May 21 Eyes on NPC and CPPCC


Covid-19 Globally over 4.9m cases, 324k deaths
US futures opened higher but currently flat

DOW +1.52%, NDX +2.08%, S&P +1.67%, Russel 2K +3% Markets opened higher with re-opening optimism Apple +1.9%, Disney +4.9% McDonalds +2.5%, Facebook +6.4% announced a new e-commerce venture, Amazon +2%.
Good numbers from Target -3.3% and Lowes +0.2% but both closed off initial highs but was initially +VE for sentiment (and I still think Techtronics (699 HK))
MasterCard +2.8% will not ask staff to return to its worldwide corporate offices until a vaccine is available Reuters reported on Wednesday. It is also looking at its real-estate footprint and considering consolidating
DATA
MBA Mortgage Applications -2.6% vs +0.3% prior and 30yr Mortgage Rate 3.41% vs 3.42% prior
EIA Gasoline Stock Change 15 May +2.83m vs -3.513m prior (Consensus was -2.134m)
EIA Crude Stock Change 15 May -4.983m vs -0.745m prior (Consensus was -2.134m)
FOMC Minutes.
USD slightly weaker vs Yen & Euro. Bitcoin -1.7% @ 9,564.46, VIX -8.32% @ 28,
US T10 0.69% slight easing after first auction of bonds since 1986
OIL Brent +3.2%, WTI 4.79% as inventories drop
Gold +0.1%, Silver +0.3%, Copper -0.08% Gold firm on vaccine doubts
AHEAD Initial Claims, Philadelphia Fed Manufacturing Index, Manufacturing, Services and Composite PMI, Existing Home Sales, CB Leading Index, EIA Natural Gas Stocks Change.

DAX +1.34%, CAC +0.87%, FTSE +1.08% Markets opened slightly lower but worked higher through the day to close on the highs. Tech stocks lead the gains. Investors encouraged by further easing of lockdowns and good earnings. But there was some concern over the Moderna vaccine trial results with experts awaiting more details. Eurozone inflation was revised down and UK CPI dropped to just 0.8%. Renault +VE on news the Govt would lend it Euro 5bn.
UK Property names weak; Land Securities after the UK’s first negative yielding bond sale. Home builders also weak
M&S +10.7% announced a GBP 1bn covid action plan and said would be ready to re-open clothing stores when the UK Govt gave the OK.
Telecom Italia -8% as Q1 revenues missed estimates.
DATA
EUROZONE Current Account Mar Euro 40.7b vs 33.8b Feb (F/cast was 27.1b)
Core Inflation Rate Apr +0.9% YoY vs +1% Mar (F/cast was +0.9%)
Inflation Rate Apr +0.3% YoY vs +0.7% Mar (F/cast was +0.4%) [Apr +0.3% MoM vs +0.5% Mar (F/cast was +0.3%)]
Consumer Confidence FlashmMay -18.8 vs -22 Apr revised (F/cast was -26)
ECM Policy Meeting.
UK Inflation Rate Apr +0.8% YoY vs +1.5% Mar (F/cast was +0.8%) [Apr -0.2% MoM vs 0% Mar (F/cast was -0.2%)]
Core Inflation Rate Apr +1.4% YoY vs +1.6% Mar (F/cast was +1.3%) [Apr +0.1% MoM vs +0.1% Mar (F/cast was +0.1%)]
PPI Output Apr -0.7% YoY vs +0.3% Mar (F/cast was -0.5%) [Apr -0.7% MoM vs -0.2% Mar (F/cast was -0.5%)]
PPI Input Apr -9.8% YoY vs -3.1% Mar revised (F/cast was -8.8%) [Apr -5.1% MoM vs -3.8% Mar revised (F/cast was -4%)]
PPI Core Output Apr +0.6% YoY vs +0.9% Mar (F/cast was +0.5%) [Apr -0.1% MoM vs +0.3% Mar (F/cast was -0.2%)]
Retail Price Index Apr +1.5% YoY vs +2.6% Mar (F/cast was +1.5%) [Apr 0% MoM vs +0.2% Mar (F/cast was 0%)]
AHEAD
EUROZONE No data due
GERMANY No data due
FRANCE No data due
UK Manufacturing, Services and Composite PMI, CBI Industrial Trends Orders

