Asian Futures Nikkei Chicago Futures +308pts, HK ADR’s +61pts and Australia higher in early trades. India Closed
US Futures opened Dow +202pts (+0.7%), S&P +0.7% and NDX +0.9%.
ASEAN The China-backed Regional Comprehensive Economic Partnership (RCEP), was signed on Sunday. Slight +VE for sentiment although the implementation will take time.
COVID Global airlines, including Cathay Pacific, are calling on governments to implement standardized Covid-19 tests and unify digital health passes so safe air travel can resume as soon as possible. +VE
JAPAN Nikkei Futures Chicago 25,693 vs 25,385 Friday’s close Caution as investors assess the GDP data due premarket and watch the China data later this morning. Rising covid cases also a concern. Yen closed 104.60
Data due 10 minutes before the open GDP Data (Growth rate, Growth annualised, Price Index, Capex, External Demand and Private Consumption). Later industrial Production, Capacity Utilisation and a speech from Masai.
Japan does not need another state of emergency to tackle the covid 19 pandemic, PM Suga said on Friday, even though it is seeing record high numbers of new daily cases as the weather grows cold. He also said no need to change the national tourism promoting which some think has helped the virus spread. Whilst the first wave hit older people (70’s and 80’s) the second wave is hit younger people thought to be due to clusters originating in bars and clubs. But this wave seems to hitting those in their 40’s with increased family and co-worker transmissions.
On Sunday Tokyo reported 255 new covid cases (-97 from Saturday) with 1,439 nationally after 6,257 tests.
Japan to break the use personal seals to stamp all official documents, scrapping their use in nearly 15,000 administrative processes, an official at the Cabinet Office said on Friday. The use of seals will be abolished for all but 83 instances such as automobile registration, the official said, but no specific timetable has been set for phasing out seal use. +VE
The government will launch its envisaged digital agency in September 2021, and will bring on 500 employees, 100 to 150 of whom will come from the private sector, with the aim of digitizing administrative services and will work directly under the prime minister +VE
Shimachu (8184.T) on Friday said it will accept a $2 billion buyout bid from furniture chain Nitori Holdings (9843.T) rejecting an earlier agreed offer from peer DCM Holdings (3050.T). Important because it reflects the changing investment culture in Japan, where unsolicited, hostile takeover offers were once considered taboo. Their rise comes as the government pushes for better corporate governance, putting management under pressure to improve shareholder returns, especially during buyouts. +VE
Japan Airlines Co. on Thursday notified its labor union that it plans to reduce the winter bonus for employees by 80% YoY. Follows the summer bonus this year which was cut by 50%. It said that further cuts in personnel costs could not be avoided due to the devastating impact of the novel coronavirus pandemic on the industry.
Mizuho Financial Group Inc is open to mezzanine financing such as subordinated debt and preferred stocks after the COVID-19 pandemic has eroded clients' capital positions, the bank's chief executive said in an interview.
Nissan’s damages case against absent Ghosn seeking 10bn Yen (US$95m) which was filed in February has started. I think -VE for the company, likely to expose company mismanagement and distract the current management from the very complicated task of trying to make the company profitable again.
SOUTH KOREA Expect markets to open higher tech names to see continued interest. Stocks closed Friday at nearly 2 yr highs; with good turnover as Foreigners were net buyers of Samsung, Hyundai Motor, Hynix and LG Chem.
No data due BUT Saturday reported 208 new covid cases after 205 Friday which was the first time above 200 since Sept Slight -VE
South Korea's trade commission on Friday made a preliminary decision to extend anti-dumping tariffs on stainless steel bars from Japan, India and Spain for another three years.
Ministries to discuss Korean Air’s plan to buy rival Asiana The central part of the discussion would be fairness of the acqusition of the two major airline companies of Korea, examining the probabilities of approval from the antitrust watchdong.
