Sept 4 ASIAN MACRO INITIAL THOUGHTS US Futures tumbling
Covid-19 Globally over 26.2m cases, 866k deaths
US Futures Dow opened -100pts but then fell to -207pts, S&P opend -0.4% but now -0.9% and NDX opened -0.8% and now -1.6%
DOW -2.78%, NDX -4.96%, S&P -3.51%, Russel 2K -2.99% Dow opened flat ticked higher then sold down. NDX and S&P both opened lower and sold down through the day. Tech lead the declines despite the good macro data BUT the method of counting initial claims was changed to a new method
The recent rally drivers saw big selling Apple -8%. Facebook -3.8%, Amazon -4.6%, Alphabet -5.1%, Microsoft -6.2%, Netflix -4.9%. Talk of rotation into the value companies but it is difficult to see any constant behaviour. Outside of the FAANG names and Chipmakers stocks were mixed: Boeing -3.5%, Caterpillar -1.7%, United Airlines +1.4%, Southwest Airlines -1.2%, Carnival +5.2%, GAP -3.9%, Simon Property +0.2%.
Talk of a Minsky moment. Key is whether the selling continues Friday.
Challenger Job Cuts Aug 115.762k vs 262.649k revised (F/cast was 149k)
Balance of Trade Jul $-63.6b vs -50.7b Jun (F/cast was -59b)
Exports Jul $168.1b vs 158.25b Jun (F/cast was 177b)
Imports Jul $231.7b vs 208.95b Jun (F/cast was 236b)
Unit Labour Costs Q2 9% QoQ vs 5.1% prior (F/cast was +12.2%)
Non Farm Productivity Q2 10.1 % QoQ vs -0.9% prior (F/cast was +7.3%)
Initial Claims 881k vs 1.006m (F/cast was 995k). BUT under new way if counting which which was expected to show a lower number and means it is not comparative to the previous series.
4 week ave Initial Claims 991.75k vs 1.068m (F/cast was 1.019m)
Services PMI Aug 55 vs 50.0 Jul (F/cast was 54.8)
Composite PMI Aug 54.6 vs 50.3 Jul (F/cast was 54.7)
ISM Non Manufacturing Data
Business Activity Aug 62.4 vs 67.2 Jul (F/cast was 63)
Prices Aug 64.2 vs 57.6 July (F/cast was 55)
New Orders Aug 56.8 vs 67.7 Jul (F/cast was 58)
Employment Aug 47.9 vs 42.1 Jul (F/cast was 42)
PMI Aug 56.9 vs 58.1 Jul (F/cast was 42)
EIA Natural Gas Report 35 Bcf vs 45Bcf (Consensus was 34Bcf)
USD was flat vs Yen but stronger vs Euro. Bitcoin -6.4% @ 10,697.29,
VIX +26.5% @ 33.6, US T10 0.636%
OIL Brent -0.7%, WTI -0.34% but off earlier lows of -2%
Gold +0.04%, Silver -0.4%, Copper +0.05%. Gold slipped initially on the good economic data
AHEAD Non Farm Payrolls, Ave Weekly Hours, Ave Hourly Earnings, Participation Rate, Baker Hughes Total Oil Rig Count.
DAX -1.4%, CAC -0.44%, FTSE -1.52% Markets opened higher but broadly drifted lower through the session and sold off into the close as the US began selling down. PMI data was largely in line or better than F/cast except for the UK. But retail sales in the Eurozone and France were weaker than expected. Initial claims data from the US was +VE BUT BoE Deputy Gov warned that the impact from Covid on the UK economy could be worse than predicted last month.
Commerzbank -0.5% on Wednesday severed ties with auditor EY in light of the Wirecard
IAG +6.4% to lead a broad rally for the travel sector, with Easyjet +6.5%, Tui -4.9% and Lufthansa _4%
Sinch -9.6% after the UK.’s Competition and Markets Authority (CMA) announced an investigation into its planned acquisition of SAP’s cloud communications unit.
