Aug 26 ASIAN MACRO INITIAL THOUGHTS US Futures flat


28 Aug

Aug 26 ASIAN MACRO INITIAL THOUGHTS  US Futures flat

Covid-19 Globally over 23.75m cases, 816k deaths
US Futures flat (+5pts) S&P and NDX very slightly +VE


DOW -0.21%, NDX +0.76%, S&P +0.36%, Russel 2K +0.17% US markets opened flat, although the futures had indicated a higher open. Most of the data was +VE but Consumer Confidence fell for a second month, raising concerns about the US recovery -VE. NDX worked higher, the S&P traded sideways initially and worked higher in the PM but Dow sold down in the morning and then saw a rebound in the PM. Weakness in the morning in Apple -0.8% Boeing -2%, Raytheon Technologies -1.5% and Exxon Mobil -3.2%
American Airlines -2.2% on news of more job losses
Trade tensions with China may be easing as the parties said they were making progress.
Pre Market Dow index Changes were announced which are effective from close Friday. Adds Salesforce +3.6%, Amgen +5.4% and Honeywell +3.2%
Deletes Exxon Mobil -3.2%, Pfizer -1.1% and Raytheon -1.5%
DATA
Redbook +0.6% YoY vs -2.8% Prior (+4.1% MoM vs +2.8% prior)
Case-Shiller Home Price Jun +0.2% MoM vs +0.45 May (F/cast was +0.3%)
Case-Shiller Home Price Jun +3.5% YoY vs +3.6% May revised from +3.7% (F/cast was +3.6%)
House Price Index Jun +0.9% MoM vs -0.3% May (F/cast was +0.3%)
New Home Sales Jul +13.9% MoM vs +15.1% Jun (revised) (F/cast was +1%)
Consumer Confidence Aug 84.8 vs 91.7 Jul revised from 92.6 (F/cast was 93)
Richmond Fed Manufacturing Index Aug 18 vs 10 Jul (F/cast was 1)
API Crude Oil Stocks -4.5m vs -4.3m prior
USD was flat vs Yen & Euro with caution ahead of Powell speaking at Jackson Hole Bitcoin -3.5% @ 11,370.96, VIX -1.5% @ 22.03, US T10 0.688%
OIL Brent +1.8%, WTI +1.7% with US production in the Gulf of Mexico shut due to Hurricane Laura which is approaching the level of 2005’s Katrina.
Gold -0.6%, Silver -1%, Copper +0.2% on optimism over US/China trade
AHEAD MBA Mortgage Applications & 30 year Mortgage Rates, Durable Goods Order Data, EIA Oil Report. Jackson Hole Symposium starts

DAX -0.04%, CAC +0.01%, FTSE -1.11% markets opened higher following the US and Asian lead and as the US futures are higher too. German GDP Growth Rate was weak but better than forecast and Ifo data show an improvement and in most cases beat expectations. UK CBI Distributive Trades Aug was -6 vs 4 Jul (F/cast was +11). News that US/China trade talks were progress also +VE for sentiment. But then dipped in early trading and traded sideways until mid afternoon when they sold down as the US Consumer Confidence indicator fell for a second month raising concerns about the US recovery. They continued to sell down into the close.
Travel and leisure shares +VE, despite Scandinavian Airlines System Q3 earnings showed it making a a loss.
Accor +3.8% on possible deal with IHG
GVC Holdings +3.8%
Aveva Group +7.3% on news of a deal to buy SoftBank-backed US software firm OSIsoft for $5 billion.
LVMH +2% as Reuters reported that the luxury brand agreed to give another three months to complete a tie-up with Tiffany.
DATA
GERMANY
GDP Growth Rate Final Q2 -9.7% QoQ vs -2% prior (F/cast was -10.1% )
GDP Growth Rate Final Q2 -11.3% You vs -2.2% prior revised (F/cast was -11.7%)
Ifo data
Business Climate Aug 92.6 vs 90.4 Jul revised (F/cast was 92.5)
Current Conditions Aug 87.9 vs 84.5 Jul (F/cast was 86)
Expectations Aug 97.5 vs 96.7 Jul revised (F/cast was 98.9)
UK
CBI Distributive Trades Aug was -6 vs 4 Jul (F/cast was +11).
AHEAD
EUROZONE No data due
GERMANY No data due
FRANCE Consumer Confidence, Unemployment Benefit Claims, Jobseekers Total
UK No data due

