Aug 24 Asian Macro Initial Thoughts US Futures higher
Covid-19 Globally over 23.4m cases, 807k deaths
On Sunday, the US FDA issued an emergency use authorization of convalescent plasma for hospitalized Covid-19 patients, a treatment that uses blood plasma donated by people who’ve recovered from the virus. FT reports that Trump may also fast track an experimental UK vaccine for use in the US pre election.
US WeChat Users Alliance sues Trump over WeChat ban, A group of PRC Chinese working in America. https://uswua.org/about-us. Comes ahead of TikTok also taking legal action against Trump.
US Futures Open +60pts and have crept higher to +70pts with S&P and NDX opening higher too.
Short positions in US stocks have dropped to their lowest levels in more than ten years says FT article.
US & European Friday Closing Reports at bottom of the page
JAPAN Expect Nikkei to open higher following the US. Yen closed 105.78 Friday.
But covid resurgence likely to limit the upside.
No data due
Heatwave hitting Japan will put extra strain on the medical services combating covid Slight -VE
Covid cases; Tokyo 212 cases Sunday vs 256 on Saturday. Concerns that if a second state of emergency is called the economy will see a double dip recession -VE for sentiment.
National minimum hourly wage to rise 1 Yen to 902 Yen the labour ministry announced Friday
Government agency dealing with natural resources has announced the successful excavation of rare metals including cobalt and nickel from the seabed of Japan’s exclusive economic zone. The seabed mining site is located about 900 meters below sea level, off the southern coast of the Pacific island of Minami-Torishima. The Japan Oil, Gas and Metals National Corporation reported that through its excavation research, it discovered the area containing enough cobalt to meet Japan’s demand for about 88 years and enough nickel for about 12 years. +VE
Japan's department store sales -20.3% YoY in July due to the continuing impact of the novel coronavirus pandemic and the prolonged rainy season, an industry body said Friday. The poor outcome was slightly worse than the 19.1% fall recorded in June, marking the 10th consecutive month of decline, according to the data released by the Japan Department Stores Association. -VE
Nippon Paint (4612.T) rallied on Friday after saying it inked a deal worth 1.285 trillion yen ($12.18 billion) with Singapore’s Wuthelam Group, whose stake in the Japanese company will rise to just under 60% from 39%. It said it will use the funds raised as well as 100 billion yen in cash to buy out Wuthelam from their Asian joint ventures in countries including China, Malaysia and Thailand, as well as acquire Wuthelam’s wholly owned business in Indonesia. Basically seeking overseas growth as the domestic market stagnates.
Land prices -40% in urban areas as covid suppresses demand. Areas with lower and prices outnumbered those with higher prices for the first time since Q2 2012. -VE
SOUTH KOREA Expect markets to lower with the threat of a massive covid outbreak likely which could lead to a lockdown after 397 cases were reported as at midnight Saturday. A typhoon is approaching S Korea and could hit Thursday/Friday.
No data due
South Korea started talks with China’s top diplomat on Saturday, the first visit by a high-level Beijing official since the new coronavirus emerged in China late last year.
Shinsegae Food, the food arm of retail giant Shinsegae Group, said Sunday it is injecting 9.8 billion won ($8.23 million) into its US-based food manufacturing facility as it seeks to bolster the ready-made food business in the market. +VE
BANKS -VE as delinquency rates for loans overall surged last month -VE. The five main banks have delayed payments for a combined 39.1 trillion won ($32.9 billion) worth of loans, interest and installment payments from both corporate and individual customers, separate data released Aug. 18 showed. -VE
Posco aims to provide premium value to customers with its new construction steel brand Innovilt, which launched in November last year. The name Innovilt is a combination of innovation, value and built, which means to increase the value of construction steel materials through technological innovation, eco-friendliness and originality, Posco said. Slight +VE
Eastar Jet will cut down on its workforce as part of efforts to find a new owner after Jeju Air Co. scrapped its plan to acquire the smaller budget carrier amid the coronavirus' impact on the airline business, industry sources said Friday. +VE
Samsung Electronics said Friday that it has officially launched its flagship Galaxy Note 20 phablets globally. The South Korean tech giant’s newly launched lineup, available in 70 countries, comprises the standard Note 20 and the high-end Note 20 Ultra. It added that the products will be available in a total of 130 nations worldwide by mid-September. +VE
NCSoft said Friday it has launched an entertainment subsidiary Klap to expand its business portfolio. According to the South Korean game company, it established Klap on July 13 and invested 800 million won ($675,000) to control 66.7 percent of the subsidiary. +VE
SK Innovation’s US battery business is facing questioning as Congressman Doug Collins is accusing it of hiring Korean workers illegally to displace American workers at its two factories under construction in Jackson County, Georgia. -VE
LG Display said Friday that the company has provided its transparent organic light-emitting diode panels for windows of subway trains based in Beijing and Shenzhen, China. +VE
SK hynix, restored its share in the global DRAM market with over 30% for the first time since the fourth quarter of 2018. According to data from TrendForce, more than half of the DRAM market was occupied by Korean chipmakers Samsung Electronics and SK hynix in Q2 2020. +VE
TAIWAN Expect market to open higher following the US with a focus on Tech names, especially TSMC on news its bought another factory in order to expand production.
