Aug 20 ASIAN MACRO INITIAL THOUGHTS Asian Futures slip US Futures flat
Covid-19 Globally over 22.26m cases, 784k deaths
US Futures Dow opened flat -4pts S&P and NDX also slightly weaker
Asian Futures lower after Fed minutes
DOW -0.31%, NDX -0.57%, S&P -0.44%, Russel 2K +0.15% Dow opened higher, NDX just -VE and S&P flat. Markets then traded sideways before all selling down into the close after the Fed minutes outlined that the economy was under considerable risk from covid. Rates last month were kept unchanged last month but it was noted that the economy still needed monetary support.
US covid cases are trending lower +VE but new stimulus talks still stalled.
Target +12.7% after soaring profit and sales last quarter. Digital sales +197% YoY. Triggered an spike in other retailers but they later sold back down: Macy’s +0.5%, Nordstrom -0.3% and Big Lots +1.6%
S&P set a new intraday high as Apple +0.1% (off its early highs) market cap hit $2tn for the first time
Lowe’s +0.2% off initial high; reported Q2 revenue +30% (+VE Cross read to Techtronics (669 HK))
MBA Mortgage Applications -3.3% vs +6.8% prior, 30 yr Mortgage Rate 3.13% vs 3.06% prior
EIA Crude Oil stocks change -1.632m vs -4.512m (Consensus was -2.67m)
EIA Gasoline stocks change -3.322m vs -0.722m (Consensus was -1.057m)
FOMC Minutes (out 2pm NY time)
USD was slightly stronger vs Yen & Euro. Bitcoin -1.9% @ 11,765.46, VIX +4.8% @22.54, US T10 0.685%
OIL Brent -0.55%, WTI -0.44% Oil rose slightly as the inventory draw outweighed demand worries but traded lower after hours.
Gold -1.6%, Silver -1.7%, Copper -0.8%
AHEAD Initial Claims data, Philadelphia Manufacturing Index, CB Leading Index, EIA Natural Gas Report, 30 yr TIPS Action
DAX +0.74%, CAC +0.79%, FTSE +0.58% Markets opened lower but worked better through the Day to close around their highs. Airline stocks rallied with IAG +7.6% on a broker upgrade. Sterling continues to rally as USD weakened.
UK Inflation jumped to a four month high
Maersk +5% as Q2 profit beat, expects demand to pick up in Q3 but warned of a significant decline across the year. -VE cross read to HK shipping stocks.
Royal Unibrew +9.8% raised its outlook after a strong June.
Galapagos -24% after the US FDA rejected its treatment for rheumatoid arthritis.
Current Account Jun Euro +17.3b vs -7.4b May Revised (+27.5b)
Core Inflation Jul +1.2% YoY vs +0.8% Jun (F/cast was +1.2%)
Inflation Jul +0.4% YoY vs +0.3% Jun (F/cast was +0.4%) [Jul -0.4% MoM vs +0.3% Jun (F/cast was -0.3%)]
Inflation Rate Jul +1% YoY vs +0.6% Jun (F/cast was +0.7%) [Jul +0.4% MoM vs +0.1% Jun (F/cast was +0.1%)]
Core Inflation Rate Jul +1.8% YoY vs +1.4% Jun (F/cast was +1.4%) [Jul +0.4% MoM vs +0.2% Jun (F/cast was +0.2%)]
Retail Price Index Jul +1.6% YoY vs +1.1% Jun (F/cast was +1.3%) [Jul +0.5% MoM vs +0.2% Jun (F/cast was +0.2%)]
PPI Core Output Jul +0.1% YoY vs +0.5% Jun (F/cast was +0.4%) [Jul -0.1% MoM vs +0% Jun (F/cast was +0.2%)]
PPI Output Jul -0.9% YoY vs -0.9% Jun (F/cast was -0.8%) [Jul +0.3% MoM vs +0.3% Jun (F/cast was +0.3%)]
PPI Input Jul -5.7% YoY vs -6.7% Jun (F/cast was -6%) [Jul +1.8% MoM vs +3% Jun (F/cast was +1.2%)]
EUROZONE Construction Output ECB Monetary Policy Meeting Accounts
FRANCE No data due
UK CBI Industrial Trends
JAPAN Expect Nikkei to open lower following the Fed minutes, covid concerns and the rising expectation of a snap election. Yen weaker overnight currently 106.04
Data due Foreign Bond & Stock Investments
Tokyo reported 185 covid case Wednesday with the national total being 1,024
Japan's DPP approves CDP merger as snap poll speculation grows. The merger creates a more organized and numerically viable opposition force to counter Prime Minister Shinzo Abe's ruling bloc amid speculation of a possible snap election.
