Sept 7 ASIAN MACRO INITIAL THOUGHTS US Closed Expect lower opens
Covid-19 Globally over 27m cases, 881k deaths
US Markets closed so expect lighter volumes. The long weekend could have implications on the number of covid cases in the near future.
Protests in Hong Kong on Sunday (which would have been the local Election Day is the administration hadn’t cancelled them) with 289 people arrested most for illegal gathering but one said to be under the national security law.
JAPAN Expect Nikkei to open slightly lower with Tech remaining under pressure. Yen closed 106.23 slight +VE for Exporters. Typhoon Haishen approaches Japan’s southern mainland.
Data due Foreign Exchange Reserves, Leading Economic Index and Coincident Index
Tokyo reported 116 new covid cases on Sunday vs 181 cases on Saturday. Nationwide the tally was 449.
Yoshihide Suga still seen as prime candidate for the leadership of the LDP as candidates start debates. Rumour that the next PM could call a snap election shortly after taking office.
Government said on Friday it would bear the cost of providing coronavirus vaccines to the populace, as it aims for a comprehensive inoculation against the pandemic. +VE. Also it planned to establish funds to compensate for possible side effects from the vaccines.
Rakuten Inc and Tokyu Corp have established Rakuten Tokyu Planning Co Ltd, a new joint venture that will provide data marketing solutions to companies in Japan. The two companies will also explore new digital
Astrazeneca said on Friday it is beginning Phase 1/2 clinical trials in Japan of its coronavirus vaccine candidate. Trials of the vaccine, known as AZD1222, will be conducted at multiple facilities in Japan, targeting 250 subjects, the company said in a release. It is working with Daiichi Sankyo, JCR Pharma and other partners in Japan to make and distribute the vaccine.
Softbank revelled as the ‘whale’ behind the recent increase in buying call options which has contributed to the recent rally in Tech. Currently it is estimated to be sitting on unrealised gains from the trade according to the FT. Slight -VE as the trade is risky.
Amazon Japan has submitted a plan to the country’s fair trade regulator on how it will improve practices suspected of violating anti-trust rules, the Asahi Shimbun reported on Friday.
Japan’s beer giants have launched a commercial campaign to encourage people to rush out and buy third-segment beerlike beverages ahead of the tax hike on these low-priced drinks in October. Slight +VE Suntory & Kirin but this is really only bring forward sales rather than increasing them, post the tax hike sales are likely to dip.
Nissan Motor says it said it has achieved a “breakthrough” in molding carbon fiber reinforced plastic, or CFRP, components, now used in racing cars and jets because of their light weight and strength. It says it highlights the Japanese automaker’s engineering finesse, even as it faces a criminal trial in an ongoing scandal involving former Chairman Carlos Ghosn. +VE. But it also announced has pushed back UK production of its flagship new Qashqai model until the middle of next year, Slight -VE
Toyota to launch the Starlet company car in Africa in mid Sept for the first time in 21 yrs +VE
Property weak as Land prices in urban areas have fallen due to stalled transactions in the wake of the novel coronavirus, a pattern likely to be repeated across the country that may lead to a decline next year in the average posted land prices for the first time in six years.
Panasonic Corp. and SoftBank Corp. have begun developing a system to prevent package thefts in unattended deliveries, aiming commercialize the system by the end of fiscal 2020, according to the firms. Slight +VE
SOUTH KOREA Expect markets to open slightly lower but news that the number of new covid cases is easing +VE for sentiment. Also news that the Government to draft and additional Won 7tn budget +VE too.
No data due
Government reported 167 new coronavirus cases as of midnight Saturday, posting the lowest daily tally in three weeks after imposing stricter social distancing rules to blunt a second wave of infections. +VE
Large companies hiring plans show that 50% have not set their plans and 24% said they will not offer jobs in 2H 2020 a poll by Korea Economic Research Institute's (KERI) showed. -VE for sentiment
Naver announced that it would start recruiting new platform developers and engineers starting on Friday. The IT firm said it would hire more than 200 developers this year. +VE. Comas as the Fair Trade Commission on Sunday imposed a fine of over 1 billion won ($842,000) on Naver for predatory real estate practices. It prevented real estate information businesses that it had ties with from working with Kakao.
