold back above $2,000
AHEAD MBA Mortgage Applications, 30 yr Mortgage Rate, EIA Oil report, FOMC Minutes
DAX -0.3%, CAC -0.68%, FTSE -0.83% opened lower but worked higher into lunch with leisure and travel stocks bouncing. But then trended lower in the afternoon to close slightly lower than the opening levels. Concerns over US/China relations and the global recovery as Trump tightens the restrictions on Huawei. Banks and Resources weak.
Norway’s sovereign wealth fund reported 1H negative returns citing “major fluctuations” in equity markets.
Pandora -7.5% as FY guidance was weaker than expected.
Persimmon +7.9% after reinstating its dividend due to a strong start to the second half. But Rightmove -2.7% on broker downgrade
Marks & Spencer -4.9% on news of more job cuts
Capita -20% on weak interim results
Clariant +4.8% on rumours of private equity interest.
K+S +4.3% Europe’s largest potash supplier, on news that Belarus miners had joined protests against President Lukashenko.
NO DATA due.
EUROZONE Current Account, Core Inflation, Inflation
GERMANY No data due
FRANCE No data due
UK Inflation Rate, Core Inflation Rate, PPI Core Output, Retail Price Index, PPI Output, PPI Input
JAPAN Expect Nikkei to open higher as US enters new bull market but pre market trade data and Covid concerns along with Yen strength may limit the upside. Yen closed NY 105.40 having traded 105.50 on Tuesday in Japan
Data due Balance of Trade for July. Jun was Y-268.8b (F/cast -120b),
Exports for July. Jun was -26.2% (Consensus -21%),
Imports for July. Jun was -14.4% (Consensus -22.8%),
Machinery Orders for Jun May was +1.7% MoM (F/cast was +2.5%), (May -16.3% YoY (F/cast was +17%))
Tokyo reported 207 new covid cases on Tuesday and Osaka reported 185.
PM Abe’s surprise hospital visit triggered speculation about his political future and ability to influence the choice of his successor. Slight -VE
Japanese Defence Minister Taro Kono told China's ambassador to Japan, Kong Xuanyou, his country should refrain from activities around disputed East China Sea islands that are controlled by Tokyo but claimed by Beijing.
Japan’s low unemployment rate on paper suggests an economy weathering the coronavirus reasonably well, but official figures belie worsening prospects for the country’s army of temporary workers, who make up about 40% of the jobs market. -VE
BoJ refuses traders requests to work from home as it doesn’t allow home computers to connect to its network. Raising covid concerns for financial firms as covid cases surge. -VE
Bain Capital clinched a $1.2 billion deal on Tuesday to buy Japanese nursing-home operator Nichiigakkan after fending off a higher, last-minute bid from rival Baring Private Equity Asia (BPEA). +VE
Oasis Management stepped up its demand that Japanese convenience store chain FamilyMart Co pay a special dividend, saying shareholders were otherwise being denied a fair deal in a tender offer by Itochu Corp.
Over 30% of the nation's companies listed on the first section of the Tokyo Stock Exchange suffered net losses in April to June due to the coronavirus outbreak, according a securities firm report -VE for sentiment
Mauritius has arrested the captain of a Japanese bulk carrier that ran aground off its coast, causing a devastating oil spill in one of the world’s most pristine maritime environments, police said on Tuesday. Slight -VE
SOUTH KOREA Expect markets to open higher following US entering new bull market but upside limited as sentiment weak as covid cases surged with more than 200 cases for the first time since March.
No data due
South Korea tightened social distancing rules on Tuesday as it reported a three-digit increase in novel coronavirus cases for a fifth day and authorities scrambled to trace hundreds of members of a church congregation. Troops were confined to their bases -VE for sentiment
Starbucks Corp's South Korean unit is scrambling to curb the spread of coronavirus, cutting seating capacity in its cafes and delaying a promotional campaign after 50 cases were linked to one of its stores outside of Seoul. -VE
Hyundai Department Store Group decided Tuesday to acquire SK Bioland, a cosmetics firm under SK Group, expanding its beauty and health care business. According to the group, its affiliate Hyundai HCN, a cable channel provider, held a board meeting to decide on purchasing 29.7 percent of SK Bioland’s share with 120.5 billion won ($101.7 million). +VE
Eastar Jet is preparing for a new acquisition deal after talks with Jeju Air fell apart last month. The airline has chosen accounting firm Deloitte Korea, corporate law firm Yulchon and Heungkuk Finance Group as its financial advisers, one official at the company confirmed Tuesday. +VE
S-Oil said Tuesday it will utilize idle spaces at gas stations to establish an electric bike-sharing hub to provide parking, charging and maintenance services. According to the South Korean refiner, it will collaborate with electric bike-sharing app Elecle and open an “Elecle Zone” at gas stations where users can return electric bikes after use. +VE
Kumho Tire has retained its No. 1 spot in domestic sales by supplying tires for new small sport utility vehicles, the tire maker said Tuesday. +VE
SsangYong Motor has established a new sales network for the Middle East as part of its reinforcement of overseas operations amid the COVID-19 pandemic, the firm said Tuesday. It will open a store in Baghdad, Iraq, within the month, after opening a showroom in Kuwait on Aug. 10. +VE
TAIWAN Expect market to open higher following the US with Tech in focus. Good local earnings also +VE for sentiment along with TSMC’s hiring plans
No data due
President Tsai yesterday said that a bilateral trade agreement between Taiwan and the US would be mutually beneficial and help to strengthen their existing trade and business exchanges. Tsai made the remarks when meeting with American Chamber of Commerce in Taipei chairman C.W. Chin at the Presidential Office. Tsai thanked the group for recommending that Washington expedite a trade agreement with Taiwan. Expect a harsh rebuke from Beijing.