Shinhan Bank said Sunday said it would collaborate with Microsoft Korea in building and operating its new research and development platform. On Friday, the two companies signed a strategic partnership for Shinhan’s Expace -- a combination of “experience” and “space” -- which will allow the bank’s digital team to work with fintech companies, startups and other innovative firms to develop and test cutting-edge financial services and technology. +VE
General Motors Co. said Saturday it has decided to recall electric vehicles equipped with batteries made by South Korean producer LG Chem Ltd. due to safety concerns. On concerns that the batteries could cause fires when fully charged. The US National Highway Traffic Safety Administration has launched investigations into three fire cases from the EVs. GM is cutting software to limit the batteries to 90% charge. GM Korea, the South Korean unit, said there have been no fire cases reported from the Bolt EVs sold over the period. Still slight -VE to LG Chem
Hanwha Life Insurance‘s third-quarter operating income surged by 134.6% YoY to 206.9 billion won ($185.5 million), mainly due to a lower loss ratio, the company said Friday. An increase in sales of Hanwha Life‘s guaranteed products has reduced its ratio of insurance claims to premiums, officials said. +VE
Financial authorities will tighten rules on unsecured loans from later this month, as they seek to prevent people from borrowing excessively to buy homes or invest in stocks, officials said Friday. -VE Banks, Property and Brokers
TAIWAN Expect market to open higher with continued interest in large tech names.
No data due
US policy toward Taiwan has been irrevocably changed by US Secretary of State Mike Pompeo’s comment on Thursday that “Taiwan has not been a part of China,” a National Taiwan University academic said on Saturday. US policy toward Taiwan has been founded on Beijing’s promises, including its promise to resolve the Taiwan question peacefully, he said. However, now that Washington has realized that Beijing cannot be trusted when it comes to Taiwan and Hong Kong, it also believes there is no reason to comply with past agreements, he added.
The US takes no position on the issue of Taiwan’s sovereignty, the US Department of State said on Saturday. The spokesperson said the US’ “one China” policy remains guided by the US’ Taiwan Relations Act, the Three Joint Communiques between the US and China, and the “six assurances” to Taiwan, as it has been in the past fours decades.
Mainland Affairs Council (MAC) survey showed 90.3% of Taiwanese oppose China’s military threats against the country and nearly 79.8% believe maintaining cross-strait peace is the responsibility of both sides.
Yageo Corp on Saturday broke ground for a new plant in Kaohsiung that is expected to begin commercial production in 2022. Yageo chairman and chief executive officer Pierre Chen told the groundbreaking ceremony that it would be the company’s first new plant in the city in 15 years as it embarks on a plan to move its high-end technology production back home from overseas. +VE
Wistron Corp’s board of directors has agreed to expand the company’s server production capacity at home and abroad, as well as sell its mobile phone business in China’s Kunshan in January, the company said last week. The contract electronics maker — whose products include handsets, servers, laptops, PCs, tablets, video game consoles and LCD modules — has been expanding its non-Chinese production capacity over the past year, including in Taiwan, India, Malaysia, Vietnam and even in Texas, amid US-China trade tensions and geopolitical uncertainties.
The central bank yesterday asked major local lenders to improve risk control of mortgage operations, saying that, if necessary, it could introduce credit controls to maintain the stability of the financial system.
Quanta Computer, the world’s biggest contract notebook computer maker, yesterday said that it expects shipments to increase 10% QoQ for the last three months of 2020, thanks to strong demand. It shipped more than 18 million laptop computers last quarter and expects a further increase, which would bring the company’s notebook shipments to 600 million units this year. “The demand is still very strong,” Leung said. “We expect the first half of next year to resemble the second half of this year. +VE
TSMC said it is to raise employees’ regular wages by an average of 20% in an effort to acquire and retain talent. That would be the biggest hike in regular paychecks in the company’s history, as the fight for technology talent becomes increasingly fierce and talent poaching seems normal. But it will adjust bonus payments downwards, so total package remains the same but employees prefer higher base salaries +VE
China Steel Corp Friday said it would raise steel prices by an average of 1.28% for domestic delivery, as worldwide economic recovery boosted global demand for steel products. Amid solid demand for steel products, the Kaohsiung-based company has been increasing prices for six months in a row, it said. +VE
Center Laboratories on Thursday reported net profit of NT$947 million (US$32.83 million) for last quarter, +32% YoY on the back of advancing non-operating earnings from its investment in two firms in China, (Ausnutria and Jacobio Pharma) the company said. +VE
Taiwan’s major hotel operators reported gains for last quarter, reversing losses in the preceding three months caused by the COVID-19 pandemic, and are positive about business moving forward. +VE Leofoo Tourism Group, FDC International Hotels, etc.
