Aug 27 ASIAN MACRO INITIAL THOUGHTS Asian Futures +VE, US futures flat
Covid-19 Globally over 24m cases, 822k deaths
A team from the World Health Organization tasked with investigating the origins of coronavirus did not visit Wuhan, fuelling concern from western governments over China’s commitment to identifying the source of the pandemic. Although WHO says the team was just laying the ground work.
US Futures Opened -23pts with S&P and NDX flat. Caution ahead of Powells speech at Jackson Hole later today
Asian futures indicate a higher open
DOW +0.3%, NDX +1.73%, S&P +1.02%, Russel 2K -0.7% Dow opened flat and trended lower before working higher, NDX and S&P opened higher and trended higher setting new records in +VE sentiment about a vaccine and good economic data. Although Kansas City Federal Reserve President Esther George told CNBC the risk of a double-dip recession is increasing.
Salesforce +26% very good earnings after the bell on Tuesday and on the Dow member ship.
Moderna +6.4% said its coronavirus vaccine showed promising results in a small trial of patients ages 56 and older.
HP Enterprise +3.6%, Urban Outfitters +21.4% as earnings beat. But Toll Brothers -2.1% off initial high, despite good earnings.
Amazon +2.9%, Netflix +11.6%, Microsoft +2.2% and Apple +1.4%
Facebook +8.2% Wednesday acknowledged that Apple’s upcoming iOS 14 could lead to a 50%+ drop in its Audience Network advertising business. Currently advertisers can use a unique device ID number called the IDFA to better target ads and estimate their effectiveness. In iOS 14, each app that wants to use these identifiers will ask users to opt in to tracking when the app is first launched. Facebook said its apps will not collect IDFA information on iOS 14 and so will not be able to target ads on iPhones. It doesn’t affect Android phones.
MBA Mortgage Applications -6.5% vs -3.3% prior
MBA 30 year Mortgage Rate 3.11% vs 3.13% prior
Durable Goods Orders Jul +11.2% Mom vs +7.7% Jun revised (F/cast was +3.9%)
Durable Goods Orders Ex Transport Jul +2.4% Mom vs +4% Jun revised (F/cast was +1.7%)
Durable Goods Orders Ex Defence Jul +9.9% Mom vs +9.7% Jun revised (F/cast was +4.6%)
EIA Oil Crude Oil Stocks change -4.689m vs -1.632m prior (Consensus was -3.694m)
EIA Oil Crude Gasoline Stocks change -4.584 vs -3.322m (Consensus was -1.533m)
USD was flat vs Yen & Euro. Bitcoin +0.8% @ 11,470.97, VIX +5.6% @23.27 , US T10 0.688%
OIL Brent -0.15%, WTI +0.14% as US producers shut production facilities ahead of hurricane hitting Gulf of Mexico facilities.
Gold +1%, Silver +3.5%, Copper +1.4% ahead of Powells speech.
AHEAD GDP Growth Rate, GDP Price Index, Corporate Profits, Initial Claims and 4 week average, PCE Prices, Core PCE Prices, Pending Home Sales, EIA Natural Gas Report, Kansas Fed Manufacturing Index, Jackson Hole Economic Policy Symposium continues.
DAX +0.98%, CAC +0.8%, FTSE +0.14% having opened slightly lower markets traded sideways; FTSE traded around flat, DAX & CAC slight above flat but did test the support. German stocks helped after Berlin announced it was extending its Kurzarbeit furlough scheme. All markets saw an uptick into the close ahead of Powells speech at Jackson Hole; which kept Investors cautious for much of the session. But sentiment +VE as US Durable goods orders surged.
Tech +VE as Aveva +9.7% continued to climb after announcing a $5 billion deal to buy SoftBank-backed U.S. software firm OSIsoft.
Elekta +11.6% after very good Q1 earnings
Ambu -13.4% downgraded its forecast for organic growth in 2019/2020 financial year.
