Sept 30 Asian Macro Initial Thoughts S. Korea Close Expect cautious trading

02 Oct

Sept 30 Asian Macro Initial Thoughts  S. Korea Close Expect cautious trading

Covid-19 Globally over 33.5m cases, 1m deaths
US Futures opened Dow -40pts but eased to just +13pts , S&P and NDX were marginally +VE ahead of the first Presidential Debate which starts at 9pm ET and is available on all major media channels
S Korea closed today. Tomorrow China will be closed as it starts Golden Week. HK Closed for Thursday and Friday and Taiwan closed for Thursday only.
End of month and quarter so expect some window dressing but volumes to remain light.

DOW -0.48%, NDX -0.29%, S&P -0.48%, Russel 2K -0.37% Opened flat but trended lower initially with Airlines weak as New York reported positive rate of covid tests is back above 3% for the first time in months. Data was generally positive with Wholesales Inventories, Consumer Confidence and House Prices all beating forecasts. Dow and S&P worked better from around mid day but failed to get into the green. NDX traded sideway around flat all day.
House Democrats unveiled a new $2.2 trillion bill that includes a second round of $1,200 stimulus checks. Which in some ways will be more generous than the cheques that were sent out in the spring because more people would be eligible. But investors wait to see the Republican response.
Biden released his tax records ahead of the first presidential debate and urged Trump to do so too. He paid nearly US$300,000 in 2019 putting more pressure on Trump.
JetBlue -4.4%, American Airlines -4% United -4%, Delta -2.3% Southwest -1.7%
Facebook +1.9%, Apple -0.8%, Amazon -0.9%, Netflix +0.6%, Alphabet +0.5% and Microsoft -1%.
Nvidia +1.5%, AMD +2.5%, Micron +2% and Skyworks +0.3%.
Re-opening stocks Boeing -1.5%, Caterpillar -0.1%, Simon Property -2.7%, Gap -2.9%, Carnival -1.5%
Lock down names Campbell Soup +0.1%, General Mills -0.1% and JM Smucker -0.2%
GM -2.4% extends talks on $2 billion deal with Nikola -7.4% but +4% in after hours after fraud, sexual assault allegations surface against Trevor Milton and a damming report from short seller Hindenburg Research
Regeneron +0.3% (was +1.8% in after hours) said its REGN-COV2 drug reduced viral levels and improved symptoms in non-hospitalized coronavirus patients. “The greatest treatment benefit was in patients who had not mounted their own effective immune response, suggesting that REGN-COV2 could provide a therapeutic substitute for the naturally-occurring immune response,” +VE
Goods Trade Balance Adv Aug $-82.94b vs -80.11b Jul (F/cast was -81b)
Wholesale Inventories Adv Aug +0.5% vs -0.1% Jul revised (F/cast was -0.2%)
Redbook 26 Sept -0.3% MoM vs -0.9% Prior (26 Sept +2.2% YoY vs +1.5% prior)
Case Schiller Home Prices Jul +3.9% YoY vs +3.5% Jun (F/cast was +3.6%)
Case Schiller Home Prices Jul +0.6% MoM vs +0.3% Jun revised (F/cast was +0.3%)
Consumer Confidence Sept 101.8 vs 86.3 Aug revised (F/cast was 88.5)
API Crude Oil Stock Change -0.831m vs 0.691m Prior (Consensus was +1.4m)
First presidential debate; as Asian comes opens.
USD was flat vs Yen & Euro. Bitcoin +0.1% @ 10,770.54, VIX +0.3% @ 26.27, US T10 0.651%
OIL Brent -3.8% (futures expire Thursday), WTI -3.2% with demand concerns as covid cases rise.
Gold +0.5%, Silver +1.3%, Copper +0.3% on hopes of a stimulus package.
AHEAD MBA Mortgage Applications and 30yr Mortgage Rate, ADP Employment Change, GDP Growth Rate, GDP Price Index, Corporate Profits, Core PCE Prices, PCE Prices, Chicago PMI, Pending Home Sales, EIA Oil Report