CPC Corp, Taiwan and Formosa Petrochemical Corp yesterday announced that they would increase their gasoline and diesel prices for a second straight week, effective today.
CHINA Expect market to open flat ahead of data due on the open.
Data due House Price Index, Fixed Assert Investment, Industrial Production, Retail Sales and Unemployment.
Chinese Health experts predict greater risk of local coronavirus infections caused by imported patients. To tackle the risks, the country will carry out a public health and hygiene campaign in the coming seasons to help prevent the coronavirus infections and other seasonal infectious diseases, NHC's deputy director Li Bin said at a press briefing.
China is also reporting more positive covid tests on imported frozen foods leading to import bans.
China congratulates Biden and Harris on their election victory. A late response by China and after Biden had already had phone calls with the Leaders of Japan, S Korea and Australia.
China will strike back against any moves that undermine its core interests, its foreign ministry said on Friday, after U.S. Secretary of State Mike Pompeo said that Taiwan “has not been a part of China”. Underlining of the fact that the US only acknowledges the Chinese position that Taiwan is part of it, rather than explicitly recognising China’s claims. The increased clarity should be beneficial to the new administration when they set out their policy.
Chinese Ministry of Foreign Affairs, gave response to Trump's executive order that will ban American investment in companies tied to the CCP military, China Daily reported. He urged the US to look at China's military-civilian integration development policy rightfully, stop suppressing specific Chinese companies in the name of national security, and revoke such wrongful decision, The Chinese government will adamantly safeguard the legitimate rights of national companies.
Qualcomm has received an export license to supply 4G chips to Huawei, not including 5G chips, foreign reports citing insiders.
Naturgy NTGY.MC said on Friday it had agreed to sell 96% of its Chilean utility Compania General de Electricidad CGE.SN to China's State Grid International Development for 2.57 billion euros ($3.04 billion). China is Chile’s top trading partner and Chinese firms have increasingly been investing there.
Beijing will issue a yellow alert for heavy air pollution from today due to smog that is forecast for the city until Tuesday, local authorities said Saturday, Xinhua reports.
HONG KONG ADR’s +61pts to open at 26,217 with weakness in E-commerce and Telecom names. Covid still a concern as Government reported 14 new covid 19 cases on Sunday (vs 8 on Saturday) with 5 being local transmitted. HK will impose stricter social distancing measures from today. It has also introduced mandatory testing for high risk groups and for private doctors to issue a notice to any patients who are suspected to be infected with the virus.
No data due but after market Friday
GDP growth rate Q3 Final +2.8% QoQ vs -0.1% Q2 (F/cast was +3%)
GDP growth rate Q3 Final -3.5% YoY vs -9% Q2 (F/cast was -3.4%)
The Government released today the Third Quarter Economic Report 2020, together with the revised figures on Gross Domestic Product (GDP) for the third quarter of 2020.
Considering the actual outturn in the first three quarters of the year and the cushioning effects of the Government's massive relief measures, the real GDP growth forecast for 2020 as a whole is revised from -6% to -8% as announced in the August round of review to -6.1% in the current round. Also taking into account the actual outturn in the first three quarters of the year, the forecast rates of underlying and headline inflation for 2020 as a whole are revised downwards to 1.3% and 0.3% respectively, from 1.8% and 0.8% in the August round of review.
