June 18 ASIAN MACRO INITIAL THOUGHTS Dow futures open lower
Covid-19 Globally over 8.2m cases, 444.5k deaths
Business sentiment of Asian companies sank to an 11-year low of 35 in Q2 a Thomson Reuters/INSEAD survey found, with some two-thirds of the firms polled flagging a worsening COVID-19 pandemic as the biggest risk over the next six months.
US Futures Dow -120pts S&P weaker but Nasdaq flat (at 7:30 am HK time)
DOW -0.65%, NDX +0.15%, S&P -0.36%, Russel 2K -1.8% Dow & S&P opened lower NASDAQ opened higher but all initially sold down. They then worked higher through the day with all the green by mid afternoon but sold down into the close. Nasdaq helped by Amazon +1% and Netflix +2.7%. But the mood was cautious as rising covid cases puts the recovery into question.
Re-opening stocks lead the declines United -2.4%, Delta -1.9%, Southwest -0.7%, American -0.3%, Carnival -6.5%, Royal Caribbean -7.2%, Kohls -5%, Simon Property -5% MGM Resorts -2%, Caterpillar -1.4%
Powell testified to the House and warned Congress against withdrawing fiscal support for the US economy, saying it could imperil the recovery from the shock of the coronavirus crisis. Comes as they look at renewing the $600 per week in emergency unemployment insurance enacted during the crisis. The aid expires in July. Democrats want it extend but the White House has said it is a disincentive to people to return to work.
Oracel -5.6% as quarterly revenue fell.
MBA Mortgage Applications +8% vs +9.3% prior and 30 yr Mortgage Rate 3.3% vs 3.38% prior
Housing Starts May +4.3% MoM vs -26.4% Apr (Revised) (F/cast was +17.8%)
Building Permits May +14.4% MoM vs -21.4% Apr (F/cast was +12.4%)
EIA Crude Oil Stocks Change +1.215m vs 5.72m prior (Consensus was -0.152m)
EIA Gasoline Stocks Change -1.667m vs 0.866m prior (Consensus was -0.017m)
USD stronger vs Yen & Euro. Bitcoin -1.1% @ 9413.79, VIX -0.6% @ 33.5, US T10 0.733%
OIL Brent -0.85%, WTI -1.1% on over supply worries
Gold unch, Silver +0.8%, Copper -0.1%
AHEAD Initial Claims, Philadelphia Fed Manufacturing Index, CB Leading Index, EIA Natural Gas Stocks Change
DAX +0.54%, CAC +0.88%, FTSE +0.17% Markets opened higher and effectively traded sideways in choppy trading. IMF warned its June report was expected to show a downgrade of growth rates from its previous report. Investors were mindful of the escalating tension between North/South Korea and India/China.
Construction Stocks leading the gains with all sectors in the green.
SSE +8.9% after FY pre tax profit beat and it left dividend policy unchanged
Pandora +6.6% on broker upgrade
Colruyt -5.2% as sales growth missed.
New Car Registrations May -52.3% YoY vs -76.3% Apr
Construction Output Apr -28.4% YoY vs -17.5% Mar (F/cast was -34.2%)
Core Inflation Rate May +0.9% YoY vs +0.9% Apr (F/cast was +0.9%)
Inflation Rate May +0.1% YoY vs +0.3% Apr (F/cast was +0.1%) [May -0.1% MoM vs +0.3% Apr (F/cast was -0.1%)
Inflation Rate May +0.5% YoY vs +0.8% Apr (F/cast was +0.5%) [May +0.0% YoY vs -0.2% Apr (F/cast was 0.0%)
Core Inflation Rate May +1.2% YoY vs +1.4% Apr (F/cast was +1.1%) [May +0.0% MoM vs +0.1% Apr (F/cast was +0.0%)]
PPI Core Output May +0.6% YoY vs +0.7% Apr (F/cast was +0.5%) [May +0.0% MoM vs +0.0% Apr (F/cast was +0.0%)]
PPI Output May -1.4% YoY vs -0.7% Apr (F/cast was -1%) [May -0.3% MoM vs -0.8% Apr (revised) (F/cast was +0.0%)]
PPI Input May +0.3% MoM vs -5.5% Apr (Consensus was +4.5%) [May -10% YoY vs -10.2% Apr (revised) (Consensus was -6%)
Retail Price Index May +1% YoY vs +1.5% Apr (F/cast was +1.2%) [May -0.1% MoM vs +0.2% Apr (F/cast was +0.0%)
EUROZONE Economic Bulletin
GERMANY No data due
FRANCE No data due
UK BoE Rate Decision
JAPAN Expect Nikkei to open lower, extending yesterday’s losses. Yen currently 107.04
Data due Foreign Bond and Stock investments
Japan will take all possible measures to ensure surveillance of the areas around disputed islands in the East China Sea, the top government spokesman said on Wednesday. Chinese government ships have been seen near the islands, known as the Senkaku in Japan and Diaoyu in China, for 65 days in a row, the longest period since September 2012 when the Japanese government bought some of the tiny islands from private Japanese owners, Kyodo news agency reported.
