ASIAN MACRO INITIAL THOUGHTS 1 June; Dow futures -200pts


ASIAN MACRO INITIAL THOUGHTS 1 June; Dow futures -200pts

Covid-19 Globally over 6.1m cases, 370k deaths

US futures open -200pts

Weekend Riots in US cause concerns and will be -VE for insurers and retailers. They also demonstrate how peaceful the protests in Hong Kong have been and how the so called 'threat to national security' has been over-hyped by China.

Citibank warns that markets are ‘out of step with reality’ says corporate clients should raise as much money as possible before investors realise the true cost of the pandemic.


DOW -0.1%, NDX +1.3%, S&P +0.5%, Russel 2K -0.5% Markets traded sideways for most of the day and rallied after Trump’s short, scripted, press conference; which didn’t take questions. Markets relieved that the announcement was not as contentious as it could have been. Tech especially bounced.

Nordstrom -11% more selling as its quarterly loss was more than expected. It is also delaying its flagship sale by a month as rivals are expected to have heavy promotions in July.

Dollar General +4% after good results on Thursday, stock rallied throughout the week

DXC -14.3% suspends its dividend as part of its turnaround plan

Data was mixed

AFTER MARKET Pfizer -6% announced disappointing results for a breast cancer drug

DATA

Personal Spending Apr -13.6% MoM vs -6.9% Mar (F/cast was -11.4%)

Personal Income Apr +10.5% MoM vs -2.2% Mar (F/cast was -6.6%)

PCE Price Index Apr -0.5% MoM vs -0.2% Mar (F/cast was -0.7%) [Apr +0.5% YoY vs -0.2% Mar (F/cast was +0.3%)]

Goods Trade Balance Adv Apr $-69.68b vs -64.98b (F/cast was -61.2b)

Wholesale Inventories Adv Apr +0.4% MoM vs -1% Mar (F/cast was -1.4%)

Core PCE Price Index Apr -0.4% MoM vs 0% Mar (F/cast was -0.3%) [Apr +0.5% YoY vs +1.3% Mar (F/cast was -0.3%)]

Chicago PMI May 32.3 vs 35.4 Apr (F/cast was 40.3)

Uni of Michigan Data Final

Expectations May 65.9 vs 70.1 Apr (F/cast was 67.7)

5 yr Inflation Expectations May 2.7% vs 2.5% Apr (F/cast was 2.6%)

Current Conditions May 82.3 vs 74.3 Apr (F/cast was 83)

Inflation Expectations May +3.2% vs +2.1% Apr (F/cast was +3%)

Consumer Sentiment May 72.3 vs 71.8 Apr (F/cast was 73.7)

Baker Hughes Oil Total Rig Count 301 vs 318 prior

USD was vs Yen & Euro. Bitcoin -0.56% @ 9387.00, VIX -3.8% @ 27.5, US T10 0.653%

OIL Brent +0.1%, WTI +5.3%

Gold +0.85%, Silver +2.9%, Copper +1.2%

AHEAD Manufacturing PMI, ISM Manufacturing Data (New Orders, Prices, Employments, PMI) Construction Spending


DAX -1.7%, CAC -1.6%, FTSE -2.3% weakness ahead of Trump’s press conference on China. Data remains mixed and investors watch a government’s ease more of the lock-down restrictions. Tui -19% more selling pressure after the rally earlier in the week as the company announced it had cancelled all overseas beach holidays from the UK until July 1. Easyjet

Hugo Boss -9% on broker downgrade, Prada +8% as CEO said sales in China rose significantly

Vestas +2.4% on winning contracts in UK and Canada

Rolls Royce -15% as S&P downgraded its credit rating to junk.

British Land +2.5% on news Brookfield AM -1.5% had built a 7.3% stake

Flutter -3% after a discounted placement raised GBP813m

Pharma related companies strong: Sartorius +7%, BioMerieux +3.8%, DiaSorin +3.7% after a choppy trading week.

DATA

EUROZONE M3 Money Supply Apr +8.3% YoY vs +7.5% Mar (F/cast was +7.7%)

Loans to Companies Apr +6.6% YoY vs +5.4% Mar (F/cast was +5.9%)

Loans to Households Apr +3% YoY vs +3.4% Mar (F/cast was +3.8%)

Core Inflation Rate (Flash) May +0.1% YoY vs +0.3% Apr (F/cast was +0.2%) [ May -0.1% MoM vs +0.3% Apr (F/cast was 0%)]

GERMANY Retail Sales Apr -5.3% MoM vs -4% Mar (F/cast was -11.7%) [Apr -6.5% YoY vs -1.2% Mar (F/cast was -9.2%)]

Import Prices Apr -1.8% MoM vs -3.5% Mar (F/cast was -1.1%) [Apr -7.4% YoY vs -5.5% Mar (F/cast was -6.8%)]

