Oct 19 Asian Macro Initial Thoughts Asian Futures higher, US Futures opened +100pts
Covid-19 Globally over 39.9m cases, 1.11m deaths. Rising covid cases in the UK, Europe and some US States continue to be a concern. Economist warn Europe could see double dip recession -VE
US Futures opened +101pts with S&P +0.5% and NDX +0.7%
ASIAN Futures indicate a higher open, Nikkei futures +175pts, HK ADR +16pts Australia opened +0.7%
Pelosi & Mnuchin spoke over the weekend and placed a 48-hour deadline on stimulus negotiations if a bill is to be passed before the election. FT reports that Mitch McConnell, the Republican Senate majority leader, on Saturday said he would hold a vote this week on a smaller $500bn bill, as well as a separate vote on a standalone Paycheck Protection Program to help small businesses.
New Zealand PM Arden’s landslide victory means that labour can govern alone +VE but faces the tough decision about how to pay for covid.
JAPAN Futures open higher but the pre market data will be important for giving the market direction. Yen closed 105.40 Chicago Futures 23,585 (Osaka at 23,530) vs 23,410.63 Nikkei close on Friday.
Balance of Trade Sept Yen 675b vs 248.3b Aug (F/cast was 900b)
Exports Sept -4.9% vs -14.8% Aug (Consensus was -2.4%)
Imports Sept -17.2% vs -20.8% Aug (Consensus was -21.4%)
Exports 21th straight month of decline. Shipments of transport equipment -23.2%, while exports of machinery -16.8%.
Sales of manufactured goods -14.1% as iron & steel products -27.4%. Exports to the US -21.3%, Western Europe -15.3%, South Korea -13.8%, and Hong Kong -4% BUT sales to China +5.1% although that was down from an 8.2% increase in July.
Imports 16th consecutive month of decline in inbound shipments, as purchases of transport equipment -39.1%, due mainly to aircraft -50.9% & motor vehicles -38.2%.
Purchases of mineral fuels -45.1%, with a 52.5% decline in petroleum.
Imports from China -7%, Hong Kong -26.3%, Thailand -18.3%, South Korea -18.3% and the US -22%.
Tokyo Sunday reported 132 new covid cases vs 103 on Saturday. Nation-wide the number was 427.
PM Suga departed Sunday for a 4 day visit to Vietnam and Indonesia as press reports that his approval rating dropped to 60% after the Science Council furor.
The cabinet decided Friday to use 549.2 billion yen ($5.2 billion) in reserve funds for fiscal 2020 to finance an extension in subsidy programs designed to help struggling business operators during the coronavirus pandemic. +VE
PM Suga sent an offering to the controversial Yasukuni Shrine for war dead to coincide with its autumn festival but did not attend. The weekend press also has a number of articles highlighting PM Suga’s achievements and activities since taking office a month ago; no doubt aiming to keep his ratings up.
Fujifilm Holdings Corp said on Friday it was seeking approval for its flu drug Avigan as a treatment for COVID-19 in Japan, a move that comes after a late-stage study showed reduced recovery time for patients with non-severe symptoms. +VE
TELCO’s The nation’s three major mobile phone carriers on Friday started taking preorders for Apple Inc.’s first 5G-enabled iPhones ahead of their Oct. 23 release. KDDI says it will announce new tariff plans in November in response to PM Suga’s call for lower phone bills. Likely to put margins under pressure -VE
NTT Docomo -VE as Financial Services Agency plans to revise its guidelines on regulating the banking sector to demand stricter customer identity checks for account transfers related to electronic payment services, in response to a series of cases at banks across the country of fraudulent withdrawals via NTT Docomo Inc.’s e-payment service.
Toshiba Corp said on Monday it aims to generate $3 billion in revenue from its advanced cryptographic technology for data protection by 2030, as the Japanese sprawling conglomerate scrambles to find future growth drivers. The cyber security technology, called quantum key distribution (QKD), leverages the nature of quantum physics to provide two remote parties with cryptographic keys that are immune to cyberattacks driven by quantum computers.
