Nov 12 Asian Macro Initial Thoughts Asia to open mixed, China loans weak, US futures flat
Asian Futures Nikkei Chicago Futures +196pts, HK ADR’s +9pts and Australia higher in early trades China loans data was weaker than expected. Mortgages were down -VE for Chinese Property Developers. Tech likely to see interest following the rebound in the US overnight
US Futures opened Dow +30pts, S&P slightly higher NDX flat.
Leaders of the 10-member Association of South East Asian Nations (ASEAN), China, Japan, South Korea, Australia and New Zealand start talks talks today that are scheduled to conclude talks on the Regional Comprehensive Economic Partnership (RCEP) this Sunday.
DOW -0.08%, NDX +2.01%, S&P +0.77%, Russel 2K unch Dow traded sideways around flat S&P traded sideways but +VE and NDX traded higher as investors accumulated some recently beaten up names. Tech saw bargain hunting, Energy and Financials weak. But as covid cases hit a new record high hurting a number of re-opening stocks were sold down; like Kohl’s and Nordstrom that had rallied earlier in the week.
Lyft rallied after the ride-hailing company reported revenue +47% QoQ, although its net loss for the third quarter was $459.5m.
Qualcomm climbed following news that the chipmaker was teaming up with Dish Network to accelerate the introduction of a cloud-native, 5G network for the satellite TV provider. Dish also rose.
Work from home names: Facebook +1.5%, Apple +3%, Amazon +3.4%, Netflix +2.2%, Disney -3%, Zoom Video +10%, Alphabet +0.6% and Microsoft +2.6%,
Nvidia +5.1%, Micron +1.7%, AMD +4.2%, Skyworks +4.8%
Re-opening stocks Boeing -3.5%, Caterpillar -1.7%, Simon Property -6.9%, Kohl’s -10%, Nordstrom -8.5%, Gap -2.3%, United Airlines -3.9%, Carnival -3%, Wynn Resorts -5.5%, Chevron -0.7% and Exxon Mobil -1%, AMEX -4.2%
Lock down names Campbell Soup +2.1%, General Mills +1.7%, JM Smucker +1.9%
Moderna +1.8% (was +8.4% in normal hours) said that it has had enough cases of Covid-19 in its vaccine candidate trial to take a look at the data, signaling that preliminary results could be released soon.
Revolve Group -8.7% *was +2.8% in normal hours) reported a surprise Q3 net sales decline YoY and said Covid-19 has continued to hurt performance during the early weeks of the fourth quarter.
Fossil Group + 31.5% (was -5% in normal hours) Q3 results that included widening margins. The company said it earned an adjusted 31 cents per share on $435.5 million of net sales during the quarter, -19% YoY. But said it had more than $300 million in cash and cash equivalents as of Oct. 3.
Vroom -10.8% (was +6.6% in normal hours) reported a smaller-than-expected loss for Q3, said that consumer demand has returned to pre-pandemic levels, but its Q4 guidance for loss per share was between 41 cents and 35 cents.
MBA 30 yr Mortgage Rate 2.98% vs 3.01% prior and Mortgage Applications -0.5% vs +3.8% prior
USD was flat vs Yen & slightly stronger Euro. Bitcoin +2.8% @ 15,847.21, VIX -5.4% @ 23.45, US T10 @ 0.96% (Bond market was closed)
OIL Brent +0.4%, WTI +0.15% hopes that covid vaccine will increased demand.
Gold -0.7%, Silver -0.4%, Copper -0.7%
AHEAD Inflation Rate, Core Inflation Rate, Initial Claims, 4 week Average Claims, Continuing Claims, EIA Oil Report, Monthly Budget Statement. Speech by Evans, Williams and Bullard.
