Oct 15 ASIAN Macro Initial Thoughts: Good China data offset by weak US, Asian Futures
Covid-19 Globally over 38.4m cases, 1.9m deaths. France announces curfews in Paris and 8 cities to try and curb new cases. -VE for sentiment
US Futures opened flat +6pts with S&P and NDX slightly lower
ASIAN Futures indicate a lower open. Despite the good China New Loans data out after market Asian Markets to open lower and the upside for China is likely to be limited.
THAILAND declares State of Emergency as anti government protests increase. The protesters are calling for a new constitution and demanding limits on the wealth and powers of King Maha Vajiralongkorn, who spends most of his time in Germany.
Apple earphone and adapter suppliers -VE as these are no longer supplied with the iPhone. Enabling Apple to keep prices the same and claim to be environmentally friendly.
The IMF projects the global economy to contract by 4.4% in 2020, an upward revision from an earlier estimate.
DOW -0.58%, NDX -0.8%, S&P -0.66%, Russel 2K -0.93% Markets initial trended higher on earnings but then sold down around 11am on covid and concerns of the delays to the next stimulus package. Earnings in focus as even good results were sold. Goldmans +0.2% earnings beat largely due to bond sales, United Health -2.9% despite earnings beating. BoA -5.3% earnings beat but revenues missed. Wells Fargo -6% as it missed estimates; saying its bottom line was impacted by the current low interest rate environment.
Constellation Brands -2.4% on broker downgraded to neutral on concerns over “beer supply capacity” would hurt the stock going forward.
Nio +22.6% on JPMorgan upgraded and lifted its price target to $40, which is nearly double where shares closed on Tuesday. The stock is up more than 500% for 2020.
Bath & Beyond +8.1% plans to offload parts of its non-core assets, which will generate roughly $250 million.
Eli Lilly -1.1% and Johnson & Johnson -0.2% on covid trial suspensions but off lows.
Facebook -1.6%, Amazon -2.3% despite Prime Day, Apple +0.1% but off lows, Microsoft -0.9% Netflix -2.3%, Disney -1.8%.
Nvidia -1.1%, Micron -0.4%, Skyworks +0.1%, AMD -1.3%.
Re-opening stocks Boeing +0.7%, Caterpillar +0.9%, Simon Property -0.2%, Gap +1.4%, Carnival -0.4%
Lock down names Campbell Soup -0.3%, General Mills -1% and JM Smucker -1%
United Airlines +1%, announced deepening losses in the third quarter and a $1.1bn charge to cover 22,000 job cuts
MBA 30 yr Mortgage Rate 3% VS #.01% prior and Mortgage Applications -0.7% vs +4.6% prior.
PPI Sept +0.4% MoM vs +0.3% Aug (F/cast was +0.3%)
PPI Sept +0.4% YoY vs -0.2% Aug (F/cast was +0.4%)
Core PPI Sept +0.4% MoM vs +0.4% Aug (F/cast was +0.2%)
Core PPI Sept +1.2% YoY vs +0.6% Aug (F/cast was +1%)
API Crude Oil Stock Change -5.422m vs +0.951m prior (Consensus was -3.387m)
USD was weaker vs Yen & Euro. Bitcoin -0.2% @ 11,411.21, VIX +1.3% @ 26.40, US T10 %
OIL Brent +1.2%, WTI +2.1% as the API data showed crude stocks dropped, the USD was weaker and ahead of the EIA data due today.
Gold +0.7%, Silver +0.5%, Copper +0.1%
AHEAD Philadelphia Fed Manufacturing Index, Import and Export Prices, NY Empire Set Manufacturing Index, Initial Claims 4 week Ave Claims, Continuing Claims, EIA report
DAX +0.07%, CAC -0.12%, FTSE -0.58% Having opened around flat and trended higher in early trades before trading sideways but then FTSE sold down whereas the DAX and CAC trading around flat. Covid concerns as trails are paused dominated the market sentiment.
Utilities rose as Pharma names were sold.
Atlantia +10% as Italian newspapers La Repubblica and Il Messagero reported that state lender CDP has partnered with Blackstone and Macquarie to ready a bid for the infrastructure firm’s stake in its motorway unit.
Proximus -3.6% after Barclays cut the Belgian telecoms company’s stock to “underweight.”
Industrial Production Aug -7.2% YoY vs -7.1% Jul revised (F/cast was -7.2%)
Industrial Production Aug +0.7% YoY vs +5% Jul revised (F/cast was +0.5%)
FRANCE IEA Oil Report
JAPAN Expect Nikkei to open lower, Chicago future at 23,570 (Osaka at 23,540) vs 23,626 Nikkei 225′s last close. Yen currently 105.16
Data due Foreign Stock and Bond buying date Later Teriary Industry Index
A Japanese supercomputer showed that humidity can have a large effect on the dispersion of virus particles, pointing to heightened coronavirus contagion risks in dry, indoor conditions during the winter months. -VE as we enter the winter season
SoftBank had resumed share repurchase in September by buying back 6.17 million shares at JPY40.1 billion (roughly USD380 million), Bloomberg reported. +VE
ANA Holdings Inc has secured $3.8 billion in subordinated loans to bolster funds it needs to survive a slump in air travel caused by COVID-19 travel restrictions, three people with knowledge of the deal said. +VE
Nidec to move from iPhone miniature motors to auto e-drives seeking to acquire JATCO from Nissan +VE if successful worth watching.
