OCT 28 Asian Macro Initial Thoughts Asian Futures lower US Futures -150pts

30 Oct

OCT 28 Asian Macro Initial Thoughts Asian Futures lower US Futures -150pts

Asian Futures Nikkei indicates-150pts,  HK ADR’s +63pts and Australia opened lower. I would expect to see most markets trading lower as rising covid cases in Europe and US may sap momentum from the global recover
US Futures Opened -100pts and fell to -150pts in early trades with S&P and NDX lower

DOW -0.8%, NDX +0.64%, S&P -0.3%, Russel 2K -0.9% Stocks opened lower for a second day as covid cases hit new records and out-weighted the good economic data which might be in jeopardy is the second covid wave undermines the recovery. Concerns over the close run election have prompted some to hedge their positions too.
Pre market 3M -3.1% despite earnings and revenue beating, Caterpillar -3.2% reported a steep drop in earnings, Pfizer -1.4% announced that key data that was expected pre-election would be delayed, Merck -1.1% and Eli Lilly -6.9% after results
Earnings during trading: Stanley Black & Decker -3.7%, Harley Davidson +22%, JetBlue -5.4% and Raytheon Tech -7%
Work from home names. Facebook +2.2%, Netflix +0.1%, Disney -0.6%, Zoom +4.1%, Alphabet +0.9%, Amazon +2.5%, Apple +1.4% ahead of earnings on Thursday
Nvidia +1.9%, Micron -0.4%, Skyworks -1.5%, AMD -4.1% on buying Xilinx +8.6% in all stock deal
Re-opening stocks Boeing -3.5%, Simon Property -4.1%, Kohls -3.2%, Nordstrom -5%, Gap -1.2%, United Airlines -3.3%, Carnival -1.9%, Wynn Resorts -2.3%
Lock down names Campbell Soup -0.1% & General Mills +0.3% sold down into the close, but JM Smucker -1.7% was weak for most of the day
After Market earnings
Microsoft -1.3% in after hours despite earnings and revenue beat but gave weak revenue guidance (was +1.5% in normal trading)
First Solar +10.8% in after hours as earnings beat (was -1.6% in normal hours)
AMD +0.8% in after hours (was -4% in normal hours)
Chubb +2.1% in after hours (was -2% in normal hours)
Durable Goods Orders Sept +1.9% MoM vs +0.4% Aug (F/cast was +0.4%)
Durable Goods Orders Ex Transp Sept +0.8% MoM vs 1% Aug revised (F/cast was +0.3%)
Durable Goods Orders Ex Defense Sept +3.4% MoM vs +0.9% Aug revised (F/cast was +0.1%)
Redbook 24 Oct +0.8% MoM vs 1% prior (24 Oct +1.2% YoY vs +2.5% prior)
Case Schiller Home Prices Aug +5.2% YoY vs +4.1% Jul revised (F/cast was +3.9%)
Case Schiller Home Prices Aug +1.1% MoM vs +0.8% Jul revised (F/cast was +0.3%)
Home Price Index Aug +1.5% MoM vs +1.1% Jul revised (F/cast was +0.6%)
Home Price Index Aug +8% YoY vs +6.5% Jul (F/cast was +6.6%)
Consumer Confidence Oct 100.9 vs 101.8 Sept (F/cast was 101.5)
Richmond Fed Manufacturing Index Oct 29 vs 21 Sept (F/cast was 15.1)
API Crude Oil Stock Change 23 Oct 4.577m vs 0.584m prior
USD dipped vs Yen & Euro. Bitcoin +4.7% @13,688.25, VIX +2.7% @ 33.35, US T10 0.771%
OIL Brent +1.7%, WTI +2.3% on US gulf shutdowns ahead of Hurricane Zeta
Gold +0.22%, Silver +0.35%, Copper unch
AHEAD MBA Mortgage Applications and 30 year Mortgage Rate, Goods Trade Balance, Wholesale Inventories, EIA Oil Report.
Key Earnings United Parcel, Boeing, General Electric, Ford, ServiceNow, Etsy, Pinterest

