Oct 22 Asian Macro Initial Thoughts Asian Markets weak open, US Futures Flat
Covid-19 Globally over 41m cases, 1.13m deaths
US Futures opened Dow -17pts with S&P and NDX slightly lower.
ASIA set to open lower Nikkei Chicago Futures -65pts , HK ADR’s -75pts, Australia trading down 1%
The IMF on Wednesday downgraded its forecast for Asia-Pacific to -2.2% in 2020 — “the worst outcome for this region in living memory.”
DOW -0.35%, NDX -0.28%, S&P -0.22%, Russel 2K -0.86% Opened flat initially rose but then traded back to flat an then traded sideways for most of the session with selling into the close. Stimulus talks continued but increased doubts any agreement could get passed before the election as McConnell told his caucus Tuesday in a private lunch that he is encouraging the administration not to agree to a stimulus bill as he worries about dividing Republicans on major legislation days before an election, NBC News reported.
Data was weak and the Beige Book referred to an uneven recovery and the need for more stimulus.
Netflix -7% after earnings missed but SNAP +28.3% on very good earnings.
Goldmans -2.5% on settling claims over 1MDB
Work from home names. Facebook +4.2%, Amazon -1%, Apple -0.5%, Microsoft +0.1%, Disney +1.3%, Zoom -4.4% second day of selling after hitting a new high on Monday.
Nvidia -0.9%, Micron -0.4%, Skyworks -1.4%, AMD -2.9%.
Re-opening stocks Boeing -2%, Caterpillar -1%, Simon Property -0.4%, Kohls +6.6%, Nordstrom +1.1%, Gap -2.2%, United Airlines -1.4%, Carnival -0.9%
Lock down names Campbell Soup +0.2%, General Mills -0.3% and JM Smucker +0.3%
Tesla +3.2% in extended trading (was +0.2% in normal trading) after delivering its 5th quarterly profit.
Chipotle Mexican Grill, -4% in extended trading after it said a shift to delivery orders ballooned costs and led to reduced drink sales in the third quarter. -VE
Las Vegas Sands +5% in after-hours trading after the casino operator posted a smaller-than-expected loss for the third quarter and revenues larger than Wall Street’s consensus estimate.
MBA Mortgage Applications -0.6% vs -0.7% prior and 30 year Mortgage Rate 3.02% vs 3% prior
EIA Crude Stocks Change -1.001m vs -3.818m prior (consensus was -1.021m)
EIA Gasoline Stocks Change +1.895m vs -1.626m (Consensus was -1.829m)
Beige Book The economic recovery in the US remains highly uncertain and highly uneven, with certain sectors and groups experiencing substantial hardship,
USD was weaker vs Yen & Euro. Bitcoin +8.8% @ 12,994.00, VIX -2.4% @ 28.65,
US T10 0.821% a four month high as traders watch stimulus package talks.
OIL Brent -3.4%, WTI -4.1% on weak US gasoline demand
Gold +0.64%, Silver +0.74%, Copper +1.52% as USD weakens.
AHEAD Initial Claims, Initial Claims 4 week Average, Continuing Claims, Existing Home Sales, CB Leading Index, EIA Natural Gas Report, Kansas Fed Manufacturing Index, 5 yr TIPS Auction. Speech by Barkin and Kaplan. Earnings from American and SouthWest Airlines, AT&T, Coca-Cola, Intel, Kimberly-Clark, Northrop Grumman, Citrix, Dow Inc, Mattel among the 143 due to report.
DAX -1.41%, CAC -1.53%, FTSE -1.91% Markets opened flat but sold down with disappointment at their still being no US stimulus package agreement. They saw a small bounce after about an hour and traded sideways/lower for much of the rest of the session but sold down into the close. Travel & Leisure lead the declines but all sectors closed in the red.. Sterling rallied on hopes of a Brexit deal.
Good earnings from: Ericsson +9.6%, Randstad +6.2% and Storebrand +10.1%.
Nestle -0.8% despite beating and raised its growth target but the shares opened higher but sold down.
