Aug 7 ASIAN MACRO INITIAL THOUGHTS US Futures open flat
Covid-19 Globally over 19m cases, 709k deaths
US Futures flat (Dow -20pts, S&P and NDX unchanged) Expect some caution ahead of the US jobs report and weekend.
EARNINGS Noble Energy, Virtu Financial, Berkshire Hathaway
DOW +0.68%, NDX +1% (closed above 11k), S&P +0.64%, Russel 2K -0.1% Markets opened flat and traded sideways but then trended higher from midday. Investors watch for news on the new stimulus bill. Initial claims were lower than expected +VE for sentiment but some concern that the lower number linked to the ending of the US$600 per week enhanced benefit.
Stay at home names +VE Facebook +6.5% and Apple +3.5%. Netflix +1.4%. Amazon +0.6%.
Microsoft +1.6% exploring to see if it can also buy TikTok’s operations in India and Europe.
US set to tighten disclosure rules for Chinese listings.
US Defense Secretary Mark Esper expressed concerns about Beijing’s “destabilizing” activity near Taiwan and the South China Sea in a call with Chinese Defense Minister Wei Fenghe, the Pentagon said on Thursday, the first time the two are believed to have spoken since March.
Twitter begins labelling ‘state-affiliated media’, including Chinese outlets with the accounts of China Daily and Global Times are among the first to get new tag, along with Russia Today. Labels are for outlets linked to governments of countries on UN Security Council, where state ‘exercises control over editorial content’, social media firm says
Western Digital shares sank after the data storage maker warned current quarter sales and margins would be weaker than expected.
Bristol-Myers Squibb gained after raising its full-year profit forecast, which followed a US court ruling in favour of the drugmaker late on Wednesday that upheld patents protecting its Eliquis bloodclot treatment from generic competition.
Challenger Job Cuts Jul 262.6k vs 170.219k Jun (F/cast was 125k)
Initial Claims 1.186m vs 1.434m (F/cast was 1.45m)
4 week Claims average1.33775m vs 1.3685m (F/cast was 1.403m)
EIA Natural Gas Report 33Bcf vs 26Bcf Prior (Consensus was 30 Bcf)
USD was weaker vs Yen & Euro. Bitcoin +0.6% @ ,11,763.29 VIX -1.5% @ 22.65, US T10 0.538%
OIL Brent +0.1%, WTI -0.5%
Gold +0.3%, Silver +2.3%, Copper +0.2%
AHEAD Non Farm Payrolls, Average Hourly Earnings, Average Weekly Hours, Participation Rate, Wholesale Inventories, Baker Hughes Oil Rig Count, Consumer Credit Change
DAX -0.54%, CAC -0.98%, FTSE -1.27% BoE kept rates unchanged but sentiment weak with no deal on the next round of US stimulus. Earnings also dominating market sentiment.
Market opened around flat but trended lower in the morning but worked higher in the PM. Data PMI data improved MoM but in most cases missed forecasts
Eurofins +17% after the firm launched a new, lower-cost product to detect the coronavirus.
Meggitt -4% on speculation the company may need to raise new equity in the wake of the coronavirus pandemic. The company said in a statement on Thursday that its financial and liquidity position remained robust.
Lufthansa reported its largest ever quarterly operating loss and said it can no longer rule out job cuts in its home country, despite having taken a €9bn government bailout. -VE
Dialog Semiconductor slipped after UBS downgraded the chipmaker to “neutral” on valuation grounds.
Glencore led commodity stocks sharply lower after unexpectedly axing its 2020 dividend to prioritise debt repayment.
Hammerson hit a record low after writing nearly £1bn off the value of its shopping centre portfolio and setting out plans to raise £800m with a disposal and deeply discounted rights issue.
