Sept 9 ASIAN MACRO INITIAL THOUGHTS US Futures open lower but easing
Covid-19 Globally over 27.5m cases, 895k deaths
AstraZeneca -6% after hours said its late-stage trial for a potential coronavirus vaccine had been put on hold due to safety concerns after a suspected adverse reaction to a UK trial participant
US Futures opened -230pts, but have eased to -150pts, S&P futures opened -0.6% now -0.5% and Nasdaq futures opened -0.75% but now -0.35%. The Nasdaq has now seen a 10% correction in three days. I would expect futures to continue to ease.
ASIAN Markets to open lower
Apple launch event scheduled for Sept 15 +VE for supply chain names.
DOW -2.25%, NDX -4.11%, S&P -2.78%, Russel 2K -2% Markets opened lower with Tech under pressure which was probably in part due to the revelation about Softbank’s recent derivative position. Then the indexes effectively traded sideways until around 2pm when the markets sold down to close around the day lows.
Tesla -21% reaction to not being included in the S&P
Apple -6.7% will start producing 5G iPhone from mid-September after having overcome travel curbs and other coronavirus snags, the Nikkei reported. This meant that its production delay was narrowed to just weeks instead of months as earlier expected. +VE Apple supply chain names.
Facebook -4.1%, Amazon -4.4%, Netflix -1.8%, Alphabet -3.6%. Zoom -5.1%, Zillow -3.5%
Nvidia -5.6%, Micron -3.2%, Applied Materials -8.7%, Advanced Micro Devices -4%.
Reopen names Simons Property -0.3%, GAP -1.3%, United Airlines -2.4%, Delta +2.4% (but -2.4% in after hours), Caterpillar +0.2%,
Boeing -5.8% more problems with 787 production flaws,
Nikola +41% as GM +7.9% takes a $2b stake and gets a contract to supply batteries.
Slack -19% on slower revenue growth; fails to make the expected gains from work form home.
NFIB Business Optimism Sept 100.2 vs 98.8 Aug (F/cast was 97)
IBD/TIPP Economic Optimism Sept 45 vs 46.8 Aug (F/cast was 47)
Consumer Credit Change Jul $12.25b vs 11.4b Jun revised from 8.95b (F/cast was 12b)
USD was weaker vs Yen & stronger vs Euro. Bitcoin -3.3% @ 10,027.96, VIX +2.3% @ 31.46,
US T10 0.682% as investors seek safety in bonds as equities sell down
OIL Brent -5.3%, WTI -7.6% on demand concerns
Gold +0.4%, Silver -0.8%, Copper -1.4%
AHEAD MBA Mortgage Applications & 30 year Mortgage Rate, Redbook, JOLT’s Job Openings, API Crude Oil Stocks
DAX -1.01%, CAC -1.59%, FTSE -0.12% markets opened higher following Asia but sold down with Tech under pressure as the US opened lower but then rallied into the close. Eurozone GDP growth slightly better than f/cast but still the sharpest decline on record. Investors concerned over PM Johnson’s Brexit plans and Trump’s decoupling from China comments. Weakness in Sterling helped the UK market.
Caixabank -2.4% and Bankia -0.2% as negotiations on a merger continue
IAG -0.7% annual shareholder meeting Tuesday, with CEO Willie Walsh handing over to Iberia CEO Luis Gallego as it seeks billions of euros from shareholders. Shareholders opposed proposed salary awards.
Royal Mail 25% after it raised its revenue target squeezing short sellers.
