Oct 12 Asian Macro Initial Thoughts US Futures Flat US Columbus Day
Covid-19 Globally over 37.4m cases, 1.08m deaths.
WHO reversed earlier calls and said Governments should not use lockdowns as the primary method to control covid 19.
US Futures opened Dow and S&P flat but NDX +0.1%
Columbus Day in the US which is a Federal holiday but expect lighter turnover in the markets.
US Commerce Secretary Wilbur Ross said the country will impose new tariffs on aluminum sheet products worth of US$1.96 billion from 18 countries with immediate effect. Including Germany and Bahrain, excluding China, as tariffs had already been imposed on Beijing’s aluminum products, Ross added.
The Week Ahead
Overhanging the week ahead is still new covid cases with US and Europe on alert as we run into influenza season. The next US stimulus package is still in debate and on Sunday there was news that both Pelosi and Senate Republicans were pushing back on Trump's US$1.8tn offer -VE. Also electioneering with Trump looking those a number of rallies and declaring himself cured.
A new stimulus will come but I think the market will be looking at how much damage is being done to the US whilst the negotiations continue.
Investors will also have US earnings in focus with the Banks; with Citi, Wells Fargo, Goldmans BoA and Morgan Stanley reporting this week. Also Johnson & Johnson, Walgreens, United Health, United Airlines, Schlumberger VF Corp and others.
Also the Apple event on Tuesday will be closely watched; expected to introduced an iPhone 12 with 'high speed’ 5G.
Chinese loans data due this week for an indication of how well the recovery is going. Also US Retail Sales data; investors will watch for the impact from the lack of a new stimulus plan.
China in addition to the loans data we get Balance of Trade data on Tuesday and Inflation and PPI data Thursday.
Japan PPI and Machinery orders Monday and the Tankan Index Tuesday along with Industrial Production data Wednesday.
S Korea BoK rate decision on Wednesday with no change expected. Then Import/Export Prices and Unemployment on Friday.
Nothing due for Taiwan or Hong Kong.
In Europe; it's quite light.
German Wholesale Prices, Inflation, ZEW Sentiment indexes.
UK Employment and Wages data but also expected to announce more social distancing measures.
US Inflation data, IBD/TIPP Economic Optimism, PPI Import/Export Prices, NY Empire State Manufacturing, Phili Manufacturing, Retail Sales Industrial & Manufacturing Production, Michigan Prelim data and Tic Flows.
Summary of European and US Friday close at bottom of the page
JAPAN Expect Nikkei to open higher but the pre market data will be important. Market is trading at 7 month highs and needs a driver. Yen closed 105.59 Expect cautious trading ahead of US earnings. Nikkei futures in Chicago 23,600 (Osaka 23,560) vs 23,619.69 the Nikkei 225′s last close.
Data due pre market
Machinery Orders Aug. Jul was -16.2% YoY F/cast is -15% (Jul +6.3% MoM F/cast is -1.5%)
PPI Sept Aug was -0.5% YoY F/cast is -0.3% (Aug was +0.2% MoM F/cast is +0.1%)
Bank Lending Sept Aug was +6.7% YoY F/cast is +6.5%.
Due later Machine Tool Orders Sept. Aug was -23.3% YoY F/cast is -15%)
Tokyo announced 146 new covid cases Sunday vs 103 on Saturday
Japan’s Coast Guard said on Sunday that two Chinese vessels entered what Japan considers its territorial waters near disputed islands in the East China Sea. It marked the 21st time this year that Chinese boats have entered Japanese waters and the first since late August, a Japanese Coast Guard representative said. -VE for Japan/China relations and underlines the tightrope PM Suga has to walk.
The Maritime Self-defence Force conducted anti-submarine drills in the South China Sea on Oct. 9, deploying three vessels including a helicopter aircraft carrier and a submarine, according to the Japanese defence ministry. A sign of a growing anti China stance.