Consumer Confidence Aug 94 vs 94 Jul (F/cast was 96)
Unemployment Benefit Claims Jul -172.2k vs -202.7k Jun (F/cast was -70.7k )
Jobseekers Total Jul 3.7925m vs 3.9647m Jun (F/cast was 3.894m)
EUROZONE Loans to Households and Companies, M3 Money Supply
GERMANY No data due
FRANCE Business Confidence, Business Climate Indicator
UK Car Production
JAPAN Expect Nikkei to open higher following the US although Covid concerns and caution ahead of Jackson Hole speeches likely to limit the upside. Yen strengthened slightly to 105.99
Data due Foreign Bond and Stock Investments, Later All Industry Activity Index at 12.30pm
PM Abe will consult with doctors before holding a news conference on Friday, amid worries about his health after two recent hospital examinations.
Japan wants to avert another state of emergency and needs to consider more stimulus to revive the economy, the government’s Chief Cabinet Secretary said, signalling Tokyo’s resolve to focus on re-opening businesses hammered by the coronavirus pandemic.
Japanese researchers said on Wednesday that low concentrations of ozone can neutralise coronavirus particles, potentially providing a way for hospitals to disinfect examination rooms and waiting areas.
Tokyo metropolitan government on Wednesday reported 236 new cases of the coronavirus, an increase of 54 from Tuesday.
Three men were arrested in Japan on Wednesday on suspicion of making fraudulent applications for government funds for businesses hit by the coronavirus in a scheme that may have cost taxpayers up to 400 million yen ($3.77 million), NHK reported. They were trying to get 1m Yen (US$9,418) which indicates the pressure that some people are under.
Japan Post to resume insurance product sales after selling scandal
SOUTH KOREA Expect markets to open higher on news of a new stimulus package and following +VE US markets overnight. Typhoon Bavi passed S Korea and hitting land in N Korea. Covid concerns still overhang the market
Data due BoK Interest Rate Decision no change expected
South Korea’s government and ruling party have agreed to allocate more than 20 trillion won ($16.85 billion) of the 2021 state budget to financing the “Korean New Deal” stimulus package, party officials said Wednesday. They also vowed to keep up the current expansionary fiscal policy tone throughout next year, bracing for a prolonged economic downturn. +VE
South Korea ordered doctors in the Seoul area to return to work on Wednesday as they began a three-day strike in protest of several government proposals, including one to boost the number of doctors to deal with health crises like the coronavirus.
Netflix’s S Korean office is under investigation for possible tax avoidance, industry sources said Wednesday.
The Ministry of Science and ICT said Wednesday that it will look into Google and Apple‘s in-app payment systems over claims that they apply excessive commssions to app developers using their platforms.
Hyundai Mobis said Wednesday it will invest 36 billion won (US$30 million) in expanding its output capacity of electric vehicle components. +VE
KB Kookmin Bank said Wednesday it is now in the final stage of acquiring Indonesia-based Bank Bukopin. +VE
Asiana Airlines said Wednesday that its main creditor bank of has discussed with HDC Hyundai Development Co. all possible options to wrap up the acquisition of the carrier by the builder. KDB says it will await HDC Hyundai Development Company’s answer on acquiring the airline
PUBG Corp.’s eponymous game PlayerUnknown’s Battlegrounds will be made into a movie and TV series, Krafton said Wednesday.
TAIWAN Expect market to open higher following the US gains with Tech remaining in focus.
Data due Consumer Confidence
Local governments can independently set mandatory mask-wearing rules for eight types of crowded or enclosed spaces, the Central Epidemic Command Center (CECC) said yesterday, as it reported a case of a Philippine worker who tested positive after returning to the Philippines from Taiwan.
Alphabet Inc’s Google has bought a plot in Yunlin County to build a data center, local media reports said yesterday, without citing sources. Google has two existing data centers in Taiwan — one in Changhua County and the other in Tainan. In Asia, the search giant also operates a data center in Singapore and one in Mumbai, India.
Local banks’ aggregate first-half pretax profits slid 11.9% YoY to NT$193.2 billion (US$6.55 billion) due to lower investment returns, higher loan-loss provisions and reduced interest income amid the COVID-19 pandemic, data from the Financial Supervisory Commission (FSC) showed on Tuesday. It is expected they will improve in 2H. Slight -VE
CHINA Expect market to open flat ahead of the Industrial Profits data. Ant dual listing will prompt some selling as investors raise cash. Concerns over US/China relations still evident despite the good news on trade talks there are still concerns about further Trump sanctions.