Data due after market Retail Sales, Unemployment, M2 Money Supply.
Local consumers showed less willingness to make big-ticket purchases last month compared with a month earlier due to escalating COVID-19 concerns in Taiwan, despite the government’s distribution of Triple Stimulus Vouchers, a Cathay Financial Holding Co survey showed on Thursday. Slight -VE
TSMC purchased a second factory in the SouthernTaiwan Science Park for NT860m; as it prepares to expand production capacity +VE
Fubon Life Insurance increased its appetite for domestic and foreign stocks last quarter as it pursued higher profits and cash dividends in a global environment of low interest rates, the insurer said Friday. +VE
China Steel Corp Friday said that it would raise steel prices by an average of 3.36% for domestic delivery in response to an uptrend in global steel and iron ore prices — the biggest price hikes in about two years. +VE
Largan Precision European broker cuts its target price citing escalating tensions between the US and China that led to tighter sanctions against Chinese telecom equipment giant Huawei. -VE
Domestic gasoline and diesel prices are to remain unchanged this week after conflicting factors kept international crude oil prices range-bound last week, CPC Corp, and Formosa Petrochemical Corp separately announced yesterday. +VE
Telco’s Weak as the majority of Taiwanese surveyed are not inclined to switch to 5G service within the next six months, as most of them are waiting for the cost to drop, an online poll showed.
CHINA Expect market to open slightly higher as US rebound continues but upside limited as trade relations continue to sour, with Trump threatened to decouple from China. Watch for activity from Team China
No data due
Trump warns US and China could decouple ‘if they don’t treat us right’ saying that America did not have to do business with China, during an interview on Fox News -VE for sentiment
ChiNext board begins trading under revamped rules that removes daily price limits for debut shares. At least 18 firms will trade for the first time under so-called registration-based initial public offerings. The companies raised a combined of 20 billion yuan (HK$22.4 billion) from their ChiNext listings, with retail demand outstripping supply by an average of around 5,700 times.
China’s banking and insurance regulator condemns US financial sanctions on Hong Kong. Saying America’s ‘actions to undermine financial stability in Hong Kong are not only against the Chinese people but also against the people of the world’. Which is in part true but the US have already pointed out that Beijing’s imposition of a national Security Law on Hong Kong has also undermined the position of Hong Kong as a centre for free trade.
Health authorities in China’s capital Beijing have removed a requirement for people to wear masks outdoors, further relaxing rules aimed at preventing the spread the novel coronavirus after the city reported 13 consecutive days without new cases.
China has been giving experimental coronavirus vaccines to groups facing high infection risks since July, a National health official told state media.
China wants to use the trade talks as an opportunity for Beijing to ‘negotiate and manage’ growing hostilities. Reflects the pressure that Beijing is currently under as relations have sunk to all time lows in recent weeks as the two nations spar over the coronavirus pandemic, Hong Kong, Xinjiang and technology.
China has approved a wealth management joint venture between BlackRock, Singapore’s Temasek and China Construction Bank Corp (CCB) (939.HK), Slight +VE but no details on what services it will be offering.