HANG SENG INDEX Review changes take effect Monday 7 December.
Index size will increase to 52 from 50Adds Budweiser Brewing (1876), Anta (2020) and Meituan (3690)Removes Swire Pac (19)
Changes also to the other indexes.
SHORT SELLING Friday vs 15.8% Thursday
Top Shorts Country Garden (2007) 32%, CNOOC (883) 32%, Ping An (2318) 30%, BankComm (3328) 28%, BoC (3988) 27%, Hang Seng Bank (11) 27%, HSBC (5) 27%, CCB (939) 26%, ICBC (1398) 24%, Wharf REIC (1997) 24%.
Hong Kong Ferry (0050) and Empire Group sold 30 out of 123 units at Starfront Royale in Tuen Mun as of 1 pm on Sunday.
New World Development (0017) collected HK$3.9 billion after selling all 343 units on offer at The Pavilia Farm phase two on top of Tai Wai Station. NWD has already collected around HK$15 billion after selling around 1,440 units in the first two phases of the project. The developer released 396 units in the third price list of The Pavilia Farm phase two at an average HK$20,988 per sq ft after discounts, 5.8% higher than the first price list.
Goldin Financial (0530) has terminated a placing agreement that would have raised around HK$1.38 billion due to the current market conditions, the debt-laden local developer said last night. Goldin said it will consider engaging in further fundraising activities and will keep the market informed.
Hong Kong's stock market could find itself relegated to the status of an emerging market if Chinese interference in the territory intensifies, the former CEO of the FTSE Russell global index provider warned in an interview with Sky News. If the regulation of Hong Kong and it s capital controls are being determined by Beijing then the market will be treated the same as China’s. Interestingly it comes as HK’s Financial Secretary said yesterday that after coordination and research with MPFA, the conditions for including Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) into the MPFA's List of Approved Stock Exchanges were mature, and the related revision has been gazetted Firday with immediate effect. By allowing MPF funds to invest in A shares
it seems that China is hoping to ‘piggy back’ on Hong Kong’s status but it could backfire with Hong Kong be delegated to China’s. -VE
JD-SW (09618.HK) announced that sales turnover surmounted RMB271.5 billion to a new high during 11.11 Global Love Season (1-11 November 2020). During the period, sales turnover of household cleansing and paper products from Hong Kong jumped over eight times.
Centa-City Leading Index (CCL) last posted at 176.69, down 0.54% weekly. Centaline Property, pinpointed that all of the four major CCL indices advanced last week but fell this week. Blunted by negatives, such as layoffs of big companies and unsuccessful tenders of Tung Chung Commercial Land, local housing prices waned for the week, showing the upswing was briefly trapped. That said, prices have shun the trough obviously since the Mid-Autumn Festival, and elevated. In four weeks' time,
CCL grossed increment +0.49%, CCL Mass grossed increment +0.65% and CCL (small-and-medium units) grossed increment of 0.61%
DOW +1.37%, NDX +1.02%, S&P +1.36%, Russel 2K +2.08% Markets opened higher on DOW and S&P tracked higher throughout the day. Nasdaq saw some initial weakness with Facebook, Apple and Amazon seeing choppy trading all day, but the index trended higher through the day. The general trend of looking to rotate into re-opening and value names continues with some taking the opportunity to accumulate FAANG names too. Disney +2.1% off initial high and Cisco +7% after better than expected results Chicago asking residents to stay at home for Thanksgiving (Nov 26) and cancel large party plans. NY said new curfew would take effect Friday on restaurants, bars and gyms.
