June 24 Asian Macro Initial Thoughts US Futures -60pts
Covid-19 Globally over 9.1m cases, 473k deaths
US Futures opened -35pts and have slipped lower currently -60pts
Trade ministers from 15 nations on Tuesday reaffirmed that a mega Asia-Pacific trade pact will be signed later this year, but India again skipped the negotiations due to concerns about the influx of Chinese products, according to Seoul's trade ministry.
DOW +0.5%, NDX +0.74%, S&P +0.43%, Russel 2K +0.41% Opened strongly and the Nasdaq hit a new intraday and closing high as Apple +2.1% on a good response to its updated operating system for its iPhone and computers iOS 14, hitting a new high. United Health +1.7%, Visa +1.6%. But markets sold downs slightly into the close. Comments from Dr Fauci were a concern as he says the US is seeing a ‘disturbing surge’ but he was upbeat on the prospects for a vaccine which he expects in early 2021.
Banks +VE JPMorgan Chase +1.2%, Citigroup +1.7%, Wells Fargo -0.5% but had opened strongly and Bank of America +0.7%
Housing associated names +VE on very good New Home Sales data Slight +VE Techtronics (669 HK)
Travel stocks remained weak.
Redbook 20 Jun -1.4% MoM vs -2.4% prior (20 Jun -6.1% YoY vs -8.3% prior)
Manufacturing Jun 49.6 vs 39.8 May (F/cast was 47)
Services Jun 46.7 vs 37.5 May (F/cast was 44)
Composite Jun 46.8 vs 37 May (F/cast was 44)
New Home Sales May +16.6% vs +0.6% Apr (F/cast was +2.5%)
Richmond Fed Manufacturing Index Jun 0 vs -27 May (F/cast was -14)
API Crude Oil Stocks Change +1.7m vs +3.9m prior
USD flat vs Yen & Euro. Bitcoin -0.4% @ 9649.29, VIX -1.3% @ 31.37,
US T10 0.715%
OIL Brent -1%, WTI -0.9% rising covid-19 cases raising concerns over demand recovery
Gold +0.7%, Silver +0.6%, Copper -0.2% Gold at highest since Oct 2012
AHEAD MBA Mortgage Applications and 30 yr Mortgage Rate, House Price Index, EIA Stocks change Report,
DAX +2.13%, CAC +1.39%, FTSE +1.21% Markets opened higher as the Flash PMI data was better than expected. Markets then worked generally sideways before selling off slightly in the afternoon. Covid-19 cases still on overhang on the market as Germany re-imposes lock down requirements in North Rhine Westphalia. US/China relations also in focus judging from the selling seen the morning when Peter Navarro’s comments first broke.
Wirecard +19% bounce (off intraday hight) after the recent sell off as the Ex CEO was arrested and charged with inflating the company’s balance sheet.
Aegon +9% on broker initiation of coverage
Bayer +6.5% as press reported is close to agreeing an $8-10 bn settlement over claims that its glysophate-based weedkiller caused cancer.
Hikma Pharma -5% on news Boehringer Ingelheim sold its stake in the British group.
EUROZONE Flash PMI’s
Manufacturing Jun 46.9 vs 39.4 May (F/cast was 44)
Services Jun 47.3 vs 30.5 May (F/cast was 41)
Composite Jun 47.5 vs 31.9 May (F/cast was 43)
GERMANY Flash PMI’s
Manufacturing Jun 44.6vs 36.6 May (F/cast was 42)
Services Jun 45.8 vs 32.6 May (F/cast was 40)
Composite Jun 45.8 vs 32.3 May (F/cast was 42)
FRANCE Flash PMI’s
Manufacturing Jun 52.1vs 40.6May (F/cast was 46.5)
Services Jun 50.3 vs 31.1 May (F/cast was 45)
Composite Jun 51.3 vs 32.1 May (F/cast was 46)
UK Flash PMI’s
Manufacturing Jun 50.1 vs 40.7 May (F/cast was 46)
Services Jun 47 vs 29.0 May (F/cast was 40)
Composite Jun 47.6 vs 30 May (F/cast was 43)
EUROZONE ECB Non Monetary Policy Meeting
GERMANY Ifo Business Climate, Current Conditions and Expectations
FRANCE Business Confidence, Business Climate Indicator
UK BoE FPC Meeting
JAPAN Expect Nikkei to open slightly higher Yen currently 106.52
Data due BoJ Summary of Options, Later Coincident Index Final and Leading Economic Index
Japan will boost visa support, lure more international schools and streamline procedures for obtaining investment management licenses to attract highly skilled foreign finance workers, according to a draft proposal from the ruling party seen by Reuters.