People's Bank of China and the Ministry of Housing and Urban-Rural Development will form capital and financing management rules for key real estate companies, the central bank said. +VE
China Banking and Insurance Regulatory Commission said the non-performing ratio of loans to small businesses was getting close to the original level that regulators had planned to tolerate, though it is still at a controllable level. The banking industry plans to dispose of 3.4 trillion yuan (HK$3.81 trillion) of non-performing assets this year, or 1.1 trillion yuan more than last year to strengthen their balance sheet.
China investors brace for record defaults by year-end. Its US$4.1tn corpate bond market is entering a new phase according to Bloomberg. Delinquencies have already started rising after a remarkably quiet second quarter, and pressure on borrowers is set to grow as 3.65 trillion yuan (US$527.5 billion) of notes mature by year-end. While few see a crisis in the offing, debt specialists at SC Lowy and Adamas Asset Management are becoming more selective in China, arguing that the government-induced calm in local credit markets is unlikely to last. Onshore delinquencies fell 17% in the first half to 49 billion yuan, in part because the government encouraged lenders to refinance debt, accept payment delays, or find other solutions, such as swapping bonds for fresh notes with longer maturities. -VE
The Philippines has lodged a diplomatic protest over what it said was China’s illegal confiscation of fish aggregating devices from Filipino fisherman in the disputed Scarborough Shoal lagoon held by Beijing in the South China Sea. This could be the start of more pressure on Beijing from those that contest its right to claim the South China. With the US dismissing China’s claim and the 2016 arbitral case I think we can expect more pressure ahead.
China is ready to share data on water flows into the Mekong River, a longstanding request of downstream Southeast Asian countries, a Thai foreign ministry official said on Friday.
China Baowu Steel Group, the country’s top steelmaker by output, has agreed to take a controlling stake in Taiyuan Iron & Steel (Group) Co Ltd (TISCO) in the latest consolidation of the country’s mammoth steel sector. Slight +VE
HONG KONG ADR’s -54pts to open at 25,059 but with elevated shorting on Friday I would expect the market to slightly open higher. Upside limited as Trump says US could stop doing business with China. Earnings still in focus with AAC Tech, Tingyi, West China Cement and R&F Properties amongst other due to report. Expect to see the 25k level being tested. The wild card remains support from Team China
No data due
Govt announced that free covid testing for the whole of HK on a voluntary basis will start from 1 Sept
Sunday there were 25 new case, 6 imported and 19 local; Saturday 26 new cases vs 27 cases Friday
EARNINGs due Monday include Yuexiu Property (123.HK), Guangdong Land (124.HK), Tingyi (Cayman Islands) (322.HK), Qingdao (499.HK), China Overseas Land & Investment (688.HK), i-CABLE (1097.HK), China Modern Dairy (1117.HK), Harbin Electric (1133.HK), AAC Tech (2018.HK), West China Cement (2233.HK), Guangzhou R&F Properties (2777.HK), CITIC Securities (6030.HK)
Short Selling HSI Friday 20.7% vs 23.9% Thursday
Top Shorts CLP (2) 47%, Ping An (2318) 47%, Sino Land (83) 41%, Mengniu Dairy (2319) 40%, HSBC (5) 37%, BOC (3988) 37%, Sunny Optical (2382) 37%, Power Assets (6) 36%, CCB (939) 34%, Want Want (151) 34%, Shenzhou (2313) 34%, Hang Lung Ppty (101) 31%, China Res Land (1109) 31%, Sinopec (386) 30%, BOC HK (2388) 30%, HK & China Gas (3) 29%, CKI (1038) 28%, CITIC (267) 27%, Country Garden (2007) 26%.
GCL-POLY ENERGY (3800.HK) PROFIT WARNING -VE the Group expected to incur a net loss of not less than RMB1.5 billion for the six months ended 30 June 2020 as compared to the net loss of approximately RMB751 million for the corresponding period last year.
GCL NEW ENERGY (451.HK) PROFIT WARNING -VE The Group is expected to record a net profit of not more than RMB200 million for the six months ended 30 June 2020 as compared to the net profit of approximately RMB571 million for the corresponding period last year.
