Aug 5 Asian Macro Initial Thoughts Dow futures open flat
Covid-19 Globally over 18.2m cases, 686k deaths
World Health Organization team in China to probe the origins of COVID-19 had “extensive discussions” and exchanges with scientists in Wuhan where the outbreak was first detected, a spokesman said on Tuesday.
US Dow Futures opened flat +14pts with S&P and NDX just -VE
EARNINGS CVS Health, Humana Moderna, Wayfair, New York Times, Sempra Energy, Square, Zynga, Fitbit, AmerisourceBergen, Capri Holdings, BorgWarner, Regeneron Pharmaceuticals, Humana, Allianz, Cedar Fair, Tanger Factory Outlet, Marathon Oil, Etsy, Olin, Iamgold, Noble Corp, Wendy’s, CF Industries, CenturyLink, Varian Medical, Copa Holdings, American Water Works
DOW +0.62%, NDX +0.35%, S&P +0.36%, Russel 2K +0.69% Markets opened flat and traded sideways with a small rally into the close. Investors watching stimulus package talks, earnings and covid cases. Energy and Property lead with Health care and Financials the laggards.
On stimulus both sides have indicated they agree on another $1,200 stimulus check, but remain deadlocked on additional unemployment assistance.
TECH mixed Apple +0.6% Netflix +2.2%, Facebook -0.9% and Alphabet -0.6%
Ralph Lauren led US fashion retailers lower after posting a Q1 66% fall in fiscal sales and a deeper than expected loss.
TikTok founder says he had no choice but to submit to the demands of the US to sell the app.
Ford to replace Chief Executive Jim Hackett as restructuring continues
AFTER MARKET Covid cases rose to over 1,000 with a new surge in Texas and Florida but the cases in California dropped again.
Beyond Meat's revenue jumps to US$113.3m despite fall in restaurant sales. Net loss $10.2m compared to $9.4m a year ago. It said it introduced a lower-priced pack for retailers, which cut the price of its burgers from nearly two times that of conventional beef patties to an approximate 20% premium on a per-pound basis. No guidance given
Disney total revenue -42% YoY and adjusted earnings missed as it took a $3.5bn hit to operating income at its theme parks, as the pandemic ground some of the entertainment giant’s most lucrative businesses to a halt.
Total Vehicle Sales Jul 14.5m vs 13.1m Jun
Redbook +1.1% MoM vs 1.1% prior (-7.1% YoY vs -8.7% prior)
ISM New York Index Jul vs 39.5 Jun (F/cast was 45.1)
IBD/TIPP Economic Optimism Aug vs 44 Jul
Factory Orders Jun 6.2% MoM vs +8% May (F/cast was +6.5%)
Factory Orders Ex Transport Jun 4.4% MoM vs 2.6% May (F/cast was 4.2%)
API Crude Oil Stocks -8.587m vs -6.829m prior
USD was slightly weaker vs Yen & Euro. Bitcoin +0.1% @ 11,250, VIX -2.1% @ 23.76, US T10 0.512%
OIL Brent +1.3%, WTI +1.7% on inventory decline, stimulus package progress and covid cases easing. But eased after hours linked with the bombing in Beirut.
Gold Spot +1.6% breaks above US$2,000, Silver +5.6%, Copper +0.4%
AHEAD MBA Mortgage Applications and 30 year Mortgage Rate, ADP Employment Change, Balance of Trade, Treasury Refunding Announcement, Exports, Imports, Services and Composite PMI, ISM Non Manufacturing Data (Business Activity, Prices, New Orders, Employment, PMI), EIA Oil Report.
DAX -0.36%, CAC +0.28%, FTSE +0.05% Markets to opened mixed DAX was higher but sold down and drifted lower for the rest of the day. CAC opened higher but drifted lower and FTSE opened flat and traded sideways. Weak earnings pre market set the tone. Eurozone PPI slightly better but the French Budget Balance missed. Also hurting sentiment was the fact that the US still hasn’t agreed the next stimulus package.
Hugo Boss -2.6% as quarterly results were weaker than expected; opened lower, rallied but them sold down for the rest of the day.
BP +3.4% sold down into the close, had been +6% for most of the day reported a Q2 loss of $6.7bn and cut dividend and downgraded some assets
Diageo -4.9% Larger than expected drop in organic sales; wrote down assets by GBP1.3bn opened lower and traded sideways
IWG -1.3% opened lower rallied into the green but then sold off to day low before working higher for the rest of the day. Concerns remain over its business model.
Bayer -2.4% opened flat but sold down n traded sideways; posted a Euro 9.5bn net loss, having been hit with a $10.9bn settlement over Roundup.