Data due Industrial Profits (Jun was -12.8% F/cast is -6.2%)
Chinese Foreign Minister Wang Yi is lobbying his European counterparts for support but getting push back on human rights and 5G security. Amid the current geopolitical spat with the United States, he is seeking to avoid a ‘new Cold War’ and pushing 'Belt and Road’ but he has been met with concerns over human rights (Hong Kong and Xinjiang) and 5G technology security issues. -VE
The US government has announced sanctions on 24 Chinese entities including the state-owned China Communications Construction Company (CCCC), calling the move a response to Beijing’s “militarisation” of outposts in the South China Sea. -VE
Vietnam on Wednesday accused China of violating its sovereignty by conducting military drills in a disputed part of the South China Sea and said Beijing’s actions were “complicating” negotiations on establishing a code of conduct in the region. -VE
China is conducting live firing exercises including firing its ‘aircraft carrier missile’ seen as a warning to the US. -VE
Huawei is urging to MediaTek and such other suppliers to advance their shipment as it seeks to stockpile 5G mobile processors, WiFi, display drivers, and other key components, before the US ban takes effect from 14 September the Nikkei reported.
Alibaba Group has put on hold plans to invest in Indian companies, two sources aware of the plans told Reuters, amid souring business relations and rising political tension between the two nations after a clash on their Himalayan border. But there are no plans to reduce its stakes or exit investments.
Volkswagen AG said on Wednesday it will start testing autonomous vehicles in China’s eastern city of Hefei, its first in the world’s biggest car market. Follows Toyota-backed Pony.ai, Baidu Inc, Nissan-backed WeRide and Didi Chuxing who are all testing autonomous cars in different cities as automakers and tech companies are investing billions in the technology.
BlueCity BLCT.O, the owner of China’s biggest gay men dating app Blued, said on Wednesday it had bought a Chinese lesbian dating app LESDO, marking the first ever deal within the country’s LGBT market.
HONG KONG ADR’s -83pts to open at 25,408 with ADR’s mixed overnight. Results in focus along with comments from Jackson Hole. 25,500 is becoming a resistance. ANT listing could be the trigger to break through and expect local investors to be selling to raise cash for the new listing. Interesting to note that CK Asset that Li Ka Shing and Victor have been buying has a subsidiary that invested in Ant. Local arrests related to last years social arrest a -VE for sentiment.
No data due but after market Wednesday
Balance of Trade Jul HK$-29.8b vs -33.3b Jun (F/cast was -27b)
Exports Jul -3% YoY vs -1.3% Jun
Imports Jul -3.4% YoY vs -7.1% Jun
Police arrested 16 people Wednesday morning, including Democratic lawmaker Ted Hui Chi-fung and Lam Cheuk-ting relating to last year’s social unrest. Four of them were arrested for perverting the course of justice, accessing a computer with dishonest intent, property damage, and unlawful assembly. An action that is likely to raise public concerns as it relates to an incident where white shorted men attacked individuals in Yuen Long and the police failed to respond.
