Oct 27 Asian Macro Initial Thoughts Asian Futures lower, US Futures flat
US Futures opened Dow +20pts S&P and NDX slight +VE after the worst sell off since Sept 3
Asian Futures Nikkei Futures in Chicago -79pts, HK ADR’s -166pts and Australia already trading lower indicates a generally lower open for Asia
S Korea GDP data was slight better than Forecast. Due from China on the open in Industrial Profits data. Also in HK, HSBC earnings
DOW -2.29%, NDX -1.64%, S&P -1.86%, Russel 2K -2.15% the Dow opened -300pts and sold down as US covid cases spiked to a record. Stimulus hopes dashed as both sided accused the other of ‘moving the goal posts’. Markets hit their lows about 1pm the Dow was -965pts, then saw a bounce before trading sideways into the close in choppy trading. The biggest drop since September 3. Worth noting the VIX spiked too suggesting more volatility as we run into next week’s election.
Weakness in Boeing, Raytheon and Lockheed Martin after China said it would impose sanctions on them over Taiwan arms sales.
Pre market AstraZeneca was up small as trial results shows its drug triggers an immune response in adults +VE. Hasbro -9.4% as Q3 earnings beat but the stock was weak as its sales for TV, film and entertainment division missed.
Broker Upgrades saw these names pen higher but sell down; Kontoor Brands -2%, Lululemon -0.7%, Winnebago +0.1%. Palantir Technologies +4.9% after 2 new initiations were +VE
Work from home names. Facebook -2.7%, Netflix flat, Disney -3.3%, Zoom +1.2%. Microsoft -2.8% earnings today and Alphabet -3%, Amazon +0.1% & Apple flat ahead of earnings on Thursday
Nvidia -3.3%, Micron -1.3%, Skyworks -1.7%, AMD +0.3%.
Re-opening stocks Boeing -3.9%, Caterpillar -3.2%, Simon Property -3.3%, Kohls -4.6%, Nordstrom -7.7%, Gap -3.8%, United Airlines -7%, Carnival -8.7%, Wynn Resorts -4%
Lock down names Campbell Soup -0.5%, General Mills -1.3% and JM Smucker -0.4%
Twilio -1% after hours (was -1.8% normal hours) despite Q3 earnings beating
AIG +7% after hours (was -3.5% normal hours) announced it intends to separate its life and retirement business from AIG.
Chicago Fed National Activity Index Sept 0.27 vs +1.11 Aug revised (F/cast was 0.2)
New Home Sales Sept -3.5% MoM vs +3% Aug revised (F/cast was +3.5%)
Dallas Fed Manufacturing Index Oct 19.8 vs 13.6 Sept (F/cast was +9.5)
USD flat vs Yen & Euro. Bitcoin -0.1% @ 13,032.79, VIX +17.8% @ 32.46, US T10 @ 0.804%
OIL Brent -3.14%, WTI 3.24% demand fears and Libyan output resumes
Gold -0.1%, Silver -1.2%, Copper -1.2%
AHEAD Durable Goods Orders Data, Redbook, Case Swiller Home Prices, Home Price Index, Consumer Confidence, Richmond Fed Manufacturing Index, API Crude Oil Stock Change.
Key Earnings Pfizer, Merck, Eli Lilly, Caterpillar, Stanley Black & Decker, Microsoft, AMD.
DAX -3.71%, CAC -1.91%, FTSE -1.16% markets opening lower as covid concerns rise with France, Spain and Italy seeing significant increases in cases and ordering additional measure to try and contain the outbreaks. Markets then saw a brief uptick before trending lower as the US opened lowed and European markets closed at their lows.
AstraZeneca +1.7% on news its potential Covid-19 vaccine produced a similar immune response in older and younger adults. The firm’s shares climbed 2%.
SAP closed -22% having opened down 16% as it pulled its medium term profit targets and warned that business would take longer to recovery; -VE cross read for other Tech names which with the slippage in the Ifo data which suggests the recovery momentum in Europe is waning and so putting the V sharped recovery in question.