Services PMI Aug 50.5 vs 54.7 Jul (F/cast was 50.1)
Composite PMI Aug 51.9 vs 54.9 Jul (F/cast was 51.6)
Retail Sales Jul -1.3% MoM vs +5.3% Jun revised (F/cast was +1.8%)
Retail Sales Jul +0.4% YoY vs +1.3% Jun (F/cast was +3.7%)
Services PMI Aug 52.5 vs 55.6 Jul (F/cast was 50.8)
Composite PMI Aug 54.4 vs 55.3 Jul (F/cast was 53.7)
Services PMI Aug 51.5 vs 57.3 Jul (F/cast was 51.9)
Composite PMI Aug 51.6 vs 57.3 Jul (F/cast was 51.7)
Retail Sales Jul +1.5% MoM vs +8.3% Jun revised (F/cast was +2.3%)
Retail Sales Jul +5.8% YoY vs +3.5% Jun revised (F/cast was +3.8%)
Services PMI Aug 58.8 vs 56.5 Jul (F/cast was 60.1)
Composite PMI Aug 59.1 vs 57.0 Jul (F/cast was 60.3)
EUROZONE Construction PMI
GERMANY Factory Orders, Construction PMI
FRANCE Current Account, Budget Balance, Construction PMI
UK New Car Sales, Construction PMI
JAPAN Expect Nikkei to open lower following the sell off in the US; having on Thursday closed at its highest for six months. Selling likely to be exacerbated by the fact it is Friday and ahead of the US jobs report. Yen currently 106.14
No data due
Sega continues to build his support and is currently expected to be the new leader of the LDP and Japanese PM
Nissan Motor said on Thursday its sales in China -2.4% YoY in August while rival’s sales Toyota Motor +27% and Honda Motor +19.7% in the world's biggest auto market.
General Motors and Honda announced Thursday they were establishing a strategic alliance in North America to share vehicle platforms and development costs. The venture builds on existing partnerships on electric cars and fuel cell systems and comes as automakers face pressure to develop autonomous driving and other envelope-pushing technologies +VE
Ito-Yokado Co., part of Seven & i Holdings Co., has introduced an AI-powered stocking system at all of its about 130 stores to reduce the burden on its clerks to order items. +VE
SOUTH KOREA Expect markets to open lower again broad based selling following the US sell off. Good current account data out pre market unlikely to have much impact. Retail investors will take the brunt of the pain as Institutional and foreign investors were heavy sellers earlier in the week. I wouldn’t expect them to be buyers today, because of the weekend and the US jobs report but they may be active next week.
Data out Current Account Jul $7.45b vs 6.88b Jun (F/cast was 5.9b)
Govt scrambling to control a second wave of COVID-19, vowed on Thursday to double its critical-care hospital beds amid a severe shortage, highlighting the strain of the pandemic on even well-equipped countries.
HMM said Thursday that it has signed a deal with Singapore port operator PSA International to set up a joint venture. The deal will pave the way for HMM to secure its terminal in Singapore, the world's busiest container transshipment hub. +VE
LG Electronics Inc. on Thursday unveiled its vision of future home life at Europe's largest tech show, showcasing its latest innovations that could be helpful in the new normal era of the pandemic. +VE
Sales of Japanese cars in South Korea increased for the first time since a nationwide boycott of Japanese products began here last year, data showed Thursday. Slight -VE for Hyundai etc.
HDC-Asiana deal headed for collapse, Despite months of back-and-forth and attempts at breakthroughs, the acquisition talks between HDC Hyundai Development Company and Asiana Airline are likely to fall apart, according to reports Thursday. -VE
Hyundai Glovis said Thursday it has partnered with Norwegian-based shipping group Wilh. Wilhelmsen Holding ASA to proactively respond to changes in the future shipping industry. +VE
TAIWAN Expect market to open lower with broad based selling following the US sell off. But there could be limited downside for the likes of TSMC on bargain hunting.
Data due after market Foreign Exchange Reserves
The Ministry of Economic Affairs yesterday said that details on the Taiwan-US Economic and Commercial Dialogue have not yet been decided, including whether the talks would be held online or US Undersecretary of State for Economic Growth, Energy and the Environment Keith Krach would visit Taiwan in person.