EUROZONE Construction PMI Jul 48.9 vs 48.3 Jun (F/cast was 52)
GERMANY Factory Orders Jun +27.9% MoM vs +10.4% May (F/cast was +10.2%)
Construction PMI Jul 47.1 vs 41.3 Jun (F/cast was 50.4)
FRANCE Construction PMI Jul 49.4 vs 53.8 Jun
UK BoE Interest Rate Decision unchanged at 0.1%
Construction PMI Jul 58.1 vs 55.3 Jun (F/cast was 54.2)
EUROZONE No data due
GERMANY Balance of Trade, Exports, Imports, Industrial Production, Current Account
FRANCE Balance of Trade, Industrial Production, Non Farm Payrolls, Current Account
UK Halifax House Price Index
JAPAN Expect Nikkei to open higher, good Household spending data +VE for sentiment although the Ave cash earnings was weak; overall +VE. Yen currently 105.52 But expect some selling into the close ahead of the long weekend with markets closed Monday.
Data outHousehold Spending Jun +13% MoM vs -0.1% May (F/cast was +6.6%) [ Jun -1.2% YoY vs -16.2% May (F/cast was -8.2%)
Average Cash Earnings Jun -1.7% YoY vs -2.1% May (F/cast was -1%)
Later Foreign Exchange Reserves, Coincident Index Prelim, Leading Economic Index Prelim.
Nintendo said Thursday its net profit for April to June soared to ¥106.48 bn ($1 bn), a 6.4-fold rise from a year earlier, as the coronavirus pandemic and subsequent stay-home requests spurred demand for its Switch console and software. The video game maker booked an operating profit of ¥144.74 bn for the fiscal Q, a 5.3-fold increase, as sales more than doubled to ¥358.11 bn. +VE
Toyota on Thursday warned of a 64% drop in full-year net profit and reported a slump in quarterly earnings, as the coronavirus pandemic shreds the global auto market. Japan's top car maker, which had previously declined to give a bottom-line forecast because of ongoing uncertainty, now projects net profit at 730 billion yen ($6.9 billion) for the fiscal year to March, down from 2.07 trillion yen the previous year. Slight -VE but it is still the best of the Japanese Auto makers; it did make a profit and has a strong balance sheet.
Job offers to students set to graduate from universities and graduate schools next March -15.1% YoY to 683,000 amid the coronavirus pandemic, logging the sharpest drop in a decade, a research institute said Thursday.
SOUTH KOREA Expect markets to open higher and move higher but to see some consolidation ahead of the weekend. Foreigners were buyers yesterday and liquidity remains high.
No data due
Nexon on Thursday posted a record Q2 revenue of 730.1 bn won ($615.4 mn), +20% YoY, thanks to the strong sales of both PC and mobile games, despite its lower-than-expected performance in China. +VE
Dongwon F&B, the South Korean distributor of the US plant-based meat alternative Beyond Meat, said Thursday that it has launched the product at E-mart, the country’s largest supermarket chain by revenue.
Korean Air Q2 beat earnings expectations, as it posted an operating profit of 148.5 billion won ($125.2 million) due to its focus on cargo at a time airlines across the world are suffering unprecedented losses.
Incheon Airport said Thursday it has begun the bidding process to seek duty-free store operators in new rent deals, as it promised 30% lower rent prices than previously proposed to soften the blow from the ongoing pandemic.
TAIWAN Expect market to open higher with Tech still the focus.
Data due Balance of Trade, Exports, Imports
After Market Thursday
Inflation Tate Jul -0.52% YoY vs -0.76% Jun (F/cast was -0.3%) [Jul +0.17% MoM vs +0.39% Jun (F/cast was +0.3%)
As cheaper oil products continued to push down transportation costs and businesses cut prices to stimulate sales.
Wholesale Prices Jul -9.15% vs -10.36% Jun (F/cast was -8.8%)
As export prices softened 3.86% in US dollar terms, while import prices shed 7.14% favorable for a trade surplus, it said.