JAPAN Expect Nikkei to open flat and to trade with caution ahead fo Jackson Hole Symposium. Covid remains a -VE for sentiment and with little to drive the market higher it could drift lower. Yen currently 106.36
Data due 
at midday Final Coincident Index and Leading Economic Index
Tokyo Governor Yuriko Koike said on Tuesday that the novel coronavirus situation in Tokyo is improving and she's still intent on the city hosting the Olympics next year. There were 182 new cases in Tokyo Tuesday and a nationwide total of 704 so still a concern
The government said Tuesday 98.6% of households in Japan have received the one-off 100,000 yen ($940) cash handouts meant to help cushion the economic fallout from the novel coronavirus pandemic that has continued to linger,
Japanese Prime Minister Shinzo Abe is likely to fulfill his tenure as head of the ruling party, and therefore premier, until his term ends in September next year, one of his closest aides told Reuters on Tuesday. But media speculation intense on what happens if he doesn’t Slight -VE for sentiment
Nintendo is going to launch Switch Pro in 1Q21 and the next-generation console may adopt a dual screen design in a bid to compete with Sony's PS5 and Microsoft's Xbox Series, sources were quoted as saying by foreign media. It seems that there will be two upgraded Switch versions, i.e. Switch Lite which is portable and Switch Pro targeting ardent game players. Switch Pro is expected to command a price of US$399.
Kirin -VE as its sale of its Australian beverage unit to China Mengniu Dairy is blocked by the Australian Government.
Itochu raises stake in FamilyMart to 65% via tender offer
Olympus to recall 4,150 endoscopes sold in U.S., Europe The company said there is a possibility that equipment parts might come off and remain in a patient's body.
Units of Honda Motor Co have agreed to pay $85 million to settle an investigation by most U.S. states into its use of defective Takata airbag inflators in its vehicles, according to a consent order made public on Tuesday. Slight -VE
Authentication data of 38 Japanese firms stolen amid surge in teleworkers. VPN usage has increased as companies encourage employees to work from home due to the novel coronavirus pandemic. Slight -VE

SOUTH KOREA Expect markets to open slightly higher on good Business Confidence number but rising covid cases and Jackson Hole likely to cap the upside
Data out
Business Confidence Aug 66 vs 59 Jul revised from 57 (F/cast was 53)
South Korea on Tuesday ordered most schools in Seoul and surrounding areas to close and move classes back online, the latest in a series of precautionary measures aimed at heading off a resurgence in coronavirus cases.


TAIWAN Expect market to open slightly higher with large cap tech slightly +VE but upside limited.
No data due but Business sentiment improved last month
amid a bump in demand as economies reopened after COVID-19 lockdowns, the Taiwan Institute of Economic Research said yesterday. Business sentiment in the manufacturing industry was 96.32, up for the third consecutive month by 5.9 points MoM to the highest this year, driven by the strong demand for semiconductors. +VE
The Central Epidemic Command Center (CECC) yesterday reported a case of a Taiwanese who tested positive for COVID-19; a 70 year old woman after arriving in Shanghai.
TSMC announced a plan to establish a new research and development center in 2021, mainly engaged in the study of 2nm chips.
Innolux Corp yesterday said its operations are to improve further this quarter from last quarter, benefiting from resilient demand for flat panels used in tablets, laptops and TVs as the COVID-19 pandemic keeps workers and students at home. Shipments last month increased 1.5 times compared with the same period last year, it said. +VE
Cathay Life Insurance yesterday said it has turned more cautious after it increased its cash position by NT$108 billion (US$3.66 billion) last quarter and favored fixed-income bonds with higher ratings to weather volatility amid the COVID-19 pandemic. Slight -VE
Gartner yesterday reported global smartphone sales declined 20% in Q2, while TrendForce Corp said global smartphone production had the worst quarter of annual decline on record. Worldwide sales of smartphones to end users totaled 295 million units last quarter, Gartner’s tally showed. Gartner and TrendForce attributed the bleak results to the COVID-19 pandemic, which led to border closures, regional lockdowns, stagnating economic activity and disrupted supply chains. However, taking into account the lifting of lockdowns and economic stimulus policies by governments around the world to generate consumer demand, TrendForce expects a rebound for smartphone production this quarter to 335 million units, although it would still be -10.1% YoY. -VE

