Oct 20 Asian Macro Initial Thoughts Asia to open lower US Futures higher

22 Oct

Oct 20 Asian Macro Initial Thoughts  Asia to open lower US Futures higher

Covid-19 Globally over 40.3m cases, 1.1m deaths rising concerns in Europe and US -VE for sentiment
US Futures opened Dow +100pts, S&P +0.4%, NDX +0.5%
ASIAN Futures indicate a lower open Nikkei -91pts and HK ADR’s -144pts, Australia currently -0.4%

DOW -1.44%, NDX -1.65%, S&P -1.63%, Russel 2K -1.24% Markets opened higher on stimulus deal hopes but sold down through the day to close at their lows. Big tech under pressure along with Energy and wider tech but most stocks saw selling pressure although the airlines traded in the green as more than 1m travellers passed through US airport checkpoints last Sunday, the first day that threshold has been crossed since March and despite the rising covid cases.
Halliburton -0.7% although did rally after reporting adjusted net income of $100m in the third quarter that beat analyst estimates. Baker Hughes -0.2% and Schlumberger +0.3% also rallied on the news but were then sold down through the day.
IBM -2.7% in extended trading (-0.3% in normal hours) reported its third consecutive quarter of declines but inline with market f/casts. It gave no new guidance but warned of continued uncertainty over the strength of global IT demand due to the coronavirus pandemic.
Lockdown Names. Facebook -1.7%, Amazon -2%, Apple -2.6%, Microsoft -2.5%, Netflix unch, Disney -2%, Zoom +1.7%. Key I think is that despite rising covid cases and concerns of more social distancing it is difficult to see much more upside. Cramer was calling for investors to take profit on Zoom which is trading around all time highs.
Nvidia -2.3%, Micron +2% spiked midday, Skyworks -1.3%, AMD +1.4%.
Re-opening stocks Boeing -0.1%, Caterpillar -0.7%, Simon Property -1.4%, Gap -1.2%, United Airlines +3.9%, Carnival +0.5%
Lock down names Campbell Soup -0.6%, General Mills -1.7% and JM Smucker -2.3%
NAHB Housing Market Index Oct 85 vs 83 Sept (F/cast was 83)
USD was unchanged vs Yen & Euro. Bitcoin +2.5% @11,756.50, VIX +6.46% @ 29.18, US T10 0.772%
OIL Brent -1.14%, WTI -0.42%
Gold +0.03%, Silver +0.4%, Copper +0.6%
AHEAD Housing Starts, Building Permits, Redbook, API Crude Stocks Change. Speech by Quarles and Evans.
With Earnings from Procter & Gamble before the bell, while Snap and Netflix after the market closes.

DAX -0.42%, CAC -0.13%, FTSE -0.59% Markets opened higher following Asia and saw an initial spike on US stimulus deal hopes but then drifted lower through the day with a small up trend into the close. Covid and Brexit overhang the markets. Earnings in focus.
IWG +5% on broker upgrade
Julius Baer +6.2% on upbeat Q3 earnings report. +VE cross read for UBS and CS
Saab -14.3% after disappointing Q3 results and warning of increased risk due to covid.
Royal Philips -3.9% was positive for most of the day after +VE Q3 sales on demand for ventilators and patent monitors but hit down in last minute of trading.
Construction Output Aug -0.9% YoY vs -3.4% Jul revised (F/cast was -4.4%)
EUROZONE Current Account
FRANCE No data due
UK No data due

JAPAN Expect Nikkei futures lower Chicago at 23.580 (Osaka at 23,500) vs 23,671 Monday’s close. Yen currently 105.41
No data due
Japan hailed an agreement in principle to supply Vietnam with military gear and technology,
as the two governments pledged on Monday to strengthen security and economic ties amid mounting concerns about China's assertiveness in the region. +VE
Joint naval exercises involving the United States, Japan, India and Australia, were announced on Monday, in a move that is likely to annoy China, which has criticised similar joint drills as destabilising.
Some Japanese research institutions developing coronavirus vaccines have been hit by cyberattacks, apparently by China, in what are believed to be the first cases of their kind in the country, a U.S. information security firm said Monday.
Softbank gained more than 3% to ¥7,244, Monday the highest level since March of 2000 in the midst of the dot-com boom but likely to be under pressure today.