JAPAN Expect Nikkei to open higher but the pre market trade data could cap the upside. Yen currently 107.58
Data due Balance of Trade, Exports Imports, Foreign Bond and Stock Investments
Govt to lift emergency restrictions in western prefectures +VE for sentiment.
Mitsubishi to cut 40% of branches by 2024 +VE
Convenience stores -VE as customer numbers -18.4% MoM -VE
Japan Display seeks to enter medical and security markets using newly developed bendable sensors +VE
Research shows Japn could lose 3m jobs due to covid if the pandemic lasts through to next March; largely due to the drop in tourism
Press reports a pub in the Shinjuku district has installed a machine that sprays customers with hypochlorous acid water as they enter. They have their temperature monitored, are sprayed and presented map showing their seats where they can order via smartphone in order to avoid Hunan contact.

SOUTH KOREA Expect markets to open higher following the overnight rally PPI data was inline with f/casts. Sentiment a slight -VE as two high school seniors students were reported as new covid-19 cases promoting some school to turn students away but most opened.
Data out PPI Apr -0.7% MoM vs -0.9% Mar (revised (F/cast was -0.7%) [PPI Apr -1.5% YoY vs -0.5% Mar (revised (F/cast was -1.5%)]
National Pension Service on Wednesday has reaffirmed its pledge to shrink its exposure to domestic stocks in a move to ward off uncertainties due to fallout from the coronavirus outbreak, Welfare Minister Park Neung-hoo told reporters Wednesday. -VE
Government vowed Wednesday to swiftly create at least 550,000 new jobs in the public sector as soon as it secures an additional budget of 3.5 tn won ($2.8 bn) +VE
Samsung Display temporarily suspends construction at Asan complex on covid-19 concerns slight -VE
Cafe24, a South Korean e-commerce solutions company, said Wednesday it has joined Facebook’s new initiative, “Shops,” as a partner. +VE
Daewon Media said Tuesday it has signed a license contract with Walt Disney Co. Korea to make toys and figures of Marvel characters. +VE
SK Telecom said Wednesday its artificial intelligence-based senior care service has helped the 119 emergency system to rescue around 23 seniors living alone since its launch last year. +VE

TAIWAN Expect market to open higher following the global rally watch for the market to test the key 11,000 level. President Tsai calls for coexistence with Beijing; outlines priorities are industrial and economic development, as well as reforms for social welfare, national security and modernised governance. But she did reject Beijing’s sovereignty claims.
No data due

Full text of President Tsai’s inauguration speech https://www.taipeitimes.com/News/taiwan/archives/2020/05/21/2003736799
The National Development Council (NDC) is to draw up a road map to guide the nation’s search for a new growth engine in the next four years based on technology, green energy and other core strategic industries, new NDC Minister Kung Ming-hsin said yesterday.
Export orders last month again defied expectations by increasing 2.3 percent year-on-year to US$38.53 billion amid robust demand for information and communications technology (ICT) products and electronics, the Ministry of Economic Affairs said yesterday. +VE
Yulon Nissan Motor Net profit fell to NT$178.59 million (US$5.96 million) in the three-month period, compared with NT$1.51 billion a year earlier, with earnings per share dropping from NT$5.05 to NT$0.6, the firm said; due to vehicle sales in China -88% in the quarter. -VE