Tatung Co Institutional shareholders yesterday said that they would hold an open and accountable special shareholders’ meeting next month and rally behind competent candidates to steer the century-old household appliance maker. +VE
CHINA Expect market to open lower following the US and as international relations continue to deteriorate with Czech Senate President criticising China’s comments about his visit to Taiwan.
No data due but Monday pre market Trade Balance, Exports & Imports
President Xi Jinping is expected to speak at today’s opening of the China International Fair for Trade in Services, which may draw more than 100,000 people although not many foreign attendees due to quarantine restrictions. Chinese authorities are pinning hopes on the fair to showcase the nation’s success in containing the spread of Covid-19
Czech Senate President Milos Vystrcil yesterday said that he disliked a comment by Chinese Minister of Foreign Affairs Wang Yi about the Czech delegation’s visit to Taiwan, adding that countries have their own ways of interpreting China’s “one China” principle. He said Taiwan is a free and democratic country, while democratic countries always have the right to cooperate, he said, when asked if he would continue to support Taiwan.
US claims China’s ‘manipulation’ of Mekong is ‘urgent challenge’ for Southeast Asia. Senior US diplomat David Stilwell’s comments are latest evidence the river has become a new front in the US-China rivalry and signalling the issue could be on the agenda in a regional forum next week.
China is increasing its regulatory scrutiny of non-bank financial companies including Ant Group, the Chinese fin-tech conglomerate expected to raise as much as $30bn in its initial public offering this year. State media reported yesterday that China’s State Council, or cabinet, had approved regulations that would introduce licensing procedures for financial holding companies and, potentially, capital requirements.
Guangzhou eases homes purchases; to make it easier for SAR citizens to purchase homes in the Greater Bay Area, Guangzhou will allow Hong Kong and Macau residents to use their properties in the city to back mortgage loans from SAR banks. This follows Guangdong allowing Hong Kong and Macau banks to register mortgages in the nine mainland cities without having to establish branches there. The nine cities are Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing.
HONG KONG ADR’s -363pts to open at 24,644 and expect further selling in the PN session as there could be margin calls if the initial selling accelerates. Expect broad selling with the E Commerce names under pressure.
No data due
SHORT SALES Thursday 21.6% vs 21% Wednesday
Top Shorts MTRC (66) 41%, HK & China Gas (3) 39%, China Res Land (1109) 27%, NWD (17) 38%, HSBC (5) 38%, Want Want (151) 37%, Sino Land (83) 33%, Bank of China (3988) 32%, Petrochina (857) 32%, AIA (1299) 30%, ICBC (1398) 30%, Ping An (2318 28%, China Unicom (762) 28%, China Mobile (941) 27%, Sinopec (386) 26%, CCB (939) 25%, Sunny Optical (2382) 24%.
Kerry Properties (683) plans to redevelop the Kerry Hung Kai Warehouse in Cheung Sha Wan into a residential project offering a total of 3,647 units. The redevelopment plan is pending approval from the Town Planning Board.
Sun Hung Kai Properties (16) has released the sales brochure of Wetland Seasons Park Phase 3, offering 318 units measuring between 291 sq ft and 816 sq ft.
RONSHINE CHINA (3301.HK) contracted sales in August +10.09% YoY to RMB12.031 billion with contracted gross floor area being around 611,600 sq.m. In the first eight months of 2020, contracted sales totalled RMB84.533 billion, +5.02% YoY with total contracted gross floor amounting to 3.7911 million sq.m.
EVERGRANDE (3333.HK) group's property contracted sales +7.7% YoY to RMB51.48 billion with contracted gross floor area being 5.324 million sq.m, +18.5% yearly. In the first eight months of 2020, the group's property contracted sales +21.8% YoY to around RMB450.62 billion with contracted gross floor area of 49.343 million sq.m, +42.9% yearly.
Centa Valuation Index (Major Banks) (CVI) last printed @ 34.11, -0.78 pts WoW The index narrowed its slide this week from last week's 8.59 pts; Centaline Property, said banks are being prudent in mortgages given low transaction prices of individual cases, while not staying in bearish sentiment continuously.