Major Retailers saw improved business between June-August thanks to a rise in consumer spending +VE
Mitsubishi Motors Corp. has agreed with Thailand’s national power generator to cooperate in developing a system that would enable electric vehicles to power homes in case of blackouts and for other purposes. +VE
SOUTH KOREA Expect markets to open higher on stimulus hopes but upside capped as covid cases rise again. Also key China trade data. Investors still watching BTS which was -23% on Friday so expect the stock to remain in focus with reports of foreign institutional selling. For the week ahead stocks are expected to remain rangebound with US earnings in focus
No data due.
New coronavirus cases rebounded with 91 on Sunday (71 local and 20 imported) up from above 73 on Saturday and 47 Friday. Health authorities are on high alert over a potential uptick in daily infections amid eased virus curbs. The country added 73 more COVID-19 cases, including 62 domestic infections. Slight -VE
International Shareholder Services has advised shareholders to vote for LG Chem’s decision to split off of its battery business division as a wholly-owned subsidiary. +VE
Korea Gas Corp. said Sunday it would impose a new format for supplying liquefied natural gas starting 2022 to address cherry-picking by electricity suppliers which it says ultimately leads to higher electricity bills. +VE long term
HMM said Sunday the company will dispatch two more container ships to support South Korean exporters that are struggling to ship out their products to foreign countries amid the protracting COVID-19 pandemic. +VE
South Korea's electricity consumption fell to a four-year low in August in the wake of the coronavirus pandemic and a long rainy season, data showed Friday. -VE
Hyundai Motor Co. and its affiliate Kia Motors Corp. may see their combined share in the European market surpass 7% for the first time this year, industry watchers said Friday. +VE
LG Electronics has introduced a teaser video on its official website and its YouTube channel, in which the company hinted at a new collection of home appliances it would roll out Wednesday.
Korea Shipbuilding & Offshore Engineering, the shipbuilding holding company of Hyundai Heavy Industries Group, announced Friday that the company has secured 140 billion won of new deals from overseas companies. +VE
SK Telecom announced Friday that the company would spin off its mobility platform and start a new joint venture with US ride-hailing company Uber Technologies. +VE
Woori Bank said Friday it has issued AU$400 million ($283 million) in bonds in Australia as part of efforts to help coronavirus-hit South Korean firms and finance eco-friendly projects. +VE
TAIWAN Expect market to open flat ahead to the China data but there are increased concerns about China’s threatening posturing to the nation.
No data due
Hong Kong air traffic controllers told Taiwan there was danger until further notice on a flight path to Taiwanese-controlled Pratas islands in the South China Sea, Taipei said on Friday, a case that has raised fears Beijing may try and blockade the islets. Most believe that China was behind the action as the HK authorities had not issued a NOTAM which would have wanted of activities and is a globally standard aviation procedure. It comes as the U.S. national security adviser said on Friday that while China probably is not ready to invade Taiwan for now, the island needs to “fortify itself” against a future attack or any bid to isolate it through nonmilitary means, such as an embargo. -VE
Chinese People’s Liberation Army (PLA) has reportedly deployed advanced hypersonic missiles along China’s southeast coast, which Taiwan’s missile defence system might have difficulty intercepting, an analyst said yesterday. -VE for sentiment
Survey shows 80% back formal ties with US also that ‘ROC’ being replaced, with people more often preferring ‘Taiwan’ for the nation, a World United Formosans for Independence official said.