TSMC yesterday said it is stepping up recruitment this year to cope with rigorous demand, primarily for chips for 5G products and for high-performance computing. It plans to hire 8,000 people this year, TSMC chairman Mark Liu told reporters on the sidelines of a news conference to unveil a revamped semiconductor exhibition at the National Museum of Natural Science in Taichung. “Our business is exceptionally strong this year. We usually hire about 4,000 new workers a year,” Liu said. “We are scaling up [recruitment] this year.” +VE
Catcher Technology is to sell two of its smartphone metal chassis plants to Lens Technology a Chinese handset-cover glass maker, company officials told a news conference yesterday. The company’s board of directors approved the sale of its 100 percent stakes in Topo Technology (Taizhou) Co Ltd and Meeca Technology (Taizhou) Co to Lens Technology in a US$1.43 billion all-cash deal that is expected to close by the end of this year, pending regulatory approvals, they said.
Catcher spokesman said the time had come for the firm to partially transition out of its long-standing smartphone chassis business. +VE
Lotus Pharmaceutical yesterday reported that second-quarter profit was NT$298 million (US$10.1 million), 4.75 times what it was a year earlier, due to strong revenue performance by an anti-obesity drug and a treatment for opiate addiction. Earnings per share were NT$1.23, the highest in a single quarter, a company statement said. +VE
La Kaffa International owner of bubble milk tea brand Chatime yesterday said that it is upbeat about a recovery in its business after a sharp decline in the first six months of this year amid the COVID-19 pandemic. It posted NT$22.52 million (US$762,924) in net income for the first half of the year, or earnings per share of NT$0.55, -87% YoY to a nine-year low. “The worst is over and business will continue to improve at home and abroad as consumer activity around the world regains momentum,” La Kaffa chairman Henry Wang told reporters on the sidelines of a news conference in Taipei. -VE
BizLink Holding Inc reported that second-quarter profit increased due to a rise in sales and a favorable product mix, adding that it is cautiously optimistic about the second half of this year. +VE
CHINA Expect market to open lower with concerns over US/China relations and the potential for more Chinese companies to come under attack. Also increased flooding concerns -VE for sentiment.
No data due
China's biggest river, the Yangtze, and several of its tributaries have risen to dangerous levels after days of heavy rain, forcing tens of thousands of people from their homes and triggering an unprecedented emergency response alert. -VE
Starting in June, China identified the cross-border flow of gambling funds as part of national security risks and mounted tough scrutiny on online gambling to curb capital outflux, Reuters reported. Beijing's move has hit hard the liquidity in Macau’s VIP segment, said the report. -VE MACAU
China's CanSino Biologics (CanSino) +VE as Pakistan's drug regulator greenlit the country's first Phase 3 clinical trial for a potential COVID-19 vaccine, which is being developed by it and Beijing Institute of Biotechnology.
WeSure, an insurance platform belongs to TENCENT (700.HK), violated marketing and sales regulations governing the insurance sector, information disclosed by China Banking and Insurance Regulatory Commission (CBIRC) showed. The company has been fined RMB120,000 for the violation.
Shenzhen Stock Exchange (SZSE) is going to run tests related to trading services this Saturday (22nd), with tests focusing on activation of ChiNext reforms and pilot registration services in an effort to assess the accuracy of technical systems of the various market participants.
MSCI published two climate change indexes on Tuesday that allow investors in China stocks to lean toward companies with lower carbon emissions.
Baring Private Equity Asia and CITIC Capital have sold the China business of Wall Street English (WSE) at a deep discount in just over two years since acquiring it as the COVID-19 pandemic crippled the global language tutoring group, sources told Reuters. -VE
Gong Daoan, 55, vice mayor and police chief of Shanghai, is being probed by the disciplinary watchdog of the Party and the state supervisory committee. He is suspected of committing "serious violations of discipline and the law," according to a statement from authorities. -VE
HONG KONG ADR’s -200pts to open at 25,167 with broad based weakness Market saw increased increased shorting Tuesday as HSI failed to break above 25,500 again. Wild card remains Team China who could squeeze the shorts.
Results in focus with HK EX, CNOOC and Alibaba amounts other reporting
Typhoon signal 9 still in force but likely to be lowered in the early morning. Only an amber rain warning so if T9 drops to T3 before 7am normal trading, if down before 9am pre market cancelled but market opens at 9:30am
Link to HK Exchange web site on severe weather arrangements https://www.hkex.com.hk/Services/Trading-hours-and-Severe-Weather-Arrangements/Severe-Weather-Arrangements/Trading?sc_lang=en
Data due Unemployment after market.