Centamin -19.2% after reported falls in production and sales for the third quarter.
Inflation Rate Sept +0.5% YoY vs +0.2% Aug (F/cast was +0.4%)
Inflation Rate Sept +0.4% MoM vs -0.4% Aug (F/cast was +0.3%)
Core Inflation Rate Sept +1.3% YoY vs +0.9% Aug (F/cast was +1%)
Core Inflation Rate Sept +0.6% MoM vs -0.6% Aug (F/cast was +0.4%)
Retail Price Index Sept +1.1% YoY vs +0.5% Aug (F/cast was +0.9%)
Retail Price Index Sept +0.3% MoM vs -0.3% Aug (F/cast was +0.1%)
PPI Core Output Sept +0.3% YoY vs +0.1% Aug revised (F/cast was +0.2%)
PPI Core Output Sept +0.2% MoM vs +0.1% Aug (F/cast was +0.1%)
PPI Output Sept -0.9% YoY vs -0.9% Aug (F/cast was -1%)
PPI Output Sept -0.1% MoM vs +0.1% Aug revised (F/cast was 0)
PPI Input Sept -3.7% YoY vs -5.6% Aug revised (F/cast was -5.6%)
PPI Input Sept +1.1% MoM vs -0.2% Aug revised (F/cast was -0.7%)
Public Sector Net Borrowing Sept GBP -36.1b vs -30.1b Aug revised (F/cat was -32.4b)
EUROZONE Consumer Confidence Flash
GERMANY GfK Consumer Confidence
FRANCE Business Confidence, Business Climate Indicator,
UK CBI Industrial Trends Orders & Business Optimism Index, GfK Consumer Confidence, Speech by Haldane and Baily
JAPAN Expect Nikkei to open -65pts lower following US. Futures in Chicago at 23,575 (Osaka was 23,550) vs 23,640 last close. Exporters weak as Yen strengthens currently 104.53
Data due Foreign Stock and Bond buying data
PM Suga said Japan opposes any actions that escalate tension in the East and South China Seas, but added that Tokyo was not aiming at an “Asian NATO” to contain any specific country. Came as Indonesia and Japan agreed to strengthen security with an eye towards China.
PM Suga also said on Wednesday that he is aiming to make a speedy decision on the disposal of contaminated water at the tsunami-crippled Fukushima nuclear plant.
Government expected to next week pledge to reduce greenhouse gas emissions to net zero by 2050, the Nikkei reported on Wednesday.
Government plans to make the recycling of plastic materials used at offices and factories mandatory from April 2022 at the earliest to increase the low recycling rate for plastic waste resulting from corporate activities
Government reported that the birth rate is expected to fall as a result of covid. -VE
ANA expects to record a net loss of Yen 530bn as passenger numbers drop 96% in the five months to August. It is also looking to divest itself of 30 large jets -VE
Nitoria reportedly considering buying Shimachu according to press reports
Toyota Group has invested $4 million in Ugandan start-up Tugende, saying it hopes the firm's loans to small, independent businesses will also help customers buy the carmaker's vehicles.
Hino Motors and BYD Auto jointly setting up a company to develop battery-powered trucks and buses. +VE
SOUTH KOREA Expect markets to open lower a hopes of a quick US stimulus plan which had been driving the market fade.
No data due
Government to investigate deaths connected with flu jabs after 9 reported deaths but is not suspending the programme.
Government reported 91 new coronavirus cases (57 locally transmitted and 34 imported from overseas) in the 24 hours ending midnight on Tuesday up from 58 on Monday -VE
LG Chem enjoyed it best quarterly revenue and operating profit in its history in the July-September period ahead of its controversial battery business split-off, according to a regulatory filing Wednesday. +VE.
LG Chem said it will separate its cash cow battery business and focus on promoting the balanced triangular growth of its petrochemicals, advanced materials and life sciences businesses. Shareholders are noticeably displeased with the company’s plans, and LG Chem is working to persuade them that the value of their shares will not erode once energy solutions are lifted from its direct business portfolio.