CHINA Expect market to open higher but trade with caution ahead of the opening of the CPPCC and NPC conferences
No data due
China rebuked the US Sec of State Pompeo for congratulating President Tsai on her inauguration ceremony accusing him of violating the one-China policy and interfering in China’s internal affairs. It also stated again the reunification was inevitable and it would not tolerate Taiwan’s independence. To me China is hurting itself by maintaining this stance when the rest of the world can clearly see that Taiwan is not part of China. More countries need to stand up to China on this and some of its other activities. China really needs to focus on its won’t development, although the tightening of chip supplies to Huawei may give it a further reason to seek to invade Taiwan; to secure the chip technology it currently lacks.
Nestle said on Wednesday it would spend 100 million swiss francs ($103.58 million) on expanding its manufacturing footprint in China to include a new plant-based food facility and widen its production lines. +VE for sentiment

HONG KONG ADR’s +59pts to open at 24,458 but expect the initial opening to be higher as recent shorts are squeezed again. ADR ’s show the Petrochems and Chinese Financials closed in the red. Market to see cautious trading ahead of the NPC and CPPCC starting in China.
No data due


Short Selling HSI Wednesday 20.1% vs 19.9% Tuesday
Top Shorts Wharf REIC (1997) 55%, CCB (939) 44%, Hang Seng Bank (11) 39%, HSBC (5) 36%, Country Garden (2007) 34%, SHKP (16) 32%, Techtronic (669) 32%, CNOOC (883) 31%, CLP (2) 29%, MTRC (66) 28%, BoC (3988) 26%,

RESULTS This Week: Thursday Parkson Retail (3368), Alibaba (9988).

WATCH
XIAOMI (1810) Q1 net profit +10.6% beat expectations +VE
CHINA MOBILE (941.HK) said China Mobile Communications Group, its parent company entered into a collaborative framework agreement in relation to 5G co-construction and sharing with China Broadcasting Network Corporation Ltd. (CBN) The parties shall jointly determine network construction plans, jointly invest in the construction of the 700MHz 5G wireless network. On the basis of maintaining their respective independent branding and operations, the parties shall jointly explore model innovations in areas such as products and operations, carry out in-depth collaboration in areas such as content and platforms, and pursue collaborative operations in areas such as channels and customer services. The duration of collaboration between the parties shall be from the effective date of the 5G Collaborative Framework Agreement to 31 December 2031.
Macau's total spending (excluding gaming expenses) of visitors -70.4% YoY to a mere MOP5.01 billion in Q1 2020, as visitor arrivals were -68.9% (3.2192 million).   It also announced a plan to reboot tourism in 3 phases:
1) initiation of pre-promotion events locally and overseas;
2) offer of half-day free trips for overnight tourists pursuant to epidemic development;
3) roll-out of concessions for sea, land and aviation traffic.
CHINA TELECOM (728.HK) mobile subscribers 339 million in April with a net increase of 1.97 million and cumulative net increase of 2.95 million.  During the period, 5G subscribers reached 21.7 million with a net increase of 5.09 million and cumulative net increase of 17.09 million.
SHENZHEN INVEST (604.HK) won a bid for residential land parcel in Shuanglin North Heng Road, Chenghua District, Chengdu city at a total consideration of RMB1.15 billion, with a floor price of RMB16,800 per sq.m..
HK PROPERTY
Tai Hung Fai bought an old building at the junction of Des Voeux Road West and Sai On Lane in Sai Ying Pun was awarded to Tai Hung Fai at the upset price $700 million via a compulsory auction.
Centa-Salesman Index (CSI) last stood at 68.67, +1.1 ppts from 67.57 in the previous week. Steadying above 65 for three straight weeks, indicating the ongoing bullish sentiment of front-line agents and hinting price uptick. The property market has not fully warded off the epidemic sluggishness despite active second-hand transactions, leading to lukewarm CSI uptrend.
JLL (local property agents) wrote that the leasehold demand for offices remains weak in Hong Kong although the coronavirus pandemic has been getting less serious from late-April. In April, the overall rents went down 3% MoM while the vacancy rate at Grade A office towers elevated to 7.2% by the end of the month.