ASIAN MACRO INITIAL THOUGHTS June 23


ASIAN MACRO INITIAL THOUGHTS June 23
Covid-19 Globally over 9m cases, 469k deaths
US Dow futures opened +15pts and have worked higher, currently +118pts


DOW +0.59%, NDX +1.11%, S&P +0.65%, Russel 2K +1.05% Markets opened flat but worked higher through the day to close around their highs as investors focused on the recovery and good economic data over the rising number of new covid cases. White House advisor Larry Kudlow said there was no second wave of covid-19 cases. Volumes were light.
Apple +2.6%, Microsoft +2.8% Gap +8.3% on broker upgrade helped other retail names but American Airlines -6.8% as it seeks additional funding -VE for other airlines.
DATA
Chicago Fed National Activity Index May +2.61 vs -17.89 Apr (F/cast was -4)
Existing Home Sales May -9.7% MoM vs -17.8% Apr (F/cast was -2%)
USD flat vs Yen & Euro. Bitcoin +3.9% @ 9652.04, VIX -9.5% @ 31.77, US T10 0.71%
OIL Brent +2.11%, WTI +1.79%
Gold +1%, Silver +2.1%, Copper +0.09%
AHEAD Redbook, PMI’s (Manufacturing, Services and Composite), New Home Sales, Richmond Fed Manufacturing Index, API Crude Oil Stock Change.

DAX -0.55%, CAC -0.62%, FTSE -0.76% Markets opened lower but worked higher, FTSE saw resistance at Friday’s closing level but the Dax and CAC broker into the green but then markets reversed and drifted lower. Investors concerned about the rise in new US covid-19 cases and the rise in the German covid reproduction rate.
Wirecard -37% after it said the missing USD2.1bn probably doesn’t exist.
Carnival -10.2% said it would extend operation pause until Sept 30.
Lufthansa -3% as key shareholder objects to bailout package
Kingfisher +4,2% on broker upgrade Slight +VE for Techtronics (669 HK)
DATA
EUROZONE Consumer Confidence Flash Jun -14.7 vs -18.8 May (F/cast was -16)
AHEAD
EUROZONE PMI’s (Manufacturing, Services and Composite)
GERMANY PMI’s (Manufacturing, Services and Composite)
FRANCE PMI’s (Manufacturing, Services and Composite)
UK PMI’s (Manufacturing, Services and Composite)

JAPAN Expect Nikkei to open higher with Futures +1% Yen currently 106.89
Data due
PMI’s (Manufacturing, Services and Composite)
European business lobby in Japan on Monday called on the government to ease travel restrictions meant to curb the spread of the coronavirus, saying the measures are too tough on foreigners and risk driving away foreign investment.
Toshiba Corp said on Monday it planned to sell down its 40.2% stake in flash memory chips firm Kioxia Holdings and will return a majority of the net proceeds to shareholders. +VE
Shionogi & Co Ltd said it is partnering with Japanese universities to develop a saliva test for coronavirus that can yield visual results in 25 minutes. +VE
Toyota Motor Corp. said Monday its domestic production volume in July is expected to recover from what is projected for June, thanks to the resumption of economic activities in Japan following the end of national state of emergency over the novel coronavirus. +VE
Softbank -VE over exposure to Wirecard.

SOUTH KOREA Expect markets to open higher but upside limited as investors about more covid-19 outbreaks
Data out
PPI May 0.0% MoM vs -0.7% Apr (F/cast was -0.2%) [May -1.7% YoY vs -1.7% Apr (revised) F/cast was -1.8%)]
Health authorities  said for the first time on Monday it is in the midst of a "second wave" of novel coronavirus infections around Seoul, driven by small but persistent outbreaks stemming from a holiday in May. -VE
S-Oil said Monday that its CEO Hussain Al-Qahtani has bought company stocks worth 68 million won ($55,970) as a sign of confidence amid the COVID-19 outbreak. +VE
SPC Global Food Service, the food distribution affiliate of SPC Samlip, said Monday that it is exporting to Poland a number of canned kimchi and laver products it developed with small food manufacturers. +VE
Hyundai Rotem, a locomotive and rolling stock unit of South Korea’s Hyundai Motor Group, said Monday it has won an order worth 119.2 billion won ($98.2 million) from the Korea Rail Network Authority to deliver 40 train cars for Great Train Express Line A. +VE
Kakao, the operator of South Korea’s top mobile messenger, is expected to roll out a new artificial intelligence-based speaker brand in the second half of this year, according to industry sources Monday. +VE
Hyundai Motor Group Executive Vice Chairman Chung Euisun and LG Group Chairman Koo Kwang-mo met Monday and discussed further partnerships over future battery business, the firms said. +VE