Easyjet +8.8% opened flat, rallied after its trading update and then traded sideways. Other tourism names +VE too.
Merlin Property +9.9% on possible T/O offer from Brookfield the Canadian Asset Manager
Natixis +VE after ousting chief executive François Riahi, which revived hopes about a possible buyout by its parent BPCE. Nicolas Namias, BPCE’s chief financial officer, replaced Mr Riahi with immediate effect “due to strategic differences regarding the options of Natixis’s future plan”. FT Lex thinks they should focus on building the asset management business.
EUROZONE PPI Jun +0.7% MoM vs -0.6% May (F/cast was +0.4%)
PPI Jun -3.7% YoY vs -5% May (F/cast was-4% )
FRANCE Budget Balance Jun Euro -124.88b vs -117.85b May (F/cast was -195b)
EUROZONE Services and Composite PMI, Retail Sales
GERMANY Services and Composite PMI
FRANCE Services and Composite PMI, Retail Sales
UK Services and Composite PMI, New Car Sales
JAPAN Nikkei future indicate a flat open but stocks likely to work higher with good results from Sony and SoftBank. Yen strengthened, currently 105.71 slight -VE Exporters. Covid concerns remain with Tokyo reporting 309 new cases on Tuesday.
Data due Services PMI Jun was 45, F/cast is 45.2 and Composite PMI Jun was 40.8 and F/cast is 43.9.
BoJ’s Kuroda says it could extend support for companies cash flow management if deemed necessary +VE
Japan boosts East China Sea radar and patrol capacity to fend off China’s island claim: Tokyo cannot compete with PLA Navy on size and armaments so instead upgraded monitoring and defence, says Centre for Strategic and International Studies
Japan Post Holdings Co Ltd (6178.T) has decided to sell its Australian logistics arm Toll Holdings Ltd, a media report said on Tuesday. +VE
Sony Corp (6758.T) surprised the market on Tuesday by reporting Q1 just a 1.1% profit fall, as its gaming business thrived while consumers locked down at home looked for entertainment and downloaded more games. It forecast operating profit to fall 26.7% to JPY620 billion in the year ended March 2021, the lowest in 4yrs but better than the 30% drop it estimated in May 2020.
SoftBank Q1 operating profit +4.1% to JPY280 bn (USD2.63 bn), beating JPY262 bn in consensus. +VE.
Nippon Steel Corp said on Tuesday it will appeal a South Korean court ruling that allows for a seizure of its assets - the latest development in a case that has inflamed tensions between Tokyo and Seoul.
The Sega Akihabara Building 2 arcade, located along the southern edge of Akihabara, will be shutting its doors on Aug 30, famous for massive murals promoting the latest video game release or anime tie-up. Its role having been replace by home consoles.
SOUTH KOREA Expect markets to open higher on retail buying with Tech in focus but could see some consolidation after Kospi hit year high on Tuesday. China’s Caixin PMI data likely to influence the mood.
Data out Foreign Exchange Reserves Jul US$416.53 vs 410.75b Jun (F/cast was 411.2b)
Floods triggers landslides which killed 14 and more than 1,000 people forced from their homes as 42 consecutive days of rain, South Korea’s longest monsoon in seven years -VE Insures but +VE Construction names
Hanmi Pharmaceutical licensed out HM12525A to American firm MSD on Tuesday as a nonalcoholic fatty liver treatment candidate -- a promising turn of events after the pipeline was returned by Janssen last year. +VE
Hyundai Motor’s sales in the US market rose slightly over a period of five months, after struggling from the pandemic. Tuesday it reported total July sales of 57,677 units +1% YoY and +4% MoM , marking the third consecutive month of increase. +VE
Samsung Electronics’ first-ever online unpacking event Wednesday, is expected to introduce the Galaxy Z Fold 2 with a fuller display. The event is scheduled for 11 pm. And Samsung is expected to introduce five products -- the Galaxy Note 20 phablet, Galaxy Z Fold 2 foldable smartphone, Galaxy Tab S7 tablet, Galaxy Buds Live wireless noise-canceling earbuds and the Galaxy Watch 3 smartwatch.
Korea Shipbuilding & Offshore Engineering, the shipbuilding holding unit of Hyundai Heavy Industries Group, said Tuesday it had won orders worth more than 1 trillion won ($837 million) in a week. Expectations are growing that S Korean Shipbuilders will continue to win more liquefied natural gas carrier orders in the latter half despite the pandemic. +VE
K bank unveiled a mobile mortgage loan service on Tuesday, allowing customers to borrow money without visiting brick-and-mortar banking branches. +VE
KT CEO Koo Hyun-mo has told executives and employees in a company-wide email that the mobile carrier needs to move beyond network service provision to become a platform operator.