CHINA Expect market to open flat news that the trade talks were still progressing +VE but concerns about the continuing drop in US Consumer Confidence -VE for exporters and sentiment
No data due
China has lodged “stern representations” 
with the United States, accusing it of sending a US U-2 reconnaissance plane into a no-fly zone over Chinese live-fire military drills on Tuesday, further ratcheting up tensions between Beijing and Washington.
Italy and China need to forge closer ties, Italian Foreign Minister Luigi Di Maio said on Tuesday, potentially putting Rome at odds with Washington, which has raised alarm over Beijing's economic ambitions.
About 3,700 people in Sweden were told in error that they had the coronavirus due to a fault in a COVID-19 testing kit from China, the Public Health Agency said on Tuesday. The kit from BGI Genomics could not distinguish between very low levels of the virus and a negative result, the agency said. -VE for sentiment.
Canada court rejects Meng Wanzhou’s bid to see documents about arrest that officials fear could damage ties with China. Slight -VE

HONG KONG ADR’s +36pts to open at 25,525 although weakness in the Chinese financials and caution ahead of earnings today likely to see the market drift lower.
Data due
after market Balance of Trade, Exports, Imports

EARNINGs due out Wednesday include Sino Land (83 HK), Tsim Sha Tsui Properties Ltd. (247.HK), Shui On Land (272.HK), Maanshan Iron & Steel (323.HK), Sinopec Shanghai Petrochemical (338 HK), Dah Sing Financial Holdings (440 HK), TVB (511 HK), Ajisen (China) (538 HK), China Communications Services Corporation (552 HK), Shandong Molong Petroleum Machinery (568 HK), Zhejiang Expressway (576 HK), Beijing North Star (588 HK), Maoye International (848 HK), Petrochina (857 HK), Digital China (861 HK), Longfor (960 HK), CSPC Pharmaceutical (1093), China Resources (1109 HK), Qingling Motors (1122), Sino Hotels (1221 HK), Yashilli (1230 HK), Razor (1337 HK), Meitu (1357 HK), Xiaomi Corporation (1810 HK), Yantai North Andre Juice (2218 HK), China Mengniu (2319 HK), Dah Sing Banking (2356 HK), Coolpad (2369 HK), China Life Ins (2628 HK), Chongqing Machinery & Electric (2722 HK), China Oilfield Services (2883 HK), Golden Eagle Retail Group (3308 HK), Lonking (3339 HK), Chongqing Rural Commercial Bank (3618 HK), Zhuzhou CRRC Times Electric (3898 HK), ZhongAn Online P & C Insurance (6060 HK), Everbright Securities Company (6178 HK).

EARNINGS OUT After market Tuesday
ZHAOJIN MINING (1818.HK) 
interim results ended June 2020. Revenue +11.1% YoY to RMB3.132 billion. Net profit RMB412 million, +72.7% yearly. EPS equaled RMB0.13. No dividend was declared.
NCI (01336.HK) interim results ended June 2020. Net profit RMB8.219 billion, -22.1% yearly. EPS. equaled RMB2.63. No dividend was declared. During the period, total revenues RMB116.076 billion, +30.3% yearly.
SINOPEC SSC (1033.HK) that for the first half of year, net profit 24.3% yearly to RMB609 million on IFRS basis. Basic EPS equaled 3.2 fen. No dividend was declared.
ANTA SPORTS (2020.HK) interim result ended June 2020. The revenue -1% YoY to RMB14.669 billion. The net profit RMB1.658 billion, -28.6% yearly. EPS was 61.63 fen. An interim dividend of HK21 cents was declared against a dividend of HK31 cents in the corresponding period of the previous year. Announced a business change see news below.
YIHAI INTL (1579.HK) interim results ended June 2020. Revenue +34% YoY to RMB2.218 billion. Net profit RMB399 million, +47.5% yearly. EPS equaled 40.67 fen. No dividend was declared.
CHINA RES GAS (1193.HK) results for the period ended June 2020. Turnover -19.9% YoY to HK$22.572 billion. The net profit HK$2.396 billion, -18.2% yearly.  EPS was HK$1.09. An interim dividend of HK15 cents was declared, same as that in the corresponding period of the previous year.
SHIMAO GROUP (813.HK) interim results ended June 2020. Revenue +14.1% YoY to RMB64.553 billion. Net profit RMB5.266 billion, +3.1% yearly. EPS equaled 152.58 fen. Interim DPS was HK60 cents, together with special DPS of HK10 cents.
CHINA JINMAO (817.HK) interim result ended June 2020. The net profit RMB3.77 billion, +1.7% yearly. EPS was 32.01 fen. An interim dividend of HK12 cents was declared, flattish year-on-year.

Short Selling HSI Tuesday 19% vs 21% Monday
Top Shorts Want Want (151) 52%, Sino Land (83) 51%, Country Garden (2007) 46%, Hang Lung Ppty (101) 46%, CCB (939) 40%, Ping An (2318) 35%, Bank of China (3988) 35%, NWD (17) 34%, CLP (2) 28%, Hang Seng Bank (11) 28%, ICBC (1398 ) 28%, Wharf REIC (1997) 28%, China Mobile (941) 26%, BoC HK (2388) 26%.

