Sept 1 ASIAN MACRO INITIAL THOUGHTS US Future dip Asia to open lower
Covid-19 Globally over 25.3m cases, 848k deaths
US Futures Opened -30pts and have slipped to -50pts. S&P and NDX opened flat now -0.1%
Media reports that High-profile COVID-19 vaccines developed in Russia and China share a potential shortcoming: They are based on a common cold virus that many people have been exposed to, potentially limiting their effectiveness, some experts say. Slight -VE to CanSino Biologics (6185 HK)
DOW -0.78%, NDX +0.68%, S&P -0.22%, Russel 2K -1% DOW opened lower as futures reversed and trended lower until 11am then saw a small bounce and traded sideway. S&P was flat and NDX opened higher and trended higher. Banks weak as Feds Clarida said rates will not go up just because unemployment goes down. JPMorgan Chase -2.6%, Citigroup -2.2%, Bank of America -2.1% and Wells Fargo -2.2%
Apple +3.4% and Tesla 12.6% on stock spilt
Index changes Salesforce +0.8%, Amgen +0.1% and Honeywell -1.7%, Exxon Mobil -1.9%, Pfizer -0.3% and Raytheon Technologies -2%.
Microsoft -1.5%, Oracle -1.1% and Walmart -1% on news that Beijing will get involved in the decision over the sale of TikTok.
Zoom +8.6% in normal hours but +25% after hours as earnings beat.
Dallas Fed Manufacturing Index Aug 8.0 vs -3.0 Jul (F/cast was -2)
USD was weaker vs Yen & Euro. Bitcoin -0.3% @ 11,667.96, VIX +15% @ 26.41, US T10 0.706%
OIL Brent +0.6%, WTI -0.4% Brent trended lower in after hours
Gold +0.2%, Silver +2.7%, Copper +1% helped by the weaker USD
AHEAD Redbook, Manufacturing PMI, ISM Manufacturing Data (New Orders, Prices, Employment and PMI) Construction Spending, API Crude Oil Stock Change, Total Vehicle Sales.
DAX -0.67%, CAC -1.11%, FTSE Closed Markets opened higher but sold down through the day as the US sold down on Fed’s Clarida’s comments.
Nestle +0.3% had been positive for most of the day on news if was buying US peanut allergy treatment maker Aimmune Therapeutics, to boost its health science portfolio. Stock sold down heavily in the closing minutes of trading.
Philips -3.5% said the U.S. government has canceled the bulk of an order for 43,000 ventilators, and it has cut its 2020 earnings outlook as a result. A US House panel had determined last month that the government had overpaid Philips by at least $500 million.
Telecom Italia -0.5% again sold down into he closeout had been +VE up to the close. Said to be close to agreeing a landmark deal with U.S. fund KKR that could lay the groundwork for plans to create a single ultrafast broadband network, Reuters reported.
Suez +18.5% after Veolia +5.7% offered to buy a stake in the company, hopes of possibly leading to a full takeover.
Inflation Rate Prelim Aug 0% YoY vs -0.1% Jul (F/cast was -0.1%)
Inflation Rate Prelim Aug -0.1% MoM vs -0.5% Jul (F/cast was -0.2%)
EUROZONE Manufacturing PMI
GERMANY Unemployment Rate, Unemployment Change, Manufacturing PMI
FRANCE Manufacturing PMI
UK Manufacturing PMI, BoE Consumer Credit, Mortgage Approvals, Mortgage Lending, Net Lending to Individuals.
JAPAN Expect Nikkei to open lower unemployment data a slight +VE but more data due. Yen currently 105.87 Worth noting that Monday’s rebound was on lighter volumes indicating that some money is now waiting on the sidelines. Unemployment data a slight +VE
Data out Unemployment Rate Jul 2.9% vs 2.8% Jun (F/cast was 3.1%), Jobs/applicants ratio Jul 1.08 vs 1.11 Jun (F/cast wa 1.1)
Data Due Capital Spending, Later Manufacturing PMI
Media headlines focus on the LDP leadership race.
Tokyo reports 100 covid cases, lowest for a month; slight +VE
Japan Australia and India to create supply co-operative chain to reduce dependance on China.
SOUTH KOREA Expect markets to open lower, GDP data out was slightly better +VE but still expect caution ahead of Trade Data and PMI. Yesterday’s sell off was largely driven by foreign and Institutional selling; especially in Tech
GDP Growth Rate Final Q2 -2.7% YoY vs +1.4% prior (F/cast was -2.9%)
GDP Growth Rate Final Q2 -3.2% QoQ vs -1.3% prior (F/cast was -3.3%)
Data Due Balance of Trade, Exports and Imports. Later Manufacturing PMI
South Korea’s antitrust watchdog said Monday that an increasing number of companies occupy a regulatory blind spot that shields the owner families. Owners increased their shares through indirect investment from public corporations and overseas affiliates this year, it said. It is calling for tougher regulations Slight -VE
According to sources, the world’s two largest memory providers Samsung Electronics and SK hynix are planning to curtail their investments in the memory business in the coming months with the intention of adjusting the balance between supply and demand. With the move likely to continue until Q2 2021. Slight -VE but may be factored in with Monday’s sell off.
