Sept 21 ASIAN MACRO INITIAL THOUGHTS Japan Closed, US Futures open lower
Covid-19 Globally over 30.9m cases, 989k deaths
US Futures opened -151pts but have eased back to -56pts; S&P -0.2% and NDX -0.1%
UK warns of possible lock downs to cope with recent increase in new cases.
Trump approves TikTok/ Oracle deal and Tencent’s WeChat gets a court reprieve
JP Morgan expects US sales and trading staff back in the office this week.
Japan Markets closed until Wednesday
Data today; China Loan data but no change expected.
US Chicago Fed national Activity Index
No Data due from Asian or Europe.
KEY Tencent and other E Commerce names likely to see weakness as WeChat get a court reprive but threat remains. TikTok deal gets approved but the treat to other Chinese companies remains
Friday’s close of US and Europe at the bottom of the page.
JAPAN Market closed until Wednesday. Yen closed stronger at 104.55 Overhanging the market will be whether Suga will call a snap election still overhangs the market.
No data due.
Prime Minister Suga spoke to President Trump by phone on Sunday and is preparing to meet U.S. Secretary of State Pompeo in Tokyo early next month. Pompeo is expected to visit the Japanese capital for talks with foreign ministers from Japan, Australia and India, NHK said. They are expected to discuss cooperation on the COVID-19 pandemic and what they call a free and open Indo-Pacific region. Suga is expected to speak with U.S. President Donald Trump by phone on Sunday, Japanese media said on Friday.
Suga says he will pursue economic structural reforms through a mixed bag of policies that target specific industries, rather than a grand strategy to reshape society and boost long-term growth.
Japan on Saturday relaxed a rule limiting the size of crowds at professional sports matches, movie theaters and other events, in yet another sign of a gradual return to social and economic activities following the outbreak of COVID-19. +VE for sentiment
Toshiba Corp on Friday said more than 1,000 postal voting forms for its shareholder meeting went uncounted, and Sumitomo Mitsui Trust Bank, the bank that counted the votes, which carries out a similar job for almost a thousand listed companies, said the oversight may not have been limited to Toshiba. -VE
SoftBank Group Corp said on Friday it would sell U.S. cellphone distributor Brightstar for an undisclosed price, marking the latest sale of telecoms assets as the Japanese conglomerate builds a cash pile.
Travel packages at discounted prices covering travel to and from Tokyo went on sale Friday in the government’s Go To Travel domestic tourism campaign. The capital’s inclusion in the campaign, which was launched in July to support the tourism industry but initially excluded Tokyo, is scheduled to start on Oct. 1. Also on Friday, the Land, Infrastructure, Transport and Tourism Ministry said it would ask travel agencies not to charge travelers cancellation fees even if Tokyo ends up not being included in the campaign.
SOUTH KOREA Expect markets to open flat following the US but Friday saw good foreign buying (in chemicals, tech and manufacturing) as the Korean won continued to strengthen vs the USD. Overall trading volume was moderate. +VE outlook for the Tech sector Q3 profits and fewer covid cases +VE. So any downside likely to be limited. Volume likely to be slightly lighter with Japan closed.
No data due
Govt recorded 82 new covid cases on Sunday down from 111 cases on Saturday; the first drop below 100 for 17 days. +VE for Sentiment
South Korea’s tech industry is forecast to report a better performance in Q3 vs Q2, owing to pent-up demand amid the ongoing COVID-19 pandemic, according to financial sources on Sunday.
Samsung Electronics is expected to post over 10 trillion won ($8.58 bn) in operating profit in the July to September period, around +32% from it’s Q3 2019. LG also expected to post good results its Q3 operating profit is forecast to increase about 7% YoY (but +70% QoQ) to 838 billion won. Others expected to benefit include SK Hynix, Samsung Display. +VE for Sentiment
LG Uplus Corp, said Sunday it is joining forces with Google to jointly develop 5G mobile edge computing (MEC) technology. +VE
The metropolitan government in Seoul said on Friday it would seek 4.6 bn won ($4 mn) in damages against the Sarang Jeil church for causing the spread of the coronavirus by disrupting tracing and testing efforts. The National Health Insurance Service has also said it will sue the church for indemnity worth 5.5 bn won ($4.7 mn).
