Sept 23 ASIAN MACRO INITIAL THOUGHTS ASIAN Futures mixed, US Futures Flat
Covid-19 Globally over 31.5m cases, 967k deaths
Global airlines called for airport COVID-19 tests for all departing international passengers to replace the quarantines they blame for exacerbating the travel slump
Just 9 days to the end of the quarter to expect further rotational trading in the coming days.
US Futures Dow +35pts S&P and NDX slightly -VE
ASIAN Futures mixed. Nikkei Futures are lower but other market look set to rise after recent sell offs
DOW +0.5%, NDX +1.71%, S&P +1.05%, Russel 2K +0.79% US markets opened higher but initially sold down but then worked higher from around lunchtime as the S&P neared a 10% drop from the recent high; suggests sidelined buyers stepping in.
Powell says Fed will support the economy for as long as it takes. Fed Evans warns that without another Fiscal package the US economy faces a longer, slower recovery and risks recession.
Home builders +VE on better than expected Existing Home Sales other data was +VE too.
President Trump told the United Nations General Assembly on Tuesday that China must be held accountable for having "unleashed" COVID-19 on the world, prompting Beijing to accuse him of "lies" and abusing the U.N. platform to provoke confrontation.
Facebook +2.7%, Amazon +5.7% (broker upgrade), Apple +1.6%, Netflix +0.8%, Alphabet +2.1% and Microsoft +2.4%.
Nvidia +1%, AMD -0.3%, Micron +1.1% and Skyworks +4%.
Re-opening stocks Boeing +0.3%, Caterpillar +1.3%, Simon Property +0.4%, Gap +2%, United Airlines +0.8%, Carnival +0.8%
Lock down names Campbell Soup -0.9%, General Mills +0.2% and JM Smucker +0.1%
Nike +3% in normal hours but rallied 13% after hours as Q1 earnings beat with digital sales +82% and China sales +6% led by factory stores and online sales. Also reported that US retailers had started to increase orders for 2H +VE HK Shoe names.
Tesla -5.6% as Battery Day disappoints on news the battery would not reach mass production until 2022. But after market +2.2% on news deliveries to rise 30%-40% in 2020
Redbook +1.5% YoY vs -1.2% prior. (-0.9% MoM vs -1.6% prior)
Existing Home Sales Jul +2.4% MoM vs +24.7% Jun (F/cast was +0.9%)
Richmond Fed Manufacturing Index Sept 21 vs 18 Aug (F/cast was 10)
Fed Chair Powell & Treasury Sec Mnuchin Testimony
API Crude Oil Stock Change +0.691m vs -9.517m prior (Consensus was -2.256m)
USD was stronger vs Yen & Euro. Bitcoin +0.76% @10,530.54 , VIX -3.3% @ 26.86,
US T10 0.671% as Fed’s Evans says the economy risks a longer, slower recovery and possible recession without fiscal support.
OIL Brent +0.65%, WTI +0.74% but demand worries continue.
Gold -0.15%, Silver +0.1%, Copper +0.3%
AHEAD MBA Mortgage Applications & 30 year Mortgage Rate, House Price Index, PMI Flash Services, Manufacturing and Composite, Fed Chair Powell Testimony, EIA Oil Report.
DAX +0.41%, CAC -0.4%, FTSE +0.43% markets opened slightly higher and traded sideways for most of the day, going into the close the FTSE rallied as GBP sank vs USD, the CAC sold down and the DAX continued sideways. UK Govt advises people to work from home and imposes restrictions on bars and restaurants and places where mask must be worn. Oil and Gas rebounded along with Travel and Leisure stocks. But insurers were weak as Beazley warned of greater covid claims and financial regulator moved to ban charging existing customers more than new ones for their motor and home cover.
Kingfisher +9.9% results beat with adjusted pre-tax profit for the six months to July 31 rising 23 per cent to £415m as the owner of DIY stores including B&Q benefited from a boom in home renovation.
Network International rebounded 25% having halved in the past week.
Beazley Insurance -14% after raising its forecast for Covid-19 related claims.
Deutsche Bank -0.9% said it would close a fifth of its domestic branches because the coronavirus crisis had prompted retail customers to adopt digital banking in greater numbers.
