Oct 14 Asian Marco Initial Thoughts Asian Futures lower, US Futures flat
Covid-19 Globally over 38m cases, 1.08m deaths
ASIAN Futures indicate a lower open, expect caution ahead of President Xi to speech
US Futures opened up small +33pts with S&P and NDX also up small.
EU General Affairs Council Meeting and IMF/World Bank Annual Meeting (Virtual)
IMF says forecasts for the global economy are “somewhat less dire” as rich nations and China have rebounded quicker than expected from coronavirus lockdowns, but the outlook for many emerging markets has worsened.
Soc Gen Risk & Derivatives Conference starts The New Future of Investing
DOW -0.55%, NDX -0.1%, S&P -0.63%, Russel 2K -0.74% Futures were weak ahead of earnings but pre-market there were good numbers. Markets opened slightly lower and traded sideways; Dow and S&P in the red all day and the NDX trading around flat in choppy trading. Concerns on a vaccine as Eli Lilly -2.9% trial was paused that follows Johnson & Johnson -2.3% whose covid trial has also been paused due to an unexplained illness in a patient. But J&J earnings beat forecasts and raised its guidance. The negative news on covid prompting a rotation from cyclicals back into tech.
Other good earnings pre market came from BlackRock +3.9%, JPM -1.6% earnings beat but only booked $611m for possible loan losses. Other movers were Royal Caribbean -13.% on offering $500m in common stock and $500m in senior convertible notes to fund operations.
During the day Citi -4.8% earnings beat but was sold down and Delta -2.7% as its loss was greater than expected
Amazon flat rallied in the morning but sold down in the PM as Prime Day kicks off
Apple -2.7% despite the 5G iPhone launch
Beyond Meat -2.4% off lows on broker downgrade
Foot Locker +1.7% but off initial highs as broker upgraded from under perform to buy.
Despite the good pre market earnings and news stocks trended lower on concerns over the stimulus talks.
Boeing -3.1% as International arbitrators said Tuesday that the European Union can impose tariffs and other penalties on up to US$4 billion worth of U.S. goods and services over illegal American support for plane maker Boeing.
Facebook +0.1%, Microsoft +0.7% Netflix +2.7% recovering from Monday’s sell off on the Disney +3.2% re-organisation news.
Nvidia +0.2%, Micron +2.3% and Skyworks -2.5%, AMD +1.2% as Xilinx takeover talks continue
Re-opening stocks Caterpillar -0.3%, Simon Property -3.3%, Gap +0.3%, United -3.1%, Carnival -7.8%
Lock down names Campbell Soup +1%, General Mills +0.6% and JM Smucker +0.1%
NFIB Business Optimism Sept 104 vs 100.2 Aug (F/cast was 99)Core Inflation Rate Sept +1.7% YoY vs +1.7% Aug ( F/cast was +1.7%)Inflation Rate Sept +1.4% YoY vs +1.3% Aug ( F/cast was +1.5%)Inflation Rate Sept +0.2% MoM vs +0.4% Aug ( F/cast was +0.2%)IBD/TIPP Economic Optimism Oct 55.2 vs 45 Sept (F/cast was 43)Consumer Inflation Expectations Sept 2.98% vs 3% Aug (F/cast was 3%)Redbook 10 Oct +0.4% MoM vs 0% prior (+1.2% YoY vs 2.1% prior)
USD was slightly stronger vs Yen & Euro. Bitcoin -0.8% @ 11,464.04, VIX +4% @ 26.07, US T10 eased to 0.729%
OIL Brent +1.7%, WTI +2% after the China trade data suggests that good demand from China off setting the recent increases in supply but upside capped by IEA forecasting a slow recovery for oil demand as covid cases rise. They expect the global economy to recover in 2021 and energy demand by 2023.
Gold -1.7%, Silver -3.8%, Copper -0.77% as the next US stimulus package is being held up and the IMF outlook less severe.
