Oct 9 Asian Macro Initial Thoughts. China Re-opens. S Korea & Taiwan Closed
Covid-19 Globally over 36.4m cases, 1.6m deaths
US Futures opened flat but have risen to Dow +135pts +0.5%, S&P +0.5% and NDX +0.3% on hopes of stimulus as Pelosi’s Chief of Staff tweeted she and Mnuchin spoken for 40 mins on the subject.
Asian Futures Mixed Nikkei indicates lower, HK ADR’s higher, Australia is trading slightly lower and China re-opens.
Trump refuses to participate in the next Presidential debate, which was changed to virtual because he has been infected with the covid virus. Says 'Not going to waste my time’.
DOW +0.43%, NDX +05%, S&P +0.8%, Russel 2K +1.1% markets opened higher as initial claims data was in line with T&E data but missed the Dow Jones survey number. Also hopes of piecemeal stimulus; but then the market reversed as Pelosi rejected the plan for a piecemeal deal for the travel sector without a bigger aid package. After that the market basically trading sideways for the rest of the day.
United +1.7%, American +0.7%, Delta +1.7%, SouthWest +1% all off their initial highs having sold down then then bounced. Carnival -2.4% and Norwegian Cruise Line +1% again off early highs.
Fed Minutes showed concern that the recovery could stall if Congress didn’t pass an additional stimulus package.
Morgan Stanley +0.6% on news it will buy Eaton Vance in $7bn deal and the assets will be managed by its investment arm.
IBM +6% plans to spin out infrastructure business in a shift towards the cloud +VE
Facebook +2.2%, Apple -0.1%, Amazon -0.2%, Netflix -0.5%, Alphabet +1.7% and Microsoft +0.4%. Nvidia -0.9% broker downgrade, AMD -0.2%, Micron +3.1% and Skyworks +1.1%.
Re-opening stocks Boeing +2.1%, Caterpillar +1.2%, Simon Property -1.4%, Gap +0.2%, Lock down names Campbell Soup +0.4%, General Mills -0.3% and JM Smucker -0.3%
Initial Claims 3 Oct 840k vs 849k prior (F/cast was 840k)
4 week Ave Claims 857k vs 870.25k revised (F/cast was 854k)
Continuing Claims 10.976m vs 11.979m prior (F/cast was 11.5m)
EIA Natural Gas Report 75Bcf vs 76Bcf prior (F/cast was 100Bcf)
USD was unchanged vs Yen & Euro. Bitcoin +2.2% @ 10,894.29, VIX -6% @ 26.4,
US T10 @ 0.779% dipped slightly in the unemployment data
OIL Brent +3.5%, WTI +3.3% as Hurrican Delta threatens Gulf of Mexico production and Norway sees further strikes.
Gold +0.4%, Silver +0.3%, Copper +0.26%
AHEAD Wholesale Inventories, WASDE report, Baker Hughes Total Oil Rig Count
DAX +0.88%, CAC +0.61%, FTSE +0.53% opened higher but saw initial selling as German Trade Balance missed on surging imports; and the current account missed. The rising number of covid cases was also a concern with the potential for more social distancing measure -VE for sentiment. But markets worked higher as US initial claims data was good and there was talk of more US stimulus support for the airlines +VE Travel and Leisure stocks. Also rising were the Petrochems but Basic resources were weak. There was a slight sell off into the close as Pelosi rejected a piecemeal deal without a bigger aid package.
Rolls-Royce +26% continuing Wednesday’s bounce.
Hargreaves Lansdown -5%
Balance of Trade Aug Euro 12.8b vs 19.2b Jul (F/cast was 17.4b)
Exports sa Aug +2.4% vs +4.7% Jul (Consensus was +1.4%)
Imports sa Aug +5.8% vs +1.1% Jul (Consensus was +1.4%)
Current Account Aug Euro 16.5b vs 21.b Jul Revised (F/cast was 18.2b)
EUROZONE No data due
GERMANY No data due
FRANCE Industrial Production
UK Balance of Trade, GDP 3 mth Ave, GDP, Goods Trade Balance, Construction Output, Industrial & Manufacturing Production, NIESR Monthly GDP Tracker
JAPAN Expect Nikkei to open lower; futures in Chicago at 23,720 but Osaka at 23,620 vs 23,647.07 Thursday's close which was a 7.5 month high and the pre market data was weaker than expected. Yen currently 106.01
Ave Cash Earnings Aug -1.3% YoY vs -1.3% Jul (F/cast was -0.9%)
Household Spending Aug +1.7% MoM vs -6.5% Jul (F/cast was +3%)
Household Spending Aug -6.9% YoY vs -7.6% Jul (F/cast was -6.5%)
Sept Machine Tool Orders due at 2pm. Aug was -23.3% and the F/cast is -15%.