EUROZONE Consumer Confidence (Flash) Sept -13.9 vs -14.7 Aug (F/cast was -15.4)
UK CBI Industrial Trends Orders Sept -48 vs -44 Aug (F/cast was -40)
EUROZONE PMI Flash Services, Manufacturing and Composite
GERMANY Gfk Consumer Confidence, PMI Flash Services, Manufacturing and Composite
FRANCE PMI Flash Services, Manufacturing and Composite
UK PMI Flash Services, Manufacturing and Composite
JAPAN Re-opens after being closed for two down days Expect Nikkei to open lower as stocks adjust to the past two days of weakness but downside limited. Yen currently 104.96
Nikkei futures contract in Chicago was at 22,950 (Osaka was at 23,090.) vs 23,360.30 Nikkei 225 Friday close
Data due PMI Flash Services, Manufacturing and Composite, Later All Industry Activity Index, BoJ Gov Kuroda Speech.
Tokyo reports 88 new covid cases; with nation-wide total 331.
PM Suga and President Xi Jinping are planning to hold talks by telephone on Friday, Kyodo News reported, their first discussion since Suga took over as Japan's leader. Interestingly though is that he has already spoken with Trump.
Nintendo -VE as a French consumer advocacy group said Tuesday that it had filed a "planned obsolescence" claim against Nintendo's Switch console, saying the Japanese giant knew some controllers were failing too quickly.
Ushio Inc has recently launched an ultraviolet lamp that can kill the coronavirus without harming human health -- the first of its kind in the world.
Microsoft on Monday announced it will acquire ZeniMax Media for $7.5 billion, adding muscle to its Xbox arm ahead of a fierce battle in the market for new gaming consoles. ZeniMax is the parent company of Bethesda Softworks, publisher of popular game franchises including Dishonored, Doom, Fallout and Elder Scrolls
SOUTH KOREA Expect markets to open higher with Tech in focus and bargain hunting after market saw heavy selling on Increased volume Tuesday. Sentiment improved as US rebounds.
No data due
President Moon Jae-in called on Tuesday for a regional infectious disease control and public health initiative involving China, Japan, Mongolia, and North Korea to tackle health crises and lay the foundation for peace with Pyongyang.
Government suspended free flu shots on Tuesday after reports of problems in storing the vaccinations during transportation, disrupting plans to pre-emptively ease the burden on a healthcare system already strained by coronavirus outbreaks. -VE for sentiment.
Samsung Biologics signed to contract manufacture AstraZeneca‘s biologics drug for its global distribution, the company said Tuesday. The size of the contract is $330,840,300, open to grow to $529,599,900 if demand grows for AstraZeneca’s product. +VE
Daewoong Pharmaceuticals and Medytox on Tuesday gave contrasting interpretations of the US International Trade Commission‘s announcement to review parts of the final initial determination. -VE
LG Electronics’ swiveling LG Wing smartphone will retail for 1.09 million won ($936), the company said Tuesday. “LG Wing’s retail price is the lowest among smartphones with multiple screens so far,” the company said in a press release. “The company has set the price at such an aggressive level in order to allow more consumers to experience the LG Wing’s new form factor.” +VE but will put supply chain margins under pressure.
Samsung Electronics Co. will introduce a new smartphone line in India, industry insiders said Tuesday, as the South Korean tech giant eyes to expand its presence in the world's second-largest smartphone market. +VE
SK hynix on Tuesday announced its investment in an artificial intelligence solutions company Gauss Labs that will lead SK Group’s future value creation. The chipmaker will invest $55 million in Gauss Labs as the sole investor through 2022. +VE
LG Group on Tuesday said it has partially closed its headquarters building in Seoul over virus infections. Slight -VE
Incheon International Airport failed to draw enough bidders in duty-free auctions Tuesday, its operator said, underscoring an extended slump in the duty-free business sector amid the coronavirus pandemic. -VE for sentiment
TAIWAN Expect market to open higher with initial bargain hunting after heavy selling Tuesday; Tech in focus, Petrochems likely to remain weak.
Data due Industrial Production, Retail Sales
After Market Tuesday Unemployment Aug 3.83% vs 3.9% Jul (F/cast was 3.9%).