TAIWAN Expect market to open flat but news of increasing support from the US could be a mixed blessing as tension with China will ratchet up. PMI data will also be in focus in early trading.
Data due Manufacturing PMI
US has declassified the Six Taiwan security assurances that PM Regan gave back in 1982. FT reports that David Stilwell, the Department of State’s top Asia official, said it was partly a response to the “increasing threat” that China posed to the Asia-Pacific region as illustrated by its recent decision to unilaterally impose a draconian national security law on Hong Kong. “We no longer have the luxury of assuming that Beijing will live up to its commitment to peacefully resolve its differences with Taipei,” Mr Stilwell said “We will continue to help Taipei resist the Chinese Communist party’s campaign to pressure, intimidate and marginalise Taiwan.”
The United States and Taiwan will establish a new economic dialogue focused on semiconductors, health care, energy and other technology sectors in a sign of stronger ties, a senior US diplomat said on Monday.
Powerchip Semiconductor yesterday said that it plans to build a 12-inch fab in Miaoli County next year as strong demand for display drivers used in laptops and image sensors has boosted factory utilization to 100 percent.
Housing transactions last month soared from a year earlier, although the deals held steady compared with July’s, major property brokers said yesterday, attributing the results to real demand and low interest rates. Last month’s showings came even though Ghost Month started on Aug. 19 and is to last through Sept. 16. +VE
Senhwa Biosciences yesterday said that its partner Center For Advanced Research & Education (CARE) in Gainesville, Georgia, has filed an application to the US Food and Drug Administration (FDA) to conduct a phase II clinical trial of its new drug Silmitasertib for use by COVID-19 patients.
CHINA Expect market to open flat after yesterday’s month end window dressing but PMI data and US/China relations still overhang the market.
Data due Caixin Manufacturing PMI (July was 52.6 F/cast is 52.4), as with yesterday’ official data slight weakness expected as China was hit by heavy rains and flooding in August.
TikTok said to have chosen a bidder for its US, New Zealand and Australian businesses, and it could announce the deal as soon as Tuesday. Microsoft (MSFT) in partnership with Walmart (WMT), and Oracle (ORCL) are the two top contenders for the deal. But it will need Chinese approval
China Finance 40 Forum; a group of senior Chinese regulatory officials and financial experts call for more cooperation with United States to avoid escalation of bilateral conflict. But also called for China to make its own financial markets big enough and open enough to foil any attempt by the United States to decouple financially, according to a semi-official Chinese research group. More people are getting worried about Trump further weaponising the USD.
BlackRock (BLK) received approval from China regulators to set up a mutual fund unit in that country, becoming the first global asset manager to receive such approval.
India accuses China of ‘provocative’ moves on on the southern bank of Ladakh’s remote Pangong Tso lake, an area long claimed by India which has increased tensions on the Himalayan border. Beijing denies ‘provacation’. -VE for investor sentiment
Chinese Ministry of Commerce resolved to mount an anti-dumping investigation from Monday on monoalkyl ethers of ethylene glycol and propylene glycol imported from and manufactured by the US.
The Chinese government yesterday said that it had launched another probe into Australian wine imports, accusing Canberra of using subsidies to give firms “an edge” over local rivals, in the latest salvo as trade and diplomatic relations between the two deteriorate.
Chinese-born Australian CGTN journalist Cheng Lei detained in Beijing, no details of why have been released but she has not been charged. -VE for foreign investor sentiment
HONG KONG ADR’s -157pts to open at 25,020 with most ADR’s closing in the red. 25k level under pressure in early trades. Most earnings now reported but still expect analyst recommendation changes.
Data due after market Retail Sales
Short Selling Monday 14.6% vs 20.4% Friday
Top Shorts Wharf REIC (1997) 28%, Hang Lung Ppty (101) 26%, AIA (1299) 26%, BankComm (3328) 25%, NWD (17) 25%
EARNINGS OUT After market Monday
STAR PROPERTIES (1560.HK) interim result ended June 2020. The loss swung into profit of HK$350 million. EPS was HK54.61 cents. An interim dividend of HK2 cents was declared, against no dividend in the year-ago period.