Tokyo reported 248 new covid cases with the nation-wide number at 618. Slightly lower DoD. +VE
The Bank of Japan raised its economic assessment for most of the country's nine regions to say they were starting to pick up, underscoring the central bank's growing conviction the economy is emerging from the worst hit of the coronavirus pandemic.
PM Suga pushing for the Olympics to go ahead Slight +VE
LINE +VE as Luxury fashion and auto brands in Thailand have turned to selling their products on Japanese chat app Line amid the coronavirus pandemic, tapping the country's growing appetite for social commerce, a top executive said on Thursday.
ANA plans to not pay winter bonuses this year due to deteriorating revenues +VE. Both JAP and ANA say they will make smaller cuts to Domestic services in November as demand sees a slight recovery thanks to the Govt’s ‘Go To Travel’ programme. Comes as global airlines look to downsize.
SOUTH KOREA Market Closed Hangul Day re-opens Monday
No data due
Finance minister considers easing ‘large shareholder’ standards BUT the new taxation rule for stocks gets flak from retail investors -VE
Hyundai Motor Co will voluntarily recall its Kona electric vehicles as a possible short circuit due to what may be faulty manufacturing of its high-voltage battery cells could pose a fire risk, South Korea's transport ministry said on Thursday. -VE
Samsung Electronics on Thursday announced an earnings surprise for the third quarter of this year, posting the largest operating profit in two years. +VE
LG Electronics announced Thursday, the company is likely to achieve the largest revenue and operating profit for the third quarter to date this year, beating market expectations. +VE
Hyundai Oilbank announced Thursday it plans to grow the number of its electric vehicle charging stations to 200 by 2023. +VE
TAIWAN Market Closed for National Day re-opens Monday
No data due but after market Thursday
Inflation Rate Sept -0.58% YoY vs -0.33% Aug (F/cast was -0.2%)Inflation Rate Sept +0.1% MoM vs +0.18% Aug (F/cast was -0.2%)Wholesale Prices Sept -8.12% vs -9.09% Aug (F/cast was -8.5%)
Taiwan hopes to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and sign economic cooperation agreements with regional partners, President Tsai Ing-wen said yesterday, as she opened the Yushan Forum in Taipei. Likely to upset China.
China was accused by Taiwan of trying to impose censorship in India after its embassy in New Delhi advised journalists to observe the “one-China” principle after newspapers carried advertisements for Taiwan’s national day.
Taiwan Semiconductor Manufacturing Co , yesterday reported a record high revenue of NT$127.59 billion (US$4.4 billion) for last month, +3.8% MoM and 24.9% YoY. Last month’s figure marked the second consecutive monthly record, after reaching NT$122.88 billion in August, the company said. +VE
Largan Precision saw its gross margin slide to 65.6% last quarter, from 68.6% prior, after a major client canceled its orders, chief executive officer Adam Lin said yesterday. “The client directly canceled all of its orders last month, which lowered our gross margin, as the client had requested high-specification orders with higher profit margin,” Lin told investors at an online earnings conference. Rumoured to have been Huawei. -VE
MediaTek yesterday posted record revenue of NT$37.87 billion (US$1.31 billion) for last month, likely fueled by Huawei Technologies Co stockpiling supplies before a US ban that took effect on Sept. 15. Revenue +15.74% MoM and +61.18% YoY, the company said. +VE
The four major subsidiaries of Formosa Plastics Group yesterday posted combined profits of NT$49.81 billion (US$1.72 billion) for Q3, improving substantially from combined losses of NT$6 billion in the second quarter and NT$13.99 billion in the first quarter, on the back of rising product prices, raising demand and investment gains. +VE
TPK Holding Co yesterday reported that revenue for last month -28.52% YoY as Apple Inc did not release a version of its flagship iPhone last month, as it had in previous years. Slight -VE
CHINA Market re-open and re-set after over a week of being closed. I would expect the market to open higher playing catch up with other regional markets. Sentiment remains cautious as US/China relations remain fraught after Trumps recent video blaming China for the covid virus as new cases rise in Europe and US could impact Exporters.
Caixin data I would expect to be good judging from the other PMI data seem in Asia on Monday.
Data due at 9:45am
Caixin Services PMI Sept. (Aug was 54 and the F/cast is 53)
Composite PMI Sept. (Aug was 55.1 and the F/cast is 54)
The U.S. national security adviser warned China on Wednesday against any attempt to take Taiwan by force, saying amphibious landings were notoriously difficult and there was a lot of ambiguity about how the United States would respond.