Resona Bank says it has lost a disc continued the data on 14,561 customers; not been stolen and is password protected. Still -VE
Nippon Steel reorganising its overseas production bases; looks to sell ageing US auto steel plants. +VE
SOUTH KOREA Expect markets to open lower following US markets and with concerns of a new covid cluster in Busan. Comes as there were 84 new covid cases reported yesterday including 53 local infections; excluding the 53 cases in Busan. But BTS’ label set to make market debut and will be closely watched.
No data due
The government plans to carry out diagnostic tests for COVID-19 on some 130,000 workers at mental hospitals and nursing homes in the greater Seoul area after a major cluster was discovered in Busan.
South Korea will alleviate the requirements to qualify for housing subscriptions, in a move to lower the market entry barrier for young non-homeowners, Deputy Prime Minister and Finance Minister Hong Nam-ki said Wednesday. +VE Property Developers
LG Chem said Wednesday it will offer cash dividends of at least 10,000 won ($8.70) per common share over the next three years as part of an effort to promote shareholder value +VE
LG Innotek, the high-tech parts making unit of LG Group, said Wednesday the company has developed a “highly efficient” ferrite material to be used for ultra slim TVs and vehicles. +VE
Samsung Electronic Vice Chairman Lee Jae-yong met top executives of Dutch semiconductor equipment provider ASML, the company said Wednesday. Slight +VE but likely more linked with trying to keep him out of jail by stressing his importance to the company.
LG Electronics said Wednesday it will expand its washer-dryer combo lineup with large capacity products to better meet consumer demand. +VE
SK Telecom said Wednesday it will develop smart ports using 5G network services by partnering with the Ministry of Oceans and Fisheries and the Busan Port Terminal Corp. A smart port refers to ports that use Internet of Things (IoT) devices to track and analyze the movement of cargo and workers to improve logistics efficiency and worker safety. +VE
Korean Air Lines said Wednesday it will have 70% of its employees go on unpaid leave until December due to the prolonged coronavirus impact on the airline industry. -VE
TAIWAN Expect market to open lower Apple supplier names remain in focus.
No data due.
IMF on Tuesday raised its forecast for Taiwan’s GDP growth this year, as the nation is doing better than most other countries in fighting the COVID-19 pandemic. Taiwan’s GDP growth this year is expected to stand at zero, the IMF said, a significant upgrade from a 4 percent contraction forecast by the fund in April. +VE
The central bank intends to maintain selective credit controls on the local property market, which has seen an uptick in transactions and prices, it said in a report released yesterday, ahead of Governor Yang Chin-long (楊金龍) attending a meeting of the legislature’s Finance Committee today.
United Renewable Energy yesterday said that demand has picked up rapidly this quarter, primarily from the home market. Lockdowns worldwide due to the COVID-19 pandemic hindered demand and slowed solar panel installations in the first half of the year, but demand bounced back strongly after businesses reopened last quarter, URE said. It is optimistic about Q4 +VE
Airlines EVA Airways Corp saw its revenue drop by more than half last month for a seventh straight month as passenger traffic amid the COVID-19 pandemic -VE, while China Airlines Ltd posted a milder decline as it increased its focus on cargo operations slightly less -VE
CHINA Expect market to open higher after good New Loans data although Inflation and PPI data due on the open could mute the upside if disappointing. Weakness in US overnight also a -VE. Along with a further deterioration in US/China and Australia/China relations. President Xi’s Shenzhen speech was more a 'call to arms' than about new revelations but hinted that Hong Kong should be more integrated with the mainland to "enrich the new practice of 'one country, two systems,'" .
Sept Inflation Rate (Aug was +2.4% YoY F/cast is 2%) [Aug was +0.4% MoM F/cast is +0.2%]PPI Sept. Aug was -2%, F/cast is -1.8%.
After Market Wednesday
New Yuan Loans Sept CNY 1900b vs 1280b Aug (F/cast was 1700b)
Outstanding Loan Growth Sept +13% YoY vs +13% Aug (F/cast was +12.7%)
Total Social Financing Sept CNY 3480b vs 3580b Aug (F/cast was 3200b)
M2 Money Supply Sept +10.9% vs +10.4% Aug (F/cast is 10.3%)
China threatens retaliation over US deals to supply Taiwan with arms. A spokesman for the foreign ministry says Beijing reserves the right to take ‘legitimate and necessary’ steps over the plans
Xi Jinping to tighten grip on power with new rules for top policymaking bodies. Draft gives details of Xi’s scope as general secretary of the ruling Communist Party and how the top organs should operate. An observer says it’s part of a long-term project to make regulations on almost every issue, with personal power ‘always embedded’
The U.S. State Department has submitted a proposal for the Trump administration to add China’s Ant Group to a trade blacklist -VE to Alibaba if implemented.