The Bank of Japan said on Friday it would begin experimenting next year on how to operate its own digital currency, joining efforts by other central banks to catch up to rapid private-sector innovation.
Govt is considering to exempt Japanese and foreigners with residential status, returning from overseas business trip from the 14 day quarantine; with their movements being restricted to home and work and not to use public transport. A decision expected by the month end.
PM Suga to consider an organisational review of the Science Council of Japan.
Japan has pushed back by nine months a July 2021 deadline for cities to submit bids to host casinos amid delays in preparation and a downturn in operators' business conditions caused by the COVID-19 pandemic, the Japan Tourism Agency said on Friday.
Takeda Pharmaceutical Co said on Friday an alliance of drugmakers it spearheads has enrolled its first patient in a global clinical trial of a blood plasma treatment for COVID-19 after months of regulatory delays. +VE
ANA to allow pilots and other employees to take on additional jobs as salary cuts loom. Shows the adaptability of the management but underlines the salary cuts are likely to be significant and it is difficult to imagine what ’side jobs’ airlines could undertake an a regular basis. I would expect further pressure on retail stocks
JAL wants to create a low-cost carrier network with three of its discount carriers to tap leisure travel that, unlike business travel, could rebound as the coronavirus wanes, the company president said.
East Japan Rail and Hitachi announced they will jointly develop trains powered by hydrogen fuel cells. +VE
Toshiba to launch quantum cryptography which is ‘virtually’
Press report on the merger of Eighteenth Bank and Shinwa Bank as potential test case for regional bank consolidation. With local business concerns about the lack of competition and local focus. Highlights the different views between users and operators and the resistance that PM Suga’s ambitions may face.
Japan to sign the Artemis Accords, a set of principles for outer space drafted by the US.
SOUTH KOREA Expect markets to re-open higher; good results from Samsung and LG last Thursday likely to give a boost to the market.
Sentiment helped by new covid cases dropping; on Sunday to 58 from Saturday’s 72 the fourth day below 100 although authorities on alert following the holiday but likely to relax some of the social distancing rules; allowing nightspots to re-open and spectators to attend sports events.
No data due
Hyundai Engineering & Construction said Friday it has signed a $330 million deal with the Philippine transportation ministry to participate in a local railway project. +VE
SK Innovation said Sunday it has successfully extracted solvent and lube base oil from plastic waste to boost environmental, social and corporate governance under SK Group’s Green Balance initiative. +VE
LG Electronics released a teaser Sunday for the “LG Signature OLED R,” the world’s first rollable TV, which will go on sale at the end of this month. The home appliance giant uploaded a 17-second YouTube video that shows the LG Signature OLED R’s rollabe display slowly coming up from the inside of the TV’s base. As of 11:00 a.m. Sunday, the video had more than 140,000 views. +VE
On recent orders from Greek shipping companies, South Korea’s shipbuilding industry regained the No. 1 spot from China in Q3 this year, data showed Sunday. +VE Daewoo Shipbuilding & Marine Engineering, Korea Shipbuilding & Marine Engineering, Samsung Heavy Industries
Posco Energy, a wholly owned energy unit of South Korean steelmaker Posco, said Friday it has filed a 922 billion-won ($800 million) claim against US-based FuelCell Energy for damages involving their license deal. Slight +VE
TAIWAN Expect market to re-open higher Tech remains in focus after the good numbers from TSMC last week and ahead of the iPhone launch on Tuesday. Shippers may see interest after good results from Wisdom Marine Lines.
No data due
Taiwan wants to have "meaningful dialogue" with China on an equal basis, President Tsai Ing-wen said on Saturday, extending an olive branch at a time of heightened military tension with Beijing, which claims the island as sovereign Chinese territory.