AHEAD MBA 30 yr Mortgage Rate and Mortgage Applications, PPI, Core PPI, API Crude Oil Stock Change
DAX -0.91%, CAC -0.64%, FTSE -0.53% Market opened lower an initially sold down as the ZEW surveys were lower than forecast. UK employment data was mixed but earnings beat. Market traded sideways/higher in the morning. But from mid day the markets trended lower.
General caution ahead of the US bank and other earnings and concerns about the impact of Covid with many areas under heightened social distancing measures. China trade data at a headline level looks good but the underlying picture is not so convincing with exports skewed towards medical and electronics exports. The positive is that imports for domestic activity were good.
Morphosys -5.4% but off early lows; on launching a convertible bond.
Rolls-Royce -6% following a bond offering.
SSE +1.7% announced the sale of its 50% stake in two West Yorkshire-based facilities for around £995 million ($1.3 billion).
Maersk A/S -0.2% yesterday said that demand was recovering faster than expected and lifted its earnings outlook, while also announcing plans to cut 2,000 jobs as it streamlines to reduce costs. “Volumes have rebounded faster than expected, our costs have remained well under control, freight rates have increased due to strong demand,” Skou said. +VE Shipping companies
ZEW Economic Sentiment Index Oct 52.3 vs 73.9 Sept (F/cast was 60)
Inflation Rate Sept -0.2% YoY vs 0% Aug (F/cast was -0.2%)
Inflation Rate Sept -0.2% MoM vs -0.1% Aug (F/cast was -0.2%)
ZEW Economic Sentiment Index Oct 56.1 vs 77.4 Sept (F/cast was 70)
ZEW Current Conditions Index Oct -59.5 vs -66.2 Sept (F/cast was -58)
FRANCE No data due
Claimant Count Change Sept 28k vs 39.5k Aug revised (F/cast was 72k)
Employment Change Jul -153k vs -12K Jun (F/cast was -30k)
Average Earnings Ex Bonus Aug +0.8% vs +0.2% Jul (F/cast was +0.5%)
Average Earnings Inc Bonus Aug +0% vs -1% Jul (F/cast was -0.7%)
Unemployment Rate Aug 4.5% vs 4.1% Jul (F/cast was 4.2%)
Labour Productivity Final Q2 -2% vs -0.5% prior revised (F/cast was -2.5%)
EUROZONE Industrial Production
GERMANY No data due
FRANCE IEA Oil Report
UK No data due
JAPAN Expect Nikkei to open lower. Chicago futures @ 23,560 (Osaka @ 23,500) vs 23,602 close Tuesday. Yen currently 105.45
Data due 12:30pm
Industrial Production Aug. July was +8.7% MoM, F/cast is +1.7% (July was -15.5% YoY, F/cast is -13.3%)
Capacity Utilisation Aug July was 9.6% MoM and F/cast is 6%)
Japan says S Korea it will not attend trilateral summit unless there is progress on feud over compensation for wartime labour.
Japan on Tuesday launched its latest three-yearly energy policy review, with the country grappling with a need to cut greenhouse gas emissions even as the public remains wary over nuclear power following the Fukushima disaster.
JERA said on Tuesday it will shut down all inefficient coal-fired power plants in Japan by 2030 and it aims to achieve net zero emissions of carbon dioxide by 2050 to tackle climate change.
SoftBank Group has taken a 9.7% stake in educational gaming company Kahoot by investing 1.98 billion Norwegian crowns ($216 million) in new equity, the Norwegian company said on Tuesday.
Travel Agencies government will allocate additional subsidies Slight +VE
Japan's top court rejected Tuesday the provision of bonus and retirement payments to nonregular employees, saying different treatment from regular employees was not unreasonable in two closely watched cases on their pay gaps. It puts the government call of equal pay for equal work under question. -VE as Japan has a growing number of irregular workers.
SOUTH KOREA Expect markets to open lower following the US as stimulus seems unlikely in the short term and covid vaccine concerns. But domestic earnings remain in focus.
