Oct 16 Asian Macro Initial Thoughts US Futures Slight +VE Asia mixed

20 Oct

Oct 16 Asian  Macro Initial Thoughts US Futures Slight +VE Asia mixed

Covid-19 Globally over 38.8m cases, 1.1m deaths  
US Futures opened Dow +30pts with S&P and NDX both +0.2%
Expect cautious trading in Asia ahead of the weekend and with US Retail Sales tonight and Chinese data on Monday which includes GDP Growth Rate, Industrial Production and Capacity Utilisation, Retail Sales and Unemployment.

DOW -0.07%, NDX -0.47%, S&P -0.15%, Russel 2K +1.06% Markets opened at their lows and worked better, to close around the day highs. Futures had been weak despite some good earnings as Initial claims rose which to me indicates that the failure to reach an agreement on stimulus is now having an impact on the recovery. Big Tech weak but Banks and Energy were stronger.
Pre market Walgreens +4.8%, Morgan Stanley +1.4% as earnings beat, United Airlines -3.8% as loss widened but revenue was inline -VE cross read to other airlines. Fastly -27% issued a revenue warning due to a reduction in business from its largest customer; not mentioned but it has previous said it was Tik Tok Wells Fargo +1.3% fired 100 employees saying they had defrauded the Economic Injury Disaster Loan program designed to help small businesses through the pandemic.
Facebook -1.9%, Amazon -0.8%, Apple -0.4%, Microsoft -0.5% Netflix +0.1%, Disney +0.6%. Tech generally weak on rising regulatory concerns.
Nvidia -0.9%, Micron +0.6%, Skyworks +0.05%, AMD -1.3%.
Re-opening stocks Boeing +0.6%, Caterpillar +0.9%, Simon Property -0.9%, Gap +1.3%, Carnival +0.3%
Lock down names Campbell Soup -0.6%, General Mills +1% and JM Smucker -0.1%
Philadelphia Fed Manufacturing Index Oct 32.3 vs 15 Sept (F/cast was 13)
Import Prices Sept -1.1% YoY vs -1.4% Aug (F/cast was -1.1%)
Import Prices Sept +0.3% MoM vs +0.9% Aug (F/cast was +0.3%)
Export Prices Sept -1.8% YoY vs -2.8% Aug (F/cast was -2.3%)
Export Prices Sept +0.6% MoM vs +0.5% Aug (F/cast was +0.2%)
NY Empire Set Manufacturing Index Oct 10.5 vs 17 Sept (F/cast was 12)
Initial Claims 898k vs 840k prior (F/cast as 845k)
4 week Ave Claims 866.25k vs 857k prior (F/cast was 852k)
Continuing Claims 10.018m vs 10.976m prior (F/cast was 10.650m)
EIA Change Natural Gas Stocks 46 Bcf vs 75Bcf Prior (consensus was 55 Bcf)
EIA Change of Gasoline Stocks -1.626m vs -1.435m (consensus was -1.367m)
EIA Change of Crude Stocks -3.818m vs 0.501m prior (consensus was -3.387)
USD was slightly stronger vs Yen & Euro. Bitcoin +1% @ 11,507.71, VIX +2.2% @ 26.97, US T10 0.739%
OIL Brent -0.6%, WTI -0.19% as covid cases rise but the downside limited by inventory numbers.
Gold +0.3%, Silver -0.4%, Copper +1.1%
AHEAD Retail Sales, Industrial & Manufacturing Production, Capacity Utilisation, Business Inventories, Michigan Preliminary Data (Inflation Expectations, 5 year Inflation Expectations, Current Conditions, Consumer Sentiment, Consumer Expectations), Baker Hughes Total Oil Rig Count, Net Long-Term Tic Flows, Overall net Capital Flows.

DAX -2.49%, CAC -2.11%, FTSE -1.73% Markets opened lower but then sold down as rising Covid case prompts France to introduces curfews (it had 22,951 cases in 24 hours) and London to move to high alert. Sentiment was weak as unlikely to be any US stimulus pre elections, although I think that has been factored in already. Markets then traded sideways with a slight rebound into the close.
Ericcson -0.6% won a contract to build key elements for Dutch KPN after Huawei was removed from consideration.
Roche -3.2% confirmed its full-year 2020 outlook but sales missed expectations for Q3
Accor -5.3% led a broad decline for the travel sector. Technipfmc +2.5% off initial lows after the oil and gas firm entered a strategic partnership with McPhy on green hydrogen.
URW +14.1% after a major shareholder group opposed its strategy and rights issuance.
Grifols +8.4% after rival Vertex scrapped a key clinical trial of a new deficiency disorder treatment.
French Inflation Sept 0% YoY vs +0.2% Aug (F/cast was +0.1%)
Inflation Sept -0.5% MoM vs -0.1% Aug (F/cast was -0.5%)
EUROZONE New Car Registrations, Balance of Trade, Inflation Rate
GERMANY No data due
FRANCE No data due
UK No data due