Insurance-focused financial holding companies last month saw milder earnings growth compared with a year earlier, while their banking-focused peers reported steep declines in earnings, several companies’ earnings results released last week showed. The latest data showed that insurance-focused firms’ earnings growth was less robust than a month earlier mainly due to lower dividend income and investment gains, as well as foreign exchange losses after the New Taiwan dollar gained 1.35 percent against the US dollar last month. -VE
Acer and Asustek Computer saw their shipments for Q3 this year soar at double-digit percentages, with growth rates topping those of their rivals, global market information advisory firm Gartner Inc said. +VE
Hon Hai Precision Industry said it aims to secure a 10% share of the world’s electric vehicle market by 2025, with about 3 million vehicles potentially using its platform. The electronics giant yesterday unveiled the plan to expand its nascent automobile business, saying that it seeks to offset slowing growth in its core consumer electronics assembly business. +VE
Chipbond Technology Corp Friday said it plans to acquire about a 31% stake in Orient Semiconductor Electronics Ltd in a cash-and-share deal, aiming to make inroads into flash memory-chip packaging. +VE
CPC Corp, Taiwan and Formosa Petrochemical Corp On Sunday announced that they would each raise diesel prices by NT$0.1 per liter, but keep gasoline prices unchanged for this week, effective today.
Humour from the press 'Taoyuan to crack down on misuse of laughing gas’. The Taoyuan City Government has drafted a regulation to prevent the inappropriate use of certain gases, especially laughing gas, the Department of Public Health said Friday. Just made me smile!
CHINA Expect market to flat ahead of the China data due today. FDI data Friday was encouraging but the GDP and Retail Sales will be key. Unemployment is less reflective because they only count unemployed in your home city, so it fails to reflect the cases of migrant workers. The new law on trade seen as -VE for Chinese companies wanting to operate globally
GDP Growth Rate Q3 (Q2 was +3.2% YoY F/cast is 5.1%) [Q2 +11.5% QoQ F/cast is +3.3%]
Industrial Production Sept (Aug was +5.6% F/cast is 5.7%)
Retail Sales Sept (Aug was +0.5% F/cast is +1.7%)
Unemployment Sept (Aug was 5.6% F/cast is 5.5%)
Fixed Asset Investment (YTD) Sept (Aug was -0.3% F/cast is +0.7%)
Industrial Capacity Utilisation Q3 (Q2 was 74.4% F/cast is 75.1%)
After Market Friday
FDI (YTD) Sept 5.2% YoY vs 2.6% Aug (F/cast was +3.7%)
That means that in Sept alone FDI rose 25%
The Chinese government has warned Washington it may detain Americans in China in response to the Justice Department’s prosecution of Chinese military-affiliated scholars, the Wall Street Journal reported on Saturday.
The People's Bank of China announced that it will actively push for amendments to the Commercial Bank Law of PRC by issuing a proposed draft and seeking public opinion. The major revisions include refining market entry conditions for commercial banks.
China passes biosecurity law to prevent and manage infectious diseases. The law would establish systems for biosecurity risk prevention and control, including risk monitoring and early warning, risk investigation and assessment, and information sharing.
China’s national legislature passed a new law controlling the export of sensitive goods, services and technologies on Saturday in the latest move to counter escalating restrictions on Chinese technology companies by the United States. The new law will make it more difficult for US and Chinese tech companies to do business in each other’s countries, in particular making it more difficult for Chinese firms to operate globally, analysts said. During the final review of the legislation, Ouyang Changqiong, a delegate to the National People’s Congress, proposed that the law should explicitly cover areas such as computer program source codes and algorithms, the state-owned Legal Daily reported. It comes into effect 1 December 2020.
NDRC set out detailed steps to grant more autonomy to Shenzhen, letting the southern financial and technology hub pilot reforms in market development and economic integration. Shenzhen will launch stock index-futures products and will be allowed to issue offshore yuan-denominated local government bonds. The commission lists steps to further integrate the Greater Bay Area: Shenzhen and eight other cities in Guangdong province, as well as the adjacent territories of Hong Kong and Macau.