Earnings Include Walt Disney, Palantir Technologies, Applied Materials, Beazer Homes, Cisco Systems, Siemens, Burberry, Brookfield Asset Management, Unity Software
DAX +0.4%, CAC +0.48%, FTSE +1.35% opened higher, tested yesterdays closing levels, worked higher; then DAX and CAC traded sideways but FTSE worked higher. No data due released but several ECB speeches. Utilities rising but the Banks remain weak.
Corporate earnings a key driver; German IT house Bechtle up strong in early trades on strong Q3 results. ABN Amro weak despite beating profit expectations, but it missed net interest income projections and gave cautious forward guidance.
Nordea Bank weak as Sampo cut its stake. Prosus weak on concerns about stronger Chinese antitrust regulation.
EUROZONE Economic Bulletin, Industrial Production Speeches by Guindos, Panetta, Mersch, Schnabel and Lagarde.
GERMANY Inflation Rate Speech by Mauderer
FRANCE No data due
UK Balance of Trade, GDP, GDP Growth Rate, Industrial Production, Manufacturing Production, Business Investment, GDP 3 Mth Ave, Construction Output, Construction Orders, Labour Productivity, Goods Trade Balance. BoE Bailey speaks, NIESR Monthly GDP Tracker. Speech by Tenreyro and Bailey
JAPAN Nikkei to open Chicago Futures 25,545 (Osaka 25,490) vs 25,350 Wednesday’s close (highest since 1991)
Yen currently 105.41. Nissan in focus as it reports earnings.
Data due Machinery Orders, PPI, Foreigners Stock and Bond purchases, Later we get Tertiary Industry Index.
Tokyo Metropolitan Government on Wednesday reported 317 new cases of the coronavirus, up 24 from Tuesday. The number is the result of 1,010 tests conducted on Nov 8. It was the first time since Aug 20 that the number of reported infections in Tokyo has topped 300. Nationwide cases were 1,524 cases. Pressure on the government to introduce more measures to control the spread. -VE
Japan is arranging phone talks between Prime Minister Yoshihide Suga and U.S. President-elect Joe Biden to be held at an "appropriate time," the government's top spokesman said on Wednesday. +VE
SoftBank Group Corp (9984.T ) said on Wednesday SB Northstar, its new trading unit, had amassed about $3.7 billion in trading losses so far. It had not disclosed much information about the unit, which is reportedly the so-called “Nasdaq whale”, an investor with large derivatives positions in tech stocks. -VE
Marubeni Corp will pull out of the Thabametsi South African coal plant project, the group told Reuters on Wednesday, following the withdrawal of some South African investors this week. +VE
Toshiba aims to reduce greenhouse gas emissions across all operational stages by 50% of its final 2019 level by 2030. It will stop taking orders for new coal-fired power plants and lift revenue from renewables 242% over the next decade. +VE
Japan's Honda Motor Co said on Wednesday it will be the world's first automaker to mass produce sensor-packed level 3 autonomous cars that will allow drivers to let their vehicles navigate congested expressway traffic +VE
Japanese telecoms firms appealed Wednesday to the communications ministry over a planned $40-billion takeover of the country's biggest mobile carrier by its government-backed parent, warning it would "prevent fair competition”. NTT announced in September its plan to buy out remaining shares in NTT Docomo, in a potentially record-breaking deal. -VE
Tohoku Electric Power said on Wednesday it had received the green light from a local governor to restart one of its nuclear reactors. It still needs a number of other approvals but is a step towards restarting. Slight +VE
SOUTH KOREA Expect markets to open slightly higher as the stock market cap hits a record high which is likely to draw in some more retail investors. Pre market date weaker than expected.