EARNINGs due out Thursday include First Tractor (38 HK), Great Eagle (41 HK), Sichuan Expressway (107 HK), Cinda Int (111 HK), First Pacific (142 HK), China Everbright (165 HK), Minmetals (230 HK), Shun Tak (242 HK), Sino Golf (361 HK), Boyaa Interactive (434 HK), Lansen Pharmaceutical (503 HK), Guangshen Railway (525 HK), Samson (531 HK), Nanjing Panda Electronic (553 HK), China Oil And Gas (603 HK), Kerry Logistics (636 HK), Fosun Int (656 HK), TravelSky Tech (696 HK), Singamas Container (716 HK), Global Bio-chem (809 HK), Dynasty Fine Wines (828 HK), CIFI (884 HK), Emperor Watch (887 HK), Lees Pharma (950 HK), Shaw Brothers (953 HK), SMIC (981 HK), AEON Stores (984 HK), China CITIC Bank (998 HK), Dongfang Electric (1072 HK), COSCO Shipping (1199 HK), China LotSynergy (1371 HK), Bank of Tianjin (1578 HK), Kaisa Group (1638 HK), Tong Ren Tang Technologies (1666 HK), Macau Legend (1680 HK), Shandong Gold Mining (1787 HK), KWG (1813 HK), China New Higher Education (2001 HK), Best Pacific International (2111 HK), Luye Pharma (2186 HK), China Vanke (2202 HK), Ping An Insurance (Group) (2318 HK), Weichai Power (2338 HK), China Power INt (2380 HK), Chalco (2600 HK), Shanghai Pharmaceuticals (2607 HK), Win Hanverky (3322 HK), Legend (3396 HK), Greentown (3900 HK), NagaCorp (3918 HK), Inner Mongolia Yitai Coal (3948 HK), Greentown Management (9979 HK).
Short Selling HSI Wednesday 18.9% vs 19% Tuesday
Top Shorts Sino Land (83) 47%, China Shenhua (1088) 47%, Want Want (151) 47%, CLP (2) 44%, Hang Lung Ppty (101) 44%, Power Assets (6) 43%, HK & China Gas (3) 37%, HSBC (5) 35%, MTRC (66) 35%, Country Garden (2007) 34%, China Res And (1109) 34%, Hang Seng Bank (11) 33%, Ping An (2318) 32%, COONC (883) 32%, CCB (939) 31%, NWD (17) 31%, China Mobile (941) 29%, ICBC (1398 ) 29%, BoC HK (2388) 29%, Mengniu Dairy (2319) 28%, Petrochina (857) 28%.
EARNINGS out after market Wednesday
XIAOMI-W 1H20 Non-GAAP Adjusted NP Edges Down 0.7% to RMB5.67B, Beating Estimate. 1H20 NP +31.2% to RMB6.66B, Topping Forecast
CGN POWER (1816.HK) interim results for the period ended June 2020. Turnover+ 18.8% year-on-year to RMB31.507 billion. The net profit RMB5.205 billion, +3.6% year-on-year. EPS was RMB0.103. No dividend was declared.
RAZER (1337.HK) interim results ended June 2020. Revenue +25.3% year on year to US$448 million. The loss narrowed from US$48.076 million in the corresponding period of previous year to US$17.343 million. No dividend was declared.
MEITU (1357.HK) interim result ended June 2020. The revenues +20.1% year on year to RMB557 million. The loss narrowed from RMB371 million in the corresponding period of previous year to RMB15.953 million. LPS was RMB0.004. No dividend was declared.
HANSOH PHARMA (3692.HK) announced interim results for the period ended June 2020. The turnover -13.5% year-on-year to RMB3.98 billion. The net profit RMB1.222 billion, -5.7% year-on-year. EPS was RMB0.21. No dividend was declared.
WEIGAO GROUP (1066.HK) interim result ended June 2020. The revenue +3% year on year to RMB5.091 billion. The net profit amounted to RMB970 million, up 3.5% yearly. EPS was RMB0.22. An interim dividend of RMB0.062 was declared.
BOCOM INTL (3329.HK) interim result ended June 2020. The revenue +31.1% year on year to HK$931 million. The net profit amounted to HK$281 million, up 10.6% yearly.EPS was HK$0.1. No dividend was declared.
CHINA LIFE (2628.HK) interim results for the six months ended 30 June 2020. The total revenues rose 12.5% yearly to RMB504.431 billion. The net profit -18.8% yearly to RMB30.535 billion, in line. EPS. was RMB1.07. No dividend was declared. The value of half year’s sales was RMB36.889 billion, +6.7% year on year, in line.
SINO LAND (83.HK) annual results ended June 2020. Net profit was $1.688 billion, -75.6% yearly. Basic EPS equaled 24 cents. During the year, underlying profit receded 2.4% yearly to $4.557 billion. Underlying EPS equaled 65 cents. Final DPS was 41 cents, flattish yearly.
