May 29


Covid-19 Globally over 5.72m cases, 356k deaths

Dr. Anthony Fauci warned that states should not seek out do each other in re-opening but exercise caution.

Dow futures trending lower ahead of Trump’s news conference on China. Currently -150pts.


DOW -0.6%, NDX -0.5%, S&P -0.2%, Russel 2K -2.5% Opened flat but worked higher on hopes that the initial claims numbers show the economy may be bottoming, assumes no second wave as States ease lock-downs. It still means that 40.8m people have lost their jobs over the past 10 weeks; to me indicates that investors are assuming the glass if half full. But the VIX rose on fears that US/China confrontation could get worse. Markets saw the selling start around 1pm and it accelerated into the last hour after Trump said he would give a press conference on Friday regarding China.

Facebook -1.6% Netflix -1.5%, Amazon -0.4%, Alphabet -0.1%, Citi -6%, BoA -4.3% Wells Fargo -2.6% JPM -1.6%.

Abercrombie & Fitch dropped after posting a deeper than expected quarterly loss.

The US trade war with China has slashed US$1.7 trillion from American companies’ market value, the Federal Reserve Bank of New York said in a Thursday report. The higher tariffs, a tool to create a trade barrier against other countries, are poised to reduce American firms’ investment growth rate by nearly 2 percentage points.

DATA

Durable Goods Orders Apr -7.2% MoM vs -1.7% Mar (Revised) (F/cast was -13%)

Durable Goods Orders Ex Transp Apr -17.2% MoM vs -16.6% Mar (Revised) (F/cast was -19%)

Durable Goods Orders Ex Defence Apr -16.2% MoM vs -17.4% Mar (Revised) (F/cast was -16.2%)

GDP Growth Rate 2nd Est Q1 -5% QoQ vs +2.1% prior (F/cast was -4.8%)

Initial Claims 2.123m vs 2.446m prior (F/cast was 2.12m)

Corporate Profits Prelim Q1 -14.2% QoQ vs +2.1% prior (F/cast was -46%)

GDP Price Index 2nd Est Q1 +1.6% QoQ vs +1.4% prior (F/cast was +1.4%)

PCE Prices 2 Est. Q1 +1.3% QoQ vs +1.4% prior (F/cast was +1.3%)

Pending Home Sales Apr -33.8% YoY vs -16.3% Mar (F/cast was -22%) [Apr -21.8% MoM vs -20.8% Mar (F/cast was -16%)]

EIA Natural Gas Stocks change 109Bcf vs 81Bcf prior (Consensus was 107Bcf)

EIA Gasoline Stocks change -0.724m vs +283m prior (Consensus was +0.1m)

EIA Crude Oil Stocks change +2.066m vs +0.092m prior (Consen

Kansas Fed Manufacturing Index May -25 vs -62 Apr (F/cast was -46)

USD was slightly weaker vs Yen & Euro. Bitcoin % @ , VIX +3.5% @ 28.6, US T10 0.697%

OIL Brent +1.6%, WTI +2.7% on higher US demand

Gold +0.2%, Silver +0.1%, Copper -0.2%

AHEAD Personal Spending and Income, PCE Price Index, Goods Trade Balance, Wholesale Inventories, Core PCE Price Index, Chicago PMI, Uni of Michigan Data Final (Expectations, 5 yr Inflation Expectations, Current Conditions, Inflation Expectations, Consumer Sentiment) Baker Hughes Oil Rig Count


DAX +1.1%, CAC +1.8%, FTSE +1.2% Markets opened higher but after an initial rally dipped to test Wednesday’s close before working higher in the PM. EU stimulus plan and US initial claims continue to show a decline WoW.in focus but US/China tensions still overhang the market. Lead higher by Chemicals. Re-opeing beneficiaries continue to rally with CineWorld +21.4% after saying lenders had agreed to waive covenant tests. The cinema operator gave an upbeat view on demand for when its markets reopen by July.

IWG +15%

Rolls Royce -8% on news shareholder AKO Capital had sold its stake in the company at a discount.

Renault -2.7% said on Thursday that losses at its Japanese partner Nissan , in which it has a 43% stake, would drag on its on net earnings by 3.6 billion euro ($3.96 billion) in the first quarter.