Travis Perkins fell 6.6% Q2 profits saw a steep decline
EDF -7.9% after reporting a 17.6% fall in output in August and the launch of a sale of CB's
GDP Growth Rate 3rd Est Q2 -11.8% QoQ vs -3.7% prior revised (F/cast was -12.1%)
GDP Growth Rate 3rd Est Q2 -14.7% YoY vs -3.2% prior revised (F/cast was -15%)
Employment Change Q2 -2.9% QoQ vs -0.2% prior (F/cast was -2.8%)
Employment Change Q2 -3.1% YoY vs +0.4% prior (F/cast was -2.9%)
Balance of Trade Jul Euro 19.2b vs 15.6b Jun (F/cast was 22b)
Current Account Jul Euro 20.0b vs 20.4b Jun (F/cast was 22.9b)
Imports sa Jul +1.1% vs +7% Jun (Consensus was 3.3%)
Exports sa Jul +4.7% vs +14.9% Jun (Consensus was 5% )
Private Non Farm Payrolls Q2 -0.8% QoQ vs -2.5% prior (F/cast was -0.6%)
Non Farm Payrolls Q2 -0.9% QoQ vs -2% prior (F/cast was -0.4%)
Balance of Trade Jul Euro -6.99b vs -8.06b Jun revised (F/cast was -4.8b)
Current Account Jul Euro -6.2b vs -8.6b Jun revised (F/cast was -1.2b)
No data due
JAPAN Expect Nikkei to open lower following the US. Yen strengthened to 105.97 slight -VE for Exporters. Sentiment weak
Data due Machine Tool Orders
LDP in the Leadership race frontrunner and chief cabinet secretary Yoshihide Suga said that preventing the spread of the coronavirus should take priority in any decision to call a snap election.
Tokyo reported 170 new covid cases Tuesday (+93 from Monday) Nation-wide the total was 507. Slight -VE for sentiment
Whilst yesterday’s GDP and Household spending data was weak the Economy Watchers survey rose for a fourth month which is a small encouragement. The weakness in the economy may prompt the new PM to increase the current stimulus Slight +VE
ANA to resume flight to Hawaii in October with two round trips per month +VE
Onuma department store in northern Japanese city of Yamagata began bankruptcy proceedings this year - one of many distinguished department stores across the country in dire straits. -VE for sentiment but reflects the change in business methods.
SOUTH KOREA Expect markets to open lower following the US; with broad weakness. The unemployment number beat forecasts; slight +VE but likely to be ignored in the initial sell off. Watch for bargain hunting later in the session.
Data out Unemployment Aug 3.2% vs 4.2% Jul (F/cast was 4.2%)
Celltrion Inc will begin commercial production of its experimental treatment for COVID-19 this month, it said on Tuesday, as it pushes ahead with clinical trials of the antibody drug. +VE
Ministry of Science and ICT on Tuesday provided advance notice of its ordinances under the revised Telecommunications Business Act, which includes clauses that will bind foreign platform operators like Netflix and YouTube to share costs in securing stable services.
Korean Air announced Tuesday it will enforce stricter rules for passengers to wear masks on board planes as part of safety efforts to prevent COVID-19.
LG U+ announced Tuesday that the company and its global partners had developed a new technology enabling smart devices to work without SIM cards. Joining LG U+ in the development of the universal integrated circuit card, or iUICC, were cellular chipset developer Sony Semiconductor Israel, local communication module maker NTmore and German digital security solutions provider Giesecke+Devrient. +VE
Hyundai Motor and Kia Motors will work together with SK Innovation to develop an electric vehicle battery ecosystem, the automaker said Tuesday. +VE
Samsung Electronics Co. has reportedly secured an order to manufacture Qualcomm Technologies Inc.'s mobile application processor (AP) for 5G budget smartphones, industry sources said Tuesday, as the South Korean tech giant eyes boosting its presence in the foundry industry.
TAIWAN Expect market to open lower but downside slightly limited by good earnings. Expect some bargain hunting after initially selling
No data due but after market Tuesday
Wholesale Prices Aug -9.09% vs -9.15% Jul (F/cast was -8.9%)
Inflation Rate Aug +0.18% MoM vs +0.17% Jul (F/cast was +0.3%)
Inflation Rate Aug -0.33% YoUY vs -0.52% Jul (F/cast was -0.3%)
The consumer price index (CPI) last month -0.33% YoY dragged by lower transportation and recreation costs attributable to the COVID-19 pandemic, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. It was the seventh straight month that consumer prices had declined, but the retreat has been tapering off as shopping, dining and domestic tourism pick up, the statistics agency said.
Nova Technology Corp yesterday said that its Chinese semiconductor customers have become more cautious about fab expansions amid growing concern that the US might extend its export restrictions to most Chinese chipmakers. It said ASML Holding NV has put on hold shipments of extreme ultraviolet lithography machines to SMIC, a major client of Nova,. -VE
Brokerage accounts rise to all-time high: by 442,570 in the first eight months of this year, boosting the total accounts to 11.015 million. The number of investors who traded in local shares advanced to 2.3 million as of the end of last month, an increase of 659,636 from the end of last year, which the TWSE said was a reflection of wider interest in stock trading from new and long-time investors.