TST PROPERTIES (247.HK) annual result ended June 2020. The net profit amounted to HK$902 million, down 75.7% yearly. A final dividend of HK41 cents was declared, flattish year-on-year. A full-year dividend of HK55 cents was declared, flattish annually.
HSBC attacked by US Sec State Pompeo for treatment of pro-democracy customers. He said the bank was "maintaining accounts for individuals who have been sanctioned for denying freedom for Hong Kongers, while shutting accounts for those seeking freedom.” "Free nations must ensure that corporate interests are not suborned by the CCP (Chinese Communist Party) to aid its political repression," Pompeo said in a statement. -VE
Chinachem subsidiary wins the tender for a site, Lot No. 1003 in Demarcation District No. 214 at Hiram’s Highway near Heung Chung Road, Ho Chung, Sai Kung, New Territories, Wise Castle Corporation Limited (parent company: Chime Corporation Limited), on a 50-year land grant at a premium of $530 million. Chime Corporation Limited is a subsidiary of Chinachem Group. The market had valued the land lot between $403-759 million so low end; reflects developer caution slight -VE
NONGFU SPRING (9633.HK), on the second day of IPO, reported $149.2 billion margin granted by 12 brokers in aggregate at around 6:30 pm. Based on the fundraising amount of $584 million from the public offering, HK IPO was over-subscribed by over 254 times.
RAZER (1337.HK) Founder Min-Liang Tan at the results conference, said he expected the company's revenue to keep ballooning on the ride of new hardware product launches in 2H20 and services revenue growth under "stay-at-home" theme. He also predicted the GM to have sequential improvement. For profit level, the company turned to positive adjusted EBITDA of almost US$3.2 million in 1H20, which may continue to be propelled by revenue growth. revealed that the company will go on with share buyback, investment and M&A activities.
SHUI ON LAND (272.HK) declared no interim dividend. Chairman Vincent Lo explained the reasons that the decision was made based on the market performance and 1H20 results, rather than the financial position of the company. Lo underscored that the company is absolutely capable of paying dividend given its $14 billion cash at bank, yet it would rather be more prudent in this regard, hoping to identify acquisition opportunities when the market environment displays adjustment. As to whether the company will declare dividend from its annual results, Lo foretold it will be contingent on decision of board of directors.
MEITU (1357.HK) 's 1H20 non-advertising income contribution +42.9% with the fastest growth seen in overseas premium subscription services, the company revealed during a teleconference on the interim results. The group is now launching subscription services in countries with higher ARPU and where users are more willing to pay, like Japan and the U.S.. It believed such services will be applicable to the China market as well in view of the ARPU uptrend and also more willingness of users to pay. The group also stressed that it has been complying with local laws and regulations and protecting customer privacy.
Vanguard Hong Kong informed unit holders in product announcement that it is going to exit the Hong Kong ETF business orderly with fund managers considering various possibilities related to trustee and subsidiary funds, including new investment managers for each subsidiary fund and trustee. The company explained that the decision to quit Hong Kong's ETF business aims to divert local human resources and capital to its strategic focal points.
CHINA LIFE (2628.HK) announced that the Company, CLP&C and Guangzhou Xinyue (each as a Limited Partner) intend to enter into the Partnership Agreement with Guangzhou Jinhui (as the General Partner) by 30 September 2020 for the formation of the Partnership. The total capital contribution by all partners of the Partnership shall be RMB2 billion, of which RMB1.5 billion shall be contributed by the Company. The Partnership will primarily invest in financial assets and related assets in the inclusive financing sector.
CG SERVICES (6098.HK)'s value-added service income contribution may grow by 1-2 times from the current 10%, said President Li Changjiang. The management does not expect much of the earnings from "Three Supplies and Property Management" in 2H20.
COVID Testing. Online registration for the citywide virus test begins on Saturday, with around 5,000 medics signed up to help at over 100 centers, says Secretary for Civil Service Patrick Nip Tak-kuen. Residents can sign up at https://www.communitytest.gov.hk/ and enter their name, HK ID number and phone number to choose a preferred test center and a specific time slot. Each slot is 30 minutes and sampling is expected to be completed in a minute. The voluntary test is set to start on Tuesday.