Japanese oil refiner Idemitsu Kosan said on Wednesday it will end its petrochemical joint venture with German chemical manufacturer BASF due to slumping demand at home and an oversupply caused by plant expansions in Asia. +VE
Takeda on track to sell OTC drug unit to Blackstone for ¥300 billion as part of its aim to reduce debts after its purchase of Irish drugmaker Shire in January last year, the largest-ever Japanese acquisition of a foreign company. +VE
Nissan Motor has been ordered to pay several hundreds of millions of yen in back taxes in connection with misuse of funds by the Japanese automaker under former boss Carlos Ghosn, sources familiar with the matter said Wednesday. Saying it failed to declare the taxable income in five business years through March 2019, the sources said. -VE
Maxwell Holdings US International Trade Commission said it has launched a Section 337 investigation into whether certain Apple Inc mobile devices and laptop computers infringed patents held by Japan's Maxell Holdings.
SOUTH KOREA Expect markets to open lower with global growth and covid concerns
No data due
Wednesday saw the highest daily rise in novel coronavirus cases (297) since early March as outbreaks from churches around the capital spread, prompting a warning of a nationwide wave of infections. -VE
SAMSUNG A series of complaints surfaced on online tech forums Wednesday about defects in the latest Galaxy Note 20 Ultra edition. Over 100 complaints were posted on the Samsung Smartphone Community, one of the largest online communities for Galaxy device users, suggesting that customers who preordered the Galaxy Note 20 Ultra have detected flaws in their phones. -VE
Korea Aerospace Industries said Wednesday it will supply an additional two units of Chamsuri choppers to police. +VE
South Korean food companies scored massive sales growth in the wake of the COVID-19 pandemic, as the demands increased for products that can be consumed at homes, in both domestic and overseas markets. +VE CJ CheilJedang, Orion, Dongwon Industries, Daesang’s, Nongshim’s and Samyang Foods.
Local startup companies Wednesday have submitted a petition to the Korea Communications Commission, asking for an investigation into whether Apple and Google are violating laws related to in-app purchases.
Posco International is set to boost online trading of steel in partnership with local steel e-commerce operators, the firm said Wednesday. +VE
TAIWAN Expect market to open lower with tech and exporters to the US under pressure after the US Fed minutes.
Data due After Market Export Orders, Current Account
Leading industrialists yesterday called on the government to keep relief and stimulus measures alive, saying that tough times lie ahead as local tech firms would be digesting rush orders toward the end of this quarter, because of remote working and telecommuting trends.
Yulon Motor Co yesterday said that it is to invest NT$12.7 billion (US$430.39 million) in its Hua-chuang Automobile Information Technical Center research unit after it in May cut the unit’s share capital by 99.9 percent, or NT$3.28 billion. It would be Yulon’s latest effort to overhaul the capital structure of Hua-chuang and a warmup for the creation of an electric vehicle venture with Hon Hai Precision next quarter. +VE
KGI Bank a unit of China Development Financial, yesterday said that its lending momentum is expected to recover in the second half of this year. The bank’s outstanding loans rose by NT$8 billion (US$271.11 million) from NT$361 billion as of the end of March to NT$369 billion as of the end of June, company data showed. However, the increase was 42% lower than the NT$14 billion in new lending it recorded a year earlier, the data showed.
TPK Holding to invest US$100 mn and passive components maker Yageo Corp US$10 mn in US electric vehicle start-up Canoo Holdings Ltd to gain a foothold in the supply chain for electric vehicles. +VE
CHINA Expect market to open lower after the Fed concerns but the wold card remains Team China who could limit the downside.
Data due Prime Loan Rate 1 and 5 year.