Korea Gas Corp. is taking a leading role in fostering the country’s hydrogen industry, backing the government’s Green New Deal initiative which aims to roll out 200,000 hydrogen vehicles and 450 hydrogen charging stations.
Hanwha Defense loses out on $2.5b anti-air systems export. After a seven-year-long effort to export its anti-air systems to India. India decided to make the systems on its own to give a boost to the domestic industry, according to local media reports. -VE
Samsung Electronics announced Friday that the company has officially launched the Galaxy Z Fold 2 in overseas markets. It will be available in around 40 nations, including the US, Singapore, Thailand, England and France. +VE
Hanwha Q Cells said Friday that it has become the first company to receive the highest grade under the government’s carbon certification program for solar modules. It said seven of its solar modules earned grade 1 certification from the Industry Ministry. They will be available starting next month, a company official said.
LG Uplus said Friday it plans to roll out its 5G-powered autonomous robot next year. The robot which is being developed in partnership with autonomous mobility firm Unmanned Solution has recently demonstrated its abilities at local refiner Hyundai Oilbank Co.'s facility in Seosan. +VE
Kia Motors said Friday it will suspend two plants near Seoul until this weekend following the confirmation of COVID-19 cases there days earlier. Slight -VE
Incheon International Airport Corporation said on Sunday it had signed an agreement with Hyundai Motor, Hyundai Engineering & Construction and KT as part of efforts to move the Urban Air Mobility project forward, also known as “flying cars.”
BMW Motorrad, the motorcycle brand, said Friday that it has officially launched its latest model, the new R 18, in South Korea.
TAIWAN Expect market to open lower following the US on Friday but downside to be limited as outlook for tech continues to look good. TSMC broker target price upgrade also +VE
Data due after market Export Orders
The New Taiwan dollar Friday strengthened the most since March, it rose 0.54% to close at NT$29.152 vs USD, the strongest since April 2018. The currency has broken out of a tight range, even as it continues a months-long pattern that has seen it pare gains at the close of trading. Other Asian currencies also rose against the greenback yesterday, with the South Korean won up 1.2%. KEY the USD is weakening after the Fed indicated no rate rises until 2023 -VE for Exporters
President Tsai Ing-wen said Sunday the last two days of Chinese aircraft approaching Taiwan demonstrate that Beijing is a threat to the entire region and have shown Taiwanese even more clearly the true nature of China’s government. I would tend to agree and shows the need for internationally coordinated response.
Taiwan and the US are to start a formal dialogue after the two sides on Friday exchanged opinions on an array of issues, Minister of Economic Affairs Wang Mei-hua told a news conference yesterday in Taipei. Expect a rebuke from Beijing
US representative introduces bill to re-establish ties. The Legislation introduced on urged Washington to re-establish formal diplomatic relations with Taiwan, and to end its “outdated and counterproductive one China policy.” It's a non binding bill from US Representative Tom Tiffany who said “Now is the time for America to stop parroting Beijing’s one China fantasy, and for US policy to reflect the reality that Taiwan is a free, democratic and independent country,”. Likely to see a strong response from China and increase tensions.
Taiwanese delegates to the annual Straits Forum did not get a meeting with the chairperson of the Chinese People’s Political Consultative Conference (CPPCC) for the first time in the 11-year history of the cross-strait platform. A further sign of the tensions between China and Taiwan. It was learned that Beijing decided not to send Wang to the forum and to have Liu receive the delegation after the Chinese Nationalist Party (KMT) decided not to send an official delegation this year over what most Taiwanese viewed as a demeaning remark by the host of a China Central Television (CCTV) program. -VE for sentiment.
Mutual-Tek Industries Co Ltd is to end production in Taiwan, as the US-China trade dispute and Washington’s sanctions on Huawei have significantly reduced its revenue, it said on Saturday. Mutual-Tek’s main products include module boards for handset camera lenses and rigid-flexible printed circuit boards, and its major customers include Hon Hai, Primax Electronics, Sunny Optical, O-film Tech and Q Technology. -VE
Gasoline and diesel prices this week are to rise NT$0.2 and NT$0.1 per liter respectively after decreasing NT$0.5 and NT$0.3 per liter each in the previous week, CPC Corp and Formosa Petrochemical announced separately yesterday.