DAX -0.93%, CAC -1.77%, FTSE -1.09% FTSE and DAX open slightly higher but CAC lower as PPI missed. But trended lower for most of the session with a slight up tick into the close on new record cases of covid in US, Russia, France, the UK on its highest alert and Germany at risk of losing control over the spread. Brexit concerns also in focus as the EU’s negotiator travels to London.
Earnings also in focus; Santander -1% having initially risen after Q3 core profits trebled YoY. HSBC +3% as Q3 Net Profit beat forecasts easily. Good results also from Swedish Match +3.5% and Capgemini +2%. Brenntag +5.8% after announcing job cuts, while at the top of the Stoxx 600, Swedish Orphan Biovitrum jumped +7.6%.
Rheinmetall -6.3% after Janus Henderson placed 1.2 million shares and Austrian retail bank Bawag -6.3% and Finnish forestry firm UPM -2.9% on poor earnings.
BP closed -2.1% Q3 underlying replacement cost profit, used as a proxy for net profit, of $100 million vs a previous quarter loss but stock closed at day low.
Loans to Households Sept +3.1% YoY vs +3% Aug (F/cast was +2.8%)
Loans to Companies Sept +7.1% YoY vs +7.1% Aug (F/cast was +7.5%)
M3 Money Supply Sept 10.4% YoY vs +9.5% Aug (F/cast was +10.1%)
PPI Sept +0.2% vs +0.1% Aug (F/cast was +0.3%)
Unemployment Benefit Claims Sept -15k vs -171k Aug (F/cast was30k)
Jobseekers Total Sept 3.6963m vs 3.6215m Aug (F/cast was 3.6515m)
CBI Distributive Trades Oct -23 vs +11 Sept (F/cast was -6)
EUROZONE No data due
GERMANY No data due
FRANCE Consumer Confidence
UK No data due

JAPAN Expect Nikkei to open lower futures in Chicago at 23,335 (Osaka was 23,400)  vs 23,486   Yen slightly stronger at 104.52   
No data due
Government approved plan for free covid 19 vaccines
and to bear the cost of any health damage caused by a vaccine, according to a document posted on the health ministry’s website. Japan has struck deals for hundreds of millions of doses from companies including AstraZeneca Plc and Pfizer Inc. +VE
Nissan to increase output in China by 30% by the end of 2021 +VE
Convenience Stores see strong sales of ‘Kimetsu no Yaiba’ (Demon Slayer) themed products as the film is a hit in cinemas. +VE
ANA forecases Yen 505bn loss for FY2020 restructuring plan will retire aircraft, seek voluntary redundancies and transfer over 400 employees to hotels, call centres and elsewhere as it seeks to cut costs. -VE

SOUTH KOREA Expect markets to open lower with concerns over the impact of rising covid cases in Europe and US but downside muted by Tech and good Consumer Confidence number.
Data out

Consumer Confidence Oct 91.6 vs 79.4 Sept (F/cast was 81)
Government reported 88 new covid cases (72 local transmission, 16 imported) in the 24 hrs to Midnight Monday vs 119 in the prior 24 hrs. It urged people to maintain social distancing.
LG Chem National Pension Service (NPS) will oppose the plan to separate its battery business into a new company, the NPS said on Tuesday; on concerns about damage to shareholder value -VE
US International Trade Commission (ITC) on Monday delayed a decision in a trade secrets case involving LG Chem and SK Innovation to Dec. 10. LG Chem filed its trade complaints against SK Innovation last year in the US over allegations of trade secret theft, seeking to block SK from producing battery cells in the United States and importing the components necessary to make the cells. SK denied wrongdoing. Slight -VE
Samsung Group in focus as the Lee family faces a battle to maintain control of it following the death of patriarch and group Chairman Lee Kun-hee. Slight -VE
Samsung SDS, announced the Tuesday its Q3 sales marked an all-time high reaching 2.96 trillion won ($2.6 billion), +11.7 % YoY according to a regulatory filing posted Tuesday. Q2 sales were +15.6% the company added. +VE