Japan will partially ease travel restrictions with Vietnam, Foreign Minister Toshimitsu Motegi said on Tuesday, with flights between the two countries to be permitted from June 25-27.
Oriental Land Co. announced on Tuesday that Tokyo Disneyland and Tokyo DisneySea in Urayasu, Chiba Prefecture, will reopen on July 1. Both facilities have been closed for nearly four months since Feb. 29.
SOUTH KOREA Expect markets to open flat but continent to work higher.
No data due
Korea sees delays in ‘real 5G’ commercialization due to unexpected circumstances such as the lower-than-predicted demand, political issues and the latest COVID-19 outbreak. -VE
BoK said Tuesday that it had signed a memorandum of understanding with Kakao’s artificial intelligence solutions subsidiary and will adopt the technology for its business and policymaking.
Posco said Tuesday it is promoting “good consumption” with its partner companies by making advance payments in traditional markets for vouchers to revive local economies depressed by the COVID-19 outbreak. +VE
Coupang said Tuesday it will reinforce hygiene measures to cleanse and sterilize millions of products ordered through its Rocket Delivery. Before the products are delivered to customers, the delivery worker will use a portable disinfectant to sterilize the product. The disinfectant is approved by the food and drug administrations of both Korea and the US, the company said. +VE
Celltrion shares rose 7.58% on Tuesday, following news that an Italian COVID-19 patient tested negative for the virus a week after being treated with Celltrion’s autoimmune disease treatment Remsima.
TAIWAN Expect market to open slightly higher with focus on Tech
Data due M2 Money Supply
After market Tuesday
Industrial Production May +1.51% YoY vs +4.22% Apr (Revised up) F/cast was +7.5%)
It was the lowest gain in industrial activity since January, due to disruptions caused by the global pandemic. Output slowed for manufacturing (1.68% vs 4.92%in April) and mining & quarrying (10.72% vs 25.47%). Production continued to fall for both electricity & gas supply (-1.63% vs -5.5%) and water supply (-0.1% vs -0.18%). On a seasonally adjusted monthly basis, industrial production dropped 0.9%, after an upwardly revised 0.49% increase in the previous month. In the first 5 months of the year, industrial activity advanced 6.51% over a year earlier.
Retail Sales May -5.8% YoY vs -10.2% Apr (F/cast was +3%)
Sales fell at a softer pace for textiles and clothing (-3.3% vs -25% in April) and fuel and related products (-35.4% vs -39.9%). In addition, sales rebounded for information and communications equipment and electrical household appliance (2.2% vs -6.2%) and those of cultural and recreation goods (10.2% vs 2%) rose faster. Also, sales not in stores of stalls (15.7% vs 14.2%) and by electronic shopping and mail-order houses (22.3% vs 19.1%) advanced faster.
Hon Hai Precision has mapped out a five-year plan to drive growth for the company, chairman Young Liu told shareholders at an annual general meeting in New Taipei City yesterday. Highlighting a three-step plan revolving around digital transformation, Liu said the company is focused on developing three core technologies: artificial intelligence, semiconductors and new-generation communication. +VE
TSMC has invited Taiwan Speciality Chemicals Corp a supplier of chemical materials for semiconductors, to invest in the US in support of its production there, TSCC’s parent company said yesterday. +VE
China Airlines to end a salary reduction program next month and is not considering dismissing any staff, even though it is still not known whether demand for air travel will recover in the second half of this year, CAL chairman Hsieh Shih-chien said yesterday. The salary reduction was estimated to save NT$150 million (US$5.06 million) per month.
China Network Systems yesterday said it is extending its partnerships with Far EasTone Telecom and Taiwan Star Telecom on high-definition 4K content as part of its efforts to shift to more profitable businesses +VE
CHINA Expect market to open flat with continued caution over US/China relations and covid-19 outbreak.
No data due
Beijing’s mass testing for the new coronavirus will soon enter a “fast track”, a senior municipal health official said on Tuesday, suggesting that COVID-19 screening in China’s capital is about to gather pace in efforts to curb the latest outbreak. +VE but some public backlash at the ’special treatment’ in Beijing vs other major cities.