Minister of Foreign Affairs Joseph Wu on Saturday thanked India after it rebuked the Chinese embassy in New Delhi for attempting to manipulate media coverage of Double Ten National Day. The Chinese embassy sent an e-mail to about 250 Indian journalists asking them not to refer to Taiwan as a “country” or “nation” in their coverage of national day events, local media outlets reported.
The government’s capital repatriation program has beaten expectations, exceeding NT$210 billion (US$7.25 billion) and prompting officials to consider extending its favorable tax terms due to expire in August next year, the Ministry of Finance said.
Credit card spending declined in August -9.7% YoY to NT$234 billion (US$8.08 billion) after +30% YoY in July, Financial Supervisory Commission data showed.
Wisdom Marine Lines the nation’s largest dry bulk shipping company by fleet size, turned profitable last quarter, on recovering demand from the US and Chinese markets and rising freight rates, the firm said on Wednesday. The company reported a pretax profit of NT$117.52 million (US$4.1 million) during the July-to-September period, with pretax profit per share of NT$0.16, ending two consecutive quarterly losses, corporate data showed. The company said it was cautiously optimistic +VE
Pan German Universal Motors Ltd which distributes BMW, Porsche and Mini vehicles in Taiwan, yesterday reported record-high revenue as consumers’ demand for imported vehicles continues to grow. Last month’s revenue record coincided with a significant growth in the nation’s new vehicle sales, which saw monthly sales +13.4% YoY to 37,241 units, the highest September sales in 15 years. +VE
Cathay Life increases its forex reserve 4th time this year; setting aside an additional NT$2 bn, following other firms in the sector, as the local currency flies high against the greenback.
Housing transactions last month totaled 24,356 units in the nation’s six special municipalities, +36% YoY driven by real-estate needs and investment demands coupled with low interest rates, brokers said. +VE
CPC Corp, Taiwan and Formosa Petrochemical Corp yesterday announced they would each lower diesel prices by NT$0.1 per liter, but keep gasoline prices unchanged for this week, effective today.
CHINA Expect market to open slightly higher after Friday’s +VE re-opening. We could get new loans data as early a Monday although there is not official timing for the release. Overhanging the market remains the international relations with the US, India and Australia. Taiwan also remains an issue. PBoC eases the rules on FX trading to ease pressure on Offshore Yuan.
Data could get
Vehicle Sales Sept. Aug was +11.6% F/cast is +10.5%
FDI (YTD) Sept. Aug was +2.6% F/cast is +2.7%
New Yuan Loans Sept . Aug was CNY1280b F/cast is 1700b
Outstanding Loan Growth Sept. Aug was +13% YoY F/cast is +12.7%
Total Social Financing Sept. Aug was 3580b F/cast is 3200b
M2 Money Supply Sept. Aug was +10.4% F/cast is 10.3%
Chinese President Xi Jinping ‘to visit Shenzhen this week’ to attend ceremony marking 40th anniversary of the special economic zone and also meet with Carrie Lam. A private meeting with Carrie Lam is intended to send a signal that Hong Kong remains critical to future of the hi-tech mainland city.
China will maintain “normal” monetary policy for as long as possible, according to the People’s Bank of China Governor Yi Gang. Policy makers plan to encourage a “reasonable” increase in household savings and incomes, Yi wrote in an article published Saturday in the central bank’s biweekly magazine China Finance, Bloomberg reports.
PBoC said it will lower the reserve requirement ratio for financial institutions when conducting some foreign exchange forwards trading to zero with effect from today. Under current rules, financial institutions must set aside 20 percent of the previous month's yuan forwards settlement amount as foreign exchange risk reserves. The move came after the onshore spot yuan rate ended at a 17-month high on Friday against the dollar, its biggest one-day percentage gain since 2005. The yuan has gained more than 6 percent against the dollar since late May.