On Saturday Taiwan bade farewell to former president Lee Teng-hui, dubbed “Mr. Democracy” for ending autocratic rule in favor of free elections and championing Taiwan’s separate identity from China. On Friday, China carried out drills in the Taiwan Strait, including sending 18 fighter jets near the island, as Beijing expressed anger at the visit of a senior U.S. official to Taipei, there for Lee’s memorial.
Taiwan President Tsai Ing-wen pledged deeper ties with the United States at a dinner for a visiting U.S. Undersecretary for Economic Affairs Keith Krach and his team. Notable that TSMC’s retired founder Morris Chang attended Tsai’s dinner, and appeared prominently in pictures of the event put out by the presidential office. Taiwan will be stressing the importance of its tech as a reason for the US to expand bilateral relations.
Foodpanda and Uber Eats seeing strong growth but penetration is estimated at around 10% vs 20% in China so further expansion expected. Interestingly some of the partner business are independent restaurants and even night market stalls. +VE
Sale of research to China needs to be halted: academics have called on the government to crack down on researchers selling their work to China, saying that most research is funded by taxpayers and should belong to the private institutions where the researchers are employed. Those who take on part-time appointments, or participate in China’s Changjiang Scholars or Thousand Talents programs might contravene the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area or Article 34 of the Act Governing the Appointment of Educators
CHINA Expect market to open lower as tensions with the US and other countries increase. The proposed ban on WeChat and TikTok -VE for sentiment.
Data due on the open Loan Prime Rate 1y (Aug was 3.85% F/cast is unchanged) 5y (Aug was 4.65% F/cast is unchanged).
ByteDance Ltd is seeking a valuation of $60 billion for TikTok as Oracle Corp and Walmart take stakes in the short-video app's business to address U.S. security concerns, Bloomberg News reported on Sunday. Many think the $5bn ‘patriotic’ find venture could hold up the deal
Chinese Ministry of Commerce (MOC) responded that the US move to prohibit transactions relating to mobile apps WeChat and TikTok from Sunday night (20 September). It said it sabotaged the legal interest of the related companies detrimentally and distorted normal market order. For this, the Chinese government expressed vigorous opposition. If the US continues to act on stubbornness, China will take necessary steps to firmly safeguard the legal interest of Chinese enterprises, the MOC spokesman furthered. Whilst events have changed due to Trump backing the deal and a US court preventing the action against WeChat the threat remains.
President Xi said China’s economy remains resilient despite external risks. Xi reaffirmed a “dual circulation” strategy that would help steer the economy towards greater self-reliance, as U.S. hostility and a global pandemic increase external risks. China has steadily recovered from a virus-induced slump, but analysts say policymakers face a tough job to maintain stable expansion over the next several years to turn China into a high-income nation.
China’s embassies to Suriname and Guyana on Friday accused U.S. Secretary of State Mike Pompeo of “spreading rumours” and “smearing” Beijing, after Washington’s top diplomat criticised Chinese companies during a four-stop South America tour. Pompeo said Chinese companies often do not compete on a “fair and equitable basis.”
“We’ve watched the Chinese Communist Party invest in countries, and it all seems great at the front end and then it all comes falling down when the political costs connected to that becomes clear,” Pompeo said. -VE for sentiment.U.S. lawmakers will consider two bills next week on goods made with forced labor from China’s Xinjiang region, one that would restrict imports and another requiring publicly traded U.S. companies to make disclosures on supply chains. -VE
Canadian will no longer talk with China for any free trade agreement, denouncing China of suppressing democracy, Canadian media reported. The Foreign minister said it is now not appropriate to proceed with trade talks. He stressed the top task of Canada is to strive for return of two Canadians being detained in China for suspicions of espionage.