DAX -0.35%, CAC -0.23%, FTSE -0.51% Markets opened lower saw some initial selling before working slowly higher through the day but unable to break above Monday’s closing level. Brexit deal appears unlikely at this stage as negotiations resumed. Also some caution ahead of the first US Presidential Debate.
Ferguson +6.4% on restoring its dividend as cost cutting helped to boost FY profits.
Consumer Confidence Final Sept 12.5 vs 16.9 Aug (F/cast was 15)
Sentiment data
Economic Sept 91.1 vs 87.5 Aug revised (F/cast wa 88.5)
Industrial Sept -11.1 vs -12.8 Aug revised (F/cast was -10.6)
Services Sept -11.1 vs -17.2 Aug (F/cast was -16.4)
Consumer Inflation Expectations Sept 12.5 vs 16.9 Aug (F/cast was 15)
Inflation Rate Prelim Sept -0.2% YoY vs 0% Aug (F/cast was -0.2%)
Inflation Rate Prelim Sept -0.2% MoM vs -0.1% Aug (F/cast was -0.2%)
Consumer Confidence Sept 95 vs 95 Aug Revised (F/cast was 92)
BoE Consumer Credit Aug GBP 0.3b vs 1.1b Jul Revised (F/cast was 1.5b)
Mortgage Approvals Aug 84.7k vs 66.3k Jul (F/cast was 69k)
Mortgage Lending Aug GBP 3.1b vs 2.9b Jul Revised (F/cast was 3.0bn)
Net Lending to Individuals Aug GBP 3.4b MoM vs 3.9b Jul (F/cast was 3.2b)
EUROZONE Core Inflation Rate, Inflation Rate
GERMANY Unemployment Rate, Unemployment Change, Retail Sales and Import Prices
FRANCE Inflation Rate, Household Consumption, PPI
UK BoE FPC Meeting, GDP Growth Rate, Current Account, Business Investment, Nationwide Housing Prices

JAPAN Expect Nikkei to open flat with light initial trading. Pre market data slight +VE but many will be cautious ahead of the US President Debate.
Yen currently 105.65
Data due
pre market Retail Sales (F/cast -2%), Industrial Production (F/cast +1.5%),
Later Housing Starts and Construction Orders
President Putin and PM Suga on Tuesday discussed possible medical cooperation, including on the development of COVID-19 vaccines, the Kremlin said in a statement.
Nippon Telegraph and Telephone Corp. (NTT) said Tuesday it will buy all shares of its subsidiary and mobile phone unit NTT Docomo for ¥4.3 trillion.
Mitsubishi UFJ Financial Group 8306.T, Sumitomo Mitsui Financial Group 8316.T and Mizuho Financial Group will be among lenders to extend loans to Nippon Telegraph and Telephone Corp (NTT) 9432.T for its potential acquisition of NTT Docomo Inc 9437.T, two sources said. MUFG Bank will extend the biggest amount, the sources, who are familiar with the matter, told Reuters, declining to be identified because the deal is not official yet.
Toshiba will forsake its loss-making System LSI chip business in hopes of raising the group's profit margins. The Japanese conglomerate will provide the 770 affected employees with relocation or early retirement plans, likely incurring JPY11.8 billion (around US$112 million) of expenses.
Land prices fall for first time in three years amid pandemic by a average of 0.6%. The average price of commercial land fell for the first time in five years, slipping 0.3 percent, while that of residential land dropped 0.7 percent. Slight -VE

SOUTH KOREA Markets closed from Chuseok Holiday market will re-open on Monday 5 October
No data due

Govt appealed on Tuesday for people to stick to social-distancing even as they prepared to celebrate a major holiday, with the novel coronavirus posing a once-in-a-century threat even though the number of new cases has been edging lower.
LG Chem Ltd, which supplies batteries to Tesla Inc, climbed on Tuesday, after media said the U.S. electric vehicle maker was looking to acquire a stake in a battery unit the South Korean company wants to dispose of. +VE
LG Electronics Inc. is likely to report its largest third-quarter earnings in 11 years on the back of increased demand of its premium home appliance and TV products amid the pandemic-driven stay-at-home trend, analysts said Tuesday. +VE
Samsung Electronics Co. was the world's top smartphone vendor in August, a report showed Tuesday, as it widens the gap with China's Huawei Technologies Co. amid the pandemic. +VE
Samsung Electronics Co. said Tuesday it has joined forces with Microsoft Corp. to provide cloud-based private 5G network solutions as the South Korean tech giant tries to expand its presence in the next-generation communications sector. +VE
More than 30% of major Korean companies sliced greenhouse gas emissions more than 10 percent last year, according to the data from CEO Score Tuesday.
Hyundai Rotem said Tuesday it has signed a contract worth 407.7 billion won ($348.4 million) with the Defense Acquisition Program Administration to supply wheeled armored vehicles by 2023. +VE
In the latest development of an ongoing patent lawsuit SK Innovation filed against LG Chem a year ago in September 2019, the US International Trade Commission on Tuesday dismissed SK Innovation’s request for a forensic inspection of LG Chem for the alleged unauthorized export of SK Innovation data.