FRANCE GDP Growth Rate Final Q1 -5.3% QoQ vs -0.1% prior (F/cast was -5.8%)

Inflation Rate Prel May +0.2% YoY vs +0.3% Apr (F/cast was +0.2%) [May +0% MoM vs +0% Apr (F/cast was -0.1%)]

PPI Apr -2.9% MoM vs -1.7% Mar (F/cast was -0.8%)

Household Consumption Apr -20.2% MoM vs -16.9% Mar (F/cast was -14.8%)

UK Car Production Apr -99.7% YoY vs -37.6% Mar (F/cast was -92%)

AHEAD

EUROZONE Manufacturing PMI

GERMANY Manufacturing PMI

FRANCE Manufacturing PMI

UK Nationwide Housing Prices, Manufacturing PMI


JAPAN Expect Nikkei to open flat +VE is Tokyo easing covid-19 restrictions but upside muted as investors watch the to see if China reacts to Trump’s threats and the riots over the weekend in the US. Yen currently 107.80
Data due
Capital Spending (Q4 was -3.5% F/cast is -6.2%), Manufacturing PMI Final May was 41.9 F/cast is 38.4)

Curbs in Japan's capital of Tokyo to contain the coronavirus are to be eased further from Monday, Governor Yuriko Koike said, citing the recommendation of an advisory panel

Nissan The Japanese government has guaranteed almost a third of the 7l3 billion yen ($6.65 billion) in loans Nissan Motor Co has secured from its main lenders to weather the COVID-19 pandemic, according to three people with knowledge of the plans. +VE FT article today on changes; basically saying its a last roll of the dice.

Softbank -VE after news of a 113% pay rise to its investment chief


SOUTH KOREA Expect markets to open flat as investors watch to see if China reacts to the Trump’s Friday announcement and the weakness in US futures following the US riots at the weekend.
Data due
Balance of Trade (Apr was US$-0.95b) Exports (Apr was -24.3% Concensus is -22.1%) and Imports (Apr was -15.9% and Concensus is -17.9%), Manufacturing PMI (Apr was 41.6 and F/cast is 38.4)

Health authorities said on Friday they would request imports of Gilead Sciences Inc's anti-viral drug remdesivir to treat COVID-19, as new outbreaks of the disease flare as social distancing restrictions are eased.

Hyundai Motor Group said Sunday it has signed a MOU with photovoltaic solar cells maker Hanwha Q Cell for energy storage systems to use recyclable batteries from electric vehicles +VE

SSG.com said Friday it has witnessed a spike in its business as worried customers are shunning online grocery delivery platforms of Coupang and Market Kurly whose logistics centers reported virus infections recently. +VE

Samsung Group, said Sunday it is considering expanding its remote hiring process after wrapping up its first-ever online recruitment exam amid the coronavirus pandemic. The Global Samsung Aptitude Test (GSAT), an entrance exam for those who seek jobs at Samsung, was conducted online for the first time this weekend.


TAIWAN Expect market to open flat as US futures open lower and as investors watch to see any reaction from China to Trumps announcement regarding Hong Kong losing its special status. Some local concerns that China’ hardline approach to Hong Kong may mean more aggression towards Taiwan.
Data due
Manufacturing PMI (Apr was 42.2 F/cast is 45)

China will attack Taiwan if there is no other way of stopping it from becoming independent, one of the country's most senior generals said on Friday, in a rhetorical escalation from China aimed at the democratic island Beijing claims as its own.

The government is lifting sale and export restrictions on 60% of the 20 million masks made daily, but people can still make purchases using their NHI cards. FamilyMart convenience stores and other will start selling them this week.

Delta Electronics, has signed an agreement to acquire Canadian software firm Trihedral Engineering Ltd to bolster its smart production efforts for C$45 million (US$32.68 million) through its 100 percent-owned subsidiary Delta Electronics (Netherlands) BV. +VE

Domestic gasoline and diesel prices are to increase by NT$0.3 per liter this week to reflect higher international crude oil prices, CPC Corp, Taiwan and Formosa Petrochemical Corp announced separately yesterday.


CHINA Expect market to open flat after Trump’s press conference was not as harsh as some had expected. But upside limited as investors wait to see how Beijing responds, the weakness in the US futures following the weekend riots and the PMI data.
DATA 
Out Sunday

PMI Manufacturing May 50.6 vs 50.8 Apr (F/cast was 50.5)

Non Manufacturing PMI May 53.6 vs 53.2 Apr (F/cast was 52.5)

showed Factory and Services little changed MoM, Export orders continued to fall and the employment index was below 50 a slight -VE

Data due Caixin Manufacturing PMI (Apr was 49.4, F/cast was 49.5)

China announced two new covid-19 cases and four new asymptomatic cases, including one person without symptoms on a chartered flight from Germany.

