Asian Futures Nikkei Futures 142pts, HK ADR’s -377pts and Australia down nearly 2% in early trades.
US Futures opened Dow -120pts, S&P -0.7% and NDX -0.8%
Global life insurers are taking steps to curb payouts stemming from the coronavirus pandemic, including long-term health consequences that are not fully understood, industry sources told Reuters. -VE for Life Insurers
DOW -2.05%, NDX -2.61%, S&P -2.57%, Russel 2K -1.91% Markets opened lower initially trended lower before a bounce. Then traded sideways but sold down around 2pm before a small bounce in the last 30 minutes into the close. Boeing was weak after earnings showed 2020 Net loss hit $11.9bn. AMD weak despite earnings and revenue beating estimates. Microsoft started +VE after good earnings with strong sales. Starbucks earnings beat but SSS -5% due to covid. Caution ahead of Apple, Facebook and Tesla earnings which came after market.
Gamestop +135% and AMC Ent +301% continue to see a lot of retail interest and talk on online chat rooms but a number of retail platforms saw outages due to volume overload. Concerns that retail traders are squeezing larger hedge funds prompting them to liquidate other securities to cover their margins. TD Ameritrade midday Wednesday said it put in place restrictions on certain transactions involving GameStop and AMC “in the interest of mitigating risk for our company and clients.” There is now talk of retail investors looking for other stocks to squeeze; as Citron and Melvin Capital both announced unwinding short positions.
VIX rallied strongly, to its highest since November; I wrote on Wednesday that that could happen due to rising bond yields but today it was on the retail pressure raising concerns that the market is over valued and could see a significant pull back. Even the Fed leaving rates unchanged and reiterating its commitment to maintaining low rates and keeping asset purchases failed to help the market today.
Apple -1% in after hours despite a strong quarter with revenue in excess of $100bn for the first time. As new 5G iPhones helped push handset revenue to a new record and sparked a 57% rise in China sales.
Tesla -3% in after hours as earnings miss, expects 50% ave annual growth in deliveries going forward.
Facebook +1.7%in after hours as Q4 earnings and revenue beat. But warned that a reversal in pandemic trends could hurt its advertising business.
Banks JPMorgan Chase -2.8%, Citigroup -2.5% and Wells Fargo -3.9%, AMEX -1.8%
Work from home names: Facebook -3.5%, Apple -0.8%, Amazon -2.8%, Netflix -6.9%, Disney -3.9%, Zoom Video -1%, Alphabet -4.7% and Microsoft +0.3% off earlier highs.
Tech NXP -4.9%, Nvidia -3.9%, Micron -5.6%, AMD -6.2%, Skyworks -4.5%
Re-opening stocks Boeing -4%, Caterpillar -3.5%, Simon Property -2.4%, Kohl’s +5.5%, Nordstrom -0.7%, Gap -10.5%, United Airlines -0.8%, Carnival +1.3%, Wynn Resorts -4.8%, Chevron -1.3%, Exxon Mobil -1.1%,
Lock down names Campbell Soup +5.4% General Mills +2.1%, JM Smucker +3.3%
MBA Mortgage Applications -4.1% vs -1.9% prior & 30 yr Mortgage Rate 2.95% vs 2.92% prior
Durable Goods Dec +0.2% MoM vs +1.2% Nov revised (F/cast was +0.8%)
Durable Goods Ex Trans Dec +0.7% MoM vs +0.8% Nov revised (F/cast was +0.6%)
Durable Goods Ex Defence Dec +0.5% MoM vs +1.2% Nov revised (F/cast was +0.5%)
EIA Gasoline Stocks Change +2.47m vs -0.26m (Consensus was +1.764m)
EIA Crude Oil Stocks Change -9.91m vs +4.351m (Consensus was +0.43m)
FOMC Rate Decision +0.25 vs +0.25% prior as expected.
USD was stronger vs Yen & Euro. Bitcoin -4% @ 30,999.75, VIX +61.6% @ 37.21,
US T10 @ 1.018% eased as Fed to keep rates and asset purchases steady.
OIL Brent -0.68%, WTI -0.06%
Gold -0.42%, Silver -0.78%, Copper -2% as doubts on stimulus appear and Fed keeps rates steady.
GDP Price Index & Growth Rate, Initial Claims, 4 week Ave Claims, Continuing Claims, Goods Trade Balance, Wholesale Inventories, PCE Prices, Core PCE, New Home Sales, CB Leading Index, EIA Gas Stock Change, Kansas Fed Manufacturing Report.