TAIWAN Expect market to open higher with the focus on Tech
Data due
after market Industrial Production and Retail Sales
Ministry of Economic Affairs yesterday launched a Web site designed to provide easy access to information about the Triple Stimulus Vouchers at 3000.gov.tw, provides detailed information about the vouchers in Chinese and English, the ministry said. It’s part of the government’s plan to boost the local economy after the COVID-19 outbreak, the vouchers cost NT$1,000 and are worth NT$3,000.
Taiwan Semiconductor Manufacturing Co has made up its order book with other customers now that it has lost China's Huawei Technologies Co Ltd, which is subject to U.S. sales restrictions, a government minister said on Monday. +VE
Cathay Financial Holding yesterday trimmed its forecast for Taiwan’s GDP growth to 1.8% this year due to the COVID-19 pandemic vs the 2% it predicted in March. It expects investment and government spending to cushion the nation’s economy from the effects of the pandemic, making its forecast the most optimistic of all released forecasts. Slight -VE
Global shipments of servers are expected to increase 5% annually this year thanks to demand fostered by the COVID-19 pandemic, Taipei-based market researcher TrendForce Corp said in a report yesterday. +VE
MediaTek closed Monday at it’s highest level in 10 years, on hopes that demand for 5G devices would boost demand for its chips. +VE
King’s Town Construction yesterday began a share buyback program in a bid to safeguard its shareholders’ interests. The company said that it aims to buy back up to 5 million — or 1.3% of its outstanding shares — on the open market until Aug. 21 +VE

CHINA Expect market to open higher but upside limited by concerns over covid-19 and US relations
No data due
China said 
on Monday it reserves the right to respond to a Japanese city's decision to rename the administrative area that includes remote islands claimed by both China and Japan and have long been a source of friction between the neighbours.
China’s capital will see a “cliff-like” drop in new cases in a recent outbreak of the novel coronavirus by the end of this week with efforts to cut chains of transmission underway, a disease control expert said. Beijing reported 9 new cases on Monday vs 22 on Sunday.
The European Union told China on Monday to make good on a promise to open up its economy and warned of "very negative consequences" if Beijing goes ahead with a new security law on Hong Kong that the West says will curtail basic rights.
The US envoy to nuclear arms control talks with Russia taunted China on Monday for its absence, earning a rebuke from Beijing for posting a picture of empty seats with Chinese flags at negotiations China had never planned to attend. Slight -VE
China Pacific Insurance has completed London’s second-largest stock listing of the year, boosting a flagship programme to connect the biggest equity markets in Europe and China. The insurer issued $1.8bn in global depositary receipts in London, backed by shares listed in Shanghai, as part of a “stock connect” programme that links the two exchanges. Full trading in the GDRs began yesterday.
Apple Inc is to start removing thousands of mobile games lacking government approval from its App Store in China next month, closing a loophole that the likes of Rockstar Games have relied on for years. -VE
China’s notorious dog-meat festival has opened in defiance of a government campaign to improve animal welfare and reduce risks to health highlighted by the novel coronavirus outbreak, but activists are hopeful its days are numbered.
US designates 4 more Chinese media organisations as ‘state propaganda outlets’. China Central Television, China News Service, People’s Daily and Global Times to be treated as foreign missions on American soil Slight -VE