DATA

EUROZONE Business Confidence May -2.43 vs -1.99 Apr (F/cast was -3)

Economic Confidence May 67.5 vs 64.9 Apr revised (F/cast was 72 )

Consumer Confidence May -18.8 vs -22 Apr (F/cast was -18.8)

Consumer Inflation Expectations May 28.6 vs 29.2 Apr revised (F/cast was 36)

Services Sentiment May -43.6 vs -38.6 Apr revised (F/cast was -30)

Industrial Sentiment May -27.5 vs -32.5 Apr (F/cast was -23)

GERMANY Inflation Rate Pelim May +0.6% YoY vs +0.9% Apr (F/cast was +0.6%) [May -0.1% MOM vs +0.4% Apr (F/cast was -0.1%)

FRANCE Unemployment Benefits Claims Apr 827.1k vs 243k Mar (F/cast was 150k)

Jobseekers Total Apr 4.3157m vs 3.4886m Mar (F/cast was 3.6386m)

AHEAD

EUROZONE M3 Money Supply, Loans to Companies, Loans to Households, Core Inflation Rate (Flash)

GERMANY Retail Sales, Import Prices

FRANCE GDP Growth Rate, Inflation Rate, PPI, Household Consumption

UK Nationwide Housing Prices, Car Production


JAPAN Expect Nikkei to open lower with concerns on US/China relations. Yen currently 107.72

Data due Pre market Unemployment Rate, Tokyo CPI, Industrial Production, Retail Sales.

Later Consumer Confidence, Housing Starts and Construction Orders

Govt says it is seriously concerned about China’s move to impose a national security law on Hong Kong -VE

Govt continues to face criticism over its handling of the covid-19 crisis Slight -VE

Temporary workers contracted to work at companies until the end of June will find out if their contracts will be renewed by the end of May. The Health, Labor and Welfare Ministry has urged Keidanren (Japan Business Federation) and other industry organizations to ensure their member companies continue to employ temp workers. -VE

Takeda Pharmaceutical Co Ltd will be allowed to keep a drug used to treat bowel disease because changes in the market have removed the need to sell it to allay EU antitrust concerns over last year's acquisition of Shire plc. +VE

Nissan announced a Yen 671bn loss and will close its factory in Barcelona, resulting in the loss of about 2,800 jobs, it will also close its S Korean operation +VE


SOUTH KOREA Expect markets to open lower with concerns over weak pre market data, US/China relations and a spike in new covid-19 cases with 79 reported on Thursday.
Data out 
Industrial Production Apr -4.5% YoY vs +7.4% Mar (revised from +7.1%) (F/cast was -1.5%) [Apr -6% MoM vs +4.7% Mar (revised) (F/cast was -1%)]

Manufacturing Production Apr -4.7% YoY vs +8% Mar(revised from +7.6%) (F/cast was +2.5%)

Retail Sales Apr -2.2% YoY vs -8% Mar (F/cast was -2.5%) [Apr +5.3% MoM vs -1% Mar (F/cast was +0.9%)]

Construction Output Apr -2.7% YoY vs +2.2% Mar (revised from +1.5%)(F/cast was +1.1%)

Coupang said on Thursday it said it had closed a facility in Goyang, in the Seoul suburbs, after an employee tested positive there. -VE

South Korea is likely to soon approve remdesivir as an emergency treatment for coronavirus patients in what could be the first treatment drug for COVID-19 here, health officials said Thursday. +VE

Naver on Thursday said that it plans to make its US-based unit Webtoon Entertainment the head office for online cartoon businesses. The latest restructuring plan comes amid the South Korean internet giant’s efforts to expand its online cartoon business abroad. +VE

Nissan said Thursday that it has decided to shut down its business operations in South Korea from 2021, as part of its global business restructuring strategy.

Hyundai Engineering & Construction said Thursday it is starting sales of units in the third Hillstate Lake Songdo apartment complex in Songdo, Incheon. +VE

Samsung Electronics said Friday it has expanded its mobile device-based health platform to televisions as demand for in-home fitness content and services is growing in the wake of the global pandemic. +VE


TAIWAN Expect market to open lower as investors wait fro Trump’s response to China imposing a national security law on Hong Kong.
No data due

After market Thursday GDP Growth Rate Q1 +1.59% vs +3.29% prior (F/cast was +1.54%)

Taiwan’s economy might grow just 1.67%this year squarely on the back of government expenditure and private investment, as exports and consumer spending have stalled, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The forecast is a sizeable retreat from an estimate of 2.37%growth made in February before the COVID-19 outbreaks became a pandemic. -VE

Nanya Tech expects an uptrend in demand and chip prices to extend into next quarter as telework and remote learning continue to drive purchases of servers and PCs, a company executive said yesterday. +VE

Advantech yesterday said that shareholders have approved the addition of Wesley Liu, son of company founder K.C. Liu to its board of directors. Wesley Liu heads systems integration unit Advantech Intelligent Services. In his nine years at the company, he was also an industrial control engineer, sales representative and assistant manager.

Cathay Consolidated to invest NT$400 million (US$13.3 million) to expand production in Taiwan, the Ministry of Economic Affairs said yesterday as it approved the company’s application to join a government incentive program.


CHINA Expect market to open flat/lower as Premier Li announces 4 n Yuan of cost cuts to help factories and merchants save jobs; rather than debt fuelled Govt spending stimulus. Concerns over the US response to the national security law being imposed on HK also -VE for sentiment

No data due but on Sunday Manufacturing and Non Manufacturing PMI due.

President Xi has managed to deflect all criticism of covid-19 and avoided having to provide stimulus by announcing the Hong Kong national security law. I may be being simplistic but that may indicate that Beijing is short of resources to stimulate the economy.