Novatek Microelectronics yesterday reported that net profit last quarter reached another record high, benefiting from strong demand for display drivers used in laptops, tablets and gaming monitors as people under COVID-19 lockdowns learn and work from home. +VE
Formosa Plastics Group yesterday posted total revenue of NT$91.4 bn (US$3.10 bn) for last month, +4.5% MoM and the second consecutive month of month-on-month growth as market demand recovers from the impact of COVID-19. +VE
Acer Inc on Wednesday reported that net profit last quarter soared 192% annually and 114% quarterly to NT$1.19 billion (US$40.33 million). +VE
Largan Precision posted consolidated revenue of NT$4.61 billion for last month, +11.51% MoM, but -15.17% YoY. Beat f/casts +VE
Hon Hai Precision posted its highest monthly revenue so far this year, as consolidated revenue reached NT$403.3 billion last month, +11.87% MoM and +1.34% YoY. +VE
Formosa International Hotels yesterday reported Q2 consolidated profit NT$137.5 mn (US$4.66 million) -76.85% YoY as the COVID-19 pandemic continued to weigh down business. -VE
CHINA Expect market to open flat with caution ahead of the Trade data due at 10am
Data due @ 10am Balance of Trade, Exports, Imports, Foreign Exchange Reserves
On Monday we get Inflation and PPI data on the market open
China Thursday threatened to take countermeasures over a trip to Taiwan by US Sec of Health and Human Services Alex Azar, as the Chinese-claimed island geared up for its highest-level U.S. official visit in four decades.
Shenzhen Kangtai Biological Products will produce AstraZeneca Plc's potential COVID-19 vaccine in mainland China, the British drugmaker said on Thursday, its first deal to supply one of the world's most populous countries.
A Chinese court sentenced a Canadian to death on Thursday for making drugs, the third Canadian to be sentenced to death for drugs in China since Canada detained a top executive of Chinese company in 2018.
PBOC has announced the bankruptcy of regional lender Baoshang Bank the first for 20 years and authorised the liquidation, a year after it seized control of the institution. -VE for smaller banks
China’s bank regulator moves to rein in small lenders as Beijing fears financial risks. Comes after a number of easing measures during the pandemic, but underlines that economic stability remains a concern in China as cheap funds flow into stocks and property. Some lenders have been told to stop issuing structured deposits, but curbing such products – popular at small banks – could trigger liquidity stress.
HONG KONG ADR’s -109pts to open at 24,821 Broad weakness in the ADR’s and traders likely to be cautious ahead of the China data. May see some small margin selling initially. Also expect increased selling in the PM ahead of the weekend.
Data due Foreign Exchange Reserves
IPO TIGERMED (3347.HK), debut today last stood at $119.3, +19.3% against the listing price of HK$100.00, on volume of 160,000 shares, PhillipMart data showed.
EARNINGS due UniPresdient (220), China Shanshui Cement (691), Asia Cement (743), FIH Mobile (2038), China Netcom (8071),Beijing Beida Jade Bird Universal Sci-Tech (8095)
Short Selling HSI Thursday 17.9% vs 16.7% Wednesday
Top Shorts CLP (2) 50%, Sunny Optical (2382) 45%, Power Assets (6) 44%, Bank of China (3988) 41%, HK & China Gas (3) 40%, NWD (17) 39%, CK Assets (1113) 33%, Henderson Land (12) 32%, Hang Lung PPTY (101) 32%, HSBC (5) 30%, BOC (HK) (2388) 30%, CCB (939) 29%, SHKP (16) 28%, CKI (1038) 27%, Ping An (2318) 27%, China Res Land (1109) 26%, Swire Pac A (19) 25%.
SMIC (981.HK) announced that the net profit surged 6.44 times YoY to US$138 million in 2Q20. EPS was US$0.03. Revenue was US$938 million, an increase of 18.7% YoY. Gross margin was 26.5%. For 3Q20, the company expected the revenue to increase by 1% to 3% QoQ; and gross margin to range from 19% to 21%.
PCCW (8.HK) announced that interim loss amounted to $584 million, against $163 million of profit a year ago. LPS equaled 7.57 cents. Interim cash dividend was 9.18 cents. The company also resolved to declare a special interim dividend in the form of the distribution involving a distribution in specie of PCPD Shares on the basis of 85 PCPD Shares for every 1,000 Shares held by the Qualifying Shareholders.