JAPAN Expect Nikkei to open flat Yen currently 105.40 Following the US and with caution ahead of the weekend
No data due

PM Suga said on Thursday he would take measures to make it easier for men to take time off to take care of new-born babies, as the country's population ages and shrinks rapidly.
Japan will seek to create a commercial hydrogen fuel supply chain by around 2030 to support reducing carbon emissions, Industry Minister Hiroshi Kajiyama said during a virtual hydrogen conference late on Wednesday.
The Supreme Court ruled Thursday that it is "unreasonable" for Japan Post Co not to provide its fixed-term employees with the same allowances it pays to regular workers.  The top court's judgement in favor of nonregular workers came two days after its rulings against them in two different cases over a law that prohibits unfair gaps between the treatment of such employees and regular workers.
Fast Retailing Co said Thursday it expects a record net profit this fiscal year after posting a 44.4% drop to 90.36 billion yen in the year ended August due to the coronavirus pandemic, counting on a recovery in sales in some key markets.
Toyota plans to share with GAC GROUP (02238.HK) its gasoline-electric hybrid technology system, marking the first time that the Japanese automaker offers its core hybrid technology to a foreign firm, Nikkei reported.

SOUTH KOREA Expect markets to open lower following the US and weak pre market data.
Data out
Export Prices Sept -6.2% YoY vs -6.8% Aug
Import Prices Sept -11.5% vs -10.5% Aug
Unemployment Rate Sept 3.9% vs +3.2% Aug (F/cast was +3.3%)
S&P economist says the South Korean economy is expected to fare better than other countries over the next two years, but it will be in a deep recession amid the coronavirus pandemic, +VE for sentiment.
The delinquency rate for South Korean banks' won-denominated loans inched higher in August from the prior month but remained stable, the financial watchdog said Thursday. Slight -VE
South Korean coffeehouse chain Ediya Coffee said Thursday that revenue from its coffee delivery service increased around 660% YoY. The franchise began teaming up with food delivery platforms such as Yogiyo in 2018 and later with others, including Coupang Eats. +VE
GS Caltex said Thursday it has become the first refinery in South Korea to launch lubricants dedicated for hybrid vehicles called “Kixx Hybrid.” +VE
Shinhan Card said Thursday that it has issued social bonds worth $400 million via a public offering. The issuance of the bonds, aimed at funding small-and medium-sized businesses and helping the financially marginalized, is the first of its kind in the local credit card segment since the global financial crisis in 2008, according to Shinhan. +VE
Shinhan Financial Group said Thursday that it has launched a comprehensive online auto financing platform that allows users to gain access to the firm’s loan and lease services. +VE

TAIWAN Expect market to open flat following the US but downside limited by the news that TSMC was raising its revenue forecast again.
No data due

TSMC raised its 2020 revenue forecast again, the sole chip supplier for Apple Inc’s iPhone series, said that robust demand for 5G smartphones and high-performance-computing (HPC) would help boost revenue this year by 30% in US dollar terms.
EVA Airways Corp yesterday said it would change its boarding processes due to the COVID-19 pandemic, increasing social-distancing measures without sacrificing efficiency. +VE
The Financial Supervisory Commission (FSC) is investigating several overseas accountants that allegedly illegally purchased Tatung Co shares, FSC Chairman Thomas Huang said yesterday. Slight -VE
Tong Yang Industry, a supplier of automotive metal sheets and bumpers, yesterday reported pretax profit of NT$348 million (US$12.02 million) for last quarter, as its business gradually returns to pre-COVID-19 levels. The firm, which registered a pretax loss of NT$58 million in the second quarter, is speeding up production to satisfy customer demand during the industry’s peak season, it said in a statement. +VE
Wistron Corp, one of Apple Inc’s iPhone assemblers, yesterday said that it is opening another research and development (R&D) office in Kaohsiung — its third in the city since 2015 — as part of an effort to attract local software development talent, it said in a statement. +VE