Earnings: McDonald’s, Dow, Visa, Mondelez, Northrop Grumman, Comcast, Mastercard, PulteGroup, Southwest Air, Altria, American Airlines, JetBlue, T.Rowe Price, McCormick, Brunswick, Marsh and McLennan, Sherwin-Williams, Stanley Black and Decker, Canon, Valero Energy, Beazer Homes
DAX -1.81%, CAC -1.16%, FTSE -1.3% Markets open slightly lower traded sideways for an hour and then trended lower for much of the session but rebounded from the lows in the last 90 minutes. IMF’s improved forecast largely ignored but vaccination rollout plans being monitored in the face of vaccine shortages and delays.
Resources weak but Telco’s saw interest.
French mall operators rallied after French government minister Agnes Pannier-Runacher told a domestic news station on Tuesday that there was no need for government to make any decision on a new national lockdown yet. Klepierre +19% and Unibail-Rodamco-Westfield +18% on the comments.
Zur Rose Group -12% following a surge over the past month on the back of strong earnings and analyst upgrades.
Fresnillo -12% after issuing a weaker gold production outlook for 2021, leading a broad decline for miners.
Consumer Confidence Feb -15.6 vs -7.5 Jan revised (F/cast was -7.1)
Consumer Confidence Jan 92 vs 95 Dec (F/cast was 94)
Unemployment Benefit claims Dec +0.5k vs +36.6k Nov (F/cast was +25k)
Jobseekers Total Dec 3.5866m vs 3.5863m Nov (F/cast was 3.6113m)
EUROZONE Sentiment (Economic, Industrial and Services) Consumer Confidence & Inflation Expectations.
GERMANY Inflation Rate
FRANCE No data due
UK No data due
Nikkei futures opened +3pts but turned -VE currently -142pts. Yen currently 104.10. Expect markets to trade cautiously with Retail Sales key as many worry that households are saving more.
Retail Sales Dec -3% YoY vs +0.6% Nov revised from +0.7% F/cast was -0.5% YoY
Retail Sales Dec MoM vs -0.2% Nov (F/cast was +0.5% MoM)
Foreign Stock and Bond Investment
Tokyo reported 973 new covid cases Wednesday remaining below 1,000 for a third day, with around 4,000 across Japan.
PM Suga said on Thursday he had agreed with US President Biden in a phone call to strengthen their bilateral alliance, as China expands its economic and military might. Also for working. Towards the complete denuclearization of the Korean Peninsula, it added. +VE for sentiment.
A spike in coronavirus infections in Japan is driving local households to do what they have always done in times of crisis: spend less and save more, stoking fears of a deeper retail recession and grinding deflation. -VE for sentiment.
Nissan Motor Co said on Wednesday all its "new vehicle offerings" in key markets would be electrified by the early 2030s, as part of the Japanese automaker's efforts to achieve carbon neutrality by 2050. Slight +VE but a lot of other issues remain.
AstraZeneca Plc will license Japanese biotechnology company JCR Pharmaceutical, to produce some 90 million doses of its COVID-19 vaccine to help Japan avoid shortages and delays, the Nikkei newspaper reported. +VE
Nippon Express considering selling its Tokyo HQ building, in Shidome district Slight -VE
Tokyo Ginza to bring in 40 new tenants to its high end shopping mall as some traditional tenants close. Slight +VE
Expect markets to open lower following the US the good earnings announced Wednesday may prompt retail investors to lock in gains, may see some bargain hunting late in the session. The better than expected Business Confidence data unlikely to change the sentiment.
Business Confidence Jan 85 vs 82 Dec (F/cast was 83)
As uncertainty over the coronavirus pandemic and vaccine distribution retreated. In the non-manufacturing sector, the BSI on business conditions for November 2020 was 68, up 2 points from the previous month, while the outlook for the following month rose by 6 points to 70.
KDCA reported 559 new cases as of midnight on Tuesday, up from 354 a day before, bringing the national tally to 76,429 infections with 1,378 deaths.
Authorities were scrambling on Wednesday to rein in coronavirus outbreaks centred on Christian schools as the country reported a jump in infections, dampening hopes of a speedy exit from a third wave of the pandemic. KDCA said at least 323 COVID-19 cases had been traced to churches and mission schools run by a Christian organisation in two cities, -VE for sentiment.