Domino’s Pizza +3.6% as its business has proved it can thrive amid lockdowns with more people ordering takeout or delivery
GERMANY Ifo Data
Business Climate Oct 92.7 vs 93.4 Sept (F/cast was 91.1)
Expectations Oct 95.0 vs 97.7 Sept (F/cast was 97.5)
Current Conditions Oct 90.3 vs 89.2 Sept (F/cast was 87.9)
EUROZONE Loans to Households, Loans to Companies, M3 Money Supply
GERMANY No data due
FRANCE Unemployment Benefit Claims, Jobseekers
UK CBI Distributive Trades
JAPAN Expect Nikkei to open lower Chicago futures 23,415 (Osaka at 23,390) vs 23,484 Nikkei’s Monday close. Yen unchanged overnight; currently 104.82
Government reported 102 new covid cases Monday in Tokyo, 22 lower than Sunday. Nationwide the number was 403
Japan and the United States on Monday began air, sea and land exercises around Japan in a show of force in the face of increased Chinese military activity in the region. Along with increased illegal fishing vessels from China and North Korea.
Japan is aiming to cut greenhouse gases to zero by 2050 and become a carbon-neutral society, Prime Minister Yoshihide Suga said on Monday as he unveiled a major shift in position on climate change. +VE for Solar and Wind power plays
NEC Corp. will support the development of next-generation 5G wireless networks in the U.K., according to the British government; using it as an alternative to Huawei +VE
Hitachi Ltd said Monday it will abolish the use of traditional hanko (seals) for its internal paperwork by March 2022 and reduce paper copies by 70 percent by next March to promote digitalization in the company.
Murata Manufacturing was +2.1% Monday after lifting forecasts for sales and profits for the six months ended September 30. +VE cross read to Taiyo Yuden and TDK Corp.
Sony +VE yesterday on news its begun shipping PlayStation 5 units to reviewers and online influencers ahead of its initial launch on November 12.
SOUTH KOREA Expect markets to open lower with broad based weakness on covid fears rising and as US stimulus now unlikely pre US election. It will be interesting to see if Samsung related names continued to outperform; I would expect to see bargain hunting if they get hit down hard. GDP growth data slightly better but likely to be ignored
GDP Growth Rate Adv Q3 -1.3% YoY vs -2.7% prior (F/cast was -1.5%)
GDP Growth Rate Adv Q3 +1.9% QoQ vs -3.2% prior (F/cast was +1.6%)
Government sought on Monday to dispel concerns over the safety of its seasonal influenza vaccine, urging it on citizens in a bid to avert stress on a health system that is already grappling with the coronavirus.
Hyundai Motor with Kia Monday iswung to a net loss for July-September of 336 billion won ($297.72 million), missing market estimates by a wide margin most has expected a profit. It booked a 2.1 trillion won to cover charges related to engine defects that increased the risk of stalling and fire. That is a huge provision which if not fully utilised could see part being written back. -VE
Woori Financial Group said Monday that its Q3 net profit -1.13% YoY to 479.8 billion won ($425 million), but was above market expectations amid coronavirus woes. +VE
Naver and entertainment and logistics giant CJ Group signed a share-swap deal Monday in a strategic tie-up to boost their competitive edge in the e-commerce and entertainment industries, officials said. The share swaps between Naver and CJ Logistics and CJ ENM are set to take place on Tuesday, while one involving Studio Dragon is expected to take about two weeks, the companies said. +VE
LG Electronics said Monday it has inked a license agreement with European electronics company Electrolux to provide its patented icing technology for French door refrigerators. +VE
Doosan Infracore Co. said Monday that sales of its mini-sized excavators in South Korea nearly tripled in the first nine months from a year ago. +VE
Samsung Heavy Industries Co. said Monday it has launched its project along with DNV GL, a Norwegian ship quality assurance company, to develop floaters for offshore wind turbines and remote-control maintenance technologies for them.
Big Hit Entertainment, sunk nearly 10 percent Monday, hitting a new low since the company's market debut earlier this month, as investors question its proper valuation. -VE
TAIWAN Expect market to open lower with Tech under pressure and concerns about the strength of the global recovery.