Strategy Analytics revised it forecast saying the total shipments of smartphones would be 1.26 billion units this year, -11% YoY, it had previously predicted a 15.6% fall.
Doosan Group said Friday that it will repay 3 trillion won (US$2.5 billion) in debt to its main creditors by selling new shares of Doosan Heavy Industries & Construction Co. and other affiliates' assets. It is to float new shares worth 1.3 trillion won and sell them first to its shareholders and then to the public, the group said in an emailed statement. +VE
LG Electronics has finalized the name of its new dual-display smartphone to be released on Sept. 14 as “LG Wing,” the company confirmed Friday.
NCSoft said Friday its North American subsidiary NC West will release a new rhythm game “Fuser” for both PC and console in North America and Europe on Nov. 10. Fuser is an interactive DJ music game developed by Harmonix and will be published by NC West. Fuser will be available on PC and three major console platforms -- PlayStation 4, Xbox One and Nintendo Switch. +VE
Coupang began procedures for the construction of a large-scale high-tech logistics base in Gwangju in partnership with the regional government, the firm said Friday. +VE
Samsung Electronics said Sunday it has signed a partnership agreement with Hanssem, the country’s leading furniture maker, to seek business opportunities in the home interior remodeling market as consumers pay more atttention to their living spaces amid social distancing efforts. Slight +VE but not likely to be a driver.
Top medical body faced a rift on Friday after trainee doctors rejected a deal by its leader to end a two-week-old strike, although the government backed down from reform plans aimed at averting future epidemics.
TAIWAN Expect market to open slightly lower but then trade sideways with bargain hunters active.
Data due after market Balance of Trade, Exports, Imports.
After Market Friday Foreign Exchange Reserves Aug $498.169b vs 496.171b (F/cast was 497b).
US, Taiwan seek ‘like-minded’ democracies to remake global supply chains and shift from reliance on China. The US representative in Taipei says supply chains of the future will be reinvented by parties with shared values such as freedom of press and religion. Another sign the Trump administration is stepping up its support for island even without formal diplomatic ties
Largan Precision on Saturday posted a 22.1% YoY decline in revenue for last month, marking two consecutive months of annual declines. Consolidated revenue NT$5.02 bn (US$170 mn), compared with NT$6.45 bn a year earlier, +8.94% increase from NT$4.62 bn in July, company data showed. Despite last month’s annual decline in sales, Largan’s numbers were in line with its forecast that last month’s revenue would be higher than July’s, as it benefited from pull-in orders. Slight +VE as it now moves towards the peak season.
Housing transactions last month totaled 21,686 units in the six special municipalities, -8.1% MoM as some buyers avoided closing deals in Ghost Month, while others demanded bigger price concessions, brokers said. BUT was +24.6% YoY a sign that the property market has emerged from disruptions caused by the COVID-19 pandemic, although the virus situation continues to cloud the economic scene at home and abroad.
The nation’s 16 financial holding companies last quarter cut their combined lending to China to NT$671.34 billion (US$22.73 billion) from NT$698.26 billion in Q1 -9.2% from NT$739.71 billion a year earlier, data released on Saturday by the Financial Supervisory Commission showed. Slight +VE
Semicon Taiwan, the largest annual semiconductor trade show in Taiwan, would showcase innovations in smart manufacturing, advanced process technology and green manufacturing, while offering online access for the first time, event organizers said on Wednesday. This year’s event, to be held from Sept. 23 to 25 in Taipei, would feature 13 theme pavilions and 19 international seminars, including a smart manufacturing pavilion and a strategic materials conference, said SEMI, an association that represents the global semiconductor sector.
StarLux Airlines said on Sunday that its new fleet of wide-body A350 aircraft will have first class cabins, even though the pandemic has severely impacted the aviation industry.Gasoline and diesel prices this week are to remain unchanged for a third straight week, CPC Corp, and Formosa Petrochemical Corp said yesterday.