Qingdao Chest Hospital treating imported Covid-19 cases closes after 3 local asymptomatic infections confirmed. Going into lockdown after ex-patient, former worker and her husband all test positive. Authorities in city screened 200,000 residents last month after two workers at local port were confirmed as asymptomatic cases. Slight -VE fro sentiment
China says it has foiled Taiwan spy plots and accuses suspect of backing Hong Kong protests. The report by state broadcaster CCTV says Lee Meng-chu, who was detained in Shenzhen last year, was a separatist who was caught with military intelligence. It also accused Taiwan’s government of encouraging ‘independence activities’ and ‘destroying peace and stability’ -VE for relations. Bloomberg has an article saying that China’s efforts at discouraging nations from treating Taiwan as an independent nations are ‘backfiring’.
Australian writer Yang Hengjun detained in China in January set to face trial in Beijing. He has been charged with espionage. He has been held in a detention centre with no family access. Likely to raise tensions between Australia and China and raise further concerns in Hong Kong.
Huawei’s Meng Wanzhou loses court bid to see Canada-US emails about her arrest. Canada had claimed lawyer-client privilege over 19 documents, with a judge upholding protection for 18 of them. Worth noting that Meng is still under house arrest but with full access to legal team and visitors.
China's mobile gaming revenue growth in September 2020 outran the level in September 2019, although it was weaker than that in July-August 2020, according to Gamma Data's report. China's mobile gaming market tracked actual sales revenue of RMB15.995 billion in September, -10.06% MoM but +20.59% YoY.
Huawei announced on its official Weibo that its Mate40 handset series will be marketed on 22 October as scheduled, along with online launching event.
Huawei -VE as Telecom operators Orange Belgium and Proximus have decided to progressively replace Huawei Technologies Co-made (華為) mobile equipment in Belgium and Luxembourg with Nokia gear, two sources close to the matter said.
Shenzhen Govt is giving away 10 million Yuan in sovereign digital yuan to test technology and boost consumption. Winners will be announced on Sunday and can receive their digital ‘red packet’ by opening an e-wallet via official app The payouts can be used to make purchases at 3,389 designated shops in Luohu district from Monday. +VE
Japanese-themed Ichiban Street in Guangdong closed to visitors as it needs to be ‘corrected and renamed’, guard at site says. Local business owners have speculated copyright complaints and patriotism could be behind the closure. Slight -VE
HONG KONG ADR’s +97pts to open at 24,216 Concerns remain over US sanctions on Chinese firms. A delay in the Ant listing in HK also a slight concern. Apple supply chain names remain +VE ahead of the new iPhone launch.
No data due
Sunday saw 7 cases after 6 Saturday and 8 Friday Slight +VE although the Government was warned of a rising threat of another covid wave in HK.
IPO WEIHAI BANK (09677.HK), debut, opened at $3.35 in grey market, flattish with the listing price, and closed at $3.28 in grey market, down 7 cents or -2.1% against the listing price of $3.35, on volume of 2.38 million shares and turnover of $7.83 million, PhillipMart data showed.
SHORT SALES Friday 16.9% vs 20.1 Thursday
Top Shorts Wharf REIC (1997) 44%, Power Assets (6) 43%, Ping An (2318) 41%,, CLP (2) 37%, HK & China Gas (3) 33%, Hang Lung (101) 31%, CNOOC (883) 30%, Bank of China (3988) 30%, China Res Land (1109) 29%, Shenzhou (2313) 29%, Sunny Optical (2382) 29%, AIA (1299) 27%, ICBC (1398) 26%, HSBC (5) 25%.
Li Ka-shing and Victor T K Li, through Li Ka Shing Foundation Limited, acquired a total of 728,000 shares of CK ASSET (01113.HK) , at the average price of HK$38.234, HK$38.2406, HK$38.991 and HK$38.4464 per share on 5 October, 6 October, 7 October and 8 October 2020 respectively. As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK ASSET increased from 35.62% to 35.64%, and from 35.68% to 35.7%, respectively.
