Sept 17 ASIAN MACRO INITIAL THOUGHTS Asian futures indicate lower open


21 Sep

Sept 17 ASIAN MACRO INITIAL THOUGHTS Asian futures indicate lower open

Covid-19 Globally over 29.7m cases, 938k deaths
OECD predicted global economy to shrink 4.5% this year, as compared with 6% as earlier estimated. Chinese economy was predicted to grow 1.8% this year.
US FUTURES opened flat S&P and NDX also flat.
ASIAN FUTURES indicate a cautious open ahead of Central Bank decisions from Japan and Taiwan.

DOW +0.13%, NDX -1.25%, S&P -0.46%, Russel 2K +0.92% Opened higher, with the Dow rising (helped by good FedEx numbers after market Tuesday) and the S&P and NDX trading sideways. The weak retail sales number is hoped to put politicians under pressure to agree a new stimulus plan before the recovery backslides. FedEx’s good results +VE for the Dow transport index
Fed indicated rats could stay at these levels until 2023 as it tries to spur inflation. He called for further stimulus from law makers. Markets were subdued on the news maybe realising that the Fed now has limited levers to pull to stimulate the economy and will be reliant on Government stimulus.
Apple -3%, Microsoft -1.8%, Amazon -2.5%, Alphabet -1.5%, Netflix -2.5%, Facebook -3.3%, Tesla -1.8%
Nvidia -3.7%, AMD -2.9%, Micron +2.4% and Skyworks -0.4%.
Re-opening stocks Boeing +2.4% (no impact from House report showing it hid faults on the 737 Max), Caterpillar +1.7%, Simon Property +4.3%, Gap +2.2%, United Airlines +4.1%, Carnival +3.3%
Snowflake +111.6% on its debut
DATA
MBA Mortgage Applications -2.5% vs +2.9% prior, 30 year Mortgage Rate 3.07% vs 3.07% prior
Retail Sales Aug +0.6% MoM vs +0.9% Jul revised (F/cast was 1%)
Retail Sales Aug +2.6% YoY vs +2.4% Jul revised (F/cast was +2.5%)
Retail Sales Ex Auto Aug +0.7% MoM vs +1.3% Jul revised (F/cast was 1.2%)
Business Inventories Jul +0.1% MoM vs -1.1% Jun (F/cast was +0.1%)
NAHB Housing Market Index Sept 83 vs 78 Aug (F/cast was 77)
EIA Oil Crude Oil Stock Change -4.389m vs 2.032m revised from 1.838m prior (Consensus was +1.271m)
EIA Oil Crude Gasoline Stock Change -0.381m vs -2.954mm prior (Consensus was -0.16m)
FOMC Interest Rate Decision 0.25% vs +0.25% prior (F/cast was unchanged)
Foreign Bond Investment Jul $-22.8b vs 28.9b Jun
Overall Net Capital Flows Jul $-88.7b vs -67.9b Jun (Consensus was -9b)
Net Long-Term Tic Flows Jul $10.8b vs 113b Jun (Consensus was 25.2b)
USD was stronger vs Yen & Euro as Fed upgraded to economic outlook. Bitcoin +2.5% @ 11,030.50 VIX +1.8% @ 26.04, US T10 0.699%
OIL Brent +4.2%, WTI +4.9% as hurricane stopped production and inventories fell
Gold +0.1%, Silver -0.1%, Copper =0.3%
AHEAD Initial Claims, 4 week ave initial claims, Housing Starts, building Permits, Philadelphia Manufacturing Index, EAI Natural Gas Stocks Change, 10 yr TIPS Auction