The Trump administration on Wednesday appointed a senior U.S. human rights official as special coordinator for Tibetan issues, a move likely to anger China amid increasingly tense relations between Washington and Beijing.
The U.S. State Department on Wednesday warned international financial institutions doing business with individuals deemed responsible for China's crackdown in Hong Kong that they could soon face tough sanctions. -VE
Australia said on Wednesday it was deeply concerned that Australian writer Yang Hengjun is facing trial in China charged with espionage, adding his treatment fell short of "basic standards of justice".
Sinosteel increases Australian iron ore stake after merging with Baowu Steel. The purchase of half the future output of new Fenix Resources mine comes amid controversy over China halting imports of Australian coal +VE if the transaction is allowed.
FT reports that 'The total value of China’s stock market has climbed to a record high of more than $10tn, as the country’s accelerating economic recovery propelled it past the previous peak hit during an equities bubble five years ago.’ Likely to rise the attractiveness of China shares.
HONG KONG ADR’s -178pts to open at 24,489 with broad based weakness and despite the Good China loans data.
No data due
SHORT SALES Wednesday 17.4% vs 17.7% Monday
Top Shorts Hang Seng Bank (11) 50%, Henderson Land (12) 37%, CKI (1038) 36%, Bank of China (3988) 36%, China Res Land (1109) 35%, HSBC (5) 34%, Ping An (2318) 30%, CCB (939) 29%, AIA (1299) 28%, BankComm (3328) 26%, Xiaomi (1810) 25%.
CHANNEL MICRON (02115.HK), debut opened at $0.6 in gray market, +66.7% against the listing price $0.36, and closed at $1 in gray market, up $0.64 or 1.8 times against the listing price of $0.36, on volume of 12.5 million shares and turnover of $11.5 million, PhillipMart data showed.
CN LOGISTICS (02130.HK), debut, opened at $3.01 in gray market, +13% against the listing price $2.66, and closed at $2.7 in grey market, up 4 cents or +1.5% on volume of 2.55 million shares and turnover of $6.8 million, PhillipMart data showed.
ZOOMLION (01157.HK) Positive Profit Alert expected profit in a range of RMB5.5-5.8 billion, up 58.05-66.68% yearly, for the period from 1 January 2020 to 30 September 2020. Basic EPS was assumed at RMB0.74-0.78. +VE
TENCENT (00700.HK) Executive Director Lau Chi Ping Martin reduced 350,000 shares of the company at $533.3761 each on 8 October, and 150,000 shares at $541.1467 each on 9 October. The two reductions aggregated $267.85 million. Upon completion, Lau holds 0.57% shareholding of the company. Worth noting that his timing of selling has not generally been good.
DATANG POWER (00991.HK) announced the estimated results for the first nine months of 2020. Net profit is expected to increase by RMB1.06 billion to RMB1.355 billion, or 72% to 92%, as compared to the corresponding period of the previous year. +VE
EVERGRANDE (03333.HK)'s subsidiary Hengda Real Estate Group is facing pressure in regards of share buyback of strategic investors remains unresolved, Bloomberg reported. The biggest strategic investor - Shandong Hi-Speed Group - may insist to pull out of the investment in early next year upon expiry. Four companies under Shandong Hi-Speed Group made a total strategic investment of RMB23 billion to Hengda, but they have not signed the agreement to pledge giving up the buyback right, the report quoted people with the knowledge of the matter. One of the sources said Shandong Hi-Speed Group regarded the investment as financial investment, and lean toward a repurchase at maturity in January 2021.
HKEX (00388.HK)'s wholly owned subsidiary, Hong Kong Futures Exchange Limited, announced that the U.S. Commodity Futures Trading Commission certified three broad-based equity index futures contracts to be offered and sold to persons in the U.S.. The U.S. investors can trade the contracts within the U.S.. Such index futures include MSCI Singapore Free (SGD) Index Futures, MSCI Japan (JPY) Index Futures and MSCI Japan Net Total Return (JPY) Index Futures.
HSBC HOLDINGS (00005.HK) announced a meeting of a committee of the Board of Directors will be held on 27 October 2020 to consider the announcement of the Earnings Release for the Third Quarter 2020.
CHI MER LAND (00978.HK) announced that for the period from 1 July 2020 to 30 September 2020, the aggregate contracted sales amounted to RMB13.344 billion +29% YoY.
Centa-Salesman Index (CSI) last stood at 54.24, up 0.96 pts weekly, said Centaline Property. The index amassed 3.02 pts of growth in two weeks. As the Government is progressively relaxing anti-plague measures, the property market sentiment is getting more positive.