HIDILI INDUSTRY (1393.HK) interim result ended June 2020. The loss widened to RMB136 million from RMB131 million in the corresponding period of the previous year. LPS was RMB7 cents. No dividend was declared
SKYWORTH GROUP (751.HK) interim result ended June 2020. The revenue declined 7.3% year on year to RMB15.979 billion. The net profit amounted to RMB391 million, up 116% yearly. EPS was RMB12.87 cents. No dividend was declared.
CHINA HUARONG (2799.HK) interim results for the period ended June 2020. Turnover -19.6% year-on-year to RMB45.688 billion. Net profit RMB210 million, -91.7% yearly. EPS. was RMB0.01. No dividend was declared.
TA YANG GROUP (1991.HK) interim results for the period ended June 2020. Turnover +68.9% year-on-year to HK$261 million. The loss narrowed from HK$37.199 million in the corresponding period of previous year to HK$27.513 million. LPS was HK3.16 cents. No dividend was declared.
GOME RETAIL (493.HK) interim result ended June 2020. The loss widened to RMB2.623 billion from RMB380 million in the corresponding period of the previous year. LPS was 13.1 fen. No dividend was declared.
EVERGRANDE (3333.HK) interim result ended June 2020. Net profit RMB6.54 bn, -56.2% yearly. EPS. was RMB0.495. No dividend was declared.BEIJING ENT (392.HK) interim result ended June 2020. Net profit HK$3.568 billion, -4.8% yearly. EPS was HK$2.83. An interim dividend of HK40 cents was declared, flattish year-on-year.
Li Ka-shing and Victor T K Li, through Li Ka Shing Foundation Limited, acquired a total of 3.331 million shares in CK ASSET (1113.HK) at the average price of HK$42.4884, HK$42.3609, HK$41.8516 and HK$41.9248 per share on 25, 26, 27 and 28 August respectively. As a result, the deemed interests of Li Ka-shing and Victor T K Li in CKA increased from 35.4% to 35.49%, and from 35.47% to 35.56% respectively.
INSURANCE sector weakness as Hong Kong insurers' new office premiums generated from mainland visitors plunged 76.3% YoY to HK$6.24 billion in the first half of the year on cross-boundary passenger movement restrictions, the Insurance Authority says. That represents 9.6% of the total for individual businesses, the regulator added.
BANK OF CHINA (3988.HK) Chief Risk Officer Liu Jiandong said during the results conference that the bank's exposure to credit risk was expected to linger into 2H20 in wake of the complicated market environment, for which the bank will reinforce resolution to non-performing assets and size of provisions. Yet, he estimated the asset quality to remain sturdy and credit risk to be manageable overall. Vice President Zheng Guoyu separately projected the future NIM to stay under narrowing pressure. As such, the bank will cushion the market shock to the NIM through continued optimization of asset structure, improvement of capital utilization efficiency and so on.
EVERGRANDE (3333.HK) Vice Chairman and CEO Xia Haijun said various interim data notched new highs, mainly due to the rigid demand nature of the group's products coupled with proper cost control. He complemented that the internal sales target of the year was set at RMB800 billion with saleable resources of 90 million sq.m. in 2H20. The CEO was confident of meeting the target based on a sale-through rate of about 54%.
Shanghai Stock Exchange announced that the companies listed on Sci-tech Innovation Board (STAR Mkt) manifested a total net profit of RMB12.417 billion in 1H20, +42.29% yearly.
CHINA RES LAND (1109.HK) announced the proposed spin-off and separate listing of Mixc Lifestyle, a subsidiary of the Company, on the Main Board of the Stock Exchange. On August 31, CHINA RES LAND submitted a listing application to the Stock Exchange.
ICBC (01398.HK) in 1H20, COVID-19 pandemic provided Mainland banks with an opportunity to manage and control credit risk and the relevant work has reaped promising progress and outcome, said their chief risk officer cum vice president Liao Lin said during a teleconference. The company will try to maintain loan growth and strike a balance in 2H20 while stepping up support for strategical and emerging products.
As USD/ HKD triggered the Strong-side Convertibility Undertaking, HKMA undertook a USD150 million selling order to inject HKD1.163 billion into the market.
The balance of the banking system of Hong Kong will increase to HKD194.19 billion on 2 September.
PA GOODDOCTOR (1833.HK) announced that the group continued developing in the field of online medical services by setting up a renowned doctors studio, which will provide quality healthcare services to patients. Currently, the studio covers various specialist services including dermatology, pediatrics, and obstetrics and gynecology, etc. The studio provides one-stop services from pre-consultation, consultation and post-consultation.
ABC (1288.HK) saw a rally in non-performing loan ratio and balance, mainly driven by the COVID-19 pandemic and economic downturn, said Executive Vice President Zhan Dongsheng. Zhan believed there will still be an NPL rebound, especially for plague-inflicted sectors like catering and tourism industries, and export-reliant sectors.