CHINA Expect market to open lower following the US with caution ahead of the weekend.
No data due today but on Monday we get GDP Growth Rate, Industrial Production and Capacity Utilisation, Retail Sales, Unemployment, NBS Press Conference and Fixed Asset Investment.
China said yesterday that it received reports of 11 new confirmed coronavirus patients in the mainland on Wednesday, including one patients domestically infected in Qingdao, and 10 imported patients, state media said.
China accused the United States on Thursday of seeking to destabilise Tibet, after the Trump administration appointed a senior human rights official as special coordinator for Tibetan issues.
China on Thursday denied it had taken two Canadian men hostage, and repeated a call for the release of a Huawei Technologies Co Ltd executive held in Canada who faces extradition to the United States amid a long-running diplomatic dispute.
Chinese Foreign Ministry Spokesperson Zhao Lijian voiced the PRC's opposition against the convenient concept of the US on "national security", which allows misuse of national power to suppress foreign companies irrationally. China will continue to take all necessary initiatives to safeguard the rightful interest of Chinese firms, the Minister said. Comes after the U.S. State Department proposed to the White House to put Ant Group onto the trade blacklist, Reuters cited people with the knowledge of the matter.
China has raised $6 billion in a dollar bond issue that was offered to U.S. investors for the first time just weeks before the Nov. 3 election, a term-sheet reviewed by Reuters showed.
China National Biotec Group’s subsidiary Beijing Institute of Biological Products, revealed that one of China’s front-running coronavirus vaccine candidates dubbed BBIBP-CorV was shown to be safe and triggered immune responses in a combined early and mid-stage test in humans, researchers said. +VE
Ant Group as it was working in August towards its giant IPO, at least two smaller Chinese banks with existing ties to the fintech firm decided to stop sourcing new consumer loans from it, people with knowledge of the matter said. For its lending business, Ant originates demand from retail consumers and small businesses and passes that on to about 100 banks for underwriting, earning fees from the lenders and putting its own balance sheet at minimum risk. Slight -VE should be a concern for potential investors.

HONG KONG ADR’s +24pts to open at 24,182 but expect some early margin call selling after yesterday’s 500pt sell off.
No data due

SHORT SALES Thursday 19.3% vs 17.4% vWednesday
Top Shorts 
Wharf REIC (1997) 50%, Henderson Land (12) 46%, Bank of China (3988) 44%, Galaxy Ent (27) 40%, Hang Seng Bank (11) 40%, China Res Land (1109) 36%, HSBC (5) 36%, Sunny Optical (2382) 33%, Ping An (2318) 32%, AIA (1299) 30%, CCB (939) 29%, CSPC Pharma (1093) 29%, Shenzhou (2313) 25%.

Li Ka-shing and Victor T K Li, through Li Ka Shing Foundation Limited, acquired a total of 781,500 shares in CK ASSET (01113.HK) at the average price of HK$38.338, HK$38.4546 and HK$38.4555 per share on 9 October, 12 October and 14 October 2020 respectively. As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK Asset increased from 35.64% to 35.66%, and from 35.7% to 35.72%, respectively.

CHOW TAI FOOK (01929.HK) retail sales value (RSV) +2.6% yearly
during the second quarter ended 30 September 2020. In particular, the RSV of Hong Kong, Macau and other markets slid 51.6% yearly, where same store sales and SSS volume slipped 52.5% and 56.7%.
ANTA SPORTS (02020.HK) retail sales (in terms of retail value) of ANTA branded products for the third quarter of 2020 recorded low single-digit positive growth compared to the same period of 2019. Retail sales of FILA branded products recorded 20-25% positive growth compared to the same period of 2019.
SMIC (0981) revised its third quarter revenue upwards by 14%-16% QoQ as compared to the original guidance of an increase of 1%-3% due to changes in product mix and increase in other operating income. Gross margins were also revised upwards by 23%-25 % as compared to 19%-21%.
Deliveroo announced its partnership with 7-Eleven and Marks & Spencer to roll out a new grocery delivery service, providing customers with a variety of ready-to-eat food and grocery items. The food delivery platform will offer more than 1,000 grocery and meals products with 7-Eleven and M&S.
The phase II of the Royale project series was named "Starfront Royale", with Empire Group, HK FERRY (HOLD) and HENDERSON LAND (00012.HK) as selling agents. It consists of two towers, offering 614 residential flats with saleable area of 186-1,374 sq.ft..
Centa Valuation Index (Major Banks) (CVI) last printed @ 47.40 this week, -0.65 pts weekly, said Centaline Property. The index sagged this week after amassing 14.46 pts of increment in four weeks, seeing resistance at 50. Given the slight decline, they believed the index will struggle at around 50 in short run to gather momentum.

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