NetEase fined for carrying ‘inappropriate’ comments on news platforms. Company representatives told to rectify offending content, punish those who allowed it to be published, Beijing Internet Information Office and orders ‘comments’ function to be suspended for a week -VE
Goldin Financial (0530) to place about 1.4 billion new shares for HK$1.38 billion to repay debt at HK$1 per share, a discount of 0.99 percent to its Friday closing price. The 1.4 billion new shares are equal to 20% of the total existing shares, or around 16.67% of the issued share capital after placement. Chairman Pan Sutong and Goldin Global will be diluted to 59.05% from 70.86%.
SUNNY OPTICAL (02382.HK) announced that handset lens sets shipment amounted to 167 million units in September 2020, +15.5% YoY and +3.2% MoM. During the month, the vehicle lens sets shipment amounted to 6.372 million units, +32% YoY and +17.7% MoM. +VE
SINIC HOLDINGS (02103.HK) announced that the contracted sales amount for the nine months ended 30 September 2020 was approximately RMB73.42 billion.
RSUN PPT (01996.HK) announced that for September 2020, contracted sales of the Company RMB8.793 billion, +89.5% YoY.
RONSHINECHINA (03301.HK) nine months ended 30 September 2020, the aggregate contracted sales of the Group amounted to approximately RMB100.121 billion, +6.5% yearly.
SHIMAO GROUP (00813.HK) announced that the aggregated contracted sales for the nine months ended 30 September 2020 amounted to approximately RMB201.22 billion, +16% YoY. Contracted sales in September +0.37% YoY to 32.21 billion yuan (HK$37.23 billion). Contracted sales area was 1.85 million square meters. -VE
Guangzhou R&F Properties (2777) said sales +24% YoY to 14.01 billion yuan last month, +29% MoM. Sales area was 1.15 million sqm last month, +11%. Sales for the first three quarters were 86.63 billion yuan, -6.4% YoY representing 57% of the developer's full-year sales target. Sales area was 7.39 million sqm, -13.4% +VE
BYD COMPANY (01211.HK) announced that the sales volume in September aggregated 42,183 vehicles, +3.6% YoY
GREATWALL MOTOR (02333.HK) announced that sales volume amounted to 680,700 vehicles during the first nine months of 2020, -6% yearly. September sales were +17.8% YoY 117,812 +VE
Bauhaus International (0483) same-store sales -50% YoY and it closed 27 stores, for three months ended September. Same-store sales in Hong Kong and Macau -53% Taiwan sales -16 %. In the first half, same-store sales in Hong Kong and Macau were -47% while Taiwan was -28%. -VE
NEW WORLD DEV (00017.HK)’s The Pavilia Farm I, has its first price list released, involving 180 flats. The batch was 21x over subscribed. With saleable area of 322-835 sq.ft., the unit prices range $7.862-24.922 million, i.e. $20,773-29,847 per sq.ft.. Based on the maximum discount of 20%, the discounted selling prices range $6.289-19.937 million, i.e. $18,921 per sq.ft.. Subscription and showroom opened Saturday. If the subscription is well-received, NEW WORLD DEV will discuss with MTR CORPORATION (00066.HK) for the selling time. +VE
WHEELOCK sold 6 flats at Malibu Lohas Park
Centaline Property Agency reported only 12 secondary transactions at 10 blue-chip housing estates over the weekend, -20% WoW.
Centa-City Leading Index (CCL) last posted at 178.05, up 0.74% weekly with a two-week rally. Centaline Property, saw signs of the end of home price trough-seeking. While standing firmly at 176 for five weeks, CCL managed to surpass 178 this week. They anticipated home prices to pick up before and after Mid-Autumn Festival.
HK Express announced that starting at HKD388, tickets for the three #UOFlycation flights on 1, 7 and 8 November 2020 have just gone up for sale today (9 October) at 5 pm.
GENTING (678 HK) pushing for the Government to allow it and others to operate ‘staycation cruises’ . It has resumed in Taiwan and Singapore.