No data due
The Taiwan Stock Exchange yesterday commenced intraday odd-lot trading Monday, recording 46,164 transactions worth NT$363 million (US$12.56 million), accounting for 0.22 percent of the TAIEX’s total turnover, exchange data showed. TSMC was the favourite stock traded.
A civilian aircraft chartered by the military completed a flight from Taiwan to the Pratas Islands in the South China Sea yesterday, 11 days after a previously scheduled trip was cut short by Hong Kong air traffic controllers for no apparent reason.
Macronix International, the world’s biggest supplier of NOR flash memory chips, yesterday said net profit last quarter grew 22% QoQ as stay-at-home and remote learning trends boosted demand for chips used in PCs and Nintendo Co’s game consoles. Net profit expanded to NT$1.62 billion (US$56.05 million), from NT$1.33 billion in the second quarter. That translated into earnings per share of NT$0.88, up from NT$0.72 a quarter earlier. On an annual basis, net profit slumped 13 percent from NT$1.85 billion, or NT$1.01 a share, due to a higher tax payment, the company said. +VE
CHINA Expect market to open lower with concerns over the global recover and the fifth plenum continuing. We also get Industrial Profits data on the open.
Data due Industrial Profits Sept YTD (Aug was -4.4% and the F/cast is -1.6%)
China set to complete covid tests on the 4 million residents in Kashgar as it seeks to control the covid outbreak
China will impose sanctions on Lockheed Martin, Boeing Defense, Raytheon and other U.S. companies it says are involved in Washington’s arms sales to Taiwan, a foreign ministry spokesman said on Monday.
China's foreign ministry has ordered six U.S. media outlets to report back on their operations in the country within seven days, after Washington said it was designating the U.S. arms of six more China-based media firms as foreign missions.
China’s top cyber authority said on Monday it would carry out a “rectification” of Chinese mobile internet browsers to address what it called social concerns over the “chaos” of information being published online. In the latest crackdown, the Cyberspace Administration of China (CAC) gave browsers two weeks to conduct a self-examination focusing on problems including the spreading of rumours, use of sensationalist headlines and publishing of content that violates the core values of socialism. The campaign will initially focus on eight of the most influential mobile browsers such as ones operated by Huawei Tech, Alibaba Group and Xiaomi.
HONG KONG ADR’s indicate -166pts to open at 24,752 but I expect we will see more initial downside. HSBC results today will be closely watched. Good weekend property sales are likely to be ignored as investors play catch up and react to the growing covid concerns in Euopre and US that could impact the global recovery
Data due after market Balance of Trade, Exports, Imports
As expected Chief Executive Carrie Lam's trip to Beijing has been postponed as it clashes with the four-day meeting. She has delayed making her policy address until holding talks with mainland officials this week over Hong Kong's economic recovery.
Short Selling 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
Ant IPO to kick off 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.
Property market saw all 378 units on offer at The Pavilia Farm phase one in Sha Tin and the secondary market recorded more deals in Tung Chung. New World Development (0017) has collected about HK$8.4 billion after selling all 767 units at the project over the past two weeks, bringing the group's total contracted sales in Hong Kong to almost HK$10 billion. NWD expects to release the first price list of The Pavilia Farm phase two this week.
CK Asset (1113) has received about 400 checks for the 82 units in the first two price lists of El Futuro in Sha Tin, a 3.9 times over-subscription.
Sun Hung Kai Properties (0016) named its 33 To Shek Street Project Phase 1 as "St Michel," and will launch sales next month. The project provides 196 units.
Hong Kong Ferry (0050) and Empire Group released 62 units in the second price list of Starfront Royale in Tuen Mun at an average HK$15,035 per sq ft after discounts, 3 percent higher than the first price list.
Centaline Property Agency reported 25 secondary transactions at 10 blue-chip housing estates over the past three days. In Tung Chung, a Cathay Pacific Airways (0293) pilot sold a 1,160-sq-ft flat at The Visionary for HK$12.75 million, or HK$10,991 per sq ft, after HK$1.1 million was slashed from the original asking price, said Centaline Property Agency. It would not be surprising to see more similar transactions in the coming days.
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 immediate effect 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