China dismisses Indian media reports it lost 40 soldiers in border fighting ‘I can tell you responsibly that it is false information,’ foreign ministry spokesman says. But senior security officers from the two sides are working to resolve tensions, he added Slight +VE
India’s government instructed sellers to declare the country of origin for goods and services purchased via a state-run online portal. Comes amid calls for a boycott of Chinese goods after a border clash. -VE
China on Tuesday successfully put into orbit its final Beidou satellite, completing a navigation network years in the making and setting the stage to challenge the U.S.-owned Global Positioning System (GPS). +VE local sentiment.
Steven Mnuchin says US-China decoupling will occur if American firms cannot compete fairly. Treasury secretary says he has ‘every expectation’ that China will live up to terms of phase one trade deal. Slight -VE
Joerg Wuttke, the president of European Union Chamber of Commerce in China, voiced his concern about whether the EU-China investment agreement will be wrapped up within this year. Expressing disappointment on the failed joint communique at the EU-China meeting, Wuttke was worried about China is drifting itself toward isolation.
BANKS Chinese officials have sought to ease concerns after a run on banks in Hebei and Shanxi provinces I think it reveals the domestic concerns about issues with a number of the smaller Chinese Banks -VE
HONG KONG ADR’s -60pts to open at 24,847 Expect some weakness into the close with HK market closed Thursday for Tuen Ng Festival (Dragon Boat Day) and re-opens Friday
No data due
Short Selling HSI Tuesday 21% vs 20.2% Monday
Top Shorts MTR (66 HK) 52%, Wharf REIC (1997) 43%, Hang Seng Bank (11) 35%, Ping An (2318) 34%, Bank of China (3988) 32%, China Unicom (762) 30%, PetroChina (857) 30%, AIA (1299) 28%, Want Want (151) 27%, Hang Lung PPT (101) 26%, CSPC Pharma (1093) 26%, CCB (939) 25%, Tencent (700) 25%.
PROTESTs Organizers of the July 1 march offered to implement social-distancing measures as part of their application to police to hold the annual event, but admitted that they don't feel optimistic about their chances despite the changes
TSE SUI LUEN (417.HK) Deputy Chairman, Chief Strategy Officer and CFO Ng Yi Kum, Estella revealed that the company has around one-third of shops that require rent renewal every year, contingent on different landlords. This year, most shops of the retailer have been granted about 20% rental cut. Chairman and CEO Yau On Yee, Annie said the company will definitely consider any rent renewals with caution upon their expiry, taking into account of rental cost, shop requirement and so on. The CEO said only if there is a break-even will the company mull to reserve the shop.
TOP SPRING (3688) to relaxes at least 50 units in the first price list for 128 Waterloo in Ho Man Tin. The development has 110 units about half are two bedroom units measuring around 500 sq ft.
EMPEROR INT (163 HK) AnnuaL result Net loss HK$3.64bn vs net profit of HK$3.13bn prior. Underlying profit was -43.7% YoY, Revenue -45.6% Final Div HK$0.035 per share.
China's Office of the Central Cyberspace Affairs Commission has recently mounted a thorough investigation on the contents of 31 key network live broadcast platforms in China, in conjunction with related departments, with a bid to deepen the ratification and regulation on such platforms. Upon probe, ten network live broadcast platforms were found spreading indecent contents and failing to perform corporate responsibility. Such platforms included Huya's live broadcast, TENCENT (700.HK)'s Douyu live stream, B Station's Bilibili, INKE (03700.HK)'s live broadcast, ByteDance’s Xigua and NTES-S (09999.HK)'s CC Live.
HSBC customers prefer diversified investment in wake of epidemic, pointed out Sami Abouzahr, Head of Customer Wealth, Retail Banking and Wealth Management, Hong Kong on a call. While some customers shifted their assets to the US stock market upon earlier uptrend, others redirected theirs to conservative asset types. As to the legislation of national security law in Hong Kong, Greg Hingston, Head of Retail Banking and Wealth Management, Hong Kong at HSBC, said there has not been obvious capital outflow so far, although some clients converted their currencies in hand inconsistently.
While Hong Kong public housing is subject to a 9.66% rental hike this year based on prevailing mechanism, Housing Authority (HA) is pondering over whether any alleviation can be implemented, sources said.
PING AN (2318.HK) 's Lufax Holding announced that Lufax International (Hong Kong) has received an approval from the SFC and obtained Type 1 License. Meanwhile, the fintech firm announced that its online wealth management platform for Hong Kong residents expects to launch an app in August.