TAIWAN Expect market to open flat Tech +VE but with market closed tomorrow and end of month and quarter expect some window dressing.
No data due
Market will be closed Thursday but re-open Friday

Taiwan's defence chief said on Tuesday that there are no signs that China is preparing for all-out war with Taiwan, such as massing troops along its eastern coast, after repeated Chinese drills near the island that China claims as its own.
Taiwan is investigating an incident two days ago in which a Taiwanese fishing vessel was allegedly rammed by a Japanese coastguard ship in contested waters, Premier Su Tseng-chang said Tuesday.
Manufacturing no longer in state of recession says TIER. The climate gauge for the manufacturing industry last month turned from “blue” to “yellow-blue,” aided by the peak sales season for technology products and inventory demand from China’s Huawei the Taiwan Institute of Economic Research said Tuesday. The manufacturing business index compiled by the Taipei-based think tank reached 11, up 1.03 points from July. It emerged from five straight months of being in a recessionary state, or “blue,” but is still registering a slowdown.
Winway Technology which provides semiconductor testing interfaces, yesterday signed an agreement to build a NT$3.2 billion (US$109.77 million) facility at Kaohsiung’s Nantze Export Processing Zone. The company plans to build an eight-story smart manufacturing center, which is expected to be completed in 2022, on the campus, the Ministry of Economic Affairs said in a statement.
Supply of flat panels used in TVs would remain constrained into next year as manufactures are allocating new capacity to produce panels used in monitors, laptops or ultra-large TVs, market researcher TrendForce Corp said yesterday. The prices of TV panels have started to increase since July and have not shown signs of waning, boosting shares of AU Optronics Corp (+19.7%) and Innolux Corp (18%).
Commercial property transactions totaled NT$67.64 billion (US$2.32 billion) in the July-to-September quarter, more than doubling from the previous quarter and a year earlier, driven by self-occupancy and investment demand from local technology and insurance companies, Cushman & Wakefield Taiwan said yesterday.

CHINA Expect market to open flat. I would expect Team China tone active to try and see a positive close to the month and quitter. Markets will be closed tomorrow for a week so expect de-risking.
Data due 
at 9am Manufacturing PMI (F/cast 51.4) and Non Manufacturing PMI F/cast 54.9) , the at 9:45am Caixin Manufacturing PMI (F/cast 53.4)
Markets will be closed Thursday for Golden Week and reopen 9 October

In August 2020, China delivered international good and service trade revenue of RMB1.69 trillion and spending of RMB1.38 trillion, representing a trade surplus of RMB312.1 billion, according to the findings from State Administration of Foreign Exchange.
China's internet companies above designated scale posted business revenue of RMB796.2 billion for 8M20, +13.6% yearly, with the growth rate slipping 1.3 ppts from 7M20 and 7.3 ppts from 8M19, according to data from Ministry of Industry and Information Technology (MIIT). The industry achieved operating profits of RMB73.6 billion, up 23.7% yearly, with the growth rate rising 17.8 ppts from 7M20.
During the first eight months of 2020, Chinese software industry generated nearly RMB5 trillion in revenue, up 10% yearly, according to data from Ministry of Industry and Information Technology (MIIT).
Huawei -VE as Keith Krach, the undersecretary of state for economic affairs, stepped up warnings as Germany and Italy consider their next-generation mobile networks, in his first tour of European capitals since the COVID-19 pandemic hindered travel in March. Krach said that Finland's Nokia NOKIA.HE and Sweden's Ericsson ERICb.ST were the only companies that European governments should choose.
Portuguese leaders have criticised U.S. ambassador George Glass after he said they must choose between the United States and China or risk the consequences. President Marcelo Rebelo de Sousa told reporters on Monday: “In Portugal it is the representatives chosen by the Portuguese and they alone who decide on their destiny, respecting the constitution and the rights it gives them.”
Thailand will receive its first foreign vacationers when a flight from China arrives next week, marking the gradual restart of a vital tourism sector battered by coronavirus travel curbs, a senior official said on Tuesday.
Beijing blocking Wikipedia from United Nations intellectual property agency over Taiwan is resistance against ‘Western values’, analysts say. The move counters Washington’s successful campaign earlier this year to derail China’s candidate as head of the World Intellectual Property Organization. The UN agency has an outsize role in global patents and trademarks, which is attractive to both China and the US as they battle over technology.
Hong Kong officials have been told to refrain from meeting American diplomats or engaging with them over the phone, after Beijing retaliated against restrictions imposed on the activities of Chinese envoys in the United States. -VE

HONG KONG ADR’s +66pts to open at 23,341 but expect a cautious open with many watching the US Presidential debate. End of month and quarter window dressing likely to be minimal ahead of markets being closed on Thursday and Friday.
Data due 
Retail Sales Aug after market (July was -23.9% YoY F/cast is -11%)
Markets will be closed Thursday and Friday and re-open Monday 5 October

Techtronics (669 HK) opened above HK$100 and tested the support in early trades and then rallied to HK$101.50 as shorts were squeezed. Tested there a couple of times but became resistance and then trended lower back to support level at HK$100. +VE report out on how people are spending more on their homes during covid. Accumulate if it drops below HK$100.

