Sept 18 ASIAN MACRO INITIAL THOUGHTS US Futures slight +VE ASIAN Futures weak


22 Sep

Sept 18 ASIAN MACRO INITIAL THOUGHTS US Futures slight +VE ASIAN Futures weak
Covid-19 Globally over 3m cases, 944k deaths
US Futures Opened -30pts but now +50pts S&P and NDX futures still flat.
ASIAN Futures indicate a slightly lower open although HK ADR’s closed higher

DOW -0.47%, NDX -1.27%, S&P -0.84%, Russel 2K -0.63% Markets opened on their lows but worked higher until Mid Morning and then sold down before working higher again in the afternoon. Vaccine beneficiaries weak; Trump said the US would distribute vaccines as soon as October contradicting the director of CDCP who said limited quantities this year and not widely available for 6-9 months. Also conflicting stories on another stimulus package with Trump suggesting a larger package but Republicans appear reluctant without knowing more details. Initial claims were better along with the 4 week average and continuing claims
Tech opened on its lows again.
US Senate Democrats announce US$350 billion plan to confront China saying the bill intends to strengthen the US medical supply chain, support new technologies like 5G and counter China’s ‘predatory economic behavior’
Snowflake -9.6% on its second day of trading.
Apple -1.6%, Microsoft -1%, Amazon -2.3%, Alphabet -1.7%, Netflix -2.8%, Facebook -3.3%, Tesla -4.2%
Nvidia -0.4% off initial lows, AMD -0.1%, Micron +1.5% and Skyworks -1.4%.
Re-opening stocks Boeing +0.04% off initial lows, Caterpillar +1.8%, Simon Property -3%, Gap -2%, United Airlines +0.1%, Carnival -1.2%
DATA
Initial Claims 860k vs 893k prior revised (F/cast was 830k)
4 week ave initial claims 912k vs 973k revised prior (F/cast was 960k)
Continuing Claims 12.628m vs 13.544m prior (revised) (F/cast was 13.5m)
Housing Starts Aug -5.1% MoM vs +17.9% Jul revised (F/cast was -5%)
Building Permits Aug -0.9% Mom vs +17.9% Jul (F/cast was +2.5%)
Philadelphia Manufacturing Index Sept 15.0 vs 17.2 Aug (F/cast was 13)
EAI Natural Gas Stocks Change 89Bcf vs 70Bcf prior (Concensus was 79Bcf)
10 yr TIPS Auction -0.966% vs -0.93% prior
USD was flat vs Yen & Euro. Bitcoin -0.3% @ 10,930.71, VIX +1.6% @ 26.46, US T10 0.689%
OIL Brent +2.3%, WTI +2% as OPEC urges compliance with production cuts and said would hold emergency meeting in October if oil market weakens further.
Gold %, Silver %, Copper %
AHEAD Current Account, Michigan Prelim Data (Current Conditions, Inflation Expectations, 5 Year Inflation Expectations, Consumer Sentiment and Consumer Expectations), Leadings Index, Baker Hughes Total Oil Rig Count.

DAX -0.36%, CAC -0.69%, FTSE -0.47% markets opened lower follow FOMC decision and in reaction to BoJ, Taiwan’s central bank and the BoE. FTSE tracked higher through the day after the BoE warned that the outlook was 'unusually uncertain’, it is also considering -VE interest rates. DAX initially traded higher but then traded sideways lower before a small rally into the close. CAC worked higher into lunch but then drift for most of the afternoon before an uptick into the close. BANKS led the declines but most stocks closed in the red.
Grenke +34% after heavy losses earlier this week. It issued a firm denial of fraud allegations by short-seller Viceroy Research and said it is considering legal action against Viceroy.
IG Group +6% reported a spike in revenues for the first quarter of fiscal year 2021.
URW -10% after a 3.5 billion euro ($4.1 billion) rights issue.
FT reports CaixaBank and Bankia agree terms to create Spain’s biggest lender. Details of agreement for institution with assets of more than €650bn due to be made public on Friday
DATA
EUROZONE
New Car Registrations Jul -5.7% YoY vs -22.3% Jun (F/cast was -1%)
New Car Registrations Aug -18.9% YoY vs -5.7% Jun (F/cast was -14%)
Construction Output Jul -3.8% YoY vs -4.8% Jun revised (F/cast was -4.2%)
Core Inflation Rate Final Aug +0.4% YoY vs +1.2% Jul (F/cast was -0.4%)
Inflation Rate Final Aug -0.2% YoY vs +0.4% Jul (F/cast was -0.2%)
Inflation Rate Final Aug -0.4% MoM vs -0.4% Jul (F/cast was -0.4%)
UK
BOE Interest Rate Decision 0.1% unchanged and as expected
BoE Quantitative Easing GBP 745b unchanged and as expected
AHEAD
EUROZONE Current Account
GERMANY PPI
FRANCE No data due
UK Retail Sales