TAIWAN Expect market to open higher, market broke above the technical 12,700 level Tuesday so may see some consolidation today but TECH remains in focus.
Data due Foreign Exchange Reserves
The Central Epidemic Command Center (CECC) yesterday reported a new case of COVID-19, a Taiwanese woman who returned from the Philippines, while the Centers for Disease Control (CDC) urged people to avoid mosquito bites, as the risk of indigenous dengue fever is rising.
Innolux Corp yesterday said that quarterly losses improved last quarter on the back of increased demand for panels for monitors, laptops and medical devices, as economies reopened in the US and Europe, and the COVID-19 pandemic drove remote learning and telecommuting trends. Its net loss narrowed to NT$4.78 billion (US$161.82 million) during the April-to-June quarter, compared with a net loss of NT$5.2 billion in the first quarter, the company said in a statement. +VE
GlobalWafers, the world’s third-largest silicon wafer supplier, yesterday said that net profit last quarter contracted 4% YoY due to significant increases in logistics expenses, as many countries imposed transportation restrictions amid the COVID-19 pandemic. Net profit fell to NT$3.4 billion (US$115.1 million), from NT$3.54 billion during the same period last year. On a quarterly basis, net profit +18% from NT$2.88 billion. It benefited from rush orders for medical electronic products and customers building up their inventories.
Also from booming demand for e-commerce and digital services due to stay-at-home orders, while the telecommuting trend bolstered demand for computers, cloud services, servers and data centers. Company gave a +VE outlook for 2H +VE
Housing transactions in the six special municipalities totaled 23,588 units last month, +19.3% MoM on pent-up demand and excessive liquidity, brokers said, citing government data. +VE Developers
CS Aluminium Corp has asked the government to impose anti-dumping tariffs on Chinese-made aluminum foil products, the Ministry of Finance said in a public notice on its Web site yesterday. An investigation is under way, and a provisional tariff could be put in place as early as late November if the allegations are verified, ministry sources said.
Sinbon Electronics, which produces cables, connectors and modems, yesterday reported consolidated sales of NT$1.91 billion for last month, up 4% MoM and 12.1% YoY
Sunjuice Holdings Co Ltd (鮮活果汁), a supplier of concentrated fruit juice, yesterday said that its revenue last month rose for the fifth consecutive month to the highest this year, aided by seasonal demand and improved consumption in China. Consolidated revenue rose 8.49% MoM and 15.29% YoY to NT$394 million,
CHINA Expect market to open flat ahead of the Caixin data.
Data due 9:45am Caixin Services Jun was 58.4 F/cast is 56 and Composite PMI Jun was 55.7 and F/cast is 55)
Beijing does not want tensions with Washington to escalate further following tit-for-tat consulate closures over the past weeks, the Chinese ambassador to the United States said on Tuesday.
China will not accept any "theft" of its technology companies by foreign countries, as the state media China Daily said in a commentary. The remarks came after the US President Donald Trump's threat to put down TikTok unless the latter sells its American arm to Microsoft or any other US legal entities before mid-September. If Washington proceeds with "smash and grab" according to its plan, China will have ways to retaliate, the article said, which yet did not further on the initiatives to be taken by China.
Huawei has kick started its "Nanniwan" project which is intended to shun any products comprising of American technologies, Chinese chinastarmarket.cn reported. The report said the company is expediting business of laptops and smart screens as these two kinds of products do not involve US techs.
Chinese State Council in the latest policy guidance to promote integrated circuit and software industries, wrote that all integrated circuit and software developers founded in China can enjoy relevant policies as stipulated, regardless of their shareholding structure, in order to promote global cooperation across the said industries.
China vows retaliation if the US persisted with “hostile action” against Chinese journalists who may be forced to leave in coming days if their US visas are not extended. It said it would retaliate, including targeting US journalists based in HK, many mainland journalists have already been targeted -VE
SCMP reports that China is increasingly worried about Japanese exodus of firms. Japan’s decision to offer an initial group of 87 companies subsidies totalling US$653 million to expand production at home and in Southeast Asia has sparked debate whether the world’s third largest economy is trying to gradually decouple from China. -VE for China long term.
China is shifting its economic strategy to focus more on its huge domestic market as the international environment becomes more challenging. SCMP report Key is that China has been trying to build its domestic consumption model over the past few years. But the pandemic has impacted domestic spending as citizens worry about the impact of Covid on jobs.