DAX +0.29%, CAC +0.13%, FTSE -0.44% Markets opened flat/lower and initially traded sideways but FTSE and CAC started trending lower from mid morning before a small rally into the close. DAQ traded sideways all day. General caution ahead of the FOMC press conference. Mining stocks lead the gains and Autos the laggards.
European Commission President gave her state of the union address Wednesday, vowing to build a new transatlantic agenda with the U.S. regardless of November’s election result warned that the chances of a trade deal with the U.K. were fading by the day.
The Hut Group +32% on its debut after its GBP 5.4b IPO.
AMS 9% on broker upgrade
Inditex +8.1% after announcing a return to profit amid recovering sales
Sinch +5.2% and Dutch chemicals distributor IMCD +9.2% after announcing that it would buy India’s Signet Excipients.
Grenke -40% as selling continued on the back of fraud and misconduct allegations from short-seller Viceroy, which warned about insolvent payments company Wirecard ahead of its accounting scandal. Grenke has rejected Viceroy’s accusations as unfounded.
DATA
EUROZONE
Balance of Trade Jul Eiro 27.9b vs 20.2b revised (F/cast was 25.1b)
UK
Inflation Rate Aug +0.2% YoY vs +1% Jul (F/cast was +0.1%)
Inflation Rate Aug -0.4% MoM vs +0.4% Jul (F/cast was -0.4%)
Core Inflation Rate Aug +0.9% YoY vs +1.8% Jul (F/cast was +0.8%)
Core Inflation Rate Aug -0.6% MoM vs +0.4% Jul (F/cast was -0.7%)
PPI Core Output Aug 0.0% YoY vs +0.1% Jul (Consensus was +0.0%)
PPI Core Output Aug +0.1% MoM vs -0.1% Jul (Consensus was +0.1%)
Retail Price Index Aug +0.5% YoY vs +1.6% Jul (F/cast was +0.7%)
Retail Price Index Aug -0.3% MoM vs +0.5% Jul (F/cast was -0.2%)
PPI Input Aug -5.8% YoY vs -5.7% Jul (Consensus was -4.9%)
PPI Input Aug -0.4% MoM vs +1.8% Jul (Consensus was +0.3%)
PPI Output Aug -0.9% YoY vs -0.9% Jul (F/cast was -0.7%)
PPI Output Aug 0.0% MoM vs +0.3% Jul (F/cast was +0.2%)
AHEAD
EUROZONE New Car Registrations, Construction Output, Core Inflation Rate, Inflation Rate
GERMANY No data due
FRANCE No data due
UK BOE Interest Rate Decision, BoE Quantitative Easing, MPC Meeting Notes


JAPAN Expect Nikkei to open lower with caution ahead of the BoJ rate decision, no change expected but likely to say ready to work with the new PM. Yen currently 104.99 slightly weaker overnight.
Nikkei futures at 23,365 (Osaka was at 23,280) vs Nikkei 225′s last close at 23,475.53.
Data due
Foreign Stock & Bond Investment Data, BoJ Interest Rate Decision
Yoshihide Suga became Japan's first new prime minister in nearly eight years on Wednesday, pledging to contain COVID-19 and push reforms after retaining about half of predecessor Shinzo Abe's lineup in his cabinet. He pledged to reforms including deregulation, digitalisation and smashing of bureaucratic barriers. Seeming to play down the possibility of an early election, he said what Japanese most wanted was to contain the coronavirus outbreak and revive the battered economy
Nintendo plans to launch a myriad of new Switch games next year and beyond to extend the gaming console's life cycle, Bloomberg reported. Four years after release, Switch has been tracking the fastest-ever sales growth helped by the success of Animal Crossing: New Horizons and stay-at-home entertainment demand amid the epidemic.
Nintendo also reported on Wednesday surging user numbers for its Switch Online subscription service, driven by hit titles like "Animal Crossing: New Horizons", as the firm belatedly builds the recurring revenues such services offer.
SoftBank and Naver announced that they seek compelling Line shareholders to sell their stakes in order to privatise the messaging app, Bloomberg reported.
Hitachi Ltd said on Wednesday it would exit a stalled British nuclear power project, a decision that deals a blow to Britain's plans to replace ageing plants. Slight -VE
East Japan Railway Co., or JR East, and West Japan Railway Co., or JR West, expect to suffer consolidated net losses totaling some ¥650 billion in fiscal 2020, due to a slump in travel demand amid the new coronavirus epidemic. -VE
Tourism names +VE ahead of discount travel packages going on sale on Friday.
Nissan Motor Corp on Wednesday unveiled the Z Proto, signaling the company's intent to launch a new generation of the legendary Z sports car. Shown at a virtual event beamed around the world from the Nissan Pavilion in Yokohama, +VE
Dentsu Group Inc and Toyota Motor Corp have agreed to form a business alliance and establish two companies to improve Toyota's communications and digital transformation strategy, Dentsu said in a statement on Wednesday. Both the firms will operate under a holding company, of which Toyota will own 66% and Dentsu 34%. The companies are scheduled to start operations in January 2021. +VE