JAPAN Expect Nikkei to open lower pre market inflation data mixed. Yen unchanged over night currently 104.73 Caution as the BoJ said the Japanese economy has started to pick up but remained in “a severe situation” but no immediate change in policy. Telco’s weak as Suga seeks lower charges.
Nikkei futures contract in Chicago was at 23,305 while its counterpart in Osaka was at 23,220. That compared against the Nikkei 225′s last close at 23,319.37.
Data out

Inflation Rate Aug +0.2% YoY vs +0.3% Jul (F/cast was +0.1%)
Inflation Rate Aug -0.1% MoM vs +0.2% Jul (F/cast was -0.1%)
Core Inflation Rate Aug -0.4% YoY vs +0.0% Jul (F/cast was -0.3%)
Inflation Rate Ex Food & Energy Aug -0.1% YoY vs +0.4% Jul (F/cast was +0.2%)
Prime Minister Yoshihide Suga's government was backed by 66.4% of the public, Kyodo news agency said on Thursday, citing the results of its telephone poll conducted on the first two days of his administration.
The Bank of Japan will monitor not just inflation trends but job growth in guiding policy, its governor Haruhiko Kuroda said, signalling the BOJ's readiness to ramp up stimulus if job losses from the coronavirus crisis heighten the risk of deflation.
Japanese lawmakers on Thursday compiled a draft proposal urging the government to hold joint military drills with the United States around a group of East China Sea islands administered by Japan but claimed by China to fortify Tokyo's control over them.
Bridgestone The French government is looking into options to try to prevent the closure of a its tyre plant in northern France by its Japanese owner, and save jobs, finance minister Bruno Le Maire said on Thursday.

SOUTH KOREA Expect markets to open lower and see more profit taking ahead of the weekend. Turnover to remain moderate.
No data due
Korean Air announced on Thursday it was injecting 1.1 trillion won into its subsidiary company Hanjin International 
to help pay off its debts and keep the latter’s hotel business afloat. Slight +VE
Hyundai Glovis said Thursday it partnered with Thailand’s No. 1 business group, Charoen Pokphand Group, to target the country’s logistics market. +VE
Hyundai Motor said Thursday that it has received 10,842 precontracts on launch day for its new sport utility vehicle, the all-new Tucson, in South Korea. It is the first SUV model to surpass the 10,000 mark on the first day, the automaker said. +VE
Samsung Biologics signed to contract develop Panolos Bioscience‘s novel anti-cancer drug candidate PB101, the company announced Thursday. Per contract, Samsung Biologics will be responsible for all steps of PB101’s development, including cell line development, preclinical and global clinical trials’ sample manufacturing and investigational new drug applications.
Prices for server DRAM chips are expected to further decline in the fourth quarter of the year, a report showed Thursday, boding ill for South Korean chipmakers amid the novel coronavirus pandemic. Market researcher TrendForce recently revised its server DRAM prices forecast for the last three months of 2020, saying that server manufacturers still hold a relatively high inventory of the product, while the industry is dealing with an oversupply issue. -VE

TAIWAN Expect market to open lower with caution ahead of the weekend, 13,000 remains a key resistance so expect the market to consolidate before trying to move higher.
No data due
The central bank yesterday kept its policy interest rate at a record low of 1.125% for the second consecutive quarter
and slightly raised its forecast for GDP growth this year from 1.52% to 1.6%. Remains committed to loose monetary policy to help stabilise consumer prices and support the economy.
Taiwan Semiconductor Manufacturing Co’s (TSMC) revenue this year is expected to increase about 21% to NT$1.29 trillion (US$44.01 billion) from NT$1.07 trillion last year, driven by strong demand for advanced 5-nanometer and 7-nanometer chips mainly used in smartphones and high-performance computing devices, a Moody’s Investors Service report on Wednesday said. Morris Chang, founder of TSMC, is expected to receive about NT$312 million (US$10.64 million) in cash dividends from the contract chipmaker, which is to distribute dividends next month. Yesterday, shares of TSMC went ex-dividend before the company issues to shareholders a cash dividend of NT$2.5 per share for earnings per share of NT$4.47 recorded in the first quarter.
The European Trade Office said that a forum in Taipei would pave the way for closer business cooperation in the post-pandemic economy +VE
Chinese National Association of Industry and Commerce chairman Lin Por-fong yesterday said that he would not attend a Taiwan-US economic dialogue scheduled for today. Slight -VE
FT Reports US plans $7bn arms deal with Taiwan. Washington to bolster Taipei’s defences as China ratchets up military threat
Nytex Composites Co is to invest nearly NT$300 million (US$10.24 million) to develop its production capacities in Taiwan as part of the government’s Invest in Taiwan initiative, the Ministry of Economic Affairs said in a statement yesterday. Eyeing the 5G and green energy-related markets, Nytex is planning a factory in Changhua County with a smart production center and a technical service center, the ministry said.