LG Chem Strong battery sales pushed revenues to a record high in 2020 it reported annual sales of 30.05 trillion won ($27.1 billion), surpassing the 30 trillion-won mark for the first time. +VE
LG Display, which in the third quarter of last year swung to profit after six consecutive quarters of operating deficits, reported strong fourth quarter results on the back of increased demand for panels for IT gadgets and TVs. +VE
LG Electronics Inc. is collaborating with Qualcomm Technologies Inc. for the development of 5G automotive platforms, its senior executive has said, as the South Korean tech giant tries to expand its presence in the automotive business for future growth. +VE
Kia Corp, saw its latest quarterly net profit nearly triple from a year earlier, on the back of improved product mix. The company’s net profit from October to December last year came to 976.75 billion won ($883.78 million), up from 346.36 billion won the year prior +VE
LG Household & Health Care’s 2020 saw Beauty product sales faltered, but household items strong; it reported full-year revenue of 7.8 trillion won and operating profit of 1.2 trillion won, up 2.1 percent and 3.8 percent, respectively, on-year. It decided on dividends of 11,000 won per ordinary share and 11,050 won per preference share. The total payout amounts to 184.4 billion won. +VE
Samsung Electronics Co. said Wednesday it paid out more than 77.7 billion won ($70 million) in incentives to its semiconductor partner companies last year as the South Korean tech giant tries to build up a healthy ecosystem for the local chip industry. +VE
Samsung Group said its 11 affiliates, including Samsung Electronics and Samsung SDI Co., decided to give payments for purchase orders to suppliers in advance so that they can better support their employees ahead of the Lunar New Year's holiday amid the pandemic. +VE for the wider economy.
Nonghyup Hongsam in time for the upcoming Lunar New Year holiday, is holding a buy-one-get-one-free event for its flagship ginseng products, officials said Wednesday. Shows that retailers are actively trying to make up for lost sales. Slight +VE but margins will be hit.
LG Energy Solution and Samsung SDI benefitting from spiking demand for micro batteries as AirPods and Galaxy Buds become ever more popular. Counterpoint Research data, the size of the global wireless earphone market is estimated to have reached 220 million units last year from 120 million units from a year prior. +VE
Samsung Electro-Mechanics on Wednesday said its fourth-quarter net profit in 2020 swung to the black from a year earlier on the back of increased sales of its products amid the growth of 5G and automotive sectors. +VE
SK Telecom, the industry’s largest in terms of mobile subscription, announced Tuesday its sale of professional baseball team SK Wyverns to Shinsegae Group’s supermarket chain E-Mart. Following KT Corp. who last week approved the auction of its 44.85 percent stake in affiliate KT Powertel +VE
Expect market to open lower as investors watch US markets but downside may be limited by good local results. Also upbeat outlook from AMD and Texas Instruments.
No data due
Taiwanese government said it has been in talks with the executives of four major domestic chipmakers, (TSMC, UMC, Vanguard and Pwerchip) who had pledged the production of auto chips will be prioritized amid worldwide under-supply, said Economics Affairs Minister Wang Mei-hua.
United Microelectronics Corp (UMC) yesterday reported net profit of NT$11.2 billion (US$394.64 million) for last quarter, compared with NT$3.84 billion a year earlier and NT$9.11 billion in the previous quarter. For the full year, net profit jumped 200 percent to NT$29.19 billion from NT$9.71 billion a year earlier. That translated into earnings per share of NT$2.42, up from NT$0.82 in 2019. +VE
Housing transactions last year hit a seven-year high, as the market recovered steadily from the introduction of a property gains tax in 2016, government data showed on Tuesday. Data released by the Ministry of the Interior showed housing transactions recovering from a low of 245,396 units in 2016 to 326,589 units last year. The recovery had been gradual, but resilient, despite the COVID-19 pandemic last year and renewed credit controls imposed by the central bank early last month, Sinyi Realty Inc said in a news release.
Expect market to open lower with concerns over US China relations as well as with Australia and Camberra denounces President Xi’s speech to Davos. Covid concerns remain especially as the Govt keeps tight control on media reporting.
No data due
Chinese military exercises near Taiwan are a “solemn warning to external forces,” Beijing said yesterday, after the new US government expressed strong support for Taiwan. The US Department of State over the weekend said that US commitment to Taiwan was “rock-solid,” as Taiwan reported multiple Chinese jets and bombers had flown into its air defense identification zone.
U.S. Secretary of State Antony Blinken said on Wednesday, his first full day in the job, that he favored cooperation with China on climate change and other issues of shared concern, even as he reiterated that genocide had been committed against Uighur Muslims in its Xinjiang region.
China Communications Construction Co and Philippine company MacroAsia Corp had won the US$10bn auction in 2019 to partner with the Cavite provincial government to upgrade Sangley airport. That has now been canceled “The notice of selection and award for the Sangley Point International Airport Project issued on 12 February 2020 was canceled,” MacroAsia told the stock exchange yesterday.
China’s cherry sales suffer ‘devastating blow’ after reports of coronavirus contamination in cherries scare consumers. Positive coronavirus test in Jiangsu province threatens nationwide cherry sales during peak season ahead of Lunar New Year holiday, when cherries are given as gifts. New data shows they have tested negative but the damage has been done. Origin of contaminated cherries not disclosed, but Chilean authorities have sprung into damage-control mode, splashing out US$1.5 million to tell Chinese that its crucial export is safe. There is now potential for other fresh fruits to be tainted in the same way. Shows how little we really understand about the transmission of covid.