SOUTH KOREA Expect markets to open lower following the US markets overnight but expect some early margin hunting after yesterday’s selling. Interest sensitive names a slight +VE but Exporters weak on concerns over US growth.
No data due
President Moon Jae-in has told Japan’s new prime minister, Yoshihide Suga, that he was willing to sit down anytime
in a bid to improve ties strained by historical and economic disputes, Moon's office said on Wednesday.
Organization for Economic Cooperation and Development recently increased its outlook for S Korea, Asia’s fourth-largest economy this year, officials said Wednesday. It also reiterated the need to sustain expansionary fiscal policies, warning that hasty belt-tightening as the economy is slowly recovering could dampen growth prospects for next year. +VE
Kakao, operator of South Korea’s top mobile messaging platform, announced Wednesday that the company has launched a new enterprise messenger. The new corporate messenger developed by Kakao’s artificial intelligence unit Kakao Enterprise has combined existing user interface of popular messenger app Kakao Talk with AI and cloud technologies to support digital transformation of work environment and to improve work efficiency, the company said +VE
US officials expressed concerns over South Korea’s revised Telecommunications Business Act, which would require foreign platform operators to share the cost of ensuring stable services, business community representatives and government officials said Wednesday. Slight -VE
LG Chem will split off its battery business, in an apparent move to shore up investments through an initial public offering, according to industry sources Wednesday. +VE
S-Oil said Wednesday that it has launched a mega-scale hybrid charging station in the Unjeong area of Paju, Gyeonggi Province, so it can offer comprehensive services to its customers. +VE
KT Corp., said Wednesday it will build 5G test facilities nationwide as part of the government's initiative to support companies developing new services on the high speed network. The 28.5 billion-won ($24.2 million) project is expected to be completed by 2023 and targets to provide small and medium-sized firms access to research versions of the 5G network to test nascent services, such as connected vehicles, drones and smart factories. +VE
Samsung Electronics Co. on Wednesday launched new small-size laundry appliances with upgraded artificial intelligence (AI) features to target single-person households and small families. +VE

TAIWAN Expect market to open flat ahead of the Central Bank rate decision. Yesterday the market experienced resistance as it tested 13,000. Expect it to retest again today.
Data due
Interest Rate Decision
The upcoming Taiwan-US Economic and Commercial Dialogue would be “historic” and represent “another step forward” in relations between the two nations, Minister of Economic Affairs Wang Mei-hua said yesterday. She welcomed the visit of a US delegation led by US Undersecretary of State for Economic Growth, Energy and the Environment Keith Krach, but remained tight-lipped on the details. It has been reported in the local media that the US delegation could be arriving in Taiwan as early as today. Expect China to be upset by the news.
TrendForce tips tumble for server DRAM chips. The researcher said that it had factored into its prediction rush orders from Huawei over the past two weeks, ahead of export rules the US imposed. Prices for DRAM chips used in servers are likely to drop at a faster pace of 18% next quarter as enterprise data center operators cut investments in servers amid the COVID-19 pandemic, TrendForce Corp said yesterday. Excessive inventory in barebone servers and DRAM chips for servers this quarter is also a key factor driving down prices, the Taipei-based researcher said in a report. -VE
Chunghwa Telecom Co yesterday said it is to sell Apple Inc’s latest Apple Watch Series 6 and Apple Watch SE from Tuesday next week at selected stores and on its Web site. +VE
The Taipei International Travel Fair, the highest-profile event for the nation’s travel and tourism industry, is to take place late next month, even though the COVID-19 pandemic would likely limit participation to domestic players, organizers said yesterday.
Shin Kong Financial Holding yesterday said that its insurance unit would adjust its investment portfolio after being banned from buying new stocks a day earlier by the Financial Supervisory Commission (FSC). The commission on Tuesday fined Shin Kong Life Insurance NT$27.6 million (US$941,722) for reckless investment, and demanded that the insurer reduce its overseas investment ratio from 43 percent to 39 percent.
Economy ‘lopsided’: Pegatron chairman said describing Taiwan’s economy as “too dependent” on the technology sector. Yesterday he called for the nation to transition to a more diversified economy to keep thriving in the post-COVID-19 world.


CHINA Expect market to open lower following the US. Concerns over further sanctions on Chinese Tech -VE for sentiment. Yuan strength continues +VE for those with US debt and exposure like Airlines but -VE for Exporters.
No data due
China's foreign ministry said on Wednesday that China hopes Japan will refrain from developing official ties with Taiwan.
In reply to a question on his views regarding Japan’s new defence minister, who has close ties with Taiwan.
CHINA’s Global Times warns on Nvidia’s purchase of Arm saying “...if Arm falls into U.S. hands, Chinese technology companies would certainly be placed at a big disadvantage in the market,” the author of which was not named.
Reuters reports that companies represented by the semiconductor and electronics manufacturing suppliers industry group SEMI; that supply the chip sector with sophisticated and expensive equipment plan to warn the Trump administration against a proposal to blacklist China's top chipmaker Semiconductor Manufacturing International Corporation (0981.HK) arguing it would be "detrimental" to U.S. industry.
Ant Group is requesting at least seven brokerages for research report coverage of the Group written by technology analysts, Bloomberg cited people familiar with the matter. It was known that the request was made verbally by Ant's investor relation department, involving five Chinese brokers and two international ones. Several analysts in contact with Ant's investor relation unit elaborated the meaning behind the request that Ant Group wants to stress its focus of being a technology provider, instead of a financial service firm. Possibly raising approximately US$30 billion in Hong Kong and Shanghai, the company was valued at US$225 billion.
Trump says he doesn’t like Oracles proposal for TikTok deal -VE
REUTERS reports An obscure Hong Kong-registered company stands at the center of the U.S. criminal case against China’s Huawei Technologies and its chief financial officer. Reuters has uncovered previously unreported links in Brazil between Huawei and the company, Skycom Tech Co Ltd, that could offer support to the U.S. case against the tech giant and Meng Wanzhou, its chief financial officer. -VE
Chinese says military drills off Taiwan’s southwest coast last week were a “necessary action” to protect China’s sovereignty. Beijing said on Wednesday, after Taiwan complained the large-scale air and naval exercises were a serious provocation.


