Sept 25 ASIAN MACRO INITIAL THOUGHTS Asian futures flat, US Futures higher
Covid-19 Globally over 32.1m cases, 980k deaths
US Futures opened +70pts and have risen to +100pts , S&P +0.3% and NDX +0.4%
Asian Futures indicate a flat to slight +VE open but expect caution ahead of the weekend and with China’s Golden week starting next weekend S Korea’s Chuseok also next week retail investors may look to de risk.
Mitch McConnell, the Republican leader in the Senate who rarely censures Mr Trump, on Thursday tweeted that there would be an “orderly transition just as there has been every four years since 1792”. Countering Trump’s refusal to commit to a peaceful transition should he lose the election.
DOW +0.2%, NDX +0.37%, S&P +0.3%, Russel 2K +0.02% Markets opened lower but trended higher though the morning on mixed data with big tech stocks seeing a rebound. But then sold down from the highs in the afternoon.
Employment data missed and still no sign of an agreement on the next stimulus package, although talk that the Democrats are preparing a US$2.4tn package well above what the Republican’s have said they are willing to agree. As the market view the Fed having limited options from here. New home sales down but beat forecasts. GS cut its Q4 GDP forecast. Also of concern was Trump’s comment that he would not commit to a peaceful transfer of power should he lose the election. Obviously worried about staying in another government facility after the Whitehouse!
But there are still a lot of funds that misses the first rally and now have cash looking for an entry point. USD strengthened as investors worry about the rising covid cases in Europe.
Facebook +0.2%, Amazon +0.7%, Apple +1%, Netflix +0.5%, Alphabet +1% and Microsoft +1.3%.
Nvidia +1.9%, AMD +1.5%, Micron -0.8% and Skyworks +1%.
Re-opening stocks Boeing -3.3%, Caterpillar +0.5%, Simon Property unch, Gap -1.4%, United Airlines -1%, Carnival -2.8%
Lock down names Campbell Soup +3.6%, General Mills +1.7% and JM Smucker +2.4%
Initial Claims 870k vs 866k prior revised (F/cast 840k)
4 week ave initial claims 878.25k vs 913.5k prior revised
Continuing Claims 12.58m vs 12.747m (F/cast 12.1m)
New Home Sales Aug +4.8% vs 14.7% Jul revised (F/cast was -2.3%)
EIA Gas Report 66 Bcf vs 89 Bcf prior (Consensus was 78 Bcf)
Kansas Fed Manufacturing Index Sept 18 vs 23 Aug (F/cast was 7)
USD was stronger vs Yen & Euro. Bitcoin +4.8% @ 10,706.04, VIX -0.2% @ 28.51, US T10 0.665% fell after the disappointing jobless claims number.
OIL Brent +0.2%, WTI +1% falling US inventories offset by a stronger USD and still concerns about global demand.
Gold -0.1%, Silver -2.2%, Copper -0.9%
AHEAD Durable Goods Data, Baker Hughes Total Rig Count.
DAX -0.29%, CAC -0.83%, FTSE -1.3% opened lower as rising covid cases overhang the market but are trending higher through the morning but then sold down into the close but all saw a small bounce at the close which suggests a few bargain hunters still out there. Rising covid cases in the UK and two German ministers test positive. Retail weak on the prospect of more lockdowns. UK announces new package to replace the furlough scheme.
Norway’s Nel -10.1% as Nikola’s tumble stateside continues to drag down green energy stocks. Nel signed contracts with Nikola in June to supply electrolysers for hydrogen infrastructure.
Banco BPM +8.8% in afternoon trade after its CEO said Italy’s third-largest bank is on alert for further consolidation. It is said it could be takeover targets for Crédit Agricole, France’s second-biggest lender. Creval +11.6 could also be a target
Umicore fell on the prospect of increased competition in the production of cathodes used in electric vehicle batteries after Tesla said it would expand its involvement in the battery supply chain.
Cineworld -14.8% after warning that a worsening of the coronavirus crisis could cast doubt on its ability to survive.
EUROZONE Economic Bulletin, ECB General Council Meeting, EU Council Special Meeting
Ifo Business Climate Sept 93.4 vs 92.5 Aug Revised (F/cast was 93)
Ifo Current Conditions Sept 89.2 vs 87.9 Aug (F/cast was 89)
Ifo Expectations Sept 97.7 vs 97.2 Aug Revised (F/cast was 98)
Business Confidence Sept 96 vs 92 Aug revised (F/cast was 93)
Business Climate Indicator Sept 92.4 vs 90.4 Aug revised (F/cast was 90)
CBI Distributive Trades Sept 11 vs -6 Aug (F/cast was -12)
EUROZONE Loans to households and Companies and M3 Money Supply European Council Special Meeting
GERMANY No data due
FRANCE Unemployment Benefit Claims and Jobseekers
UK Consumer Confidence, Public Sector Net Borrowing, Car Production
JAPAN Expect Nikkei to open flat/ slight +VE. The Nikkei futures in Chicago 23,110 (Osaka at 23,000) vs Nikkei 225′s last close at 23,087.82. Yen slightly weaker currently 105.42
No data due
Tokyo reports 195 new covid cases national tally 472, as expects warn of a possible resurgence -VE for sentiment.