SOUTH KOREA Expect markets to open lower concerns over US stimulus package and rising local covid cases hurting sentiment.
No data due
Government on Monday reported 76 new covid cases for the 24 hour period to midnight Sunday 
(50 local and 26 imported) vs 91 reported for the previous period but the drop may be due to less tests being carried out over the weekend.
Hyundai Motor and affiliate Kia Motors warned Q3 earnings will include another $2.9 billion of provisions related to engine issues, bringing their total hit from the years-long quality problem that has tarnished their credibility to nearly $5 billion. -VE
Autos Sept sales +22.2% YoY and production +23% YoY +VE with exports of also rebounding +14.8% YoY.
LG Chem said Monday that it has developed a new material made of 100 percent biodegradable raw materials, the first in the world that is identical to synthetic plastic in its properties and functions. +VE

TAIWAN Expect market to open lower having closed just above 12,900 Monday with Tech under pressure following the sell off in the US.
Data due 
After market Export Orders Sept (Aug was +13.6% F/cast is +8.5%)
Yuan deposits held by Taiwanese banks stood at 235.12 billion yuan (US$35.17 billion) at the end of last month, -0.32% to the lowest level in 80 months, as local investors lost interest in the Chinese currency, the central bank said yesterday.
TWSE urges caution ahead of launch of odd-lot intraday trading on Oct. 26. It has asked securities brokerages to provide new online trading platforms that are exclusively for odd-lot intraday trading to differentiate it from current platforms for regular stock trading.
Taiwan has accused two Chinese officials of beating up one of its diplomats in Fiji, after they gatecrashed a reception for its national day and harassed international guests. FT reports that the foreign ministry said Fijian police forcibly removed the two Chinese diplomats from the reception. However, it added that they “falsely claimed that they had been attacked by our people”. Taipei said it was pushing for a police investigation and would seek police protection for future events.
Mandarin Oriental Taipei plans to reopen its guestrooms in December to take advantage of a boom in domestic travel. +VE

CHINA Expect market to open lower following the US sell off and ahead of the Housing Price Index.
Data due on the open

Loan Prime Rate 1 and 5 year (No change expected for 5 year, 1 year F/cast 4.7%)
House Price Index Sept (Aug was +4.8% F/cast is 4.7%)
China denied on Monday that foreign nationals are under threat of arbitrary detention, following a newspaper report that Beijing had warned Washington it might arrest Americans in China. The Chinese foreign ministry said it was Washington that was mistreating foreign citizens, accusing the United States of “outright political repression” of Chinese academics.
China’s Sinovac Biotech's experimental coronavirus vaccine appeared to be safe in a late-stage clinical trial in Brazil, preliminary results showed on Monday. +VE
Tesla Inc said on Monday it would start exporting China-made Model 3 cars to more than 10 European countries this month, joining a growing number of automakers using China as an export hub for electric vehicles.
China's experimental $1.5 million (1.16 million pounds) giveaway of digital yuan to Shenzhen citizens ended on Sunday with acclaim from currency analysts and scepticism from some users saying they preferred existing shopping tools like the ubiquitous Alipay app.
Merkel says German companies should diversify to Asian markets beyond China; with Singapore and South Korea offer promising opportunities since they regained their economic strength soon after weathering the pandemic.
China-Australia relations: coal, cotton curbs could violate trade rules, lawyers say. It was reported last week in the press that Chinese authorities had started asking importers verbally not to buy Australian coal and cotton. The moves could violate World Trade Organization rules, as well as the China-Australia Free Trade Agreement -VE
Some major state-owned banks in Shenzhen have tightened business loans to small and medium enterprises, mainland media 21st Century Business Herald reported, citing sources. These banks have slowed approval for the loans that are backed by residential mortgages, and have basically stopped granting loans backed by shops, the sources said. Earlier this year, Shenzhen offered interest subsidies for loans obtained by SMEs to help them ride out the pandemic. But such cheap loans were reported to be misused to buy property in the city, raising concerns of a real estate bubble. Many SME owners with cash flow problems tend to use their properties as collateral to obtain loans from banks, the report said.

HONG KONG ADR’s -144pts to open at 24,398, could see more downside depending on the China data.
Data due 
after market Unemployment Rate Sept (Aug was 6.1% F/cast is 6%)
After Market Monday Aug Total Exports of Goods -1.2%
The Hong Kong Monetary Authority (HKMA) announced Monday the composite interest rate at the end of September 2020; decreased by 5 basis points to 0.36 per cent at the end of September 2020, from 0.41 per cent at the end of August 2020. The decrease in composite interest rate mainly reflected decreases in the weighted funding cost for deposits during the month.