Liberal Democratic Party is drafting a proposal to attract high-skilled workers from abroad (with HK residents in mind) for Tokyo’s financial sector, the lawmaker heading the LDP’s committee on foreign labourers said on Wednesday.Satsuki Katayama told reporters the party could formalise its proposal to the government as early as Thursday
Government will consider resubmitting legislation to raise the retirement age for civil servants, its top spokesman said on Wednesday, after public backlash prompted the withdrawal of draft legislation. Its intended to raise the retirement age to 65 from 63
Japanese researchers confirmed the presence of the coronavirus in wastewater plants, a finding that could serve as a signal for future outbreaks. The findings mirror similar studies in Australia, the United States, and Europe. Public health experts say such sampling could be used to estimate the number of infected people in a region without testing every individual.
Toursim record low numbers, -1,700 in May -VE but no surprise.
Aircons may rise the Covid -19 risk but high performance model are considered effective in eliminating viruses. Could be a slight +VE for Daiken but watch for news of them bringing out new models
Nissan's chief operating officer Ashwani Gupta helped engineer the troubled automaker’s latest turnaround plan. Now his allies are pressing the board to promote him to co-CEO to drive the new strategy, said four people with direct knowledge.
Summer bonuses at major Japanese firms down 6% to ¥925,947 due to the coronavirus pandemic and a slowdown in the global economy, the Japan Business Federation, or Keidanren, said in a preliminary survey report Wednesday.
United Kingdom announced Wednesday it would pursue accession to a revamped version of the Trans-Pacific Partnership.
SOUTH KOREA Expect markets to open lower but the work slightly higher through the day. But concerns of North Korea and Covid overhang the market.
No data due
North Korea said on Wednesday it had rejected a South Korean offer to send special envoys to ease escalating tension over defiance by North Korean defectors and stalled reconciliation efforts, and it vowed to redeploy troops to border areas.
Govt plans to impose tax on cryptocurrency, the country's finance minister said Wednesday, adding that his ministry will announce the details next month. -VE
Korea Development Bank, Wednesday refused to support the liquidity-stricken SsangYong Motor using its bailout fund of 40 trillion won ($32.95 billion) created to extend a lifeline to local companies suffering from the fallout of the novel coronavirus. “It takes money for a company to get through hardships, but much more is needed. It needs a strong business model. We doubt whether SsangYong stays true to its willingness to survive on its own.”
GCMS, an in-vitro diagnosis service provider under GC Pharma, said Wednesday that it signed three deals worth $30 million in total, to provide COVID-19 test kits to Europe, Middle East and Asia.
Hyundai Motor Group said Wednesday that it will open the country’s largest driving center, called the HMG Driving Experience Center, in the first half of 2022 to offer customers new opportunities to experience the brand and practice driving.
TAIWAN Expect market to open flat with support from Tech.
Data due after market Interest Rate Decision
Taipei City Government plans to spend nearly NT$600mn (US$20.21mn) to revitalize economy activity in the city, Taipei Deputy Mayor Vivian Huang said yesterday under the “2020 Taipei Shopping Go” to promote commercial activities from July 15 to Aug. 31 With two main ideas: holding lotteries to boost sales in shopping districts, as well as at traditional and night markets; and offering an additional NT$1,000 subsidy to city residents who spend their vouchers, using EasyCards for senior citizens and disabled people, she said.
The nation’s three major telecoms have all secured 5G licenses after the National Communications Commission (NCC) yesterday approved Taiwan Mobile’s application.
Asia Pacific Telecom yesterday said that it is in talks with several local peers to offer 5G services in August at the earliest, after larger rival Chunghwa Telecom said that it expects to launch its 5G services on July 1.
AU Optronics Corp yesterday said that it has deployed two production lines to make flat panels used in the auto industry, part of a NT$40.7 bn (US$1.37 bn) three-year investment relocating production back to Taiwan due to US-China trade tensions.
CHINA Expect market to open lower with concerns of the covid outbreak in Beijing and rising international pressure over India and Hong Kong. Banks weak on news that they would curb profitability and extend more loans.
No data due
Beijing Center for Disease Prevention and Control, said COVID-19 infections are still on the rise in the capital, reported Beijing Daily. As the biggest agricultural by-product trading market, Beijing has an extensive logistics network and a high population density, thus facing grave risk of COVID-19 outspread and difficulty in plague control. They did not rule out the possibility that infections will keep ballooning in Beijing for a period of time.
India and China said they wanted peace but blamed each other on Wednesday after soldiers of the two sides savagely fought each other with nail-studded clubs and stones on their Himalayan border, killing at least 20 Indian troops. Media reports that at least 45 people were dead or injured on the Chinese side. No shots were fired. But it got a lot of coverage in India and it likely to lead to a boycott of a lot of Chinese goods. Also the Chinese army carried out a live-fire drill in Tibet as tensions with India escalated following the deadly clash on the disputed Himalayan border, Chinese state media revealed.
China to forgive interest-free loans to Africa that are coming due, Xi Jinping says Beijing has also agreed to delay loan repayments for 77 low-income countries, including those in Africa, as part of a G20 programme +VE for those countries but they only account for less than 5% of the loans that are owed to China. Still it may rise concerns at home regarding the lack the stimulus programmes.