The government kept its economic assessment for September, released Thursday, unchanged for the third straight month, saying activity was continuing to show signs of “picking up” from the slump triggered by the novel coronavirus.
Mitsubishi UFJ Lease said on Thursday it would buy smaller rival Hitachi Capital Corp in a deal calculated at 294 billion yen ($2.8 billion). +VE
Hitachi Transport System on Thursday said it and delivery firm SG Holdings had decided to scrap a four-year-old capital tie-up, citing the need for greater flexibility in the coronavirus era. The two companies are no longer considering a merger, Hitachi Transport said, adding it would be returning its 20% stake in SG Holdings for 87.5 billion yen ($830 million) +VE
Toshiba Corp's top investor has called for an investigation of a botched meeting in July at which it says several shareholders were deprived of their vote, a letter to the Japanese conglomerate's board seen by Reuters shows. What began as a problem at Toshiba has widened into a larger scandal for corporate Japan, with the bank hired to count the votes, Sumitomo Mitsui Trust Bank, and Mizuho Trust, revealing details of counting errors at more than 1,300 firms. -VE for sentiment.
Department store sales Aug -22% YoY for the 11th straight month of decline, hit by the coronavirus pandemic and hot weather that prompted people to refrain from going out, an industry body said Thursday. The decline was steeper than the July -20.3% according to data by the Japan Department Stores Association, underscoring the continued challenges facing the retail industry. -VE
Sri Lanka's president has ordered the termination of a $1.5-billion Japanese-funded light rail project, saying it is not a "cost-effective solution" for the congested capital Colombo, officials said Thursday. -VE
SOUTH KOREA Expect markets to open flat with a disappointing Consumer Confidence number and general weak sentiment going into the weekend and with Chuseok starting next Wednesday. But having fallen to a one month low do expect some bargain hunting in large cap names as trading volumes Thursday were moderate.
Data out Consumer Confidence Sept 79.4 vs 88.2 Aug (F/cast was 85)
Govt reported 125 new COVID-19 cases (109 locally transmitted and 16 imported) for the second consecutive day Thursday, due to sporadic clusters of infections across the country, keeping health authorities on edge ahead of the Chuseok holiday.
Netmarble said Thursday it has launched BTS Universe Story in 173 countries, a storytelling game featuring 3D-scanned avatars of RM, Jin, Suga, J-Hope, Jimin, V, and Jungkook. According to the South Korean game maker, in BTS Universe Story, users can create and participate in interactive, choose-your-own-adventure-style stories where their choices throughout the game lead to different outcomes.
Hyundai Motor Group said Thursday it has scouted Tomaso Poggio and Daniela Rus, experts on artificial intelligence, to work together on various projects of AI technology development. +VE
Posco, a South Korean steelmaker, said Thursday it received dividends of about 50 billion won ($42.6 million) from Roy Hill Holdings, which operates an iron ore mine in Australia. According to Posco, the Roy Hill Holdings board of directors agreed to start profit-sharing for the first time, seeing the improved financial solvency and profit.
Prosecutors on Thursday raided KEB Hana Bank‘s headquarters in Seoul in an apparent move to add fresh fuel to the investigation of Optimus Asset Management’s private equity fund misselling. KEB Hana Bank was one of trustee banks of the disputed funds. -VE
Asiana Airlines will offer a special two-hour flight to nowhere next month, becoming the first among local airliners to provide the service to ordinary customers. Slight +VE
TAIWAN Expect market to open flat but with potential for bargain hunting after leading companies in all sectors saw weakness yesterday.
No data due but after market Thursday;
M2 Money Supply Aug 6.69% YoY vs 5.89% Jul (F/cast was 5.8%).
Said to be due to the effects of rising time deposits, as well as further growth in bank loans and investments.
Hon Hai Precision Industry Co and Adlink Technology Inc have formed a robotic venture that aims to use “swarm technology” to create robots that can communicate with one another on the factory floor to optimize production efficiency. +VE
Chunghwa Precision Test Technology, is cautiously optimistic about its business outlook for next year, bolstered by robust demand for vertical probe cards (VPC) and testing demand for high-performance-computing (HPC) chips, a company official said yesterday. Revenue from the high-margin VPC business is expected to grow by a double-digit percentage next year compared with this year, which would boost VPC’s contribution to more than 25 percent of overall revenue, CHPT president Scott Huang told reporters on the sidelines of a media briefing in Taipei. +VE
Solar Applied Materials Technology, a part of TSMC's “green supply chain,” has pledged to invest NT$1 billion (US$34.1 million) to build a new plant at the Tainan Technology Industrial Park, the Ministry of Economic Affairs said yesterday. SOLAR has been collaborating with TSMC to extract precious metals from waste and reuse them as “sputtering target” material in high-end semiconductor manufacturing, +VE
CHINA Expect market to open flat
No data due but on Sunday China is due to report Industrial Profits (YTD) F/cast is -4.7% vs Jul -8.1%
FTSE Russell announced Thursday that Chinese government bonds are scheduled to be included in the FTSE World Government Bond Index starting October 2021.