HONG KONG ADR’s -25pts to open at 24,700; Oil stocks higher but the wider market weak following the US overnight. HSBC hits an 11 year low as brokers downgrade their forecasts -VE
Data due
Unemployment Rate

Short Selling Wednesday 21% vs 18.4% Tuesday
Top Shorts China Res Land (1109) 42%, Mengniu Dairy (2319) 38%, Henderson Land (12) 35%, Bank of China(3988) 31%, ICBC (1398) 30%, BABA-SW (9988) 30%, Ping An (2318) 29%, CCB (939) 25%, PetrochIna (857) 25%

WATCH
Agricultural Development Bank of China (ADBC) entered into a strategic cooperation agreement with Zhejiang E-Commerce Bank t
o deepen cooperation in rural finance, industrial finance, joint risk control, financial technology and so on, on top of the foundation of existing on-lending, small and micro direct loans and so on. This marked the first comprehensive strategic cooperation between a policy bank and an internet bank.
Ricacorp: Over 11K Private Flats Completed in 7M20, Up 83%, Highest in 15 Yrs The occupancy permit approvals of some property projects have hit impasse since the outbreak of third round of epidemic, said Derek Chan, research head of Ricacorp Properties. According to the latest monthly report of Buildings Department released today, merely three projects were approved in July 2020, with only 83 private flats completed, tumbling 94% from June, being the least in terms of single month in 3.5 years. That said, the number of completed units YTD remained high. For 7M20, 11,454 private flats were completed, up about 83% from a year ago, being the most since 2005.
HKMA announced that, as USD/HKD triggered the Strong-side Convertibility Undertaking during Hong Kong trading hours, the HKMA undertook a US$200 million selling order to inject HK$1.55 billion into the market. The balance of the banking system of Hong Kong will increase to HK$210.963 billion on Friday (18 September).
Harbin Electric signed a strategic cooperation deal with CHINA MOBILE (941.HK) and ZTE (00763.HK) . Adhering to the principle of "co-development for win-win situations", the parties will give prominence to their edges and resources and leverage next-generation communication technologies like 5G, cloud computing, big data, AI, and AR/ VR
ZTE (00763.HK) collaborated with CHINA TELECOM (00728.HK), CHINA UNICOM (00762.HK) and other partners. At an online forum, they displayed a digital twin-based 5G network co-sharing project, setting an example for a leading digital operating system under new 5G infrastructure co-sharing and co-building.
CHINA EB INT'L (00257.HK) announced that the stock short name for trading of the securities of the Company on the Stock Exchange will be changed from “CHINA EB INT’L” to “EB ENVIRONMENT” with effect from 9:00 a.m. on 22 September 2020. The stock code of the Company will remain unchanged as “257”.
BABA-SW (09988.HK)'s Tmall announced the strategic partnership with E-HOUSE ENT (02048.HK) to jointly launch the "Tmall Haofang" (transliteration of "天貓好房") platform. Both sides aim to help real estate firms set up online flagship stores, pledging to subsidize buyers with 100% of their revenue for the next three years.
Centa-Salesman Index (CSI) last stood at 51.73, up 1.89 pts weekly, said Centaline Property. With the index busting through 50 the second time in three weeks, they expected it will soon test 55. In light of tapering local epidemic, the Government further relaxed the social distancing measures, favoring normalization of economic activities and property market. Whilst the second-hand deals are increasing, front-line agents have better mood. The CSI was foreseen to rise steadily and recoup 55, hinting a home price pickup around Mid-Autumn Festival.
The Buildings Department approved 19 building plans in July 2020, with four on Hong Kong Island, nine in Kowloon and six in the New Territories. Of the approved plans, seven were for apartment and apartment/ commercial developments, five were for commercial developments, two were for factory and industrial developments, and five were for community services developments.
The Securities and Futures Commission (SFC) announced that it has prohibited Fabian Shin Yick, a former responsible officer (RO) and chief executive officer of Yi Shun Da Capital Limited (YSD Capital), from re-entering the industry for 20 months from 15 September 2020 to 14 May 2022 for breaching the SFC’s Code of Conduct and Sponsor Guidelines.

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