Samsung Biologics marked an operating profit in the first three quarters of 2020 of more than double its entire yearly performance of 2019, proving it has been undamaged and even buoyed by the COVID-19 pandemic, which has largely slashed earnings across various industries. +VE
LG Display signed a three-year strategic partnership with Walt Disney Studios’ StudioLAB to provide it with organic light-emitting diode TV panels, the company said Wednesday. +VE
Vietnam’s leader has asked Lee Jae-yong, of Samsung Electronics, to make an investment in building a semiconductor plant in the country, according to news reports by Vietnamese media on Wednesday.
The prices of small to midsized apartments have increased precipitously in recent years, according to data from the office of Rep. Kim Sang-hoon. The lawmaker’s office received the data from the Korea Appraisal Board.
Phnom Penh Commercial Bank -- the Cambodian subsidiary of JB Financial Group’s flagship lender -- signed a deal with a Thailand-based financial technology firm to provide electronic loan repayment services to customers, the South Korean banking group said Wednesday. +VE
TAIWAN Expect market to open lower with Tech under pressure after US weakness. Key will be TSMC which has been as stabiliser for the wider market.
Data due after market Sept Unemployment (Aug was +3.83% F/cast is +3.8%)
US State Department has approved the potential sale of three weapons systems to Taiwan, including sensors, missiles and artillery that could have a total value of $1.8 billion, the Pentagon said on Wednesday. +VE for sentiment but likely to annoy China.
Innolux Corp yesterday said it is bullish about panel demand over next 12 months as the COVID-19 pandemic continues to drive demand for notebook computers, tablets and TVs. Saying that the pandemic has boosted demand for electronic devices as workers and students increasingly work and study remotely, leading to strong revenue growth and portending a profitable quarter for the panel maker. +VE as Innolux has posted losses for the past seven quarters.
The Industrial Technology Research Institute and US-based electronic design automation solution developer Synopsys Inc yesterday announced the establishment of a new laboratory in Taiwan, which is expected to speed up artificial intelligence (AI) chip development in the local semiconductor industry. +VE
Life insurance companies in Taiwan increased their combined property investments by NT$128.8 billion (US$4.46 billion) to NT$1.34 trillion in the first eight months of this year, data compiled by the Financial Supervisory Commission showed on Tuesday. The increased investment for the whole of this year is expected to hit a new record, compared with the previous high in 2012, when life insurers added NT$111.8 billion in new property investment, FSC data showed.
Cathay Pacific Airways yesterday said it is planning new flight services for Taiwan as it announced a corporate restructuring that included the shutdown of its regional subsidiary, Cathay Dragon, and could lead to job cuts in Taiwan. -VE
CHINA Expect market to open lower with the strong Yuan -VE for exporters although helpful for companies with USD debt.
No data due
China's total consumption ballooned 8.7% MoM in the 2020 National Consumption Promotion Month, according to Ministry of Commerce's data. Spending on goods RMB2.63 trillion +11.4% MoM and services RMB1.61 trillion, +4.5% MoM.
Spot USD/CNY closed at 6.6575, up 243 bps to a new high in over 27 months. As at 16:53, Wednesday USD/CNY climbed 193 bps in the night session. USD/CNH stood at 6.6443, up 186 bps.
Brazil's President Jair Bolsonaro said on Wednesday the federal government will not buy a COVID-19 vaccine from China's Sinovac, one day after the health minister said it would be included in the nation's immunization program. -VE
U.S. Secretary of State Mike Pompeo announced on Wednesday the State Department was designating the U.S. operations of six more China-based media companies as foreign missions, a move he said was aimed at pushing back against communist propaganda. They are the Yicai Global, Jiefang Daily, the Xinmin Evening News, Social Sciences in China Press, the Beijing Review, and the Economic Daily. -VE for relations
TikTok wrote on its blog post that it pledged to step up efforts in clamping down hateful speech and behavior. TikTok, having tried to wipe out hate speech and hateful ideologies like neo-Nazism and white supremacy, it is now planning to remove content around neighboring ideologies such as White nationalism and White genocide theory.