Trump on Friday ordered his administration to begin the process of eliminating special U.S. treatment for Hong Kong to punish China, but stopped short of calling an immediate end to privileges that have helped the HK be the global financial centre it is today.

Britain is prepared to offer extended visa rights and a pathway to citizenship for almost 3 million Hong Kong residents in response to China's push to impose national security legislation in the former British colony.

Volkswagen AG confirms plans to boost its electric push in China, the world’s biggest auto market, by pumping 2.1 billion euros in two Chinese electric vehicle players.


HONG KONG ADR’s +174pts to open at 23,135 expect some initial upside as recent shorts cover. But with Dow futures opening -200pts trading is likely to remain cautious with investors watching to see if there will be a response from China and whether we get more details about the extent of US action. A new covid-19 cluster is linked to a Kerry Logistics warehouse in Kwai Chung Slight -VE for sentiment.

Data due After market Retail Sales (March was -43.8% F/cast is -45%)


Short Selling HSI Friday 19.5% vs 23.9% Thursday

Top Shorts Geely Auto (175) 58%, China Res Land(1109) 43%, HSBC (5) 36%, Galaxy Ent (27) 34%, WH Group (288) 29%, HK & China Gas (3) 29%, CLP (2) 28%, Sino Land (83) 28%, BoC HK (2388) 28%, Ping An (2318) 27%, Hang Seng Bank (11) 27%, Country Garden (2007) 26%, MTRC (66) 25%.

IPO YEAHKA (9923.HK) to debut (1 June), Friday it opened at $17.46 in gray and closed at $15.02, down $1.62 -9.7% vs listing price of $16.64, on volume of 8.48 mn shares and turnover of $134 mn, PhillipMart data showed. Excluding the handling fees, a book loss of $648 was reported per board lot of 400 shares.

BUYBACKS/INSIDER DEALING YANZHOU COAL (1171.HK) said that the Company implemented 14 Share Repurchases in May 2020 so far. The aggregate number of the H shares repurchased is 52.016 mn, representing approx 1.06% of the total issued share capital of the Company as at the Repurchase Mandate Date. The aggregate consideration for the Share Repurchases is HK$310 million.

PROFIT WARNING GLOBAL BIO-CHEM (809.HK) issued a profit warning, expecting that the Group will recorded significant decreases in revenue by circa 79.9% and gross profit by circa 53.7% for the three months ended 31 March 2020 as compared to the corresponding period in 2019. -VE


WATCH

Primary Property Sales about 350 sales.

Wing Tai (369) sold 14 out of 88 units at Oma by the sea in Tuen Mun

SHKP (16) sold 290 units out of 298 units at Wetland Seasons Park

Hanison Construction (896) sold 61 unts at West Park in Sham Shui Po

Wheelock Properties said it has sold 1,588 units out of 1,600 units in Lohas Park 5A (Malibu)

Secondary Property Sales +20% WoW said Centaline; with 11 deals at 10 major estates

Administration over the weekend has been getting as many prominent officials and business leader to come out in support of China’s action on the National Security Law and how is will be good for Hong Kong as possible but a number of media sources are reporting that local people are changing their savings into US dollars and making enquires about emigration -VE for sentiment.

TENCENT (700.HK) is set to invest US$200 million to subscribe for Warner Music's shares before its slated IPO, as reported in the Wall Street Journal .

The Lands Department site at Sha Tin Town Lot No. 613 at the junction of Tsung Tau Ha Road and Kwei Tei Street,  New Territories, listed in the 2020-21 Land Sale Programme will be disposed of by public tender. The tender invitation for the lot will commence on June 5 and close on July 3.  It has a site area of about 9,178 square metres and the permissible uses are industrial. 

The Insurance Authority Friday released provisional statistics of the Hong Kong insurance industry for Q1 2020, show a growth of total gross premiums by 10.9% YoY to $165 bn.

New office premiums in respect of policies issued to Mainland visitors were $5.4 billion (-57.7%), constituting 15.5% of total individual business. Restrictions imposed on cross-boundary passenger traffic to contain the COVID-19 outbreak caused premiums to contract by 27% on a quarterly basis. Critical illness 48%, whole life 37% and medical products 4% of new policies taken out by Mainland visitors respectively. About 98% of policies were settled at regular intervals, i.e. non-single premiums.

Centa-City Leading Index (CCL) last printed at 178.54, a 14-week high, +0.56% weekly.

CCL Mass last posted at 181.92, a 26-week high, +0.65% weekly.

CCL (small-and-medium units) last stood at 179.46, a 23-week high, +0.48% weekly.

CCL (large units) was last at 172.79, a 7-week high, +0.52% weekly.

They expect a continual CCL upswing after housing prices had ticked up post-Labor-Day holiday. Prices of Hong Kong Island and Kowloon outshone, registering the sharpest surge and shoring up the overall prices.