Oct 26 Asian Marco Initial Thoughts
US Futures opened -150pts as US covid cases hit 83,000 a record high.
ASIAN Futures Nikkei flat, Australia opened slightly higher, HK Market closed but ADRs in Friday were +64pts
Europe also seeing a surge in covid cases with Spain ordering a curfew, Italy announced more social distancing measure. -VE for sentiment.
JAPAN Nikkei to flat Chicago futures 23,515 (Osaka at 23,560) vs 23,516.59 Nikkei’s Friday close. Yen closed 104.69
Data due at 1pm Hong Kong time August Coincident Index Final (July was 78.3 and F/cast is 79.4) and Leading Economic Indicators (July was 86.7 and F/cast is 88.8)
PM Suga floats fertility treatment to help birth rate; offering support for IVF to be paid for by national health insurance. Would be +VE for the associated Pharm companies.
Scholars excluded from Japan’s top science advisory panel said the move was unconstitutional and a dangerous sign of how newly installed Prime Minister Yoshihide Suga will wield power. I think it shows the conservative nature of established Japan and the general reluctance to change and probably an element of resentment at the changes taking place.
The governments of Japan and Britain signed a comprehensive economic partnership agreement on Friday. The agreement is expected to take effect on Jan. 1, following approval by Japan’s Diet and Britain’s Parliament.
Government is in no mood for a huge bailout plan for ailing airline ANA, sources say, preferring a piecemeal approach to direct capital injections Slight -VE for Airlines
ANA Holdings Inc plans to cut about 3,500 jobs in three years as Japan's largest airline operator braces for its biggest-ever annual loss due to a plunge in demand driven by the coronavirus pandemic.It is also intending to ask other companies like Toyota to accept some employees on secondment.
Japan Airlines Expects net looses of around Yen 85bn in core business (Jul-Sept) and began offering discounted coronavirus tests to travelers Friday after teaming up with a medical institution in Tokyo, in a bid to ease concerns about infections and encourage customers to travel amid the pandemic.
Mitsubishi Heavy Industries will freeze development of its SpaceJet regional jet as the COVID-19 pandemic squeezes finances and erodes prospects for Japan's first passenger aircraft in half a century, two sources said. +VE
SOUTH KOREA Expect markets to open lower as traders watch for news of the US Stimulus package and the recent rise in covid cases -VE. Samsung in focus after the death of the Chairman which has raised speculation about changes in corporate governance.
No data due
Government reported 61 new covid cases in the 24 hours to midnight Saturday but noted that could be due to reduced testing over the weekend. Slight +VE
Deaths after getting flu shots rises to 48 but the government is continuing the programme saying no evidence linking the deaths to the programme.
Samsung Chairman died on Saturday raising speculation of whether there would be changes to the governance structure.
Retail sales in South Korea advanced 8.5% YoY in September as online shops enjoyed brisk sales amid the new coronavirus pandemic, data showed Sunday. +VE
LG Electronics on Sunday introduced a new budget smartphone as the South Korean tech firm seeks to boost its presence in the mobile market with price-competitive devices.
South Korea saw its sales of luxury imported cars rise sharply over the first nine months of the year despite the new coronavirus pandemic straining the economy, data showed Sunday. Slight -VE for Hyundai and Kia.
Hugel became the first Korean botulinum toxin maker to enter the Chinese market for aesthetic BTX, which is estimated to be worth 1.75 trillion won ($1.55 billion) by 2025 and it has a preemptive partnership with Sihuan Pharmaceutical, the third most-distributed pharmaceuticals company in China. +VE
LG Chem, partnering with Chinese firm TransThera Biosciences, has applied for a phase 1 clinical trial of its nonalcoholic fatty liver disease treatment in the US, the company said Friday. +VE
Posco and its affiliates Q3 posted an operating profit of 666.7 billion won ($588.6 million) -35.9% YoY. The total revenue reached 14.26 trillion won in the same period, -10.8% YoY, and the net profit stood at 514 billion won, +3.5%. For Q4 it anticipates profitability to improve, as companies across the globe are resuming operations and governments are making efforts to boost their respective economies. In addition, the company said it will strengthen its sales portfolio to meet demand in environmentally friendly industries such as electric vehicles, plug-in hybrids and wind and solar energy equipment. +VE
SK hynix Inc.'s acquisition of Intel Corp.'s NAND memory business will bring positive results to the company, analysts here said Friday, as it can beef up profitability and technological prowess in the sector. An interesting call that not everyone agrees with as the Nand business is viewed by many as a sunset sector.