The consumer protection committees of CBIRC and PBoC recently guided investors to embrace concepts of rational investment and value investing. In practical terms, investors should cast doubt on capital-protected financial products with a yield of over 6%, while realizing those with a yield of over 8% are dangerous ones. Investors should brace for the loss of principal when investing in products with a yield of over 10%.
Commerce ministry releases details of blacklist that was announced in May last year. On Saturday it said firms and individuals on the blacklist would be restricted or banned entirely from trading – both imports and exports – with China and also from investing in the country. Global Times reported China was ready to add American companies including Qualcomm, Cisco and Apple and that it was also considering suspending buying aircraft from Boeing, in response to US sanctions on Huawei Technologies. HSBC (0005) and FedEx are "highly likely" to be put on the first batch of the list, due to "behaviors of jeopardizing the interests of Chinese firms by cooperating with the long-arm jurisdiction of the United States.” -VE especially for HSBC
Around 350,000 people have taken experimental coronavirus vaccines developed by China National Biotec Group (CNBG), its chairman said on Friday, as part of the country’s emergency inoculation programme. China has been actively offering vaccines that are still undergoing late-stage trials to people facing high infection risk and considering expanding the programme to prepare against a potential resurgence, raising safety concerns from experts.
Ant Group has received approval from the Shanghai Stock Exchange for a domestic initial public offering, the bourse said on Friday, bringing the financial technology firm closer to a dual-listing expected to be worth up to $30 billion. +VE Alibaba
Mongolia protests against the greater use of Mandarin continue with the president caught between national culture and the demands of the countries biggest trading partner. Press reports about 100 people protested in the main square in the capital Ulan Bator last week during a two-day visit by Chinese Foreign Minister Wang Yi. Not a large number but very unusual to see any street protests. -VE
HONG KONG ADR’s -96pts to open at 24,359 with most ADR’s lowers but expect more downside, especially in the E-commerce names under pressure whilst the Trump bans on WeChat is on hold and the deal for TikTok approved the threat remains -VE Tencent but more risk that its gaming operations come under scrutiny -VE. Developers likely to see interest after good weekend sales and more primary releases.
HK reported 23 new covid cases on Sunday and 14 on Saturday up from 3 on Friday.
Data due after market Inflation rate
Short Selling Friday 16.8% vs 20.8% Thursday
Top Shorts HK & China Gas (3) 43%, Ping an (2318) 33%, BABA-SW (9988) 31%, Sands China (1928) 30%, ICBC (1398) 25%.
RAZER (01337.HK) repurchased 2.949 million shares through the Stock Exchange today (18 September), involving $5.0628 million.
Li Ka-shing and Victor T K Li acquired through Li Ka Shing Foundation a total of 600,000 shares in CK ASSET (01113.HK) at the average price of HK$41.0488, HK$41.32 and HK$40.8775 per share on 14 September, 16 September and 17 September 2020 respectively. As a result, the deemed interests of Li Ka-shing and Victor T K Li in CKA increased from 35.54% to 35.56%, and from 35.61% to 35.62%.
Techtronics (669 HK) A long time favourite of mine as readers will know. Traded below $100 yesterday but rallied on the open but then sold down but ticked up into the end to close at HK$100. I think upside is likely but I would look to accumulate below HK$100. With more housing data due next week from the US that is likely be a big driver of the stock.
TENCENT (00700.HK) After the US Department of Commerce had announced prohibitions on transactions relating to mobile apps WeChat from Sunday night (20 September). Tencent said it talked with the US Government for several times and yet no consensus was reached so far. TENCENT said both parties will continue to talk upon the matter. -VE. US Court intervened so the ban is on hold but the threat remains.
Henderson Land Development (0012) released 68 homes in the third price list of Two Artlane in Sai Ying Pun, at an average price of HK$28,746 per sq ft after discounts, 4% higher than the first list. The developer sold 74 of the 80 flats on offer at Two Artlane on Saturday.
Sun Hung Kai Properties (0016) in Tin Shui Wai, released 38 units in the fourth list of Wetland Seasons Park Phase 3 at an average price of HK$13,688 per sq ft after discounts, about 5.55% higher than the first price list. The developer sold about 95% of the 133 flats on offer at the project on Saturday.