China warns US over its naval sailings near Taiwan was “extremely dangerous” and stirring up such trouble was in neither country’s interests. -VE
China-India border dispute: advanced fighter jets sent to nearby airbases. Two J-20s seen at Hotan airbase in China’s Xinjiang region, while India has deployed five new Rafales to Ladakh, according to media reports -VE
General Motors Co (GM.N) is planning an electric car offensive in China with more than 40% of its new launches in the country over the next five years set to be electric vehicles (EVs), the U.S. carmaker said on Wednesday.
HONG KONG ADR’s -148pts to open at 25,030; holding 25k is going to be difficult I would expect the market to trend lower ahead of results after the Fed minutes. Also expect shipping names to be under pressure after Maersk’s warning.
Data due Inflation Rate
After Market Wednesday Unemployment Jul 6.1% vs 6.2% Jun (F/cast was 6.3%)
NEW SECURITY LAW
US State Department said it notified Hong Kong on Wednesday that Washington has suspended or terminated three bilateral agreements with the semi-autonomous city following China’s imposition of a sweeping national security law. They covered “the surrender of fugitive offenders, the transfer of sentenced persons, and reciprocal tax exemptions on income derived from the international operation of ships.” Slight -VE
US State Department is asking colleges and universities to divest from Chinese holdings in their endowments, warning schools to get ahead of potentially more onerous measures on holding the shares, linked to the delisting of Chinese companies in the US -VE
EARNINGS DUE Thursday include Hong Kong Earnings including Henderson Land (12), Bank East Asia (23), Henderson Investment (97), Xingfa (98), K Wah (98), Sinofert (297), Bank of Jinzhou (416), Cosco Chipping (517), Kerry Property (683), Tongda (698), China State Construction (830), Hisense Home Applicances (921), Sinopec Danton’s (934), China Renewable Energy (987), Huadian Power (1071), Haier (1169), AIA Group (1299), DragonMining (1712), Ping An Healthcare & Tech (1833), Stella (1836), Kaisa Prosperity (2168), Comba Telecom (2342), Tongda (2363), BOC Aviation (2588), China Overseas Property (2669), ENN Energy (2688), Champion Real Estate Investment Trust (2778), Bestway Global (3358), Parkson Retail (3368). Alibaba
Short Selling HSI Wednesday 20.5% vs 23.4% Tuesday
Top Shorts Power Assets (6) 46%, Sino Land (83) 43%, CLP (2) 42%, Want Want (151) 42%, China Res Land (1109) 40%, China Shenhua (1088) 39%, HK & China Gas (3) 37%, CCB (939) 36%, ICBC (1398) 32%, CITIC (267) 30%, Mengniu Dairy (2319) 30%, Hang Seng Bank (11) 30%, HSBC (5) 28%, Hengan (1044) 28%, China Mobile (941) 27%, CNOOC (883) 26%, Ping An (2318) 26%, BOC HK (2388) 26%, China Unicom (762) 26%, PetroChina (857) 25%, Country Garden (2007) 25%, MTRC (66) 25%.
BUYBACKS/INSIDER DEALING Li Ka-shing and Victor T K Li through Li Ka Shing Foundation Limited acquired a total of 750,000 shares in CK ASSET (1113.HK) at the average price of HK$42.665, HK$42.6428 and HK$42.74 per share on 13, 17 and 18 August 2020. As a result, the deemed interests of Li Ka-shing increased from 35.33% to 35.36% and Victor T K Li increased from 35.4% to 35.42%.
EARNINGS OUT Tuesday After market
CNOOC (883.HK) interim results ended June 2020. Net profit amounted to RMB10.383 billion, -65.7% yearly. EPS equaled RMB0.23. Interim DPS was HKD0.2, against HKD0.33 in the corresponding period of the previous year. During the period, oil and gas sales -29.9% yearly to RMB66.34 billion.
CHINA RESOURCES BEER (291.HK) 1H net profit +11.1% to 2.08 bn yuan (HK$2.33 billion), declaring an interim dividend of 12.8 fen. Basic earnings per share were 64 fen. However, turnover for the first six months -7.5% to 17.41 billion yuan, mainly due to the Covid-19 pandemic. He estimated there will be low-level growth in the next half, impacted by the flooding in China, with sales of the cheap beer unlikely to increase, instead customers will reduce their consumption. He also expects the overall beer industry will record negative growth of 6 to 7 percent this year.