HENDERSON LAND (12HK) sold 164 unites of 168 offered at Seacoast Royal in Tuen Mun on Saturday.Centaline reported 17 secondary transactions -15% WoW at 10 major housing estates Slight -VE
ZTE reported in the Nikkei Asian Review along with Huawei have slowed down 5G base station installations as US sanctions bite. The aim being to try and replace as much US equipment with Chinese alternatives -VE
Ant Group, the largest fintech magnate in the world, is applying for a consumer finance licence, and is initiating the setup of Chongqing Ant Consumer Finance Co., Ltd. according to Chinese media.
Xpeng Motors revealed its US listing plan, saying its existing shareholder BABA-SW (9988.HK) together with Coatue and Qatar Investment Authority, express their intention to subscribe shares of the company for US$200 million, US$100 million and US$50 million. Besides, XIAOMI-W (1810.HK) is also interested in US$50-million shares. Offering 85 million shares, Xpeng Motors will set the offer price at US$11-13 per share, raising US$1.1 billion at most, boosting its valuation above US$9.1 billion
TENCENT +VE US President Donald Trump's administration is approaching Apple Inc. privately to allow the latter doing business with TENCENT's WeChat continuously, Bloomberg cited sources. After active talks with some companies, Washington found that the US technology companies, retailers, game operators and other industries will take toll from TENCENT's business ban once enacted.
iCable -VE as 200 staff sign an open letter against the recent dismissal of three core members of the editorial team. -VE
NWS HOLDINGS (659.HK) will disposed of the entire equity interest of NWS Transport Services Limited to Bravo Transport, an independent third party, for a cash consideration of $3.2 billion. NWS Transport Services Limited held the public bus franchises of Citybus and NWFB. Bravo Transport is a company in which Templewater Bravo, HANS ENERGY (554.HK) and Ascendal Group holds 90.8%, 8.6% and 0.6% shareholding interest respectively.
WHARF REIC (1997 HK) sent bailiffs into some some shops last week and sued a cinema to recover rent arrears -VE for Retail names.
Pinduoduo (PDD.US) Q2 2020 unaudited financial results. The Non-GAAP adjusted net loss trimmed to RMB77.241 million from net loss of RMB411 million over a year ago, beating the market expected loss of RMB1.517 billion. Net loss per ADS was RMB0.75, whilst non-GAAP net loss per ADS was RMB0.06.
Sinopharm's CNBG posted on Weibo that it held a contract signing ceremony with Morocco Thursday (20 August) in regards of cooperation in COVID-19 vaccine, following approvals in UAE and Peru for clinical trials. This marked another milestone of the company, demonstrating the full-swing acceleration of its international clinical trials.
AGILE GROUP (3383.HK) announced that its 1H20 pre-sales amounted to RMB55.1 bn. Chairman Chen Zhuo Lin disclosed that sales will be accelerated in 2H20, confident of achieving the full-year sales target of RMB120 billion. The company will be highly cautious about its future land acquisition strategy, the chairman added, underscoring the company will not resort to M&A blindly and may retain capital for appropriate opportunities next year.
The tender invitation for a site, Lot No. 1003 in Demarcation District No. 214 at Hiram's Highway near Ho Chung, Sai Kung, closed at 12pm Friday. At least 22 bids were received for the site. CK ASSET (1113.HK), SINO LAND (83.HK), WING TAI PPT (369.HK), EMPEROR INT'L (163.HK), GRAND MING (1271.HK) and Chinachem submitted bids on a sole basis.
Other bidders included NEW WORLD DEV (17.HK), K. WAH INT'L (173.HK), FE CONSORT INTL (35.HK), CHEVALIER INT'L (25.HK) , KINGBOARD HLDG (148.HK) and K&K Property.
HK Government said in early July, the Chinese government had given green light to the scheme for inbound and outbound travel to Mainland with health codes, although the scheme hit snags from ups and downs in coronavirus situation, said Chief Executive Carrie Lam. However, travels may be resumed under the scheme once the pandemic stabilizes.Asked about some political parties' proposal that the public must present a health code before entering shopping malls, the city leader stated that the information may have been distorted as the Government has never considered such ideas and accentuated that it is unfeasible and unfair for residents to show a health code before entering public premises.
Centa-City Leading Index (CCL) last printed at 180.90, +0.18% weekly. This marked the end of CCL's three-week decline, with the index standing firmly at 180 for four weeks.