HONG KONG ADR’s -75pts to open at 24,679 Approval of the Ant IPO may prompt some selling
Data due after market Sept Inflation rate (Aug was -0.4% F/cast is +0.1%)
IPO FIRST SERVICE (02107.HK), debut, opened at $2.26 in gray market, -5.8% against the listing price $2.4, and closed at $2.12 in gray market, down $0.28 or -11.7% against the listing price of $2.4, on volume of 29 million shares and turnover of $61.1 million, PhillipMart data showed. Excluding the handling fees, a book loss of $700 was reported per board lot of 2,500 shares.
SHORT SALES Wednesday 16.4% vs 20.6% Tuesday
Top Shorts Ping An (2318) 34%, CLP (2) 34%, CCB (939) 33%, Mengniu Dairy (2319) 33%, Sinopec (386) 33%, Country Garden (2007) 28%, ICBC (1398) 28%, Sunny Optical (2382) 28%, China Resources Land (1109) 25%.
Li Ka-shing and Victor T K Li, through Li Ka Shing Foundation Limited, acquired a total of 980,000 shares in CK ASSET (01113.HK) at the average price of HK$37.65, HK$37.545, HK$37.53 and HK$37.188 per share on 15 October, 16 October, 19 October and 20 October 2020 respectively. As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK Asset increased from 35.66% to 35.68%, and from 35.72% to 35.75%, respectively.
China Evergrande (3333) is seeking refinancing on loans worth HK$11.4 billion. The group is in talks with banks for a HK$11.4 billion three-year senior secured loan partly to refinance a HK$8 billion senior loan due in November and tied to an office tower in Hong Kong's Wan Chai district, according to people familiar with the matter, who are not authorized to speak publicly and asked not to be identified. Slight -VE Approval of the Ant IPO may prompt some selling to raise cash for the issue and could mean lower daily turnover for the HK Exchange.
WUXI BIO (02269.HK)'s October-to-date undelivered orders reached US$10.3 billion (about HK$79.826 billion), according to the firm's online presentation. The firm projected a growth of over 50% next year, thanks to the coronavirus vaccine and monoclonal antibodies. +VE
CHINA UNICOM (00762.HK) announced that for the first three quarters of 2020, EBITDA amounted to RMB73.7 billion, +0.8% YoY. EBITDA as a percentage of service revenue was 35.5%. The profit amounted to RMB10.824 billion, +10.2% YoY. Mobile billing subscriber ARPU increased by 2.6% YoY to RMB41.6.
BYD COMPANY (01211.HK) announced that a controlled subsidiary of the company, and Hino signed a joint venture agreement on 21 October 2020. Each of the Parties will contribute its 50% of the capital to establish a joint venture company in the PRC in 2021 for development of the commercial BEVs and parts and components of electric vehicles. The Parties plan to launch the commercial BEVs under the brand name of Hino by 2025. Hino is principally engaged in the manufacture of commercial vehicles (trucks and buses) and their engines, and its controlling shareholder is Toyota Motor Corporation.
BABA-SW (09988.HK)'s Tmall 11.11 Global Shopping Festival has kicked off at 00:00 am yesterday, Securities Times reported. Within an hour of the beginning of pre-sale, the number of participants increased by more than a double from the same period last year. Over 300 brands traced pre-sales toppling the full-day amount over a year ago. After ten minutes of pre-sale onset, Taobao's livestreaming promotion recorded a turnover more than that in the full day of last year, up by four times.
The Hong Kong Monetary Authority has sold around HK$101 billion into the market so far this month to defend the currency peg, with Ant Group's upcoming dual listing driving up demand for the local currency.
Centa-Salesman Index (CSI) last stood at 54.05 this week, -0.19 pts weekly, said Centaline Property. CSI climbed slowly under brisk home market sentiment and a user-oriented market. The index had struggled at 50 last five weeks and at 55 in the recent three weeks, waiting for a breakthrough. The property market will get back on track if CSI surpasses 55 without pullback, they said.