CK Asset (1113) at Lohas Park will release the sales arrangement of Sea To Sky as early as today.
Centaline Property Agency recorded 16 secondary deals at ten blue-chip housing estates, +14.3% WoW
ZTO EXPRESS-SW (02057.HK)'s international placing was over-subscribed by several times, and introduced subscription from global prestigious investment institutions and Asian long-term funds, including BABA-SW (09988.HK) and Hillhouse Capital, according to street information. +VE
Macau casinos are facing a liquidity crunch due to a double whammy of travel restrictions and Beijing's anti-money laundering campaign, according to media reports. Macau is expected to see an uptick during the forthcoming Golden Week holiday (Oct 1-7).
HKMA announced that as USD/HKD triggered the Strong-side Convertibility Undertaking during New York trading hours, the authority undertook a USD427-million selling order to inject HKD3.309 billion into the market. The balance of the banking system of Hong Kong will therefore increase to HKD224.652 billion next Tuesday (22 September).
The Hong Kong Monetary Authority (HKMA) published Friday statistics of payment cards issued in Hong Kong for the second quarter of 2020. According to the quarterly statistics, the total number of credit cards in circulation was 19.52 million by the end of Q2/2020; -0.5% QoQ (-0.4% YoY)
The total number of credit card transactions was 203.71 million for Q2/2020, +0.4% QoQ (-0.6% YoY). The total value of credit card transactions was HK$143.6 billion for Q2/2020, -15.7 % QoQ (- 24.3% YoY).
HUI XIAN REIT (87001.HK) announced that, through the Distribution Reinvestment Arrangement in respect of 2020 interim distribution of Hui Xian REIT, CK ASSET (01113.HK) and Li Ka Shing Foundation Limited have elected to receive their 2020 interim distribution in the form of new Units (issue price: RMB1.72 per unit) in lieu of a cash distribution.
The Lands Department (LandsD) announced Friday Tai Po Town Lot No. 241 at Tai Po Road - Tai Po Kau, Tai Po, New Territories, in the 2020-21 Land Sale Programme will be disposed of by public tender. The tender invitation for the lot will commence on September 25, and close on October 23. Tai Po Town Lot No. 241 has a site area of about 6,238 square metres and is designated for private residential purposes. The minimum gross floor area and the maximum gross floor area are 5,615 sq m and 9,357 sq m respectively.
BABA-SW (09988.HK)'s interactive entertainment division (Aligames), in charge of the gaming unit, will be upgraded to an independent business group and stand side by side with Alibaba Digital Media & Entertainment Group, according to Chinese reports.
PING AN (02318.HK) Co-CEO Chen Xinying said at a seminar that Ping An Group has been the pioneer of digital transformation and that coronavirus pandemic has sped up the such transformation. The group's "financial + ecology" strategy leverages the five major ecospheres - financial services, healthcare, smart cities, real estate services and automobile services - which facilitate the group to approach internet users outside its core financial business scope. As of 30 June 2020, PING AN owns over 210 million individual customers and 560 million internet users. +VE
Centa-City Leading Index (CCL) last posted at 176.76, -0.62% weekly.
CCL Mass last stood at 179.76, down 0.54% weekly.
CCL (small-and-medium units) last reported at 177.32, down 0.55% weekly.
CCL (large units) last tracked at 173.83, down 0.99% weekly.
The indices of two New Territories districts advanced together for two weeks, being the first time since June 2019, said Centaline Property.
CCL Mass of New Territories East +2.53% and West grossed +1.89% in two weeks. Illustrating that the rise of these two indices led the bottom-out of housing prices and demonstrated sequential uptrend signs, indicating the recent peak season began in New Territories and helped snap losing streak of overall housing prices.
DOW -0.88%, NDX -1.07%, S&P -1.12%, Russel 2K -0.38% Triple witching as individual stock, ETF and index options expired which added to the choppiness of trading. Markets opened flat and saw initial selling, the DOW then bounced to trade sideways around flat until midday, then it sold down to the day low at 1:30pm. It worked higher then towards to the close but saw some late selling in the last 20 minutes. NDX and S&P sold down from the open hitting the lows around 1:30pm and then worked higher in the PM. S&P also saw late selling in the last 30 minutes.