CHINA Expect market to open lower with sentiment hurt by news that the US is considering sanctioning SMIC. BUT key will be the premarket trade data which is expected to be weak MoM. Yuan strength remains which will put exporters under pressure but good for importers and domestic consumption plays as well as Airlines and others with USD debt.
Data due pre market
Balance of Trade (July was $62.33b F/cast is for $47b),
Exports (July was +7.2% F/cast is for +6.5%),
Imports (July was -1.4% F/cast is for +0.1%).
Later Foreign Exchange Reserves
President Xi Jinping said on Friday that China will open up its market further to the services trade and called upon other countries to help forge an “open and inclusive” environment, promoting China as the leader to restore global trade and growth after the coronavirus outbreak. A sign the Beijing is aware of the de-coupling threat to its economy.
China may gradually cut its holdings of U.S. Treasury bonds and notes, in light of rising tensions between Beijing and Washington, state-backed newspaper Global Times reported cited experts as saying.
Press reports that Chinese banks are planning near-record bond sales this month to replenish capital levels weakened by a surge in cheap loans to struggling businesses and sliding earnings. Industrial & Commercial Bank of China Ltd, the world’s largest lender, and three domestic competitors plan to sell a combined 195 billion yuan (US$28.5 billion) of perpetual or tier 2 capital bonds, said people working on the plans, who asked not to be named discussing internal matters.
China National Biotec Group (CNBG) and Sinovac Biotech Ltd said on Saturday that Serbia and Pakistan have agreed to participate in the Phase 3 trials of CNBG’s vaccine candidates while Sinovac has received approval from Turkey and Bangladesh. The two companies are seeking more data from overseas as new cases in China are dwindling.
U.N. human rights experts have told China a new security law for Hong Kong “infringes on certain fundamental rights” and voiced concerns that it could be used to prosecute political activists in the former British colony. More pressure on China
China is planning a more than 1 trillion yuan ($146 billion) push to accelerate infrastructure investment in Tibet, including new and previously announced projects, three sources familiar with the matter told Reuters. Comes as China/India border clashes. +VE for local infrastructure plays.
Reuters special report titled Australia faces down China in high-stakes strategy Considers whether Australia is the harbinger of how other countries may react to China.
U.S. national security adviser Robert O’Brien said on Friday, that China has taken the most active role among countries seeking to interfere in the U.S. election and has the biggest program to influence domestic politics, without providing any details. -VE for sentiment.
The White House has required government agencies for details of any funding that supports China's business activity and Beijing, Reuters citing White House Office of Management and Budget (OMB)'s document. Could indicate Trumps intention of increasing the ‘China bashing’ in the run up to the election which is now only two months away.
India and China said on Saturday they had agreed to work towards reducing tensions along their contested border, following a meeting of the defense ministers of the nuclear-armed neighbors, Reuters reports.
China announced success of reusable spacecraft as it returned safely to Earth. The Experimental vessel landed safely after spending two days orbiting the planet. Details of craft remain secret, but one source has hinted that it may act like the US X-37B space plane; a smaller but similar concept to Nasa’s space shuttle.
HONG KONG ADR’s -76pts to open at 24,619 but expect some margin call selling in the morning after the 338pt fall on Friday. Watch SMIC (981 HK) which is reported to be under consideration for US sanctions.
Data due Foreign Exchange ReservesHong Kong reported 21 new covid cases on Sunday; three times higher than Saturday's. Five as a result of the community testing with two inmates and six imported.
SHORT SALES Friday 11.3% vs 21.6% ThursdayT
op Shorts Petrochina (857) 23%, Hengan (1044) 20%
National Security Law HK government in response to the UN statement said HK "objects to interference with our country’s and HKSAR’s internal affairs in any form. "We would like to reiterate that safeguarding national security through legislation is in line with international practice. Every country has laws and duty to safeguard its national security and sovereignty," he said. The spokesman added: "We would also like to emphasise that the National Security Law does not affect the legitimate rights and freedoms of Hong Kong residents.
IPO Yum China (YUMC.N) 9987.HK is set to raise $2.22 billion in its secondary Hong Kong listing after indicating that its shares would be priced at HK$412 each, a 4.8% discount to the stock’s Thursday closing price of $55.92 in the U.S. Reuters reports.