Hyundai Robotics Co. said Friday it has joined hands with fried chicken franchise KFC Korea Co. to automate the chicken cooking process. Slight+VE
TAIWAN Expect market to open higher on good Industrial Production which hit a new high came out after market Friday, the good Retail Sales and the new Govt relief budget.
No data due but after market Friday we had
Retail Sales Sept +2.88% YoY vs 8.17% Aug (F/cast was +3.5%)
Industrial Production Sept +10.73% YoY vs +3.6% Aug revised (F/cast was +5.5%)
M2 Money Supply Sept +7.15% YoY vs 6.69% Aug (F/cast was +6.3%)
Industrial Production hit a record higher on increased demand for information and communications technology products. Govt said traditional industries have been much harder hit by the pandemic, but they are also recovering. Notably, the mechanical equipment and basic metals sectors returned to the positive territory for the first time since the pandemic hit. Most sectors +VE but Petrochems and coal remained weak.
Retail sector last month posted record sales driven by year-end promotions and government stimulus packages. E-Commerce sales were +20.3%. The outlook to the year end was hopeful.
The Legislative Yuan Friday passed a special budget of NT$209.95 billion (US$7.26 billion) largely to continue economic relief measures to ease the impact of the COVID-19 pandemic on the economy.
Asustek Computer on Friday said it made NT$3.739 billion (US$129.3 million) in unaudited standalone net profit last month, +62% YoY, EPS of NT$5.04, Unaudited standalone revenue of NT$36.586 billion, +34.57% YoY. The company had earlier said that it remained cautiously positive regarding its outlook for next year. It forecast that its diverse product offerings across the consumer, commercial, education and gaming sectors would make it a key beneficiary of the new norms in the post-COVID era. +VE
More than 77 percent of Taiwanese say they are willing to fight for the nation in the event of an invasion by China, a survey released yesterday showed.
EVA Airways Corp yesterday partially resumed passenger flights to Bangkok, with China Airlines Ltd planning to do the same next month as Thailand begins to lift its travel restrictions. +VE
Cheng Uei Precision Industry a cable and connector maker, plans to start mass production for Apple Inc later this year from its new plant in India, a person familiar with the matter said, the latest sign of the US company’s increasing presence in the South Asian country. The chairman of Cheng Uei, also known as Foxlink, is Gou Tai-chiang, the brother of Hon Hai founder Terry Gou
Gasoline and diesel prices are this week to remain unchanged from last week, CPC Corp, Taiwan said yesterday. Formosa Petrochemical Corp also said that it would leave its prices unchanged.
Hundreds of people rallied in Taiwan’s capital on Sunday to call for China to release 12 Hong Kong people arrested at sea by mainland authorities in part of a global campaign to support the pro-democracy movement in the financial hub.
CHINA Expect market to open flat with caution ahead of the Fifth Plenum of the Nineteenth Communist Party Congress. With Ant’s IPO data now set; expect brokers to be in focus.
No data due Monday but we get Industrial Profits Tuesday
China detected 137 new asymptomatic coronavirus cases on Sunday in Kashgar in the northwestern region of Xinjiang after one person was found to have the virus the previous day - the first local new cases for 10 days in mainland China
President Xi Jinping said on Friday that China will never allow its sovereignty, security and development interests to be undermined; speaking on the Seventh anniversary of Chinese troops entered the Korean War to fight against U.S. troops. “Let the world know that ‘the people of China are now organised, and are not to be trifled with’,” Xi said
China has substantially increased purchases of U.S. farm goods and implemented 50 of 57 technical commitments aimed at lowering structural barriers to U.S. imports since the two nations signed a trade deal in January, the U.S. government said on Friday. +VE for sentiment.
Government is discussing permits for millions of tonnes of additional corn imports over the next year, three industry sources told Reuters, amid a surge in animal feed demand and after storms and drought damage tightened domestic supplies.