Banks JPMorgan Chase +0.6%, Citigroup +0.8% and Wells Fargo +1.1%, AMEX +3.5%
Work from home names: Facebook +0.7%, Apple flat, Amazon +0.6%, Netflix -0.8%, Zoom Video -5.9%, Alphabet +1.7% and Microsoft +0.5%,
Nvidia -1.2%, Micron +3%, AMD -0.5%, Skyworks +0.1%
Re-opening stocks Boeing +5.9%, Caterpillar +1.5%, Simon Property +8%, Kohl’s +7%, Nordstrom +10.3%, Gap +1.6%, United Airlines +5.8%, Carnival +7.2%, Wynn Resorts +6.4%, Chevron +2.9%, Exxon Mobil +2.4%,
Lock down names Campbell Soup +1.4% General Mills +0.8%, JM Smucker +1%
PPI Oct +0.3% MoM vs +0.4% Sept (F/cast was +0.2%)
PPI Oct +0.5% YoY vs +0.4% Sept (F/cast was +0.4%)
Core PPI Oct +0.1% MoM vs +0.4% Sept (F/cast was +0.2%)
Core PPI Oct +1.1% YoY vs +1.2% Sept (F/cast was +1.2%)
Michigan Prelim Data
Current Conditions Nov 85.8 vs 85.9 Oct (F/cast was 82.9)
Inflation Expectations Nov 2.8% vs 2.6% Oct (F/cast was 2.4%)
5 year Inflation Expectations Nov 2.6% vs 2.4% Oct (F/cast was 2.3%)
Consumer Sentiment Nov 77 vs 81.8 Oct (F/cast was 82)
Consumer Expectations Nov 71.3 vs 79.2 Oct (F/cast was 88.4)
EIA Gas Stock Report 6 Nov 8 Bcf vs -36Bcf (Consensus was -3Bcf)
Baker Hughes Total Oil Rig Report 312 vs 300 prior
USD was weaker vs Yen & Euro. Bitcoin -0.4% @ 16,180.70, VIX -8.9% @ 23.10, US T10 @ 0.898%
OIL Brent -1.7%, WTI -2.43% Gold +0.8%, Silver +1.9%, Copper +1.2%
AHEAD NY Empire State Manufacturing Index.
Fed speakers Clarida and Daly
Earnings Vodafone, CasperSleep, Aecom, Tyson Foods, Palo Alto Networks, Baidu, SmileDirectClub
DAX +0.18%, CAC +0.33%, FTSE -0.36% Markets opened mixed FTSE lower, DAX and CAC lower but initially rose. FTSE resistance at Thursday’s closing level and traded sideways but sold down into the close. DAQ and CAC rose into the green then with support at Thursday’s closing level and rallied into the close. Covid concerns overhanging the market despite the +VE covid vaccine news from Monday there are worries about how long before it is widely available and the impact on the economic recovery in the meantime.
Delivery Hero -6.5% on news that the Korea Fair Trade Commission had proposed the German food delivery group divest its Yogiyo brand as a condition of the regulator’s approval of Delivery’s joint venture with Woowa Brothers
Naturgy +7.7% after an announcement that the Spanish utility group had struck a deal with China’s State Grid International Development to sell its 96 per cent holding in Chilean group Compañía General de Electricidad for €2.57bn.
GDP Growth Rate 2nd Est Q3 +12.6% QoQ vs -11.8% Q2 (F/cast was +12.7%)
GDP Growth Rate 2nd Est Q3 -4.4% YoY vs -14.8% Q2 (F/cast was -4.3%)
Balance of Trade Sept Euro 24.8b vs 13.9b Aug revised (F/cast was 23.3b)
Employment Change Prel Q3 +0.9% QoQ vs -2.9% Q2 (F/cast was +1.5%)
Wholesale Prices Oct -1.9% YoY vs -1.8% Sept
Wholesale Prices Oct -0.2% MoM vs 0% Sept
Inflation Rate Oct 0% YoY vs 0% Sept (F/cast was 0%)
Inflation Rate Oct 0% MoM vs -0.5% Sept (F/cast was -0.1%)
UK No data
EUROZONE No data speeches by Guindos & Mersch
GERMANY Bundesbank monthly report
FRANCE No data due
UK No data due