CHINA Expect market to open lower with concerns over more sanctions on US Tech firms and increased US/China tension over Taiwan.
No data due
China suffered "far fewer" than the 20 deaths incurred by India's military 
in a clash on their border in the Himalayas in June, the Global Times editor-in-chief said in a tweet, contradicting a claim made by India's defence minister. He also said “No Chinese soldiers was captured by Indian troops, but PLA captured many Indian soldiers that day,” Hu Xijin said in the tweet, referring to China’s People’s Liberation Army (PLA). Likely to enrage Indian nationalists -VE
China will make a “necessary response” to a visit by U.S. Undersecretary for Economic Affairs Keith Krach to Chinese-claimed Taiwan, and has lodged a complaint with Washington, the foreign ministry said on Thursday ahead of his arrival. -VE for sentiment
The top U.S. diplomat for East Asia said on Thursday China’s recent actions around the world were not those of a responsible global actor, but of a “lawless bully,” a further ratcheting up of rhetoric against Beijing as the U.S. election approaches. -VE for sentiment
ByteDance is planning a U.S. initial public offering of TikTok Global, the new company that will operate the popular short video app, should its proposed deal be cleared by the U.S. government, people familiar with the matter said on Thursday.
China claims 1.3 million Xinjiang residents given ‘vocational training’ each year. Observers say figure in State Council white paper could be first time Beijing has ‘indirectly acknowledged’ the scale of internment camps

HONG KONG ADR’s +106pts to open at 24,446 but expect weakness in Tencent and other E commerce names as Trump has asked Epic Games and others about their security protocols (Tencent has a 40% in Epic and owns Riot). Chinese Banks still under selective pressure but the other ADR’s closed higher.
No data due
After Market Thursday 
HK unemployment Aug 6.1% vs 6.1% Jul (F/cast was 6.3%)
Still at the highest level since Jan 2005, with under-employment rising as well. Actual employment rose but so did the size of the workforce.

IPO FULU HOLDINGS (02101.HK), debut today, closed at $10.4 in the gray market, up $1.5 or 16.85% against the listing price of $8.9, on volume of 14.8 million shares and
turnover of $163 million, PhillipMart data showed. Excluding the handling fees, a book gain of $750 was reported per board lot of 500 shares.

SHORT SALES Thursday 20.8% vs 21% Wednesday 
Top Shorts Bank of China (3988) 40%, Hang Seng Bank (11) 40%, ICBC (1398) 37%, China Res Land (1109) 36%, BoC HK (2388) 34%, CCB (939) 34%, HK & China Gas (3) 33%, Hang Lung PPT (101) 29%, AIA (1299) 27%, CLP (2) 27%, BABA-SW (9988) 26%, Galaxy (27) 26%, Tencent (700) 25%, Hengan (1044) 25%.

WATCH
Tencent Sports nailed a cooperation with Premier League, under which the former will become an exclusive rebroadcast platform in Mainland China for the latter's football matches.
  Tencent Sports will rebroadcast 372 Premier League's matches, being all remaining events in the 2020-2021 season.
BANK OF E ASIA (00023.HK) noted a press release in connection with enforcement action taken by the Securities and Futures Commission against the Bank;  The board of directors does not consider the aforesaid matter to have any material adverse impact on the business or operations of the Bank or any of its subsidiaries.
AlipayHK announced to provide Hong Kong merchants with its open mini programs, allowing them to have their own apps instantly and move their services or goods online.  The merchants will also get a chance to expand their reach to over 2 million AlipayHK users.
In a notice issued after market close, CTFO (002373.SZ)  and YUYUE MEDICAL (002223.SZ)  announced that the CBIRC had granted an approval for Ant Group to establish a consumer finance company in Chongqing.
As USD/HKD triggered the Strong-side Convertibility Undertaking 7.75, the HKMA undertook a US$400 million selling order to inject HK$3.1 billion into the market.  The balance of the banking system of Hong Kong will increase to HK$214.057 billion next Monday (21 September).
HKT-SS (06823.HK)'s CSL Mobile announced that it has been named as the exclusive mobile network carrier to distribute PlayStation 5. "PlayStation 5 Console Promotion Plan" will be open for booking tomorrow. The console is priced from $3,180.
MTR CORPORATION (00066.HK) will invite developers and/or consortia to submit Expression of Interest (EOI) for LOHAS Park Package Thirteen Property Development tomorrow (18 September 2020). The deadline for submission is 12:00 noon on 24 September 2020.
China Passenger Car Association (CPCA) expected China's narrow-sense PV retail salesvolume to grow around 8% YoY to 1.915 million units in September, as "Golden September and Silver October" are traditional peak seasons for sales.
Centa Valuation Index (Major Banks) (CVI) last printed at 38.54 this week, 4.95 pts weekly. The government has gradually relaxed the anti-plague measures, boosting the second-hand home market with deals turning vibrant, said Centaline Property. CVI's five-week slide came to an end this week.

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