CCL Mass lifted 0.11% weekly to 184.37. CCL (small-and-medium units) gained 0.14% weekly to 181.49. CCL (large units) ascended 0.40% weekly to 177.85.
Centaline Property said it showed that the second-hand deals were boosted by showroom visit resumption in wake of easing epidemic. Entering September, the housing price trend was expected to become more certain.
EARNINGS OUT After market Friday
SUN.KING ELEC (580.HK) interim results for the period ended June 2020. Turnover +9.6% YoY to RMB688 million. The net profit RMB91.65 million, -18.9% yearly. EPS was RMB5.69 fen. An interim dividend of HK2 cents was declared.
ANHUI CONCH CEMENT (914.HK) interim results ended June 2020. Revenue +3.3% YoY to RMB74.007 billion. Net profit RMB16.069 billion, +5.3% yearly. EPS equaled RMB3.03. No dividend was declared. The group expects China's infrastructure investment to continue to be positive and a stable real estate investment.
BRILLIANCE CHINA (1114.HK) interim results for the period ended June 2020. Turnover -23.9% YoY to RMB1.45 billion. The net profit amounted to RMB4.045 billion, +25.2% yearly. EPS was RMB0.80178. No dividend was declared.
PICC P&C (02328.HK) interim results for the six months ended 30 June 2020. The net profit faded 21.7% yearly to RMB13.179 billion, with an EPS of 59.3 fen. No dividend was declared. Gross written premiums added 4.4% to RMB246.304 billion.
PICC GROUP (1339.HK) interim result ended June 2020. The net profit amounted to RMB12.606 billion, -18.6% yearly. EPS was RMB0.29. An interim dividend of 3.6 fen was declared.
SHENZHEN EXPRESS (548.HK) interim results for the period ended June 2020. Turnover -37.7% YoY to RMB1.687 billion. The net profit amounted to RMB43.9229 mn -97.2% yearly. EPS was RMB0.02. No interim dividend was declared.
HAITONG INT'L (665.HK) interim results for the period ended June 2020. Turnover -13.2% YoY to HK$3.553 billion. The net profit amounted to HK$521 million, -49.8% yearly. EPS was HK8.9 cents. A dividend of HK4.4 cents was declared.
MEITUAN-W (3690.HK) interim results ended June 2020. The company swung into net profit of RMB631 million from loss of RMB554 million over a year ago, vs brokers' forecast for loss of RMB1.078-3.419 billion. Revenue -1% yearly to RMB41.476 billion.EPS equaled RMB0.38.1H20 Non-IFRS Adjusted NP +463% to RMB2.502B
FUYAO GLASS (3606.HK) interim results for the period ended June 2020. Turnover -21.1% YoY to RMB8.121 billion. The net profit amounted to RMB964 million, down 36% yearly. EPS was RMB0.38. No dividend was declared.
CHINA HONGQIAO (1378.HK) interim results for the period ended June 2020. Turnover -3.6% YoY to RMB39.939 billion. The net profit amounted to RMB2.832 bn +14.3% yearly. EPS was RMB0.33. An interim dividend of HK15 cents was declared, against no dividend in the year-ago period.
LVGEM CHINA (95.HK) interim results for the period ended June 2020. Turnover -28% YoY to RMB2.462 billion. The net profit amounted to RMB37.556 million, -96.2% yearly. EPS was RMB0.74 fen. No dividend was declared.
DOW +0.69%, NDX +0.43%, S&P +0.34%, Russel 2K -0.76% markets opened around flat but worked better through the day to closed around their highs. S&P and Nadaq closed at new highs. PMI data was better than f/cast, and existing home sales very strong with the average selling price for homes hitting an all-time high, at $304,100. As supply remains tight and mortgage rates remain low but does seem to indicate confidence from those still in jobs. Politicians remain in deadlock over the new stimulus package.
Apple +5.1% to a new high. Broker report talks of an underestimation of pent up demand and that 350m iPhones are ready to be upgraded. (Should be +VE for the Apply supply chain in Asia). Friday saw Epic get support from Microsoft in its case against the ‘Apple Tax’ regarding Apples threatened suspension of Epic’s Unreal Engine which many developers use. -VE for Apple.
Deere +4.4% and Foot Locker +1.4%, on better-than-expected quarterly results.