SHORT SALES Tuesday 21.4% vs 19.1% Monday 
Top Shorts NWD (17) 40%, Country Garden (2007) 39%, Hang Seng Bank (11) 39%, Bank of China (3988) 37%, CLP (2) 36%, HK & China Gas (3) 36%, Ping An (2318) 34%, HK EX (388) 33%, CCB (939) 32%, Sands China (1928) 32%, BoC HK(2388) 32%, China Res Land (1109) 30%, Swire Pac A (19) 29%, SHKP (16) 28%, Henderson Land (12) 27%, HSBC (5) 27%, Wharf (1997) 27%, Sunny Optical (2382) 25%, Petrochina (857) 25%, Tencent (700) 25%.

COUNTRY GARDEN (02007.HK) Co-Chairman Yang Huiyan added 10.85 million shares on 24 September, involving around $103 million, according to HKEX's disclosure of interests. Her stake in the firm increased from 57.38% to 57.43%.

EVERGRANDE (03333.HK) announced that it has recently engaged in negotiations with strategic investors holding equity interests in the aggregate amount of RMB130 bn in Hengda Real Estate.
Supplemental agreements were entered into with investors holding equity interests in the aggregate amount of RMB86.3 billion. Under the supplemental agreements, the investors agreed not to require the repurchase of their equity interests in Hengda Real Estate and will continue to hold their interests in Hengda Real Estate, with their percentage of equity interests remaining unchanged. Would suggest that Evergrande is in some financial stress that it needed to enter into such agreements.
Hong Kong Monetary Authority published the Half-yearly Report on Monetary and Financial Stability, saying the Hong Kong foreign exchange and money markets continued to operate in a smooth and orderly manner. With the repeated triggering of the strong-side Convertibility Undertaking and growth in total deposits in the first seven months of 2020, no significant outflows from the Hong Kong dollar or the Hong Kong banking system were observed during the review period, according to HKMA.
The Hong Kong Housing Authority (HA) announced that the four-week application period for the Sale of Home Ownership Scheme Flats 2020 (HOS 2020) and the White Form Secondary Market Scheme 2020 (WSM 2020) will close next Wednesday (October 7) at 7pm. To avoid difficulties in logging in or delays in completing the applications, applicants are urged to submit their online applications as early as possible to ensure successful submission before the deadline, said the HA.
Tenders for MTR CORPORATION (00066.HK)'s Lohas Park Phase 13 starts today. The project's land premium amounted to $5.568 billion, i.e. roughly $3,600 per sq.ft., the highest among all Lohas Park projects, according to market sources.
Local developers are offering more homes next month, with CK Asset (1113) planning to launch luxury project El Futuro in Kau To Shan, offering 266 units sized between 470 square feet and 1,220 sq ft.
Also Top Spring International (3688) and Chun Wo Development revealed the first price list of 128 Waterloo in Ho Man Tin, offering 50 units at an average price of HK$27,676 per sq ft after discount. The cheapest one, sized 342 sq ft, is priced at HK$7.83 million, or HK$22,889 per sq ft.
HKTV (01137.HK)'s HKTVmall announced the launch of a simplified version of its mobile app, along with O2O counters, advanced opening hours and instructors to encourage the elderly to go online shopping and make registration. New app users are entitled to $150 in shopping coupons.
The "PayPal Hong Kong Merchant Survey: From New Normal To New Growth" survey was conducted in August 2020. 61% of the surveyed Hong Kong firms expected their businesses to return to pre-epidemic levels by end-2020, according to PayPal's latest report. 86% said they would seize the opportunities to enhance online shopping experience and bolster competitiveness.
HKEX (00388.HK): Calvin Tai to Act as Interim Chief Executive from 1 Jan 2021 They announced that LI Xiaojia, Charles intended not to seek reappointment as the CEO at the end of his current contract in October 2021. With the full support and agreement of the Board, Li will remain as the CEO until 31 December 2020. Effective 1 January 2021, he will take up the role of Senior Advisor to the Board for 6 months, continuing to provide guidance and ensuring a smooth transition.
Ping An OneConnect Bank (PAOB) announced its official launch. The virtual bank is currently serving 30% of Hong Kong's SME customers, while mainly focusing on the users of its trade partner TRADELINK (00536.HK), revealed PAOB Chief Executive Ryan Fung.
The Government announced that the Minimum Allowable Wage (MAW) for foreign domestic helpers (FDHs) in Hong Kong would remain at $4,630 per month, and the food allowance would remain at not less than $1,121 per month. The Government reviews the MAW and food allowance for FDHs regularly, said a spokesman.
A 150-meter military dock in Central has been handed over to the Hong Kong Garrison of the People's Liberation Army, but part of it will be open to the public in the future. The government said yesterday the dock was delimited as a military restricted zone yesterday to be managed and used by the PLA. While a military site is usually closed off, the PLA has promised to open part of it because it is on the harbourfront.

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