China-Australia relations: Canberra hits back at Xi Jinping’s ‘bullying’ remarks amid trade dispute. China’s President Xi Jinping told the Davos forum this week that relations between countries should be governed by rules and institutions, not dictated by might. BUT Canberra-Beijing relations were in free-fall throughout last year, with China hitting out at a list of issues and imposing import levies on various products. Having listened to the speech it is obviously that China’s view of bullying and listening to opposite views is very different from most peoples.
Shanghai wants to add rolling out 12 nanometre chips to its ambitious efforts to cut reliance on imported chips as it works with Tesla on domestic production.
Cobalt prices rise to a two year high on demand for EV’s. The metal is largely mined in the Democratic Republic of Congo and Chinese companies are investing heavily there. Cobalt is a key ingredient in lithium-ion batteries and analysts predict more price rises to come
ADR’s -377pts at 28,920 with across the board weakness and Ecommerce names especially weak.
No data due
SHORT SELLING Wednesday 14.8% vs 13.5% Tuesday
Top Shorts: Wharf REIC (1997) 42%, Ping An (2318) 38%, Henderson Land (12) 38%, NWD (17) 36%, Hengan (1044) 31%, SinoBiopharm (1177) 30%, Hang Lung Property (101) 30%, Country Garden (2007) 26%.
EARNINGS Hang Lung Property (101) earnings due today
COVID President Xi Jinping expressed concern about Hong Kong's Covid-19 situation as he endorsed the work of Chief Executive Carrie Lam Cheng Yuet-ngor in her first online duty visit to state leaders. Xi also praised her for “having taken a firm stand” in national security issues and her efforts in fighting the pandemic.
All aircrews who have been to South Africa, Britain, Brazil and Ireland since January 23 must observe a 21-day hotel quarantine, health authorities announced yesterday. This will have a significant impact on Cathay Pacific’s cargo operations -VE
KUAISHOU-W (01024.HK) tracked margin subscription of almost $323.5 billion as at around 6 pm, according to local brokers' data. Based on the fundraising amount from public offering at approximately $1.05 billion, the IPO has been over-subscribed by over 307 times.
JOY CITY PPT (00207.HK) announced that the aggregate contracted sales of the Company, together with its subsidiaries, joint ventures and associates for the year ended 31 December 2020 amounted to approximately RMB20.122 billion (+67.3% YoY) with an aggregate contracted sales area of approximately 653,000 square meters.
Hong Kong is still weathering with various uncertainties this year, for example the policy stance of the new US administration, the change of China-US relation and the influence of Brexit, said Eddie Yue, Chief Executive at Hong Kong Monetary Authority. In face of the current situation, Yue said the Exchange Fund will maintain the high liquidity and defensiveness, such as by raising the cash and bond ratio. Said as the Hong Kong's Exchange Fund reported an investment income of HK$197.8 billion in 2020, -24.6% YoY, according to the Hong Kong Monetary Authority. That compared with a gain of HK$262.2 billion in 2019. The Exchange Fund is managed by the HKMA to safeguard the exchange value of the Hong Kong dollar and to maintain the stability and integrity of monetary and financial systems. The investment return rate also fell to 4.4 percent from 6.6 percent in 2019. -VE
PA GOODDOCTOR (01833.HK) announced that, on 27 January 2021, in line with the Company’s strategic upgrade, the “Ping An Good Doctor” APP was officially renamed as “Ping An Health.” Since the official release of the APP in 2015, the “Ping An Health” APP has accumulated 346 million registered users and over 67 million monthly active users
POWERLONG (01238.HK) announced that on 25 January, the Company issued the first tranche of the 2021 super short term commercial paper at the size of RMB440 million. The interest rate is 5.7% per annum. The commercial paper will be valid for 270 days.
MTR CORPORATION (00066.HK) announced that the tender for "THE SOUTHSIDE", the phase five property development project atop Wong Chuk Hang Station, was secured by KAYSON LIMITED, which was formed by NEW WORLD DEV (00017.HK), Empire Development Hong Kong (BVI) Limited, CSI PROPERTIES (00497.HK) and LAI SUN DEV (00488.HK).
Intel (INTC.US) will make another US$475 million investment into its Vietnam plant to enhance technologies and production of its 5G products and core processors.
Centa-Salesman Index (CSI) last printed at 59.62, up 2.54 pts from 57.08 in the previous week. The research department of Centaline Property, elaborated that the latest index kept ascending, nearing 62.59, the peak prior to the third wave of plague. Such level indicated that the front-line agents maintained the upbeat spirit.
The second-hand market continued to be vibrant, they added, forecasting the CSI to get close to 70 before Chinese New Year.