EARNINGS DUE Wednesday include Kowloon Development (34), China Resources Beer (291), HK EX (388), CNOOC (883), China Merchants Land (978), Hengan Int (1044), Yuexiu Transport (1052), MMG (1208), China Lilang (1234), Samsonite (1910), BBMG (2009), Yancoal Australia (3668), Alibaba (9988).
Short Selling HSI Tuesday 23.4% vs 21.7% Monday
Top Shorts Hang Lung PPTY (101) 48%, BOC HK (2388) 48%, CCB (939) 46%, Sino Land (83) 45%, China Res Land (1109) 43%, NWD (17) 40%, ICBC (1398) 38%, CLP (2) 38%, MTRC (66) 38%, Power Assets (6) 37%, China Shenhua (1088) 36%, HK & China Gas (3) 35%, Hang Seng Bank (11) 35%, China Life (2628) 35%, Galaxy (27) 35%, Want Want (151) 34%, PetroChina (857) 34%, HSBC (5) 32%, CITIC (267) 30%, Ping An (2318) 30%, AAC Tech (2018) 30%, Swire Pac A (19) 29%, Henderson Land (12) 28%, Wharf REIC (1997) 28%, China Mobile (941) 28%, Sunny Optical (2382) 27%, BoC HK (2388) 27%, Shenzhou (2313) 26%.
EARNINGS OUT Tuesday After market
POWERLONG CM (9909.HK) interim results for the period ended June 2020. Turnover +16% YoY to RMB869 million. The net profit RMB145 million, +66.3% YoY EPS was RMB23.4 fen. An interim dividend of HK10 cents was declared.
CHINA FEIHE (6186.HK) interim results for the period ended June 2020. The revenue rose 47.8% year-on-year to RMB8.707 billion. The net profit amounted to RMB2.753 billion, +57.2% YoY. EPS was RMB31 fen. An interim dividend of HK13.75 cents was declared.
361 Degrees International (1361) 1H net profit -17.8% YoY to 301.97 billion yuan (HK$337.73 million No interim dividend, EPS 14.6 fen. Said decline due to sports activities being suspended amid the Covid-19 pandemic. The sportswear retailer had a total of 5,289 core brand stores as of the end of June, a net decrease of 230 stores compared with a year ago. The average inventory turnover cycle was 112 days for the first six months this year, compared with 120 days a year ago. The company expects sports events to gradually resume in the second half this year.
Government calls on ParknShop and Wellcome, to provide price offer to customers if they want to get wage subsidies under the Employment Support Scheme Phase 2, (applications start Aug 31 and end Sept 13) or offer supermarket coupons. But some think that could put other smaller supermarkets at a disadvantage. Property Management companies will also have to give back at least 80% of the subsidy to the property owners. The stipulations are likely to make the scheme unviable for a lot of companies. Many companies have already complained that the rules are unreasonable and could result in more low paid workers losing their jobs.
Empire Group and Hong Kong Ferry (50) will offer 168 units at Seacoast Royale in Tuen Mun for sale on Saturday. The developers released 94 flats in the sixth price list of the project, at an average of HK$15,193 per sq ft, after discounts, 11.9 percent higher than the first price list.
China Evergrande (3333) released 47 units in the fourth price list of The Vertex, in Cheung Sha Wan, with the cheapest 224-sq-ft flat offered at HK$5.44 million, or HK$24,294 per sq ft, after discounts. The mainland developer will offer 85 units at the project for sale on Saturday.
Times China (1233) chairman and CEO Shum Chiu-hung said the mainland developer plans to redevelop 10 projects this year
China Merchant Commercial REIT (1503) plans to seek projects in second-tier cities.
JD-SW (9618.HK) has recently told its merchants to stop using STO Express, foreign media reported. JD-SW explained it has suspended cooperation with BABA-SW (9988.HK)'s STO Express as their contract has expired.
CPIC (2601.HK) announced that it had kickstarted with the groundbreaking works for its first-ever large-scale elderly care community project in Shanghai, preceded by the first project being in Hangzhou.
CHINA TELECOM (728.HK)'s U.S. division has a local operating license and has been complying with local laws while providing telecommunication services to customers, Chairman cum CEO Ke Ruiwen said during a teleconference on results announcement. Although Huawei has been a significant partner of CHINA TELECOM, the company will adopt a strategy of having diversified supplier sources instead of one single supplier, Ke said when he was asked if the company's equipment supplies will be affected by Huawei being targeted by the U.S.
RAZER (1337.HK) announced that Razer Gold, with which players purchase items in games and other digital entertainment contents, is now available at all Fortress stores. As at the end of 2020, Razer Gold's virtual credit system covered over 130 countries and is applicable to 33,250 digital entertainment contents.
CHINA LIFE (2628.HK) (601628.SH) announced that it had noted market rumors on the Company's merger with other insurers. After verification, CHINA LIFE stated the rumors were untrue and the Company does not have any discloseable information which remains undisclosed.