SMIC (981 HK) Trump administration is considering whether to add China’s top chipmaker SMIC to a trade blacklist, a Defense Department official said on Friday, very -VE
CK Asset plans to sell two projects in Beijing and Shanghai at a total of 50 billion yuan (HK$56.68 billion), while Sunac China (1918) has shown interest in buying the properties, Caixin reported. One of the residential and commercial complexes being sold is in Chaoyang, Beijing, while the other is in Putuo District, Shanghai.
CHINESE DEVELOPERS may see weakness as Hangzhou Municipal government imposes three-year residency rule for parents staying with their children in the city before allowing home purchase. Previously workers with hukou were able to gain a quota to purchase a second home for their parents without residency requirement. The same measure is already operating in Shenzhen and Nantong and could be rolled out in more places.
HK EX (388 HK) +VE on news China will expand the scope of investments allowed in the Stock Connect link with Hong Kong, broadening the exchange-traded funds connect, and allow foreign investors to trade more commodities futures products, China Securities Regulatory Commission Vice Chairman Fang Xinghai said. Officials are planning to announce revised rules on qualified foreign institutional investors as soon as possible to increase their "willingness and confidence" to invest in China, he said at the China International Financial Annual Forum 2020 in Beijing yesterday. Foreigners currently hold only 4.7% of Chinese stocks in circulation, way below the more than 30% in markets like Japan and South Korea, he said.
Centaline Property Agency recorded 21 secondary transactions at 10 blue-chip housing estates over the past weekend, +5% WoW and hitting a 17-week high.
Sun Hung Kai Properties (16) sold 11 out of 47 units on offer at Regency Bay over the weekend.
China Feihe (6186) will take over YuanShengTai Dairy Farm (1431) in a HK$3.07 billion deal and intends to keep the raw milk producer listed on the local bourse. Feihe will pay HK$0.63 per share, representing a premium of 1.6 percent over YST Dairy's closing price last Thursday. Trading of YST Dairy resumes today after being suspended last Friday. Feihe said it will finance the consideration through its internal resources.
ELEC & ELTEK (1151.HK) announced that an application has been made to each of HKEX and SGX-ST for the withdrawal of listing of the Shares from the respective exchanges. So far, SGX-ST has advised E&E that it has no objection to the proposed delisting of the Shares from SGX-ST; and the delisting application made to HKEX is pending HKEX's approval. Subject to the completion of the compulsory acquisition (and approval for delisting of the Shares from HKEX being granted by HKEX), the withdrawal of listing of the Shares from each of HKEX and SGX-ST is expected to take effect from 9:00 a.m. on 25 September 2020.
WISDOM EDU INTL (6068.HK) announced that Li Suwen, the chairperson, an executive Director and a controlling shareholder of the Company, acquired an aggregate of 300,000 ordinary shares of the Company on the market on 4 September 2020 at an average purchase price of approx HK$2.99 per Share.
CROCODILE (122.HK) PROFIT WARNING -VE The Group’s audited annual results for the Year was expected to deteriorate greatly and record a consolidated loss within the range of HK$250-300 million (2019: profit of HK$30.6 million), primarily due to the substantial losses arising from the revaluation of the Group’s investment properties, the worsening performance of the garment business during the Year; and the reversal of the securities trading in the second half of the Year.
CHINA OVERSEAS (688.HK) contracted property sales in January-August 2020 RMB222.294 billion, +2.1% yearly.
Private domestic housing completion -94% MoM in July 2020 to 83 units, hitting new low in recent 3.5 years, data from Rating and Valuation Department showed. In the first seven months of 2020, private domestic housing completion lifted 83% year-on-year to 11,454 units, representing 55% of the estimated completion of 20,854 units.
Centa-City Leading Index (CCL) last printed at 177.43, down 0.72% weekly.
CCL Mass fell 0.93% weekly to 180.22;
CCL (small-and-medium units) went down 0.91% weekly to 177.79;
CCL (large units) added 0.31% weekly to 175.60.