Export Prices Oct -6.4% YoY vs -6.2% Sept (Consensus was -5.6%)
Import Prices Oct -11.6% YoY vs -11.3% Sept (revised from -11.5%)(Consensus was -10%)
Celltrion Chairman Seo Jung-jin stirred up a storm Wednesday after saying in a radio interview that his company’s COVID-19 antibody treatment will eradicate the SARS-CoV-2 virus in the human body in four to five days from administration and that it will be available for emergency use in Korea starting at year-end. But the drug has yet to complete its clinical phase 2 trail (due by year end). Slight +VE
Posco Energy said Wednesday it had begun operations of its new liquefied natural gas carrier business the same day, becoming the first private LNG terminal operator in the country to do so. +VE
E-Mart said Wednesday that Q3 net profit +6.7% YoY thanks to its faster-than-expected sales recovery from the pandemic and renewal of its outlet networks.+VE
Unionized workers at Hyundai Mipo Dockyard Co. launched a strike vote Wednesday after failing to bridge a wide gap with its management on a wage and collective agreement. It is due to end Friday. -VE
Unionized workers at GM Korea Co. said Wednesday that they will continue their partial strike this week for higher wages despite the company's statement that it may reconsider planned investments in its plants. -VE
TAIWAN Expect market to slightly open higher having closed at a historic high Wednesday with old economy and financial names seeing interest and stability in the tech sector.
No data due
The housing price index in Q2 +0.67% QoQ to 105.9 as home prices picked up across Taiwan on the back of real demand and asset allocation needs, Ministry of the Interior data showed. +VE
Taishin Financial Holding Co will continue boosting its online banking service Richart to protect its lead as three Web-only banks gear up for their launch before the end of the year, the company told an investors’ conference in Taipei yesterday. Taishin Bank reported a net profit of NT$3.53 billion (US$122.44 million) for last quarter, -2% QoQ as it had not fully recovered from a plunge in investment gains in Q1. Net interest margin slid, but net fee income from its credit card and corporate loan operations helped profit to rise; also helping was the rising profit Tashin Securites. It was also announced that the Fair Trade Commission yesterday approved Taishin Financial Holding Co’s acquisition of Prudential Life Insurance Co of Taiwan Inc. +VE
Fubon Financial Holding Co on Tuesday reported a net profit of NT$6.38 billion (US$221.3 million) for last month, +53% MoM and 2.69 times from a year earlier, as its insurance arm took advantage of global stock market rallies to realize investment gains. +VE
Largan Precision Co on Tuesday said that it is to build two plants in Taichung to expand its production capacity despite weakness in global smartphone demand. It is investing about NT$6.06 billion to build two production sites in the city, where it is headquartered. The company has designated NT$3.82 billion to build one facility and NT$2.24 billion for the other, delegating two contractors for the development, it said. The land for the facilities has been purchased, it said. Construction at the sites is scheduled to be completed in 2024, Largan said. Long term +VE
CHINA Expect market to open lower with concerns over the economic recovery on weak loan growth
No data due but after market Wednesday
Vehicle Sales Oct 12.5% vs 12.8% Sept (F/cast was 10.5%)
New Yuan Loans Oct CNY 689.8b vs 1900b Sept (F/cast was 850b)
Outstanding Loan Growth Oct 12.9% YoY vs 13% Sept (F/cast was 12.9%)
Total Social Financing Oct CNY 1420b vs 3480b Sept (F/cast was 1450b)
M2 Money Supply Oct 10.5% YoY vs 10.9% Sept (F/cast was 10.8%)
New loans are usually lower in Oct due to National Holidays and the fact that most banks have used up their quota’s but this was weaker than usual. Household loans (mostly mortgages) dropped to CNY433.1b from 960.7b in Sept and Corporate Loans dropped too. Total Social Financing dropped sharply but was in line with expectations.
Germany, holder of the European Union's rotating presidency, has criticized China for the dismissal of several pro-democracy opposition lawmakers from the city assembly in Hong Kong. -VE
China urged the United States on Wednesday to stop boosting ties with Taiwan, after Washington and Taipei announced they would hold economic talks this month that Taiwan's government described as a "major milestone" in relations.