The U.S. national security adviser said on Friday that China was perpetrating “something close to” a genocide with its treatment of Muslims in its Xinjiang region. He also warned that while China probably is not ready to invade Taiwan for now, the island needs to “fortify itself” against a future attack or any bid to isolate it through nonmilitary means, such as an embargo.
Canadian PM Trudeau on Friday said he will continue to stand up against China’s “coercive diplomacy” and human rights abuses in Hong Kong and Xinjiang after being rebuked by Beijing for similar comments earlier this week.
The deputy director of China’s National Energy Administration (NEA) has been placed under investigation for “suspected serious violations of discipline and laws”, the Communist Party’s disciplinary watchdog said on Saturday. -VE for the sector.
China beefs up coastal forces as it prepares for possible Taiwan invasion reports SCMP -VE for sentiment.
Reuters interesting article 'A millennials love affair: China's second-hand luxury goods market booms’. A shift that could impact the luxury retail market in China
HONG KONG ADR’s +16pts to open at 24,402 but the China data will be the key driver. Shorts on Friday rose to 20% so if the data is inline or better expect a squeeze. ADR’s were mixed weakness in Petrochems, some Chinese Financials. China Unicom weak as the US FCC asked is its US operations were a threat to national security. HSBC and Standard Chartered may see weakness ahead of the US identifying individuals it says are responsible for eroding Beijing’s obligations under the Basic Law.
No Economic data due but on Sunday HK reported 4 new covid cases following Saturday 17 vs 7 Friday. On Sunday Secretary for Food and Health Sophia Chan Siu-chee said that the feared fourth wave of the pandemic might arrive early.
IPO EXCELLENCE CM (06989.HK), debut, opened at $12.48 in gray market, up almost 17% against the listing price $10.68, and closed at $11.4 up $0.72 or 6.7% against the listing price of $10.68, on volume of 30 million shares and turnover. of $351 million, PhillipMart data showed. Excluding the handling fees, a book gain of $720 was reported per board lot of 1,000 shares.
PROFIT WARNING EMPEROR E HOTEL (00296.HK) PROFIT WARNING, expecting a net loss of not more than HK$160.0 million for the six months ended 30 September 2020 as compared with a net profit amounting to HK$177 million for the same period last year. -VE
SHORT SALES Friday 20% vs 19.3% Thursday
Top Shorts Hang Seng Bank (11) 49%, Sunny Optical (2382) 41%, China Res Land (1109) 41%, Ping An (2318) 37%, Galaxy Ent (27) 33%, Bank of China (3988) 32%, Henderson Land (12) 28%, BOC HK (2388) 28%, CSPC Pharma (1093) 28%, HSBC (5) 28%, CCB (939) 26%, Wharf REIC (1997) 26%, Power Asset (6) 26%, Sinopec (386) 25%.
FCC issued show-cause orders warning it might shut down the US operations of three state-controlled Chinese telecom companies: China Telecom, China Unicom and Pacific Networks Corp and its subsidiary ComNet (USA). -VE
GOLDIN FIN HOLD (00530.HK) announced the disposal of Goal Eagle to FONG Tim for an aggregate consideration of $14.3 billion. The company has applied for resumption of share trading on Monday (19 October).
JDD signed a comprehensive strategic cooperation with PSBC (01658.HK), pursuant to which both parties will foster cooperation of joint named credit cards, digital marketing, consumer credit, electronic payments and small and micro business loans in fields of personal finance, corporate finance, asset management wealth and fintech.
XTEP INT'L (01368.HK) announced that mid-single digit YoY retail sell-through growth was recorded for the three months ended 30 September 2020. The retail discount level was 30-35%.
CHINA EAST AIR (00670.HK) operating data for September 2020. The number of passengers carried was 8.9832 million, down 14.4% yearly; freight load volume
decreased by 21.4% yearly.
LUK FOOK HOLD (00590.HK) announced that with the continuing impact of COVID-19 pandemic, the overall SSSG of the Group’s retail business was -55% for 2Q FY2021, compared with -71% for 1Q FY2021.