DOW +0.57%, NDX +1.39%, S&P +0.88%, Russel 2K +0.55% Nasdaq opened much higher and worked higher through the day. DOW and S&P also opened slightly higher and traded sideways. A big driver was news that a revised stimulus package; with Trump now offering $1.8t, was being discussed. Although it is unlikely to be passed before the election. Consumer Discretionary and Tech led the markets.
Facebook +0.3%, Apple +1.7%, Amazon +3%, Netflix +1.4%, Alphabet +1.8% and Microsoft +2.5%. Nvidia -0.6%, Micron unch and Skyworks +1.8%.AMD -3.9% on news it is in advanced discussions to buy Xilinx in a takeover that could be valued at US$30 billion. Re-opening stocks Boeing -0.4%, Caterpillar +1.5%, Simon Property -3.3%, Gap -0.1%, United +0.3%, American +0.3%, Delta +0.4%, SouthWest +1.9%, Carnival +0.5% and Norwegian Cruise Line +2.9%.Lock down names Campbell Soup +0.1%, General Mills +0.8% and JM Smucker +1.3%
Wholesale Inventories Aug +0.4% MoM vs -0.2% Jul revised (F/cast was +0.5%)
Baker Hughes Total Oil Rig Count 269 vs 266 prior
USD was weaker vs Yen & Euro on growing expectation of a Biden presidency
Bitcoin +2.8% @ 11,400, VIX -5.2% @25.0, US T10 flat @ 0.779%
OIL Brent -1.13%, WTI -1.4% as the strike hurting Norway’s production ended. Brent’s six-month contango, has shrunk to around $1.90 a barrel from $3.24 less than a month ago.
Gold +2.2%, Silver 6%, Copper +1.4% on expectation of more stimulus
AHEAD No data due
DAX +0.07%, CAC +0.71%, FTSE +0.65% Markets opened slightly higher despite the large amount of UK data out pre market (Balance of Trade, GDP 3 mth Ave, GDP, Goods Trade Balance, Construction Output, Industrial & Manufacturing Production, (later NIESR Monthly GDP Tracker) and French Industrial Production which was largely weaker than forecast. There are also concerns about the rise in covid cases which combined with Influenza could be very dangerous but investors are watching earnings and still hoping for positive news from the US on a new stimulus plan.
Rolls Royce +14% continues to rebound; a good piece in Market Thinking about how the traders have played this stock in the third and fourth paragraphs
Pandora +17.2% after raising its guidance.
FRANCE Industrial Production Aug +1.3% MoM vs +3.8% Jul (F/cast was +2.2%)
Balance of Trade Aug GBP 1.4b vs 1.7b Jul revised (F/cast was +0.6b)
GDP 3 mth Ave Aug 8% vs -6.8% Jul revised (F/cast was +8.5%)
GDP Aug +2.1% MoM vs +6.4% Jul revised (F/cast was +4.9%)
GDP Aug -9.3% YoY vs -11.3% Jul revised (F/cast was -7.2%)
Goods Trade Balance Aug GBP -9.01b vs -7.87b Jul revised (F/cast was -9b)
Construction Output Aug -13% YoY vs -15.6% Jul (F/cast was -9.8%)
Industrial Production Aug -6.4% YoY vs -7.4% Jul revised (F/cast was -4%)
Industrial Production Aug +0.3% MoM vs +5.2% Jul (F/cast was +2.7%)
Manufacturing Production Aug -8.4% YoY vs -10.1% Jul revised (F/cast was -6.2%)
Manufacturing Production Aug +0.7% MoM vs +6.9% Jul (F/cast was +2.8%)
NIESR Monthly GDP Tracker Q3 15.2% vs 8% prior revised (F/cast was +9.1%)
EUROZONE Speeches by Schnabel and Lagarde
GERMANY Wholesale Prices
FRANCE No data due
UK No data due