Data due 9am BoK Interest Rate Decision no change expected
Hyundai Motor Co started construction on a research and development centre in Singapore on Tuesday that will house a small-scale electric vehicle production facility. +VE as could make up to 30,000 electric cars a year.
Hyundai Motor Group's executive vice chairman Euisun Chung is set to be made chairman of the South Korean carmaker as soon as on Wednesday, Yonhap news agency reported, as he formally takes over the reins from his octogenarian father. Little impact
SK Biopharmaceuticals has licensed out its breakthrough epilepsy drug cenobamate to Japan’s Ono Pharmaceutical for 53.1 billion yen ($503 million), the company said via shareholders’ notice, Tuesday. The contract gives Ono the rights to develop and commercialize cenobamate in Japan. +VE
LS Cable & System Asia announced Tuesday Q3 operating profit +827% recovering from Q2 But compared to the same three-month period last year, the company‘s operating profit was -20%, when the sales increased by 6%, according to the company. It expects continue improvement +VE
Posco International said Tuesday that it has won an order for electric vehicle parts from Vietnam’s automotive manufacturer VinFast in partnership with Korean parts firm Erae AMS. It is the first time for the trading company to supply auto parts to VinFast. +VE
GS Caltex said Tuesday it has combined drones and self-driving robots to establish contact-free logistics platforms for islands and mountainous areas. Slight +VE
T'way Air, a South Korean low-cost carrier, said Tuesday it will deploy two passenger jets as cargo planes as it strives to survive the coronavirus crisis. Slight +VE
Eastar Jet Co. said Tuesday it will lay off more than half of its workforce this week as it strives to find a new investor after Jeju Air Co. scrapped its plan to acquire the smaller budget carrier amid the coronavirus pandemic. -VE
TAIWAN Expect market to open lower following the US. Apple names in focus.
No data due
Covid case A Taiwanese man who returned from China’s Jiangsu Province yesterday became the nation’s 530th confirmed COVID-19 case, the Central Epidemic Command Center (CECC) said yesterday. Raises questions about China’s official data on covid cases.
The White House is moving forward with more sales of sophisticated military equipment to Taiwan, telling Congress on Tuesday that it will seek to sell Taipei MQ-9 drones and a coastal defensive missile system, sources familiar with the situation said.
The Financial Supervisory Commission (FSC) yesterday fined several Chinese investors a total of NT$25 million (US$864,454) for illegally buying 130 million shares of Tatung Co (大同) last year through a financial institution in Singapore. The commission has barred them from exercising their rights as shareholders, which means they would not be able to vote at an extraordinary shareholders’ meeting to be held on Wednesday next week.
China Steel Corp yesterday raised domestic steel prices by an average 5.02% for delivery next month and said it expects price hikes to extend into December amid increasing demand, matching an uptrend in global steel prices. +VE
E Ink Holdings expects revenue to climb to a four-year high this year as the COVID-19 pandemic helps fuel demand for e-readers and electronic shelf labels during the year-end shopping season. +VE
Foxconn needs new deal for Wisconsin tax credits as the state said it cannot calculate job creation or capital investment tax credits, because the firm is not building the factory envisioned in the original deal. It has told Foxconn Technology that it would not qualify for billions of US dollars in state tax credits unless it strikes a new deal for a scaled-back factory complex. Slight -VE
CHINA Expect market to open lower with caution as investors ahead of President Xi speeches and the new loans data due sometime this week and tomorrows Inflation and PPI data.
No data due but 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%
State Councillor Wang Yi, on Tuesday urged Asian countries to remain "vigilant" over the risk of U.S. strategy stoking geopolitical competition in the South China Sea and other parts of the region.
China and Russia were elected to the United Nations Human Rights Council on Tuesday, but support for Beijing dropped by more than 20% compared with a 2016 vote and Saudi Arabia failed in its bid to win a seat on the Geneva-based body.