China’s foreign exchange regulator told businesses Friday to prepare for more volatility in the yuan, CNBC reports.. The yuan strengthened by roughly 1 percent this week against the U.S. dollar to levels not seen since July 2018. Less than five months ago, the yuan was at its weakest against the greenback since early 2008.
A U.S. judge in San Francisco rejected the Justice Department's request to remove TENCENT (00700.HK) 's WeChat from the U.S. app stores of Apple and Google. The Justice Department said it will continue to appeal to the U.S. Court of Appeals for the Ninth Circuit.
The Italian government has prevented Fastweb from inking a deal for Huawei's 5G core network equipment, Reuters citing sources. The Italian telecoms group was asked to diversify its suppliers.
Tesla recalls nearly 50,000 Model X & S in China over faulty suspension. -VE
The deputy White House national security adviser on Friday denounced China’s treatment of Uighur Muslims, saying there was no justification for the country maintaining “concentration camps” within its borders.
America may send more coastguard ships to counter illegal fishing in Indo-Pacific. Saying enhancing its coastguard presence in the region will ensure the US remains ‘the maritime partner of choice’, national security adviser Robert O’Brien says as Chinese vessels ‘constantly fish illegally or overfish in waters under the jurisdiction of other coastal states’, according to US Secretary of State Mike Pompeo. I think a key element here is that China sends out these large fishing fleets because it needs to. Food security is still something that China lacks and Beijing knows that any shortages undermine its legitimacy, as has been seen in the pressure on Pork Prices after ASF.
Cambodian security guards broke up a small protest Friday near the Chinese embassy opposing alleged plans to boost Beijing's military presence in the country. The Cambodian government has repeatedly denied reports that China had reached a secret deal to let it place forces at the Ream Naval Base, saying that hosting foreign forces would be against Cambodia's constitution. Interesting to note that there is growing resentment to the growing Chinese business presence in Cambodia; especially their purchase of large tracts of land forcing locals out.
HONG KONG Market closed; re opens Tuesday. ADR’s closed +64pts @ 24,982; with weakness in some Chinese Banks, Petrochems and China Unicom. Govt reported 6 new covid case on Saturday vs 4 on Friday.
No data due but after market Friday
Business Confidence Q4 -8 vs -11 prior (F/cast was -28)
Quarterly Business Tendency Survey Q4 2020. The survey gathers views on short-term business performance from the senior management of about 550 prominent establishments in various sectors in Hong Kong.
The proportion of respondents expecting their business situation to be worse (25%) in Q4 2020 over Q3 2020 is slightly higher than that expecting it to be better (17%). When compared with the results of the Q3 2020 survey, the proportion of respondents expecting a worse business situation in Q4 2020 as compared with the preceding quarter has slightly decreased to 25%, against the corresponding proportion of 28% in Q3 2020.
Short Selling Friday 21.3% vs 16.8% Thursday
Top Shorts Ping An (2318) 41%, Bank of China (3988) 34%, CCB (939) 32%, Galaxy Ent (27) 31%, ICBC (1398) 31%, MTRC (66) 30%, HK & China Gas (3) 29%, HSBC (5) 28%, Mengniu Dairy (2319) 28%, Sands China (1928) 26%, Country Garden (2007) 25%.
Cenovus Energy Inc has agreed to buy rival Husky Energy Inc controlled by Li Ka-shing's Hutchison Whampoa in an all-stock deal valued at C$3.8 billion (US$2.9 billion) to create Canada's No 3 oil and gas producer as a pandemic-driven demand collapse and weak oil prices force the industry to consolidate +VE
Brokers will be offering significant margin deals for clients looking to take part in the Ant IPO which starts this week. Hong Kong has seen a significant rise in margin accounts; there were 851,157 margin lending accounts with total loan volume of HK$161.8 billion (US$21 billion) in the first half, according to the SFC vs 601,842 at the same time last year. Rates will be competitive but it should be a significant boost to earnings.