SHORT SALES Monday 18.7% vs 20% Friday
Top Shorts Henderson Land (12) 36%, Ping An (2318) 36%, ICBC (1398) 29%, Hang Seng Bank (11) 29%, BOC HK (2388) 28%, Sunny Optical (2382) 27%, Wharf REIC (1997) 27%, Mengniu Dairy (2319) 27%, China Res Land (1109) 27%, Galaxy Ent (27) 27%, Bank of China (3988) 25%,

announced that Vice Chairman Cheng Cheung Ling and Executive Director Tse Hsin had on 16 October acquired an aggregate of 700,000 shares. On the same date, SINO BIOPHARM repurchased 1.628 million shares.

CLP HOLDINGS (00002.HK) announced that the overall electricity sales were 26,426 GWh in Hong Kong for the first three quarters of 2020
, -0.6% YoY. The Board of Directors declared the third interim dividend for 2020 of HK$0.63 per share, flattish year-on-year.
CHINA TOWER (00788.HK) announced that operating revenue was RMB60.22 billion, +5.6% yearly. EBITDA was RMB44.019 billion, +5.4% yearly. Profit was RMB4.564 billion, +17.8% yearly. In the first three quarters of 2020, a total of 345 thousand 5G sites were built, and more than 97% of 5G demands were fulfilled through sharing the existing site resources.
CATHAY PAC (293 HK) rallied last Friday on the Singapore travel bubble news but could see more weakness today as announced it expects to operate at 10% of its pre-pandemic capacity for the rest of the year and under half capacity for next year overall. There is also the expectation that it will announce staff lay-off this week -VE
Director of Macau Tourism Office, told Radio Macau Monday that FY20 tourist volume will potentially slide over 90% yearly, but the government will continue to spare no efforts in plague precautions to guarantee public health in winter. The government will study the establishment of "Air Travel Bubble" in Hong Kong and foreign countries to see if the scheme is feasible in the gambling hub, said the director. At this moment, the city has been in no talks with any governments about such a scheme.
XIAOMI-W (01810.HK) said via Weibo that the latest Mi Watch "Color" will be introduced at 10am today.
CK Asset's (1113) received presales consent for El Futuro in Sha Tin and expects to release the first price list soon. The project offers 266 units, measuring between 470 square feet and 1,220 sq ft. +VE
Farzon Group released 16 units in the second price list of Eight Kwai Fong Happy Valley on Tuesday, at an average HK$35,166 per sq ft after discount, about 13% higher than the first price list. The cheapest flat, measuring 402 sq ft, is priced at HK$13.18 million after discounts. The developer will offer 50 flats for sale on Friday and Saturday.
The preliminary visitor arrivals to Hong Kong -99.7% yearly to 9,132 in September, announced by Hong Kong Tourism Board. Visitor arrivals from Mainland declined 99.7% annually to 6,211, while those from non-Mainland countries or regions dropped 99.6% yearly to 2,921.
The Urban Renewal Authority (URA) issued acquisition offers to property owners affected by the Kai Tak Road/ Sa Po Road Development Scheme in Kowloon City. Eligible owner-occupiers of domestic properties of the Project will be offered $17,698 per square foot of saleable area, which is the unit rate of a seven-year old notional replacement flat situated in the same locality (Notional Unit Rate).  The Project covers about 460 property interests. All property owners will have 60 days to consider the URA’s offers. After completion of the property acquisition, the URA will make ex-gratia allowance for the eligible tenants and rehousing arrangement for the eligible domestic tenants.
Hong Kong Federation of Trade Unions (HKFTU) conducted a survey, uncovering that 72% respondents had their jobs impacted by epidemic, among which 17% said they were sacked, 33% were suspended/ furloughed and 11% were given wage cut/ basic salary. Only 28% replied their jobs remained untouched. The survey also asked about rental situation. Among 1,749 replies, 45% interviewees were public households, who were imposed higher rents in September. 16% of interviewees said they lived in private properties with intact rents, yet 8% of them had to pay more rents. -VE
As USD/HKD triggered the Strong-side Convertibility Undertaking, the HKMA undertook a US$2.63 billion selling order to inject HK$20.383 billion into the market. The balance of the banking system of Hong Kong will increase to HK$347.906 billion Wednesday (21 October).

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