Walsin Technology Corp yesterday said that its revenue was +39.7% YoY (+1.4% MoM) last month to NT$3.41 billion (US$115.57 million), benefiting from growing demand in China for 5G-related applications and other devices. Last month’s figure the highest in 21 months. +VE
CHINA Expect market to open lower following the continued correction in the US. Inflation and PPI due on the open will also influence the direction of trading
Data due on the open
Inflation Rate Aug (July was +2.7% YoY (F/cast is +2.5%)
Inflation Rate Aug (July was +0.6% MoM (F/cast is +0.3%)
PPI Aug (July was -2.4% YoY (F/cast is -1.5%)
The United States on Tuesday will move to block imports of cotton and tomato products from western China’s Xinjiang region over allegations that they are produced with forced labor, officials with U.S. Customs and Border Protection told Reuters.
China to sanction US officials who visit Taiwan; a symbolic gesture
India/China relations -VE as both accuse the other of firing into the air along the contested border areas.
Australian journalists assisted out of China by consulate staff after police questioning -VE for China Australian relations. Comes as China announced Cheng Lei was detained last month on suspicion of carrying out illegal activities that endanger the country's security
Police in Inner Mongolia region have detained at least 23 people following protests last week against a new policy that replaces Mongolian-language textbooks with Chinese ones in classrooms. -VE
Beijing negotiating with Teliban; China will invest initially in road but then energy and other projects if the Teliban ensure peace in Afghanistan.
Banks -VE Lex article regarding the rise in NPL’s and the requirement for the SOE banks to lend
American artificial meat startup Beyond Meat (BYND.US)'s subsidiary Beyond Meat (Jiaxing) Food has entered into an agreement with Jiaxing Economic & Technological Development Zone (JXEDZ) to design and develop manufacturing facilities in the region.
HONG KONG ADR’s -325pts to open at 24,299 with across the board weakness.
No data due
SHORT SALES Tuesday 16.7% vs 12.9% Monday
Top Shorts Ping An (2318) 46%, MTRC (66) 33%, AIA (1299) 30%, China Res Land (1109) 29%, HSBC (5) 28%, Mengniu Dairy (2319) 27%, CLP (2) 26%, WH Group (288) 25%, CCB (939) 24%.
RAZER (1337.HK) repurchased 1.924 million shares through the Stock Exchange Tuesday (8 September), involving $2.9706 million.
BABA-SW (9988.HK) holds 19% of Class A shares of XPeng (XPEV.US) as disclosed by the US SEC filing.
Q TECH (1478.HK) announced that the total sales volume of camera modules +7% MoM and +4.8% YoY, among which camera modules with resolutions of 10 megapixels and above decreased by 0.3% MoM and increased by 20.0% YoY respectively. The MoM increase of total sales volume of camera module products was mainly attributable to the customers’ product cycle.
SUNLIGHT REIT (435.HK) annual results ended June 2020. Annual distributable income -0.1% yearly to $467 million. Final distribution per unit was 13.6 cents, vs 14.1 cents a year ago; annual distribution per unit was 26.8 cents, as compared with 27.3 cents in the previous year. The payout ratio shrank from 96.4% to 95.2%.
GAC GROUP (2238.HK) production volume was 166,300 vehicles in August 2020, +7.82% yearly; the sales volume was 180,600 vehicles, +11.64%.
LONGFOR GROUP (960.HK) contracted sales amounted to RMB24.22 billion in August 2020, +10.09% yearly.
SHK PPT (16.HK) has published the first price list of Wetland Seasons Park Phase 3, involving 65 flats in saleable area of 316-726 sq. ft.. Based on a maximum of 18% discount, the units launched under the Tin Shui Wai residential project are priced $4.133-9.335 million.
South Korean game developer PUBG Corporation will no longer grant TENCENT (700.HK) the rights to publish its mobile game in India after the local government has banned 117 Chinese mobile apps.
HKJC announced the Mark Six lottery to resume 24 Sept but tickets only available on line, and draw will be weekly. Widely seen as a tax on lower income earners it’s resumption is a sign the administration thinks the economy is getting better