China’s Sinovac Biotech expects to begin analysing final-stage human trial data on its coronavirus vaccine candidate this year to decide whether it is effective enough to seek regulatory approval before trial completion, its chairman said on Thursday.
WeWork on Thursday said it will sell control of its China division to one of its investors - private equity firm Trustbridge Partners - as it steps back from a competitive market where it has suffered low-occupancy rates.
China has barred entry to two “anti-China” Australian scholars, the Global Times newspaper said on Thursday, citing unidentified sources, amid heightened tension between Beijing and Canberra. -VE for sentiment
China accuses Chinalco rare earth unit of breaking pollution regulations. Chinalco “sincerely accepted” all requests from the inspection team and will “resolutely rectify” the violations, it said in a statement. Slight -VE
Tianjin-based Bohai Securities defaulted after buying 375 million yuan (US$55 million) of special purpose bonds issued by the Henan government via auction. In response Henan province blacklisted the brokerage firm which is controlled by the municipality of Tianjin. Highlights the rapidly worsening financial situation in Tianjin, one of the four mainland cities that are under direct supervision of the central government. But says that the firm tried to pay again later but did not succeed. -VE for sentiment
HONG KONG ADR’s +21pts to open at 23,332 expect an initial short squeeze and then some margin selling before trading sideways lower ahead of the weekend.
No data due
IPO MING YUAN CLOUD (00909.HK), whose shares debut today, closed at $25.15 in gray market, up $8.65 or +52.4% against the listing price of $16.5, on volume of 38.3 million shares
Short Selling Thursday 20.9% vs 19.6% Wednesday
Top Shorts Hang Seng Bank (11) 49%, BoC HK(2388) 44%, Bank of China (3988) 40%, CCB (939) 35%, Country Garden (2007) 35%, CITIC (267) 34%, Petrochina (857) 33%, MTRC (66) 32%, Sands China (1928) 32%, China Res Land (1109) 30%, Wharf REIC (1997) 28%, Techtronics (669) 28%, Hang Lung PPT (101) 27%, Power Assets (6) 26%, Ping An (2318) 26%, AIA (1299) 26%, HK EX (388) 25%.
Li Ka-shing and Victor Li, through Li Ka Shing Foundation Limited, acquired a total of 1.4 million shares in CK ASSET (01113.HK) at the average price of HK$40.2188, HK$39.3403, HK$38.5437 and HK$38.5412 per share on 18 September, 21 September, 22 September and 23 September 2020 respectively. As a result, the deemed interests of Li Ka-shing and Victor Li in CK ASSET increased from 35.56% to 35.59%, and from 35.62% to 35.66%.
New Security Law Joshua Wong arrested again for allegedly participating in an unauthorised assembly during anti-government protests in the city last year. -VE for sentient
China Evergrande (3333), was -5.6% Thursday and which has 835.5 billion yuan (HK$948.17 billion) in debts, says it will take legal action against those who made up a fake company document claiming it is asking support from a Chinese official to approve its long-delayed A-share backdoor listing plan, because of surging default risk.
The Lands Department announced that in the tender for the site in Ho Chung, Sai Kung, New Territories, was awarded to Wise Castle Corporation Limited (parent company: Chime Corporation Limited), at a premium of $532 million, the second highest tender amount submitted by the unsuccessful tenderer was $468.8 million, 11.86% below the bid winning price.
Pinduoduo (PDD.US) At the Chinese farmers' harvest festival event announced to launch a new training program to nurture 100,000 new farmers, who have growing importance in the upward movement of farm products, according to news.cnstock.com. As of end-June 2020, Pinduoduo had prompted over 100,000 new farmers nationwide to return to their roots and start businesses.
Spot USD/CNY closed at 6.8240, down 320 bps to a new low since 11 September. As at 16:46, USD/CNY shed 179 bps in the night session. USD/CNH stood at 6.8339, down 92 bps.
Centa Valuation Index (Major Banks) (CVI) last printed at 43.23 this week, up 4.69 pts weekly. The index amassed 9.64 pts of increment for two straight weeks, and shot up above the lower end of critical territory of 40. Centaline Property, said property transactions kept increasing with active revival of second-hand market. Banks' mortgage valuation became more ambitious in Wong's view. As the Government took gradual steps to relax the anti-epidemic measures, housing market activity normalized, Wong observed, who also predicted the CVI to ascend continuously. Looking ahead, the index may even test 50, which hinted at market uptick.