YUM CHINA-S (09987.HK) announced that it is considering the declaration and payment of a quarterly dividend. If the Board decides to proceed, the declaration will be adopted by Board resolution on or around October 29. +VE
CHINA TAIPING (00966.HK) announced that premium income for the first nine months of 2020 reached RMB145.377 billion, up 3.01% year-on-year.
ASIA ORIENT (00214.HK) announced that on 14 October 2020, it had on the open market acquired 13.75% EVERGRANDE (03333.HK) notes due 2023 in a notional amount of US$3 million at an aggregate consideration of US$2.78 million (equivalent to approximately HK$21.68 million).
LIFESTYLE INT'L (01212.HK) announced that between 2 July 2020 and 14 October 2020, the Group had on the open market disposed of EVERGRANDE (03333.HK) notes with an aggregate principal amount of US$63 million for an aggregate consideration of approximately US$62.43 million. The Group expects to record a gain on disposal of approximately HK$70.6 million from the Disposals.
New World Development (0017) said it will invest more than HK$10 billion to develop a large-scale cultural commercial project in Prince Bay in Shenzhen. The project, modeled on Victoria Dockside, would have a gross floor area of 3.9 million square feet and is expected to become the largest harbour front cultural-retail destination in Shenzhen, said the developer. +VE long term. Interesting to see Adrian Cheng on LinkedIn after appearing on CNBC Friday. A sign of the change in approach by the CEO who took over in May +VE
The Government is pondering over a suspension to the vacancy tax legislation in light of the latest economic situation, said Christopher Hui, Secretary for Financial Services and the Treasury.
HKD remained strong and neared the Strong-side Convertibility Undertaking Saturday morning, leading the spot USD T/T rate to 7.7503, despite HKMA's capital injection during Hong Kong and New York trading hours.
Centa-City Leading Index (CCL) last printed at 175.83 , down 1.25% weekly. Snapping the two-week rally.
CCL (mid-and-small units) slid 0.84% weekly to 176.65;
CCL (large units) slipped 3.42% weekly to 171.55.
Centaline Property, said the index is seeking trough, with the successful completion subject to further confirmation. Looking ahead, housing prices after Mid-Autumn Festival may pick up.
DOW +0.39%, NDX -0.36%, S&P +0.02%, Russel 2K -0.31% Markets opened higher and after an initial rally traded sideways before we saw Big Tech being sold down into the close. The strong Retail sales number and there were some good pre market earnings encouraging investors. But Industrial Production fell for the first time in 5 month -VE.
Healthcare +VE on good news from Pfizer; a +VE cross read to Merck, Abbott Laboratories and Thermo Fisher. But Gilead fell as WHO remdesivir had little or no impact on a patient’s chances of surviving Covid-19. Utilities also saw interest. But Energy was weak as a resurgence of Covid cases expected to hit demand.
Boeing +1.9% as the EU regulator says its 737 Maxjet is safe to fly again.
Pfizer +3.8% said it would apply for emergency use of its coronavirus vaccine as soon as it reaches certain safety milestones, expected in late November. Also scaling up production capacity.
Amazon -1.9% concerns over Prime Day sales.
Reports Pre Market
VF Corp -2.5% despite profit beating, revenue was in-line and increase dividend
Schlumberger -8.8% profit beat but revenue missed; impacted by reduced drilling/rig activity in North America BUT profit margins improved QoQ.
Hewlett Packard Enterprise -4% raised its fiscal 2021 as covid-19 had prompted an acceleration in the need for remote work solutions
Ford Motor +0.7% saw a 25% YoY increase in China sales, the second straight quarterly increase after three years of decline.
Caterpillar +2.3% on broker upgrade; Wells Fargo expects substantial earnings improvement at start of 2021.
Lockdown Names. Facebook -0.3%, Apple -1.4%, Microsoft unch, Netflix -2.1%, Disney -0.4%. But Zoom +4.2% to a new high.