YUEXIU TRANSPORT (1052.HK) interim results for the period ended June 2020. The revenue -39.2% YoY to RMB840 million. It swung into loss of RMB288 million. LPS was RMB0.1722. No dividend was declared.
MEIDONG AUTO (1268.HK) interim result ended June 2020. The net profit amounted to RMB301 million, up 27.6% yearly. EPS was 25.72 fen. An interim dividend of 14.51 fen was declared, against 6.1 fen in the year-ago period.
SCHOLAR EDU (1769.HK) interim results for the period ended June 30th 2020. The revenue climbed 10.2% year-on-year to RMB326 million while net profit hiked 38.4% yearly to RMB46.323 million. EPS amounted to 8.34 fen. An interim dividend of HK6 cents was declared.
TENCENT (700.HK)'s WeChat Mini Game team revealed that the monthly active user base ballooned 16% in 1H20 from 2H19, with an 18% period-on-period commercial monetization growth.
HK EX’s Charles Li said IPO applications remain vibrant in Hong Kong this year. Over 100 IPOs are still pending approvals in the second half, including US-listed Chinese concept stocks. The inclusion of secondary listed Chinese concept stocks into Southbound Trading of Stock Connects should be done and will be done, for which communication is underway, added the CEO. Board still working in finding Charles Li's successor
The Hong Kong Monetary Authority (HKMA) has relaxed the counter-cyclical macro-prudential measures for mortgage loans on non-residential properties. The applicable loan-to-value ratio caps for mortgage loans on non-residential properties are adjusted upward by 10 percentage points, from 40 per cent to 50 per cent for general cases. The adjustment takes effect from August 20, 2020. The Chief Executive of the HKMA, Eddie Yue, said the COVID-19 outbreak has led to significant pressure on the Hong Kong economy. While the residential property market has remained firm, major corrections have been seen in prices, as well as transaction volumes, of different types of non-residential properties including offices, flatted factories and retail premises.
+VE for Commercial Property Investors
MTR CORPORATION (66.HK) announced that phase one of the new large-scale shopping mall "The LOHAS", which is tied to its property project LOHAS Park located in Tseung Kwan O, will be opened this Sunday (August 23), when a series of community services facilities and shops will first be opened. Initially, "The LOHAS" is scheduled for opening at the end of this year but the company decided to open the mall phase by phase in an effort to cater to the needs of the residents, whose numbers have been increasing, in the vicinity.
YUEXIU TRANSPORT (01052.HK) did not declare any interim dividend for 1H. The Chairman Li Feng explained that the company halted dividend because it made loss during the period, yet stressing the dividend yield has always been stable in past years. The Chairman envisaged a fairly good operation condition in 2H20, which may come better than 1H20. The management will also plot it out to catch up results laggards, and reconsider final dividend after comprehending the full-year situation.
India's largest telecommunications operator Bharti Airtel is planning to ditch the equipment of Huawei and ZTE (763.HK) in its 5G trials and will turn to Nokia and Ericsson instead, sources quoted as saying by India's The Economic Times. It was reported that Chinese vendors including Huawei were amongst the first who applied for 5G trials.
SSY GROUP (2005.HK) announced that Abidol, one of the products of the Group, was included in the “Diagnosis and Treatment Program for Novel Coronavirus Infected Pneumonia (Trial Version 8)” by the National Health Commission of the PRC on 18 August 2020. The Diagnosis and Treatment Program reconfirmed that Abidol was used in antiviral treatment.
The US and China remain yet to schedule another high-level trade negotiation, said White House Chief of Staff Mark Meadows. US Trade Representative Robert Lighthizer will remain in touch with his Chinese counterpart, furthered Meadows. -VE
Centa-Salesman Index (CSI) last printed at 44.28, -0.53 pts WoW, said Centaline Property. The index stabilized by jumbling around 45. Deals in the second-hand market were turning vibrant upon a gradually muted coronavirus situation. Wong foresaw a lighter mood among front-line agents, measuring the CSI to test upward to the critical point of 50.