Bangladesh will not co-fund a late-stage domestic trial of a potential coronavirus vaccine developed by China's Sinovac Biotech, the country's health minister Zahid Maleque told Reuters on Tuesday. Slight -VE
China’s securities regulator is probing a potential conflict of interest in fintech giant Ant Group’s planned $35 billion stock listing, delaying approval for what could be the world’s largest IPO, three people with direct knowledge of the matter said. CSRC is looking into the role of Alipay, Ant’s flagship payment platform, as the only third-party channel through which retail investors could buy into five Chinese mutual funds investing in the IPO. -VE
China calls off international Airshow China which was due to be held in November but has been postponed until further notice due to covid concerns.
Xi Jinping tells marines to focus on ‘preparing to go to war’ in military base visit during southern China tour.
He also urged the nation’s technology industry to become more self-reliant as the sector faces “unprecedented” international trade and security headwinds.
China’s public health insurance agency says it can’t afford to provide Covid-19 vaccine for free; it says the system can only cover basic medical needs. But a free immunisation programme could still be covered by government funds. An indication of the potential cost of covid on funding.
HONG KONG ADR’s -28pts to open at 24,621 as market re-opens after the typhoon. I think the market could see more downside with Alibaba weak on delays to ANT IPO.
BUT data out Tuesday on Autos was good and Chinese Banks also +VE as the CBIRC looks to unwind some of the requirements of negative profit growth. Shipping stocks could see interest after Maersk says demand is recovering.
No data due
SHORT SALES Monday 17.7% vs 16.9% Friday
Top Shorts Hang Seng Bank (11) 60%, Wharf REIC (1997) 58%, Ping An (2318) 51%, China Res Land (1109) 46%, HSBC (5) 37%, Henderson Land (12) 35%, AIA (1299) 24%.
CHINA JINMAO (00817.HK) announced that in order to demonstrate their confidence in the Company and their recognition of the investment value of the shares of the Company, the executive directors had on 12 October purchased a total of 3 million ordinary shares with their self-owned funds on market.
BRIGHT CULTURE (01859.HK) announced that Chairman Liu Mu had on 9 October acquired a total of 9.289 million shares on the market. Immediately after the above increase in shareholding, Liu is interested in 48.39% of the total issued share capital of the Company.
DEXIN CHINA (02019.HK) announced that Hu Yiping, the chairman and a controlling shareholder of the Company, acquired 50.29 million shares of the Company at an average price of HK$2.9 per share on the last trading day (12th), involving around HK$146 million.
China Evergrande (3333.HK) is looking to raise up to $1.1 billion in a share placement to help refinance some of its debt and build up its working capital, according to Reuters. It will sell 490 million shares at between HK$16.50 and HK$17.20 a share to raise between $1.04 billion and $1.087 billion. It then has an option to sell a further 120 million shares to raise another $266 million if the stock is priced at the top of the range. -VE
HSBC (0005) was left off the list of banks arranging China's US$6 billion (HK$46.8 billion) sovereign dollar debt sale for the first time since the nation returned with big annual deals in 2017. -VE
China's financial watchdog will unwind the requirement of negative profit growth on mega banks in 3Q20 to cope with sequential slide of capital adequacy ratio and risk of high bad debts, Bloomberg reported. China Banking and Insurance Regulatory Commission (CBIRC) has recently talked with some national commercial banks and allowed disclosure of such banks about their differentiated negative growth of net profit in 3Q20, people familiar with the matter revealed.
China's vehicle sales +12.8% YoY to 2.565 million units in September, according to data from China Association of Automobile Manufacturers (CAAM). Of which, NEV sales +67.7% YoY to 138,000 units.
CHINA SOUTH AIR (01055.HK) announced that with the approval of the CSRC, the Company shall issue A Share Convertible Bonds, with an aggregate value amounting to RMB16 billion.
ZTE (00763.HK) announced that the Board had on 12 October passed a resolution in respect of the proposed adoption of the Management Stock Ownership Scheme by the Company. The Company has plans to set aside an management stock ownership scheme fund of RMB115 million, accounting for 2.23% of the Company’s audited Net Profit for 2019, to be utilised as incentive for the key management team under the Management Stock Ownership Scheme.