China’s Shanghai Fosun Pharmaceutical Group said on Thursday an experimental antibody treatment for COVID-19 being developed by its unit had been approved for human testing in the United States and the trial was expected to start soon. +VE
China's tourism sector recovered at a faster pace over Golden Week, with sales at Hainan Duty Free surging 1.4x YoY to 530 million yuan (HK$604.72 million) during the first five days this month, mainland media reported. Tourist spots in the capital city Beijing recorded arrivals of 13.8 million during the first seven days of October, returning to 99.7 percent of the level last year. Total revenue surged 63.1 percent from a year ago to 850 million yuan. +VE
ByteDance's TikTok was the world's most downloaded non-gaming app in September, boasting 61.1 million installs (up 2% YoY). The short video hit was the most downloaded in Brazil (11%), followed by the United States (9%).
HONG KONG ADR’s +120pts to open at 24,313 with China data a key to the market direction but upside ahead of the weekend may be limited on talk of a fourth wave of covid in HK as new covid cases rise to 18 yesterday and the potential for mandatory testing; which is likely to raise personal data concerns. Turnover to improve with Connect flows restarting which should give HK a slight boost too.
No data due but After market Thursday
Foreign Exchange Reserves Sept $453.3b vs 450b Aug (F/cast was 450.3b)
IPO EVEREST MED-B (01952.HK), debut today; closed Thursday at $72.05 in gray market, up $17.05 or 31% against the listing price of $55, on volume of 7.95 million shares and turnover
of $576 million, PhillipMart data showed. Excluding the handling fees, a book gain of $8,525 was reported per board lot of 500 shares.
SHORT SALES Thursday 20.1 vs 15.9% Wednesday
Top Shorts Henderson Land (12) 39%, Galaxy Ent (27) 38%, China Res Land (1109) 37%, Bank of China (3988) 35%, Wharf REIC (1997) 34%, HK & China Gas (3) 30%, HSBC (5) 30%,Ping An (2318) 29%, CLP (2) 28%, Hang Lung Ppty (101) 28%, Country Garden (2007) 27%, CNOOC (883) 27%, CSPC Pharma (1093) 26%, Hang Seng Bank (11) 26%, Xiaomi -W(1810) 26%, Swire Pac A (19) 25%.
GEELY AUTO (00175.HK Sept total sales volume was 126,400 vehicles, +11% YoY and +11% MoM
CHINA OVERSEAS (00688.HK) announced that for September 2020, the contracted property sales of the China Overseas Series of Companies amounted to RMB34.892 billion +20.5% YoY and the corresponding GFA sold was 1.5751 million square meters, flat YoY.
EVERGRANDE (03333.HK) announced the launch of nine new projects in Harbin, Chongqing, Guizhou, Qingdao, Zhuhai, Foshan and Baotou on 8 October. As of 1:30 p.m., the developer tracked a sales value of more than RMB8 billion.
BEIJING ENT (00392.HK) announced that it was informed that Zhao Xiaodong, Chairman of the Board and General Manager of Yanjing Brewery (000729.SZ) which is a subsidiary of the Company, is under official investigation and detained by the mainland Chinese relevant authorities due to suspected duty-related violation and is unable to perform his duties.
Zhao is Executive Director and Vice Chairman of the Board of the Company. -VE
NEW WORLD DEV (00017.HK) has tapped international and local construction conservation teams for its State Theatre project, said Executive Vice Chairman Adrian Cheng. Experts and renowned artists have also been invited to give opinions thereon. Relevant research and study can be finished as soon as within a year, disclosed Cheng. While the costs and details will be later disclosed, demolition is definitely not going to be an option, and performance theatres will be retained.
Sophia Chan, Secretary for Food and Health, saw ballooning local infections but no decline in cases of unknown origin, adding this could be the start of COVID-19 resurgence. Hence, the Government shall stay vigilant provided an invisible transmission chain in the community. The Government is also studying the legal framework of compulsory COVID-19 testing, she furthered.
SWIRE PACIFIC A (00019.HK) announced its subsidiary Swire Pacific Offshore had proposed to list its subsidiary Swire Blue Ocean A/S (SBO) (to be renamed Cadeler A/S) on the Oslo Stock Exchange. SBO’s principal business is the installation of wind turbines and foundations for offshore windfarms and the provision of operation and maintenance services, accommodation, met mast installation and removal and decommissioning services to the offshore windfarm industry in northern European waters. Slight +VE
Centa Valuation Index (Major Banks) (CVI) last printed at 48.05 this week, +2.08 pts weekly. The index amassed 14.45 pts of increment in four weeks and stayed above the lower end of critical territory of 40 for three weeks, said Centaline Property.
The Government plans to increase statutory holidays (commonly known as labor holidays) from 12 days to 17 days in a decade under a gradual and orderly progress, local media citing sources. Subsequently, the number of statutory holidays will be the same as that of public holidays (commonly known as bank holidays).