Three major indices started to narrow their slide. As property prices are starting to bottom out, he predicted the price level to pick up growth around mid-autumn festival.
DOW -0.56%, NDX -1.27%, S&P -0.81%, Russel 2K -0.61% Dow opened slightly higher with S&P and NDX flat but then sold down hitting the lows mid/late morning but then rallied back to around flat only to sell down again into the close.Boeing +1.4%, Caterpillar +1%, JPMorgan Chase +2.1% and Citigroup 2%, Bank of America +3.5%. Wells Fargo +1.1% (new out that Buffet has sold down his stake from 5.5% to 3.3%). Carnival +5.3% and United Airlines +2.2%.
BUT TECH saw very choppy trading Facebook -2.9%, Amazon -2.2% and Alphabet -3%. Netflix -1.8%, Microsoft -1.4%. PayPal -6.4%, Salesforce -4%, Twitter -4.2% and Nvidia -3%
Apple +0.1% but had been -8.3% intraday; some cite concerns over its iPhone update after Broadcom cautioned Q4 revenue would be weal because Apple had delayed its latest handset launch.
Tesla +2.8% but was more than -8% intraday; not helped by the news it had been left out out of the recent additions to the S&P 500, which is thought to have been a reason behind its recent strong rally. Those being added are Etsy, Teradyne and Catalent.
News out that Softbank was the ‘whale’ behind the recent increase in buying call options which has contributed to the recent rally in Tech. It also makes the market prone to more volatility -VE
Unemployment fell but there is caution about getting it lower with signs of the recovery slowing as PPP funds are running out and Congress has yet to agree a new package. Small businesses are increasingly struggling and is they go bankrupt it is unlikely that those jobs will come back.
Non Farm Payrolls Aug 1.371m vs 1.734m Jul (F/cast was 1.49m)
Unemployment Rate Aug 8.4% vs 10.2% Jul (F/cast was 9.9%)
Ave Weekly Hours Aug 34.6 vs 34.5 Jul (F/cast was 34.4)
Ave Hourly Earnings Aug +4.7% YoY vs +4.7% Jul Revised (F/cast was +4.6%)
Ave Hourly Earnings Aug +0.4% MoM vs +0.1% Jul Revised (F/cast was +0.1%)
Participation Rate Aug 61.7% vs 61.4% Jul (F/cast was 61.6%)
Baker Hughes Total Oil Rig Count 256 vs 254 prior
USD strengthened vs Yen & Euro. Bitcoin flat @ 10,472.29, VIX -8.5% @ 30.8, US T10 0.721% Yield above 0.7 as unemployment drops
OIL Brent -3.2%, WTI -3.8% but fell further in after hours; weak demand concerns. Brent hit its lowest level since late July.
Gold +0.2%, Silver +0.9%, Copper +3.3%
AHEAD No data due.
DAX -1.65%, CAC -0.89%, FTSE -0.88% markets opened lower despite having sold down into the close on Thursday but then rallied lead by the Banks as Spain’s Caixabank +12.4% and Bankia +32.9% announced Thursday that they have entered merger talks to create Spain’s largest bank. Then as the US sold off European stocks followed to close in the red again. Tech was again under pressure but Banks closed +VE with Banco de Sabadell +13.8%. Spain’s Bankinter +5.3% and Germany’s Commerzbank +9%
EU is considering fresh sanctions on Russia following the poisoning of Putin critic Alexi Navalny.
Construction PMI Aug 47.8 vs 48.9 Jul (F/cast was 49.5)
Factory Orders Jul +2.8% MoM vs +28.8% Jun revised (F/cast was +5.9%)
Construction PMI Aug 48 vs 47.1 Jul (F/cast was 49.1)
Budget Balance Jul Euro -151.04b vs -124.88b (F/cast was -128b)
Construction PMI Aug 46 vs 49.4 Jul (F/cast was 50.2)
Construction PMI Aug 54.6 vs 58.1Jul (F/cast was 58)
New Car Sales Aug -5.8% vs 11.3% Jul
EUROZONE No data Due
GERMANY Industrial Production
FRANCE No data due
UK Halifax House Price Index