The central bank yesterday announced that it would raise its cap on special loans for small and medium-sized enterprises (SMEs) from NT$200 million to NT$300 million so that they can better weather the downturn caused by the pandemic. +VE
The production value of the nation’s semiconductor industry is expected to grow 16.7% YoY outpacing the global industry’s 3.3% growth, industry association SEMI said yesterday. +VE
TSMC (TSM.US) achieved a major breakthrough in its 2nm process R&D, reported Taiwanese media. The firm will adopt a new multi-bridge channel field-effect transistor (MBCFET) architecture for its 2nm, with R&D progress ahead of the sector, according to the supply chain. The industry predicts a 90% yield rate of risk trial production for 2H23, conducive to TSMC's securing of big orders from manufactures like Apple (AAPL.US) and NVIDIA. The Taiwanese semiconductor maker will likely overtake its rival Samsung. +VE
Qualcomm (QCOM.US)'s management paid visits at wafer foundry factories in Taiwan, including those of TSMC (TSM.US), UMC and VIS, Taiwan media reported. Qualcomm hoped to lock on Taiwan's productivity in advance in case SMIC (00981.HK)'s delivery is disrupted by the US sanction. Qualcomm is reportedly one of the three biggest customers of SMIC, contributing 13% of the overall wafer revenue. +VE for Tech names.
Swancor Renewable Energy Co yesterday announced plans for a 4.4 gigawatt (GW) offshore wind project off Miaoli County as part of its commitment toward Taiwan’s energy transformation, the company said in a statement. The “Formosa 4” project includes three deep-water wind farms 18km to 20km off the coast, Swancor Renewable CEO Lucas Lin said, adding that planning for the project began last year. +VE
CHINA Expect market to open higher following the US but upside capped by tensions over international relations as Trump says China responsible for covid and Beijing accuses Trump of lies and abusing UN platform.
No data due
President Xi Jinping told the UN General Assembly on Tuesday that Beijing has “no intention to fight either a Cold War or a hot one with any country,” as tensions grow between China and the United States. “We will continue to narrow differences and resolve disputes with others through dialogue and negotiation. We will not seek to develop only ourselves or engage in zero sum game,”
China also said it will cut its carbon dioxide emissions to nearly zero by 2060, in a surprise move announced at the virtual UN General Assembly in New York. -VE for Coal and have industry in long run as it will increase costs.
China and India have agreed to stop sending more troops to a Himalayan flashpoint along their contested border and to avoid any actions that might complicate the tense situation there, the two countries said on Tuesday.
China sentenced a former property executive who once called President Xi Jinping "a clown" to 18 years in prison for graft, a court said on Tuesday, in what some critics called an especially harsh sentence amid an ongoing clampdown on dissent.
Beijing is unlikely to approve an "unfair" deal that Oracle and Walmart say they have struck with ByteDance over the future of video-streaming app TikTok, the state-backed Global Times said in a commentary.
U.S. pork exports to China have surged beyond pre-trade war levels, led by higher shipments from Brazil's JBS SA and China's WH Group 0288.HK, owner of Smithfield Foods, according to Panjiva, the research unit of S&P Global Market Intelligence.
US dollar bond defaults by Chinese firms have jumped threefold to US$12 billion so far this year from US$4 billion for all of 2019 -VE and suggests that the recovery in China is not as smooth as some of the official data suggests.
Democrat Joe Biden would seek to reset the terms of economic and technology ties with China while combating unfair practices and aggressively enforcing U.S. trade laws, a senior foreign policy adviser to the former U.S. vice president said on Tuesday.
China is pushing growing numbers of Tibetan rural laborers off the land and into recently built military-style training centers where they are turned into factory workers, mirroring a program in the western Xinjiang region that rights groups have branded coercive labor.
HONG KONG ADR’s -38pts to open at 23,678 and likely to see some early margin selling but T/O was light Tuesday as investors waited on the sidelines so expect a spike in early trading. Shoe makers and Sports Apparel +VE on strong Nike numbers.
No data due
After Market Tuesday Current Account Q2 HK$60.53b vs -8.86b Q1. (F/cast was -7b)
Equivalent to 9.5% of GDP. Goods deficit narrowed sharply YoY and the secondary income shortfall declined. The primary income surplus fell and the services surplus fell.