Sentiment weak as U.S. government said it will block all TikTok and WeChat downloads in the country on Sunday (WeChat has reportedly seen increased down loads ahead of the ban) and concerns of further escalation could hurt online gamers. Still no agreement on the next stimulus package.
Apple 3.2% increased activity as call options expired out of the money, Microsoft -1.2%, Amazon -1.8%, Alphabet -2.4%, Netflix -0.1%, Facebook -0.9%, Tesla +4.4%
Nvidia -2.2%, AMD -2.1%, Micron -0.5% and Skyworks -1.7%.
Re-opening stocks Boeing -3.8%, Caterpillar -1%, Simon Property -2.9%, Gap -0.7%, United Airlines -3.6%, Carnival -5.7%
Current Account Q2 $-170.5b vs -111.5b prior revised (F/cast was -150b)
Michigan Prelim Data
Current Conditions Sept 87.5 vs 82.9 Aug (F/cast was 82)
Inflation Expectations Sept 2.7% vs 3.1% Aug (F/cast was 3.2%)
5 Year Inflation Expectations 2.6% vs 2.7% Aug (F/cast was 2.8%)
Consumer Sentiment Sept 78.9 vs 74.1 Aug (F/cast was 75)
Consumer Expectations Sept 73.3 vs 68.5 Aug (F/cast was 68)
CB Leading Index Aug +1.2% MoM vs 2% Jul revised (F/cast was 1%)
Baker Hughes Total Oil Rig Count 255 vs 254 prior
USD was weaker vs Yen & Euro. Bitcoin % @ , VIX -2.4% @ 25.8, US T10 0.697%
OIL Brent -0.35%, WTI +0.3% as US inventories decline and OPEC stresses need to adhere to production cuts.
Gold +0.4%, Silver -0.6%, Copper +1.2% Gold benefitting from the weaker USD.
AHEAD Chicago Fed national Activity Index.
DAX -0.7%, CAC -1.22%, FTSE -0.71% Dax opened flat and initially trade just above flat until midday after which is drifted lower into the close. FTSE and CAC opened lower, with the FTSE trading sideways just below flat all day, the CAC was similar in the morning but drifted lower in the afternoon to close just off its lows. Both the UK and France are seeing a rise in covid cases which is a concern and hurt Travel & Leisure sector -3.4% but Healthcare +0.5%. EU says a Brexit deal is still possible. UK Retail sales declined but slower than expected.
Caixabank -2.2% and state-owned Bankia have approved a merger plan that will create the Spain’s largest bank.
Unibail-Rodamco-Westfield -7.3% continued selling took it to a two-decade low a day after it announced a €3.5bn rights issue. Cross read to Klépierre -9.6% its lowest since 2009.-VE
IAG -14.6%, Intercontinental Hotels -4.5%, Ryanair -3.9% warned of cutting winter schedule.
Roche +1.7% announced Friday that a study had indicated that one of its drugs reduced the likelihood of patients with Covid-19 related pneumonia requiring a ventilator.
Covestro +5% after denying reports that it is subject to a takeover bid from private equity firm Apollo.
Network International -22%
Ericsson AB +1.3% agreed to buy CradlePoint Inc, a US provider of wireless solutions that it says will help it expand its 5G footprint.
Current Account Jul Euro 25.5b vs 17.3b (F/cast was 29b)
PPI AUG 0% MoM vs +0.2% Jul (F/cast was +0.1%)
PPI AUG -1.2% YoY vs -1.7% Jul (F/cast was -1.4%)
Retail Sales Aug +2.8% YoY vs +1.4% Jul (F/cast was +2.9%)
Retail Sales Aug +0.8% MoM vs +3.7% Jul revised (F/cast was +0.5%)
Retail Sales ex Fuel Aug +4.3% YoY vs +3.1% Jul (F/cast was +3.7%)
Retail Sales ex Fuel Aug +0.6% MoM vs +2.1% Jul revised (F/cast was +0.3%)
EUROZONE No data due
GERMANY No data due
FRANCE No data due
UK No data due