BUYBACKS/INSIDER DEALING
Li Ka-shing and Victor T K Li, through Li Ka Shing Foundation Limited, acquired a total of 1.7 million shares in CK ASSET (1113.HK) at the average price of HK$42.84, HK$41.9796 and HK$42.148 per share on 19 August, 20 August and 21 August 2020 respectively. As a result, the deemed interests of Li Ka-shing and Victor T K Li in

WATCH
Ant Group, Alibaba's fintech arm and China's dominant mobile payments firm, filed for a dual listing 
in Hong Kong and on Shanghai's Nasdaq-style STAR Market on Tuesday and could raise as much as $30 billion in what would be the world's largest IPO.
Hong Kong Ferry (0050) and Imperium Group's Seacoast Royale in Tuen Mun updated the price list, marking up the price 17% compared to the first price list. The developers will launch the fourth batch sales of 76 units, ranging from 289 square feet to 547 sq ft, on Saturday. Of these, 24 featured units will be sold via tender from Saturday until October 5. The sale prices range from HK$4.63 million to HK$8.88 million after discounts.
Henderson Land Development's phase 2 project in Sai Ying Pun was officially named Two Artlane and sales will be launched next month at the earliest. The project offers 264 residential units.
SINOPEC SSC (1033.HK) announced that the Company entered into the Equipment Leasing Framework Agreement with China Petrochemical Corporation, pursuant to which, the Group agreed to lease equipment to and from Sinopec Group during the period from 25 August 2020 to 31 December 2021.
IBO TECH (2708.HK) announced that the next generation low cost 5G signal product for indoor space developed by its Shenzhen-based subsidiary, Shenzhen IBO Communication, had passed the trial of China Mobile. After the trial of the Project, it is found that the Project can make full use of the original DAS systems resources and efficiently realize low-cost 5G signal indoor coverage. It is the preferred plan for 5G construction at the current stage and recommended for large-scale promotion and commercial use.
Sinopharm's chairman Liu Jingzhen revealed during a meeting with Huawei's rotating chairman Guo Ping in Beijing that the two groups had entered into a strategic cooperation agreement. Sinopharm hoped to develop deep collaboration with Huawei in areas including corporate digitalisation, smart drug manufacturing, drug circulation, medical information and exploration of international market, stated Liu.
SHIMAO GROUP (813.HK) will hopefully exceed its FY20 sales target at RMB300 billion, as the group still has RMB400 billion of salable resources in 2H20, said President Jason Hui at an online conference. The Chinese developer sees no rush now to expand its land investment, added Hui, explaining that the group is going to wait for more signals from the market.
COUNTRY GARDEN (2007.HK)'s sales receded yearly in 2M20 amid pandemic, the volume for 7M20 was close to the level over a year ago, said President Mo Bin. He was confident the August volume could exceed that of last year, thus driving an overall sales recovery. The group's CFO Wu Bijun separately said the company will maintain its dividend at a stable proportion in future.  CKA increased from 35.36% to 35.4%, and from 35.42% to 35.47%, respectively.
NEXT DIGITAL (282.HK) announced the appointment of Hung Chi Keung, Dennis as the chief financial officer of the Group (CFO) in place of Chow Tat Kuen, Royston with effect from 25 August 2020.
ANTA SPORTS (2020.HK) announced the new direct to consumer business model for ANTA brand business in certain regions in China. The Group believes changing ANTA brand business model from wholesale distribution model to direct to consumer model can bring multiple advantages, including analysis of real-time operation data of all the stores nationwide to achieve nationwide flexibility in inventory distribution among direct retail stores. At the first stage, the Group would launch a hybrid operation model in 11 regions in China, namely Changchun, Changsha, Chengdu, etc., and would end the cooperation with local distributors in these regions.
Hong Kong expatriate pay packages continued to grow throughout 2019 while the cost of employing expatriate staff in most other locations dropped. The average cost of employing a mid-level expatriate worker in Hong Kong cost a company USD284,500 (HKD2.2316 million), including an average cash salary of USD88,100 (HKD691,300). This was one of the findings of the latest MyExpatriate Market Pay survey published annually by ECA International.
Expatriate employees may be happy to hear that the average cash salary increased in 2019 ;now standing at USD88,100 per annum for mid-level expatriates and is the highest in the region, said Lee Quane, Regional Director Asia at ECA International

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