LAW The police said they will only recognize journalists registered with the government’s Information Services Department, or are a member of an internationally-known media group. The Hong Kong Journalists Association, alongside unions of various local mainstream media including Ming Pao, Next Media and RTHK, last night released a joint statement slamming the change. “This is a de facto licensing mechanism, which will severely affect freedom of reporting and freedom of the press in Hong Kong, and gradually turn Hong Kong into an authoritarian regime.” -VE for local sentiment.
IPO JOY SPREADER (06988.HK), debut, opened @ $3.6 in grey market, up 25% against the listing price $2.88, and last stood at $2.91, up 1% against the listing price, on volume of 5.69 million shares, PhillipMart data showed.
PICK Techtronics (669 HK) Expect the stock to retest HK$100 after UK Kingfisher earnings beat and US rebound with better than expected US existing home sales. I still think the outlook is +VE and would accumulate below HK$100.00
SHORT SALES Tuesday 18.5% vs 19.6% Monday
Top Shorts China Res Land (1109) 43%, CCB (939) 33%, CITIC (267) 33%, Petrochina (857) 33%, Ping an (2318) 33%, BoC HK(2388) 33%, CLP (2) 32%, Power Assets (6) 31%, Hang Seng Bank (11) 29%, ICBC (1398) 29%, Henderson Land (12) 29%, Country Garden (2007) 28%, Swire Pac A (19) 27%, Bank of China (3988) 27%, Sinopec (386) 26%, HKEX (388) 26%.
CHINA OVERSEAS (00688.HK) repurchased 500,000 shares of the company through the Stock Exchange Tuesday (22 September) at $19.9-19.94 per share, involving $9.962 million. The repurchase represented the first buy-back of the company within the year.
WH Group (288 HK) +VE as US Exports to China rise. Reuters reports exports linked to WH Group rose 90.1%, Panjiva said Tuesday. Meanwhile, Springdale, Arkansas-based Tyson Foods Inc TSN.N shipped 7.3% less pork to China compared to the same period in 2017.
PROPERTY CK Asset (1113) to offer 285 units at Sea to Sky in Lohas Park for sale on Saturday. Chevalier International (0025) will release the first price list of Sablier on Wednesday to offer at least 50 units. In Tin Shui Wai, Sun Hung Kai Properties (0016) has released 48 units in the sixth price list of Wetland Seasons Park Phase 3 at an average HK$13,942 per sq ft after discounts, about 7.5 percent higher than the first price list. SHKP will offer 192 units at the project for sale on Saturday.
CHINA COMM CONS (01800.HK) Moody's has downgraded to Baa1 from A3, and the outlook revised to "Stable" from "Negative”. The ratings agency expected CHINA COMM CONS's leverage to remain elevated over the one to two years ahead, mainly driven by PPP investments.
TENCENT (00700.HK) said the assembly of Tencent Maps and car-hailing is indeed an in-depth cooperation with DiDi, where the latter will offer mobility service and safety scheduling, while Tencent Maps will provide its platform, reported Sina Tech. Already piloting in Xi'an, Dongguan, Zhuhai, Shenzhen and Shaoxing, the taxi-hailing service will be launched in other cities sequentially.
ND PAPER (02689.HK) announced annual results ended 30 June 2020. Revenue declined 6% yearly to RMB51.341 billion. Net profit amounted to RMB4.168 billion, up 7.5% yearly. EPS. equaled RMB0.89. Final DPS was 22 fen, as compared with 18 fen for the period last year.
Wellcome announced a Give-Back program of over $120 million to support Hong Kong’s community, including 1 million cash vouchers and 1 million meal vouchers to be distributed to those most in need, worth over $80 million in total. On top of $5 million in donations to help vulnerable groups, the supermarket chain will also be freezing prices on more than 300 everyday essential items for at least 6 months, from the end of September, to protect its customers from price fluctuations.
ParkNShop stated that it has lodged an application for the second tranche of Employment Support Scheme and that its proposal to spare a helping hand to the underprivileged has been accepted by the Government. $200 in cash coupons will be distributed in October to each low-income household member, elderly and disabled person. The coupon scheme, in a size of over $40 million in total, is set to benefit over 200,000 coronavirus-hit individuals and families, said the supermarket chain, who extended its appreciation to 20 welfare organizations for their assistance.