YUEXIU REIT (405.HK) results for the six months ended June 2020. Interim distribution dived 24.9% yearly to RMB319 million. Distribution per unit was RMB0.099, or HKD0.1098.
CKH HOLDINGS (1.HK) interim results ended June 2020. On a Post-IFRS 16 basis, revenue -12.5% yearly to HK$189.942 billion. Net profit -29.1% annually to HK$13 billion, with an EPS of HK$3.37. Interim DPS equaled HK$0.614, against HK$0.87 over a year ago.
CK ASSET (1113.HK) interim results for 2020. Total revenue +6.8% yearly to $36.323 billion. The net profit -58% yearly to $6.36 billion. Underlying profit -35.5% yearly to $8.367 billion. Chairman Victor Li wrote that the global battle against COVID-19 continues, pending an effective line of defense to contain the spread of the virus. With the roll-out of various government relief packages, the full economic impact of the pandemic is yet to be reflected. The global economy is projected to contract sharply and significant challenges lie ahead for all sectors. Implementation of the China-US Phase One Trade Agreement, the approaching US presidential election, Brexit and escalating international conflicts present additional uncertainties. The business environment is expected to remain volatile amid a rapidly changing economic and political landscape. However, with CK ASSET's solid financials, a low debt ratio and a portfolio of quality assets, the Group remains resilient amid a macro-environment full of uncertainties. Li is optimistic that their worldwide businesses will regain growth momentum at times of economic recovery once the virus has subsided, and are well-equipped to seize quality investment opportunities in Hong Kong and overseas. The Group will adhere to its strategy “Advancing Without Forgoing Stability” and continue to generate sustainable value for shareholders.
MTR CORPORATION (66.HK) interim results ended June 2020. Revenue from recurrent businesses -23.6% year-on-year to HK$21.592 billion. The Company swung into a loss of HK$334 million, against net profit of HK$5.506 billion in the same period over a year ago. LPS was HK$0.05. The interim dividend was kept at HK$0.25. CEO Jacob Kam Chak-pui expected the pandemic to last for a period of time, hence finding the firm's performance unpredictable for the second half of year. Given limited COVID-19 impact, MTR will still push for the commissioning of Sha Tin to Central Link (SCL) as scheduled.Property Director David Tang Chi-fai did not expect any occupation permit to be granted for new projects in the second half of year. However, MTR will continue to conduct tenders for Lohas Park Phase 13, and Wong Chuk Hang Station Package 5 and 6 in the next few months.
HSBC HOLDINGS (5.HK) will have the bonus pool of traders and investment bankers axed by US$600 million compared to a year ago, despite their outstanding performance during the second quarter, according to the corporate filing seen by foreign media. If the London-based lender keeps cutting bonus at the same pace through this year, relevant staff will have their variable compensation axed by a third yearly.
MACAU -VE as Hong Kong visitors must show negative test result within 24 hours for entry to Macau which is difficult considering the length of time the tests in Hong Kong take.
The Hong Kong Monetary Authority announced that the Monetary Authority has granted a banking licence to CBHB (9668.HK) under the Banking Ordinance. CBHB is incorporated in the People's Republic of China. The granting of this banking licence took effect Thursday.
The Home Affairs Department (HAD) said in view of the severity of the epidemic, it will extend the scope of the COVID-19 Community Testing Scheme from Friday (7 August) and conduct COVID-19 tests for households of some private residential buildings with confirmed cases as well as households of buildings in public housing estates. The HAD, together with charities and a social service organisation, will extend the scope of the scheme to cover a total of 46 buildings and about 86,000 residents.
Centa Valuation Index (Major Banks) (CVI) last printed at 45.44 this week, slightly up 0.13 pts weekly. Centaline Property, said the index stood firmly around 45 for four weeks a stabilizing sign