Nvidia -1.1%, Micron -0.6%, Skyworks -0.2%, AMD +0.1%.
Re-opening stocks Simon Property -0.5%, Gap -2.7%, Carnival +0.4%
Lock down names Campbell Soup -0.5%, General Mills -0.5% and JM Smucker -0.8%
Retail Sales Sept +1.9% MoM vs +0.6% Aug (F/cast was +0.5%)
Retail Sales Sept +5.4% YoY vs +2.8% Aug revised (F/cast was +2.2%)
Retail Sales Ex Auto Sept +1.5% MoM vs +0.5% Aug revised (F/cast was +0.4%)
Industrial Production Sept -7.3% YoY vs -7 Aug revised (F/cast was -6.6%)
Industrial Production Sept -0.6% MoM vs +0.4% Aug (F/cast was +0.6%)
Manufacturing Production Sept -6% YoY vs -6.3% Aug revised (F/cast was -5.6%)
Manufacturing Production Sept -0.3% MoM vs +1.2% Aug revised (F/cast was +0.8%)
Capacity Utilisation Sept 71.5% vs 72% Aug Revised (F/cast was 71.7%)
Business Inventories Aug +0.3% vs +0.1% Jul (F/cast was +0.3%)
Michigan Preliminary Data
Inflation Expectations Oct 2.7% vs 2.6% Sept
5 year Inflation Expectations Oct 2.4% vs 2.7% Sept
Current Conditions Oct 84.9 vs 87.8 Sept (F/castr was 87)
Consumer Sentiment Oct 81.2 vs 80.4 Sept (F/cast was 79)
Consumer Expectations Oct 78.8 vs 75.6 Sept (F/cast was 75.1)
Baker Hughes Total Oil Rig Count 282 vs 269 prior
Net Long-Term Tic Flows Aug $27.8b vs 11.3b Jul revised
Overall net Capital Flows Aug $86.3b vs -89.5b Jul revised
USD was vs Yen & Euro. Bitcoin +0.2% @ 11,357.00, VIX +1.63% @ 27.41, US T10 0.749%
OIL Brent -0.19%, WTI -0.44%
Gold -0.3%, Silver +0.23%, Copper -0.73%
AHEAD NAHB Housing Market Index,
DAX +1.6%, CAC +2.04%, FTSE +1.49% Markets opened higher, rebounding from Thursday’s selling but the FTSE traded sideways whilst the DAX and CAC worked higher. AUTOs strong on good registration data but Telcos weak. UK under pressure to cede ground to get a Brexit deal but PM Johnson remains firm; -VE for Sterling.
US is offering to remove tariffs on whisky, wine and other products from the European Union if Airbus repays billions of dollars of aid to European governments, Reuters reported. Comes as WTO finds Boeing received aid from the US Govt.
Europe’s aviation regulator has said Boeing’s 737 Max aircraft is safe to fly again.
Thyssenkrupp +11% but off initial highs, on reports that Liberty Steel may make a takeover bid for its steel unit.
Home builders weak on rising covid cases.
Getinge -5.9% Q3 profits good but reported a fall in ventilator orders,
Galapagos -7% as Credit Suisse and KBC Securities cut their price targets for the stock.
New Car Registrations Sept +3.1% YoY vs -18.9% Aug (F/cast was -2%)
Balance of Trade Aug Euro 14.7b vs 27.7b Jul revised (F/cast was 15.1b)
Inflation Rate Final Sept -0.3% YoY vs -0.2% Aug (F/cast was -0.3%)
Inflation Rate Final Sept -+0.1% MoM vs -0.4% Aug (F/cast was +0.1%)
Core Inflation Rate Final Sept +0.2% YoY vs +0.4% Aug (F/cast was +0.2%)
EUROZONE Construction Output
GERMANY No data due
FRANCE No data due
UK No data due