Chinese Premier Li Keqiang told local and foreign reporters that China is giving back money to the people to create new wealth, cultivate sources of tax revenue, and sustain its fiscal policy. The country still has room for policies, whether they are fiscal, financial or social security ones, in the face of substantial economic or other changes. There will be sufficient reserves for Beijing to launch new initiatives without hesitation, as China's stable economic operation is of utmost importance.

China he said has ascertained her "six securities" target, ranging from employment to livelihood, which is related to GDP growth and it set to achieve positive growth this year when that target is achieved.

On comments that Beijing had unrolled weaker-than-expected stimulus kits, Li opined that the policies were quite fierce. He said China had avoided broad and indiscriminate economic stimulus policies long time ago, except for some extraordinary cases where more resources are needed. He said the country should adopt more theme-oriented policies. Under the current sizeable policy implementation, the government allocated funding to two categories: RMB2 trillion to address new deficit and issue of anti-epidemic national bonds; and a larger proportion to waiver of social security charges.

US, UK, Australia and Canada release a joint statement condemning Beijings move to impose a national security law on Hong Kong. All parties in Taiwan also condemned the move which should illustrate to China that its calls for unification are unwarranted.  Japan said it was seriously concerned. Other countries silence on the matter is a disappointment but illustrates the desire to put commercial interest above legal rights in my view and are likely to encourage Beijing that action against Taiwan would not be opposed.

HONG KONG ADR’s -107pts to open at 23,025; most ADR’s in the red the exceptions being the Sinopec, Unicom, HK Ex and China Life. I would expect the market to remain weak ahead of Trump’s press conference.
No data due

Short Selling HSI Thursday 23.9% vs 22.4% Wednesday

Top Shorts Wharf REIC (1997) 53%, SHKP (16) 44%, Country Garden (2007) 42%, MTRC (66) 39%, Geely Auto (175) 38%, Hang Seng Bank (11) 37%, Henderson Land (12) 37%, Hang Lung PPTY (101) 36%, HK & China Gas (3) 33%, CLP (2) 33%, China Overseas (688) 33%, Mengniu Diary (2319) 33%, Petrochina (857) 31%, CK Asset (1113) 30%, BoC (3988) 30%, Galaxy Ent (27) 30%, ICBC (1398) 29%, HSBC (5) 29%, China Mobile (941) 29%, Sino Land (83) 28%, Power Assets (6) 27%, Techtronic (669) 27%, CSPC Pharm( 1093) 26%, Sands China (1928) 26%, CCB (939) 25%, Tencent (700) 25%.


PROFIT WARNING BOSSINI INT'L (592.HK) issued a profit warning, expecting the loss to widen to HK$195 mn for the ten months ended 30 April 2020 from the loss of approximately HK$94 mn for the six months ended 31 December 2019.  The operating conditions were set to be further aggravated in the second half of the financial year with the outbreak of the COVID-19 pandemic, said the announcement.


WATCH

HK Government posts an open letter from Carrie Lam regarding the imposition of the National Security Law in the local papers.

To asses the impact of how investors view the imposition of the National Security law take a look at the share price of most HK orientate stocks, many of which closed yesterday around 5 year lows. Whilst it might be understandable in the case of stocks like Swire Pac (19 HK) and Cathay Pacific (293 HK) both of whom have upset China in the past 12 months by allowing their staff to exercise their individual right of free expression over the Extradition bill last year. Beijing took offence at the time and imposed restrictions on Cathay Pacific’s flight over China and enforced management changes. But for the others it seems that investors are demonstrating with their money that the move by China is unwelcome. Even as companies now try and avoid upsetting China investors will be looking for alternatives. The move in the Nikkei suggests that it is a beneficiary as an alternative in the eyes of Asian investors.

Emperor Int (163) reports receiving 260 cheques for the 68 units it has put on offer. The first 34 units were sold by 9pm Thursday.

Vanke Property has released 47 units at The Campton in Cheung She Wan

SHKP (16 HK) reports receiving 7,000 cheques from 298 units at Wetland Seasons Park Phase 2 in Tin Shui Wai, a second batch will be launched on Saturday.

Henderson Land (12 HK) is launching several large units at Double Cove in Ma On Shan due to increased demand, having sold 7 flats in the past two weeks

Centa Valuation Index (Major Banks) (CVI) last printed at 90.1 +19.79 pts WoW. The index advanced significantly this week, failing to indicate re-emerging social incidents of late. They expect a persistent social movement possible, with rising uncertainty for home price trends but no signs of decline and believed CVI may rattle at around 80 in short run, with continuous home price rally.

PING AN (02318.HK)'s subsidiaries and B-soft (300451.SZ) jointly announced to give full play to their respective edges in the future, while exploring strategic partnership in smart medical insurance, smart healthcare, smart business insurance and other application scenarios. Accordingly, both parties aim to develop a new and comprehensive healthcare ecosystem.