Chinese financial watchdog has told banks to control their profit growth below 10% this year as they want the lenders to support the economy amid the steepest slide over four decades, as Bloomberg learnt from insider sources. Beijing will urge banks to extend more loans at lower rates and boost provision for credit losses over the altar of their earnings, said the report. THE key will be on to whom the loans are made and how they are used. -VE
G7 Countries urge China to reconsider Hong Kong National Security Law expressing ‘grave concern regarding China’s decision to impose a national security law on Hong Kong’ and “We strongly urge the government of China to reconsider this decision,” Increasing the pressure on China.
SCMP reports Chinese human rights lawyer Yu Wensheng has been sentenced to four years in prison after being found guilty of inciting subversion of state power after being tried in secret in May last year, his wife said on Wednesday that “They held the trial secretly, ruled secretly, against the law, without telling the families or his lawyers, without telling anyone, not caring about the rule of law,” she said. “Is this country that has the rule of law?” He was initially charged with obstructing a public service, Xu said her husband was subsequently investigated for and charged with inciting subversion of state power. Awkward as Beijing tries to convince Hong Kong that the National Security Law should not raise concern.
President Trump signed legislation on Wednesday calling for sanctions over the repression of China’s Uighur Muslims, as excerpts from a book by former US national security adviser John Bolton alleged that Trump encouraged China’s president to continue with detention camps for the minority group.
HONG KONG ADR’s -125pts to open at 24,356 but expect more down side. JD-SW debut should still go well and the Dotcom names remain firm but the wider index to be weak and we may see some margin calls. Watch to see if volumes increase having been in decline for three days.
No data due
Short Selling HSI Wednesday 21.2% vs 21.6% Tuesday
Top Shorts Wharf REIC (1997) 56%, Bank of China (3988) 45%, Hang Seng Bank (11) 38%, Link REIT (823) 35%, China Res land (1109) 34%, HSBC (5) 31%, Country Garden (2007) 31%, Want Want (151) 31%, Hang Lung PPY (101) 29%, CK Asset (1113) 28%, MTRC (66) 28%, ICBC (1398) 27%, AIA (1299) 25%, CCB (939) 25%, Sunny Optical (2382) 25%
IPO JD-SW (9618.HK) last traded at $238.8, +5.7% vs the listing price
RAZER (1337.HK) repurchased 1 million shares on the Stock Exchange with $1.315mn on 17 June at $1.31-1.32 per share. Year to date, the company has bought back 2.63mn shares, representing about 0.0299% of the issued shares.
Li Ka-shing and Victor T K Li acquired further the shares of CK ASSET (1113.HK)
POLITICS US Justice Department officials on Wednesday recommended that a high-capacity undersea data cable system (The Pacific Light Cable Network) proposed by Google and Facebook bypass Hong Kong, citing potential national security concerns following China’s moves to exert greater control in the city.
GEELY AUTO (175 HK) said on Wednesday its board had approved a preliminary proposal for the possible issue of renminbi shares and a listing on mainland China’s Nasdaq-like STAR board. +VE
As USD/ HKD triggered the Strong-side Convertibility Undertaking at 7.75 again, the HKMA undertook US$100 million of selling orders during Hong Kong trading hours and injected HK$775 million into the market. The balance of the banking system of Hong Kong will increase to HK$126.537 billion on 19 June.
JD-SW (9618.HK) and Kuaishou joined hands to treat users to a shopping spree, recording live-streaming sales value of RMB1.42bn yesterday, reported Chinese media. Particularly, Kitty Zhang Yuqi prompted sales of RMB223mn worth of goods in her live broadcast, which had reached 25 million views.
CHINA SHENHUA (1088.HK) said commercial coal production in May totalled 24.70mn tonnes, -0.4% YoY; sales amounted to 37.20mn tonnes, -10.1% YoY
Reuters earlier cited insiders that TENCENT (700.HK) would like to acquire iQIYI stakes from Baidu, the substantial shareholder of iQIYI. Baidu clarified on social media that iQIYI is an integral part of the company's ecological strategy. Backing iQIYI's development just as always, Baidu made a call for dismissing wild guesses.
HANG LUNG PPT (101.HK) said that it is joining forces with Mastercard to launch the year-long "ONLife" campaign, bringing a series of e-privileges to patrons that cover shopping, dining, learning and traveling.
ByteDance, owner of TikTok, recorded revenue of around RMB40bn for Q1 +130% plus YoY, Reuters citing insiders. ByteDance fixed its 2020E revenue target at RMB200 bn, roughly half of TENCENT (700.HK)’s 2019 revenue of RMB377 billion, according to sources.
Centa-Salesman Index (CSI) last posted at 59.13, -0.25 pts weekly. The market sentiment did not deteriorate further despite a latent second wave of local coronavirus outbreak, unfinished social movements and employment rate upsurge. Frontline agents remained upbeat on the property market. CSI lingering around 60 for four weeks hinted at ongoing home price uptick.