LAI SUN INT'L (00191.HK) results for the year ended 31 July 2020. The loss was $1.966 billion against the net profit of $2.797 billion from a year ago. LPS was $5.067. No final dividend was declared. -VE
NONGFU SPRING (09633.HK) and ANDRE JUICE (02218.HK) will be added to the Southbound Trading of Shanghai-Hong Kong Stock Connect, with effect from the next trading day for the Stock Connect, announced Shanghai Stock Exchange. +VE
EVERGRANDE (03333.HK) announced that on 23 October, the Company has redeemed an aggregate principal amount of US$1.565 billion of all outstanding 11% senior notes due 2020. EVERGRANDE shall pay off the debt of about $29.4 billion in ten days. Slight +VE
CHINARES CEMENT (01313.HK) announced the first three quarters result ended September 2020. The turnover +1.8% YoY to HK$27.201 billion. The net profit amounted to HK$7.393 billion, +27.6% yearly. EPS was HK$1.059.
INFINITY L&T (01442.HK) announced that on 23 October, Dato’ Chan Kong Yew, the chairman of the Board, has disposed of 8.2 million shares of the Company to an independent third party, cashing in roughly HK$2.87 million. -VE
SHANDONG MOLONG (00568.HK) announced that 15 million shares of the Company held by the single largest shareholder, Zhang Enrong, have been judicially frozen by the Middle People’s Court of Weifang City, Shandong Province until October 2023. -VE
CH DISPLAY OPT (00334.HK) total revenue -33.2% YoY to RMB3.034 billion for the first nine months of 2020 -VE
MINMETALS LAND (00230.HK) contracted sales in the first nine months of 2020 reached approx RMB8 billion +27.8% YoY and the corresponding contracted gross floor area amounted to 369,000 square metres, +12.8% YoY +VE
HENGDELI (03389.HK) announced to sell all 80% stakes held by the Company in Jing Guang Tang, a Taiwanese watch retailing business, to connected persons at the subsidiary level for a cash consideration of TWD93.7 million (approximately HKD25 million). +VE
LEE'S PHARM (00950.HK) announced that the Group Commercial Operations Centre (GCOC) has been officially established on 22 October. The GCOC is a dedicated unit to manage all aspects of the Group’s commercial operations in China.
POLY CULTURE (03636.HK) announced that the 15th Anniversary Auction of Beijing Poly International (a subsidiary of the Group) ended on 20 October. There were around 8,000 items at the auction. The total turnover was over RMB4.1 billion.
ASSO INT HOTELS (00105.HK) and TIAN TECK LAND (00266.HK) Profit Warning expected to record loss before taxation of HK$608 million and HK$605 million for the six months ended 30 September 2020, as compared to around HK$331 million and HK$332 million in the corresponding period of last year. -VE
K11 announced its formal foray into Shenzhen Prince Bay. Modeling its Hong Kong's flagship project Victoria Dockside, the Shenzhen's one-stop cultural and retail flagship integrated landmark elements - K11 Art Mall, Discovery Park and K11 ATELIER.
The Hong Kong Monetary Authority (HKMA) announced that it designated nine authorised institutions as Primary Liquidity Providers (PLPs) for offshore renminbi (RMB) market in Hong Kong (i.e. CNH market) for another term of two years with effect from October 27, following the expiry of their current 2-year term of designation. They are: Agricultural Bank of China Limited, Bank of China (Hong Kong) Limited, Bank of Communications Co., Ltd., BNP Paribas, China Construction Bank (Asia) Corporation Limited, Citibank, N.A., Hongkong and Shanghai Banking Corporation Limited, The Industrial and Commercial Bank of China (Asia) Limited and Standard Chartered Bank (Hong Kong) Limited.
HSBC spokesman said iBond was overwhelmingly received on the first day of subscription, with the total application amount via HSBC more than that on the first sale day of 2016.
HSBC said it will set aside over $100 billion funds for customers to subscribe for the IPO of Ant Group.
While Chief Executive Carrie Lam had revealed her late October trip to Beijing to discuss measures good for Hong Kong's health, the trip may not be happening this month, as local media citing sources.
Centa-City Leading Index (CCL) last posted at 176.85, +0.58% weekly. Centaline Property, highlighted seven major indices surged altogether this week, representing the first time in 14 weeks. Besides, all of the four overall key indices rose, being the second time in three weeks, reflecting the market situation as of the week of Mid-Autumn Festival, which hinted at the trough-shunning prices.