TAIWAN Expect market to open lower although the down limited by the good performance overnight of Working from home names.
No data due
The government’s business climate monitor last month flashed “green” 
for a second consecutive month, as the nation’s economy grew steadily on the back of robust export demand, the National Development Council (NDC) said yesterday. +VE
Government reported 4 deaths post flu jabs but its advisory specialist panel considered the causes to be associated with underlying health conditions, so the government’s flu vaccination program would continue.
Catcher Technology yesterday said that its net profit last quarter -79% QoQ because of a foreign exchange loss of NT$2.43 billion (US$84.16 million). Net profit fell to NT$569 million (lowest level since Q2 2010) during the quarter ending on Sept. 30, from NT$2.77 billion in the second quarter, the metal casing supplier said in a statement. Gross margin improved but EPS fell on FX, No Dividend -VE
Hon Hai Precision yesterday said that it has signed a strategic partnership contract with China Insurance Investment Co to create a venture capital fund valued at 10 billion yuan (US$1.49 billion), targeting investments in emerging technology. The fund would invest in “electric cars, digital health, robotics” and other technology-related projects, it said. +VE

CHINA Expect market to open lower as rising global covid cases likely to impact exports although some traders that it could prompt further stimulus from Beijing.
No data du
e Fifth Plenum continues
Due to the RMB strength in recent months, the PBOC has called off the counter-cyclical factor in its daily yuan midpoint fixing, Reuters cited people with the knowledge of the matter.
China last month ramped up purchases of US goods as its economy improved, but still remains far from the full-year target set out under its “phase one” trade deal with the US. The monthly value of US goods bought under the trade agreement reached a monthly record high of US$9.9 billion last month as oil, soybean and vehicle imports surged. That still leaves the country’s purchases at only 38.5% of a total target of more than US$170 billion for the year, Bloomberg calculations based on Customs Administration data showed. Purchases of US energy goods jumped about 75% last month from August as China imported a record amount of crude oil. The value of agricultural goods bought from the US climbed about 60%, with imports of soybeans surging more than 600%.
China’s environment ministry on Tuesday said new aluminium production should no longer be encouraged in the country’s sprawling western region - in a proposal that goes against a current industry trend - and made the same suggestion for coke. Aluminium smelters in China, the world’s top producer of the metal, are increasingly building plants in western parts of the country, particularly Yunnan province, to take advantage of cleaner hydropower.
United States and India signed a pact to share sensitive satellite and map data on Tuesday as U.S. Secretary of State Mike Pompeo warned of the threat posed by an increasingly assertive China.
China has raised objections to what it called U.S. bullying of Sri Lanka after Washington said the Indian Ocean island must make “difficult but necessary choices” regarding its ties with China.
Republican Senator Marco Rubio has introduced legislation to block access to U.S. capital markets for Chinese companies that have been sanctioned by Washington, threatening a blow against Chinese firms that rely on U.S. investors for funding.
Singapore’s ST Engineering and its joint venture with Airbus said they would set up new sites in China, Germany and the United States by 2023 to convert A321 passenger planes to freighters after the first one entered service with Qantas on Tuesday.

HONG KONG ADR’s +63pts HSI to open at 24,850 with weakness in Petrochems and some Chinese Financials but with a huge amount of margin finance tied up in Ant expect light trading today. Any weakness is likely to prompt margin call selling.
Earnings in focus along with the global impact of rising covid cases in Europe and US.
No data due
but after market Tuesday
Balance of Trade Sept HK$-12.7b vs -14.6b Aug (F/cast was -5b)
Export Sept -9.1% vs -2.3% Aug
Imports Sept +3.4% vs -5.7% Aug
Exports driven by those going to the mainland, with moderate growth for those going to the USA with those to the EU saw a smaller decline.

SHORT SALES Tuesday 18.3% vs 21.3% Friday
Top Shorts Galaxy Ent (27) 35%, Bank of China (3988) 32%, CCB (939) 30%, Henderson (12) 30%, Hang Seng Bank (11) 28%, CLP (2) 28%, Swire Pac A (19) 28%, Sinopec (386) 25%, ICBC (1398) 25%, China Mobile (941) 25%.
SECURITY LAW Hong Kong police on Tuesday detained three people under the city’s contentious national security law on suspicion of publishing content to incite others to secede from China.