HONG KONG ADR’s +60pts to open at 25,006 but futures indicate lower. I would expect 25k to be tested in early trades but trading to be cautious ahead of results and Caixin data.
Data due pre market PMI Jul (Jun was 49.6 and F/cast is 50.4)
Earnings today include Power Assets (6), Hong Kong & Shanghai Hotels (45), IGG (799), Mongolian Mining (975), CK Infrastructure (1038), TOM Group (2383), Wing Fung Group (8526)
Short Selling HSI Tuesday 17% vs 19.8% Monday
Top Shorts Hang Seng Bank (11) 55%, CCB (939) 37%, CLP (2) 31%, Ping An (2318) 28%, Power Assets (6) 28%, MTRC (66) 28%, HK & China Gas (3) 27%, China Res Land (1109) 26%, AAC Tech (2018) 26%, Sunny Optical (2382) 25%.
ALI HEALTH (241.HK) proposed to place 400 mn new shares at $20.05-20.5 per share, being a discount of 6-8% to the closing price of $21.8 as quoted today, raising up to $8.2 billion, according to market sources.
EVERGRANDE (3333.HK) contracted sales RMB50.3 bn in July 2020, +24.4% YoY
RONSHINECHINA (3301.HK) for the month ended July 2020, the total contracted sales amounted to RMB12.144 billion, -5.77% YoY
KWG Group (1813) July contracted sales, totalled 9.23 bn yuan (HK$10.24 billion), +37.5% YoY. Total contracted sales of 45.99 billion yuan were recorded in the first seven months, increasing 7.6% YoY.
Fantasia (1777) sales +30.9% YoY to 4.8 billion yuan in July, with that of the first seven months +33% at 16.84 billion yuan.
The Land Registry announced that the number of sale and purchase agreements for all building units received for registration in July was 7,576 (-8.2% MoM but +18.7% YoY). The 12-month moving average for July was 5,438 (+1.9% the 12-month moving average for June 2020 but -11.5% that for July 2019).
HSBC HOLDINGS (5.HK) aims to hire 2,000-3,000 wealth management advisers in four years to boost its wealth management unit in China, it pointed out in the interim result report. The first 100 new staff members have started in Guangzhou and Shanghai already.
FLAT GLASS (6865.HK) interim result ended June 2020. The net profit RMB461mn +76.3% YoY. EPS was RMB0.24. An interim dividend of 6.5 fen was declared.
KAISA GROUP (1638.HK)'s Kaisa International and Tencent Cloud inked a strategic cooperation agreement for team-ups in smart hotel, smart culture and tourism, smart industry and other fields.
Pacific Century Premium Developments (432), the real estate arm of PCCW (8), said net loss in the first half expanded by 62.2% YoY to HK$253 million. First-half revenue increased by 674 percent year-on-year to HK$1.6 billion. Basic loss per share was 15.91 HK cents, with PCPD not declaring any interim dividend.
AIA (1299.HK) announced the formation of a new long-term strategic partnership between AIA and Practo, India’s digital healthcare platform. AIA’s joint venture in India, Tata AIA Life, will collaborate with Practo through this strategic partnership. Customers of Tata AIA Life can gain preferred access to Practo’s leading digital healthcare platform. Services available on this platform range from consulting a doctor online to finding and booking appointments for physical visits, as well as using the platform to order medicine and diagnostic tests.
HKMA announced that it undertook USD150 million selling orders, by injecting HKD1.163 billion into the market, as USD/ HKD hit the Strong-side Convertibility Undertaking during HK trading hours. The balance of the HK banking system will increase to HKD187.236 billion this Thursday (6 August).
FITCH RATING Back in April, it projected China's property contract sales to slip by around 15% YoY. However, all of the top-100 developers saw growth in sales volume and GFA sold for the first seven months of 2020, given satisfactory work resumption and sales. Therefore, Fitch revised its 2020 contract sales growth forecast to flattish or +5% for Chinese developers, where large caps may even register sharper hike.
"Game Broadband", jointly developed by China Telecom's Shanghai Branch and TENCENT (700.HK), has launched experiencing activity to SDN gateway users in some districts, rendering users with exclusive broadband protection for downloads and game updates and supporting faster game playing.
Regarding two lawsuits against NTES-S (9999.HK), Guangdong Higher People's Court made final conviction that the company did not rig its dominance in the related market, and hence the Court turned down the appeals of the two plaintiffs, and the judgments were upheld on appeal. The two plaintiffs of the lawsuits, who are a player of NTES-S' game "Fantasy Westward Journey Online II" and a live-streaming operator, alleged the company of 1) misuse of market dominance and inappropriate competition, and 2) licensing of copyright contracts and monopoly respectively.