HONG KONG ADR’s +84pts to open at 24,595, Futures +0.8% expect upside to be limited with concerns still over the new National Security Law. Shorts rose yesterday so an initial squeeze should be expected.
No data due
but after market Monday Data After Market
Current Account Q1 HK$-9bn vs +41.7b prior (revised (F/cast was +15bn_
Inflation Rate May +1.5% YoY vs +1.9% Apr (F/cast was 2%)
Current Account The secondary income gap widened to HKD 7.0 billion from HKD 5.11 billion in Q1 2019 and the primary income surplus narrowed sharply to HKD 16.0 billion from HKD 61.02 billion. Also, the services surplus fell to HKD 32.15 billion from HKD 49.49 billion while the goods deficit dropped to HKD 50.18 billion from HKD 71.93 billion.
Inflation Prices slowed for food (4.8% vs 6% in April), namely pork and fresh vegetables; housing (1.6% vs 1.8%), in particular private housing rentals;
Miscellaneous goods (2.9% vs 3.5%); and miscellaneous services (0.7% vs 0.9%). Additionally, cost declined further for electricity, gas & water (-19.4% vs -18.8%); and clothing & footwear (-5.4% vs -4.4%).
In contrast, prices rose at a faster pace for transport (0.6% vs 0.1%) while cost of durable goods fell less (-2.8% vs -3.1%).
On a monthly basis, consumer prices went down 0.4 percent, after a 0.3 percent increase in the prior month.
Census and Statistics Department (C&SD) said March total employment in the private sector surveyed -3.8% YoY or 110,000 persons. The total number of vacancies was 42,300, -47% YoY or 37,300.

Short Selling HSI Monday 20.2% vs 18.7% Friday
Top Shorts Henderson Land (12) 49%, Wharf REIC (1997) 39%, MTR (66 HK) 36%, Hang Seng Bank (11) 35%, Mengniu Dairy (2319) 34%, Country Garden (2007) 31%, Sands China (1928) 30%, Sunny Optical (2382) 30%, CCB (939) 28%, China Overseas (688) 28%, SHKP (16) 25%, Galaxy (27) 25%.

Security Law Full draft of Hong Kong national security law will only be made public after it is passed by China’s top legislative body. SCMP reportsBeijing will rely on officials to explain details and hold discussions in Hong Kong with various sectors. Legislation is effectively a done deal and expected to be passed on June 30, on eve of city’s handover anniversary -VE for sentiment

WATCH
Standard Chartered 
announced the launch with Hong Kong Trade Development Council (HKTDC) of the “Standard Chartered GBA Business Confidence Index”, the first forward-looking quarterly survey in the market that looks at the business sentiment and synergistic effects across cities and industries in the Guangdong-Hong Kong-Macao Greater Bay Area, to provide the latest business intelligence for those who are keen to grow their presence in the Greater Bay Area.
Moodys said the coronavirus crisis will drive up the government debt/GDP ratios by around 19 percentage points in America, Japan, Italy, Britain and ten other richest countries, nearly twice as much as that in 2009's Financial Tsunami, according to a report by Moody’s. Compared with the financial crisis in 2009, the rise in debt burdens will turn out more immediate and pervasive, reflecting the acuteness and breadth of the pandemic-inflicted shock.
RAZER (1337.HK) said that Tinder, a dating app, debuted on the company's Razer Gold, a virtual points platform. Users can upgrade their Tinder accounts to Tinder Plus and Tinder Gold by making consumption on Razer Gold to enjoy a basket of advanced functions and increase matching success rate.
MTR CORPORATION (66.HK) stated, it had earlier announced a new series of relief measures, including a substantial increase of the current “3.3% Rebate for Every Octopus Trip” to “20% Rebate for Every Octopus Trip”, and a price reduction for Frequent User Tickets for six months. The “20% Rebate for Every Octopus Trip” will take effect on 1 July 2020 and last until 1 January Combining this new offer together with the existing “Early Bird Discount”, adult Octopus users can enjoy fare discounts of as much as about 55%. Frequent MTR travelers will also enjoy a $100 reduction for every purchase of “Monthly Pass Extra” and “MTR City Saver” for use from July to December 2020. Passengers may purchase “Monthly Pass Extra” for July at the discounted price starting from 24 June.2021.
China Securities Index Co., Ltd. announced that it will launch the CSI Shanghai-Hong Kong-Shenzhen Leading Technology Index on 16 July to enrich the index system and provide investors with the latest analysis tools and investment subjects.
HKMA Chief Executive Eddie Yue wrote on inSight that as the COVID-19 situation eases, local economic activities are showing signs of picking up. Nevertheless, economic recovery will take time and many small and medium-sized enterprises (SMEs) are still in dire straits.  It is therefore crucial to continue to support SMEs, enabling them to carry on their business and, by so doing, protect the jobs of employees. Among the various support initiatives, the SME Financing Guarantee Scheme operated by the HKMC Insurance Limited (HKMCI) on behalf of the Government is playing an indispensable role. SMEs form an important pillar and driving force supporting the economic development of Hong Kong. The authority will continue to closely monitor market developments and provide timely support to help SMEs overcome the difficulties ahead, furthered Yue.