TikTok is set to file a lawsuit at a US court as soon as Monday to challenge President Donald Trump's executive order prohibiting transactions with its parent ByteDance, foreign media reported.
Alphabet is weighing to join a consortium in tussle for TikTok, Bloomberg cited sources. Yet, it will not take the majority and voting stake.
President Trump lost his bid to delay the release of his tax returns to the Manhattan district attorney as part of a criminal investigation into his family’s real estate business while Trump pursues an appeal.
Flash PMI data,
Manufacturing Aug 53.6 vs 50.9 Jul (F/cast was 52),
Services Aug 54.8 vs 50.0 Jul (F/cast was 51.5),
Composite Aug 54.7 vs 50.3 Jul (F/cast was 51.7),
Existing Home Sales Jul +24.7% MoM vs +20.2% Jun (F/cast was +10.2)
Baker Hughes Total Rig Count 254 vs 244 prior rinsing for the first time in months.
USD was flat vs Yen & stronger vs Euro. Bitcoin -0.75% @ 11,427.21, VIX -0.79% @ 22.54, US T10 0.636% on good data.
OIL Brent -1.9%, WTI -1.1% on concerns about the global recovery
Gold +0.1%, Silver -1%, Copper -1.6%AHEAD Chicago Fed National Activity Index
DAX -0.51%, CAC -0.3%, FTSE -0.19% Markets open slightly higher following Asia and the US but then traded around flat after the PMI flash data showed Eurozone weaker, Germany mixed , France weaker and UK stronger; raising concerns about a V shaped recovery. UK Retail Sales were stronger and Public sector borrowing was less than expected but CBI Industrial Trends orders missed. Also doubts about the US/China trade talks as Trump declined to confirm the new timetable for talks.
Bayer -0.6% off initial highs announced Thursday that it would pay $1.6 billion to settle a majority of claims in the US relating to its birth control device,
Volkswagen -0.4% off initial high on news a US judge dismissed parts of a lawsuit by the Securities and Exchange Commission alleging that Volkswagen defrauded US investors during its highly-publicized diesel emissions saga.
Adyen -3.7% after several top executives sold their 15% stakes.
InterContinental Hotels +6.2% led the FTSE 100 gainers following a retread of speculation about bid interest from French peer Accor.
Pfizer +0.4% and BioNTech +10.2% on reports that their coronavirus vaccine candidate might be ready for regulatory review by October.
EUROZONE Flash PMI
Manufacturing Aug 51.7 vs 51.8 Jul (F/cast was 52.6),
Services Aug 50.1 vs 54.7 Jul (F/cast was 54),
Composite Aug 51.6 vs 54.9 Jul (F/cast was 54.3),
Consumer Confidence Flash Aug -14.7 vs -15 Jul (F/cast was -14)
GERMANY Flash PMI data
Manufacturing Aug 53.0 vs 51.0 Jul (F/cast was 52.2),
Services Aug 50.8 vs 55.6 Jul (F/cast was 55.0),
Composite Aug 53.7 vs 55.3 Jul (F/cast was 54.9),
FRANCE Flash PMI data
Manufacturing Aug 49.0 vs 52.4 Jul (F/cast was 53.2),
Services Aug 51.9 vs 57.3 Jul (F/cast was 56.7),
Composite Aug 51.7 vs 57.3 Jul (F/cast was 56.5),
UK Manufacturing Aug 55.3 vs 53.3 Jul (F/cast was 53.4),
Services Aug 60.1 vs 56.5 Jul (F/cast was 57.4),
Composite Aug 60.3 vs 57.0 Jul (F/cast was 57.2),
Retail Sales Jul +3.6% MoM vs +13.9% Jun (F/cast was +2.5%)
Retail Sales Jul +1.4% YoY vs -1.6% Jun (F/cast was +0.4%)
Retail Sales Ex Fuel +2% MoM vs +13.4% Jun revised (F/cast was +0.5%)
Retail Sales Ex Fuel +3.1% YoY vs +1.7% Jun (F/cast was +1.9%)
Public Sector Net Borrowing GBP -25.9b vs -28.8b (F/cast was -30.2b)
CBI Industrial Trends Orders Aug -44 vs -46 Jul (F/Cast was -30)
EUROZONE No data due
GERMANY No data due
FRANCE No data due
UK No data due