ANT GROUP (06688.HK) as at 6 pm on the first day of IPO, according to the data of ten brokers, they have so far granted approximately $112.6 billion of margin.
Based on the fundraising amount of $3.34 billion from public offering, the IPO was over-subscribed by almost 33 times.
TOWNGAS CHINA (01083.HK) and HK & CHINA GAS (00003.HK) announced that TCCL on 27 October entered into the Capital Increase Agreement with Shenergy Group (600642.SH) and the Target Company (Shanghai Gas), pursuant to which TCCL agreed to increase the registered capital and capital reserves of the Target Company by way of capital contribution in the amount of RMB4.7 billion. Upon Completion, the equity interests in the Target Company will be owned as to 25% by TCCL and 75% by Shenergy Group. TCCL and the Target Company also entered into the Enhanced Strategic Cooperation Agreement, pursuant to which TCCL and the Target Company agreed to work together to promote the issuance of ordinary shares by TCCL to the Target Company within one year from the effective date of the Capital Increase Agreement, such that upon completion of the Proposed Southbound Subscription, the Target Company will own 25% of the issued
HSBC HOLDINGS (00005.HK) Conference Call Group CEO Noel Quinn, at the analyst conference call, said the group is poised to extend its presence in Asian market. Given market share gain in local insurance, the bank will keep making related investment in Hong Kong, as well as other markets, such as Singapore, India and China. It will also explore Asian private banking business and expand customer manager team, especially in South Asia and China. The group said in its report that it will seek to pay a conservative dividend for FY2020 if circumstances allow. Group Chief Financial Officer Ewen Stevenson responded that it is the group's top priority to resume dividend pay, before considering buyback if it has spare capital. He also disclosed that the group targets at slashing 10,000 positions by the end of the year, while 6,000 have been sunk to date. Chief Executive Noel Quinn reiterated that the bank will focus its investment on the Asian markets, in particular China and Hong Kong.
NCI (01336.HK) announced first three quarter results ended September 2020. Operating income +27.8% yearly to RMB169.772 bn. Net profit amounted to RMB11.105 bn, -14.6% YoY. EPS equaled RMB3.56. -VE
PING AN (02318.HK) announced results for the nine months ended September 30, 2020. Net profit was RMB103.041 billion, -20.5% yearly. EPS equaled RMB5.83. -VE
WH GROUP (00288.HK) announced first three-quarter results ended September 2020. Before biological fair value adjustments, revenue +9.2% yearly to US$18.767 billion. Net profit amounted to US$890 million, +8.5% YoY EPS equaled US6.04 cents. EBITDA +12.82% to US$1.953 billion.
CHINA LONGYUAN (00916.HK) nine-month results ended September 2020. Revenue +0.1% yearly to RMB19.986 billion. Net profit amounted to RMB3.899 billion, +11.1% YoY
K Wah International (0173) will launch 168 units of KSummit in Kai Tak as soon as Saturday, at an average price of HK$24,722 per square foot after discount. The 168 flats, which range from 289 sq ft to 778 sq ft, cost between HK$6.93 million to HK$231.29 million each.
New World Development (0017) will launch sales of the second batch of the Pavilia Farm atop Tai Wai Station as soon as next week, offering 1,415 apartments. The batch offers flats ranging from studios to four-bedrooms ranging between 264 sq ft to 1,322 sq ft. The price list will be released on Wednesday.
CK Asset (1113) released the third price list of El Futuro in Sha Tin, involving 27 units with an average price of HK$17,686 per sq ft after discount. Prices range from HK$7.85 million to HK$23.71 million after discount. The developer plans to put 98 flats in the project for sale on Saturday with average price is HK$17,839 per sq ft after discount.
Henderson Land Development (0012) released the fifth price list for Two Artlane in Sai Ying Pun, offering 28 units with prices ranging from HK$26,091 to HK$35,278 per sq ft.
At ANT GROUP (06688.HK)'s roadshow Tuesday, CFO Cyril Han said the share should have been reasonably priced as investors broadly recognize the sustainable growth outlook and long-term investment value of the company, cited Chinese media.
Hao Huang, President of the digital finance business group, told Chinese media It is strategically and profoundly partnered with banks to strive for win-win outcomes,. Leveraging on the group's technological edges and banks' financial strengths, the two parties will reach out to and serve millions of consumers and small-and-micro enterprises at a higher efficiency and, yet, lower costs, opined Huang. Executive Chairman Eric Jing believes that blockchain is a trusted new infrastructure in the digital era and that the core value lies on reconstructing a cross-party trust system. The group has seized the top spot worldwide for four consecutive years in terms of application. volume of blockchain patents, added Jing.
  It is interesting that they mention partnering with Banks for win win, because that is an area that US sanctions could hurt them. Also a number of the banks they have currently partnered with in Asia are not leaders which could also slow the build out of that business.

* The email will not be published on the website.