DOW -0.38%, NDX -0.41%, S&P -0.34%, Russel 2K -0.11% US Markets opened flat but initially sold down; Flash PMI data beat forecasts but there were near record highs of covid cases and hospitalisations. But markets worked back to close flat as stimulus talks continued but whilst many points are being agreed fundamental differences remain. Market sentiment was hurt when Trump tweeted that he does not want the aid deal to bail out Democratic states.
Gilead +0.2% off initial high, but Pfizer +2%, Johnson & Johnson +0.1% off an initial high and Regeneron +0.7%.
Intel -10.6% continued weakness after results with concerns over its data cents business.
Amex -3.6% as Q3 earnings missed
Tech mixed but as investors view the prospect of a Biden victory as being -VE for the sector.
Work from home names. Facebook +2.4%, Amazon +0.9%, Apple -0.6%, Microsoft +0.6%, Netflix +0.6%, Disney +0.6%, Zoom -1.7%.
Nvidia +1.7%, Micron -2.8%, Skyworks flat AMD +3.2%.
Re-opening stocks Boeing -1%, Caterpillar flat, Simon Property +0.8%, Kohls +3.8%, Nordstrom +5.6%, Gap +1.3%, United Airlines +2%, Carnival +1.1%
Lock down names Campbell Soup +1.3%, General Mills +0.8% and JM Smucker flat
Composite PMI Flash Oct 55.5 vs 54.3 Sept (F/cast was 54.0 )
Services PMI Flash Oct 56.0 vs 54.6 Sept (F/cast was 54.1)
Manufacturing PMI Flash Oct 53.3 vs 53.2 Sept (F/cast was 53.2)
Baker Hughes Total Oil Rig Count 287 vs 282 prior
USD was weaker vs Yen & Euro. Bitcoin +0.1% @ 12.984.21, VIX +1.8% @ 28.62, US T10 0.841% rises to a four month high
OIL Brent -1.63%, WTI -1.94% as rising covid cases raise concerns over demand. Although Russia did indicate support for extending the current output cuts.
Gold -0.06%, Silver -0.04%, Copper -0.33%
AHEAD Chicago Fed National Activity, New Home Sales, Dallas Fed Manufacturing
DAX +0.53%, CAC +0.82%, FTSE +1.01% Markets opened flat but trended higher on hopes of a US stimulus package agreement. Banks +VE after good results from Barclays, Nordea Bank and Elis. Daimler raised its guidance. Flash PMI data was better than forecast for the most part and UK Retail sales beat.
Composite PMI Flash Oct 49.4 vs 50.4 Sept (F/cast was 48.5)
Services PMI Flash Oct 46.2 vs 48.0 Sept (F/cast was 47.2)
Manufacturing PMI Flash Oct 54.4 vs 53.7 Sept (F/cast was 52.9)
Composite PMI Flash Oct 54.5 vs 54.7 Sept (F/cast was 53.2)
Services PMI Flash Oct 48.9 vs 50.6 Sept (F/cast was 48.9)
Manufacturing PMI Flash Oct 58.0 vs 56.4 Sept (F/cast was 55.1)
Composite PMI Flash Oct 47.3 vs 48.5 Sept (F/cast was 46)
Services PMI Flash Oct 46.5 vs 47.5 Sept (F/cast was 45.1)
Manufacturing PMI Flash Oct 51.0 vs 51.2 Sept (F/cast was 50.5)
Retail Sales Sept +4.7% YoY vs +2.7% Aug revised (F/cast was +3.4%)
Retail Sales Sept +1.5% MoM vs +0.9% Aug revised (F/cast was +0.5%)
Retail Sales Ex Fuel Sept +6.4% YoY vs +4.3% Aug (F/cast was +4.5%)
Retail Sales Ex Fuel Sept +1.6% vs +0.6% Aug (F/cast was +0.4%)
Composite PMI Flash Oct 52.9 vs 56.5 Sept (F/cast was 53.6)
Services PMI Flash Oct 52.3 vs 56.1 Sept (F/cast was 53.8)
Manufacturing PMI Flash Oct 53.3 vs 54.1 Sept (F/cast was 52.9)
EUROZONE No data due.
GERMANY Ifo Business Climate, Expectations and Current Conditions
FRANCE No data due
UK No data due