MILLION CITIES (02892.HK) announced that the Lender, an indirect wholly-owned subsidiary of the Company, entered into the Agreement with the Project Company, a subsidiary of the Borrower LOGAN GROUP (03380.HK) The Borrower agreed to sell 30% equity interest in the Project Company for development of the Project, at the Consideration of approximately RMB159 million.
LOGAN GROUP (03380.HK) successfully issued the US$300 million 5.25% senior notes due 2025, setting a record-low interest rate among property developers' notes with the same grade and tenor recently. The issuance was over-subscribed by an almost nine times.
TRUE PARTNER (08657.HK) announced a downward offer price adjustment. Accordingly, the final Offer Price has been set at HK$1.40 per Offer Share which is 9.68% below the bottom end of the indicative Offer Price range. -VE
China's agricultural imports from the United States +44.4% YoY to RMB91.39 billion for the first three quarters of 2020, according to data from General Administration of Customs of the PRC (GAC). It remains concerned over the foreign trade impact from a sharp RMB appreciation against USD, said GAC spokesman.
The global PC shipments +14.6% yearly to 81.3 million units in Q3 2020, given ongoing work-from-home arrangement and online schooling amid the pandemic, reported IDC.
China's passenger vehicle retail sales volume reached 1.91 million units in September, +7.3% YoY, according to China Passenger Car Association. The growth stayed around 8% for three straight months. It also said NEV PV wholesale volume exceeded 125,000 units in September, +99.6% YoY and 24.1% MoM. China's vehicle sales were propelled by local car dealers in October, thanks to the government promotion of consumption, said CPCA. October will be a month of peak sales of passenger vehicles (PVs). The relatively stable domestic epidemic during the National Day and Mid-Autumn Festival holiday reinforced market confidence on economic upswing in 4Q20. The CPCA proposed in its article to maintain fiscal policies that encourage NEV development during 2021-25, including waiving vehicle purchase tax and vehicle and vessel tax for NEVs.
China Foreign Exchange Trade System announced today (13 October) that the central parity of USD/ RMB dipped 170 bps from the last trading day to 6.7296.
COSCO SHIP DEV (02866.HK) announced the disposal of a 17.94% stake (i.e. 645 million shares) in CIMC (02039.HK) to independent third party Shenzhen Capital Operation. The total consideration was RMB6.34 billion, representing RMB9.83 per share.
BYD COMPANY (01211.HK) announced revised estimated results, expecting net profit attributable to owners of the parent in a range of RMB3.4-3.6 billion for the period from 1 January 2020 to 30 September 2020, up 116%-128.7% yearly. +VE
BYD ELECTRONIC (00285.HK) Positive profit alert, expecting that the profit attributable to the shareholders for the nine months ended 30 September 2020 will increase by no less than 320% compared with the nine months ended 30 September 2019 (for the nine months ended 30 September 2019: the profit attributable to the shareholders of the Company of RMB1.027 billion).
KAISA GROUP (01638.HK) announced that the total contracted sales for the period from 1 January 2020 to 8 October 2020 amounted to RMB71.046 billion with the total contracted GFA of approximately 4.1766 million sq.m. and the ASP of RMB17,011 per sq.m..
CHINA RES LAND (01109.HK) September, the Group achieved gross contracted sales of RMB29.01 billion +32% YoY with contracted GFA of approximately 1.166 million square meters, -9.5% YoY. Also in September 2020, the Group acquired 4 land parcels in Taiyuan, Dalian and Shenyang with total gross floor area of approximately 1.2714 million square meters. The attributable land premium payable by the Group of the land acquisition amounted to RMB8.32 billion.
BJ CAPITAL LAND (02868.HK) announced that the total contracted sales and corresponding contracted sales area amounted to RMB7.65 billion +115.5% YoY and 525,000 sq.m. +307% yearly, in September 2020.