Brazil health regulator Anvisa on Wednesday allowed resumption of late-stage clinical trials for China's Sinovac COVID-19 vaccine, which had been suspended due to the death of a study subject that was registered in Sao Paulo as a suicide. +VE
American Airlines said it is restarting passenger flights to China on Wednesday, lifting the total number of U.S. weekly flights to 10 as the U.S. government continues to push for more air service between the world's two largest economies. +VE
China's Tibet Rhodiola Pharmaceutical Holding announced a deal on Wednesday to manufacture, sell and test Russia's COVID-19 vaccine in China, hours after interim results showed it was 92% effective at protecting people from the disease. Rhodiola said it plans to conduct early and mid-stage trials of the Russian vaccine in China and final-stage trials overseas, although the trials are yet to be approved by regulators. Slight +VE although there are doubts over the Russian vaccine.
FT reports China Construction Bank has partnered with a digital exchange to launch an offshore bond that relies on blockchain in a sign of rising interest in the technology from the country’s vast banking system. The deal, which aims to raise up to $3bn in total, will allow investors to buy digital tokens that are backed by deposits at the bank’s branch in Labuan, an island tax haven in Malaysia.
China passes law to provide more support for former military personnel. The new legislation sets out rules on living allowances, jobs, vocational training, educational opportunities and health care services for veterans. Being in the military should be seen as ‘a profession respected by the whole of society’, says chairman of the NPC, which approved the new law. Comes as Beijing has come under pressure from former service people.
HONG KONG ADR’s +9pts to open at 26,235. Political concerns as Non establishment LegCo members resign as Carrie Lam ousts opposition lawmakers on the basis that they endangering national security.
No data due
SHORT SELLING Wednesday 11.6% vs 13.6% Tuesday
Top Shorts CCB (939) 28%, Ping An (2318) 28%, Hang Seng Bank (11) 26%, BoC (3988) 26%.
Non-establishment Legislative Councilors met the press in the evening, during which Democratic Party Chair Wu Chi-wai announced that non-establishment Legislative Councilors will submit resignation letters collectively today (12 November), indicating their responsibility at the Council will come to an end, as a gesture of protest against Chief Executive Carrie Lam's disqualification decision. At the request of Chief Executive Carrie Lam, the NPC Standing Committee approved the decision on the qualification issue of Legislative Councilors of HKSAR. Alvin Yeung, Dennis Kwok, Kwok Ka-ki and Kenneth Leung will immediately be disqualified as Legislative Councilors.
Alibaba sales for its post-COVID-19 Singles' Day shopping extravaganza hit $74 billion, a haul that was overshadowed by a 10% drop in its shares on Wednesday after China published draft anti-trust rules aimed at internet platforms.
FT’s LEX Alibaba: trust issues. Warns the company may face more downside over new rules about how it uses customer data from online search and shopping activity -VE
miHoYo's Genshin Impact overtook TENCENT (00700.HK)'s Honor of Kings and PUBG Mobile to top the world's mobile game revenue chart in October, reported Sensor Tower. Genshin Impact garnered US$239 million in user spending in the period, 31% of which generated from China.
HUA HONG SEMI (01347.HK)'s 3Q20 results conference call, CFO Daniel Wang disclosed that the group has set a new high in sales revenue, on the ride of reviving consumption in China and gradually unleashed demands. 2H20 results were expected to outshine 1H20’s. With respect to the group's target on the Wuxi plant to strike a breakeven in 2H21, Wang stated that the goal is hardly attainable given the high investment and depreciation, although the factory will hopefully get close to the target by end-21.
Hong Kong Productivity Council unveiled the Standard Chartered Hong Kong SME Leading Business Index report for 4Q20. The overall index hit 37.5 in the quarter, rising 7.7 from 3Q20's 29.8. The index increased for the second straight quarter. However, both the overall index and sub-indices stood below 50, reflecting operating challenges faced by SMEs amid the pandemic and the new normal.
Centa-Salesman Index (CSI) last stood at 54.08 this week, +1.18 pts weekly, said Centaline Property. Failing to test 55, the index still managed to defend to critical line 50.