Nov 9 ASIAN Macro Initial Thoughts Asian Futures rise as US futures spike higher
Markets likely to see a positive initial reaction to the Biden Harris victory even though Trump has yet to concede defeat and is likely to mount a number of legal battles and could use executive orders, appointments that don’t require Senate confirmation and could send ministers to Taiwan to annoy China. Environmental names seen as being beneficiaries with fossil fuel makes expected to come under pressure. Short term investors will be watching for other policies measures mindful that the Republicans still control the senate but that is subject to a run off vote in Georgia and the seats in North Carolina and Alaska still undecided.
ASIAN Futures Nikkei Futures in Chicago +100pts. HK ADR’s +135pts pre the election results and Australia has opened higher.
US Futures Opened higher Dow +152pts and rose to +319pts in early trades with the S&P and NDX higher too by around 1%. Obviously some covering of short positions but the general mood likely to remain +VE.
Transcripts of the victory speeches from Biden and Harris https://www.japantimes.co.jp/news/2020/11/08/world/politics-diplomacy-world/transcripts-speeches-joe-biden-kamala-harris/
Covid cases are rising again and could trigger more social distancing measures in Europe and the US. Even Japan has warned that cases could rise with the onset of winter.
Macro Data ahead
Japan Tankan Index, Current Account, Bank Lending, Eco Watchers, Machine Tool and Machinery orders and PPI.
S Korea Unemployment, Export and Import Prices.
Taiwan Balance of Trade, Imports, Exports.
China Inflation and PPI we may also get October New Yuan Loans, Loan Growth, Total Social Financing, Vehicle Sales, FDI, and M2 money supply.
Hong Kong GDP Growth rate.
US data includes NFIB Small Business Survey, CPI, PPI and Consumer Sentiment along with a number of Fed speakers. Earnings season is coming to an end but some key results include McDonald’s, Softbank, Simon Property Group, Lyft, Adidas, Siemens, Walt Disney, Applied Materials and Cisco. Also remember Veteran’s Day Wednesday when Bond markets are closed.
Europe again earnings season is running down. For the Eurozone there are a number fo ECB speakers and we also get ZEW sentiment, Economic bulletin, Industrial production, GDP growth rate, Employment data
From Germany; Trade data, inflation data, wholesale prices and ZEW sentiment data.
UK employment data, GDP growth, Business Investment, Industrial and Manufacturing production data.
JAPAN Expect Nikkei Futures Chicago 24,425 (Osaka 24,360) vs 24,325 last close (and 29 year high). Yen closed Friday 103.33. Softbank earnings due today will be closely watched.
Data due Nov Tankan Index (Oct was -26 F/cast is -28), BoJ Summary of Opinions, Foreign Exchange Reserves. Later Leading Economic Indicators and Coincident Index.
Tokyo reported 189 cases new covid cases Sunday (vs 294 Saturday) with the nationwide hitting 944 cases. Hokkaido reported 153 covid cases and the local government order entertainment venues to close between o10pm and 5:30am.
The government warned of increased cases as temperatures fall and people spend more time in poorly ventilated buildings -VE
BoJ says it will watch in the FX markets after Biden’s victory and is concerned that any rise in the Yen’s value will be -VE to the Japanese economy.
Japan and China agree the resumption of business travel which could start from mid November +VE
Japanese national security adviser Shigeru Kitamura agreed with his U.S. and South Korean counterparts on the importance of trilateral cooperation in dealing with North Korea in a virtual conference on Friday
Toyota Motor and Honda Motor on Friday more than doubled their operating profit forecasts, helped by recovering demand in China as it rebounds from the coronavirus pandemic. +VE
Sharp Corp reported on Friday Q2 operating profit -17.1% as the coronavirus pandemic continued to hurt sales of automotive displays and office printers. -VE
Takeda Pharmaceutical Co is looking at making vaccines a core business after completing asset sales to lower debt following its takeover of Shire Plc, Chief Executive Christophe Weber said. +VE
The number of Japanese companies introducing early retirement programs in the first 10 months of the year was more than double the level of the whole of the previous year amid the coronavirus pandemic, according to a survey by a research firm. 72 listed companies to a total of around 14,000 employees as of Oct 29, topping 35 companies and about 11,350 employees in the previous year, the credit research agency said. The figures compared with 85 companies and around 12,200 employees in 2010. -VE
A Nagoya-based IT company developing autonomous driving technology and four other companies have begun demonstrating a self-driving taxi in Shinjuku Ward, Tokyo, on Thursday. The test is being conducted with the use of the 5G communication standard, which is capable of handling massive data throughput at ultra-fast speeds with near-zero latency — a combination seen as a necessity in making self-driving vehicles with remote monitoring on public roads feasible.
ANA flew its first flight to Hawaii on Friday evening as travel restrictions ease. Slight +VE
Japan Post announced plans to sell the freight division of its Toll Holdings and focus on International logistics in Asia.
SOUTH KOREA Expect markets to open higher on hopes that the Biden victory will be good for Korean exporters with the potential to roll back some recent tariffs.
No data due
South Korea performed 5,631 tests on Saturday and found 143 more cases covid 19 according to the Korea Disease Control and Prevention Agency’s updates (vs 89 for the previous 24 hrs) As of Saturday, new social distancing guidelines have been put in place to minimize harm to the economy.
Korea Power Corp. on Sunday released its annual sustainability report, which highlighted the state-run utility’s plan to reduce or suspend its coal-fired power plant projects at home and abroad in the future. +VE
Budget air carriers tipped to post weak Q3 earnings amid pandemic following the losses at the larger airlines; Jeju Air, T’way Air and Easter Jet due to report.
Exporters are expected to suffer from sky-high freight rates throughout next year, as global trade is set to rise down the road amid the pandemic, industry watchers said Sunday. The Shanghai Containerized Freight Index, a barometer of global freight rates, came to a new high of 1,664.56 on Friday, according to industry sources. The previous record was 1,583.18 posted in July 2010. Slight +VE for the shippers and airlines
Celltrion Inc said on Friday patients treated with its experimental COVID-19 antibody drug in a small-size early-stage trial showed at least a 44% improvement in recovery time. +VE
Lotte Shopping Co. said Friday it swung to a net profit in Q3 on robust performance in its non-department store business amid the new coronavirus outbreak. Net income was 3 billion won ($2.7 million) in the July-September period, a turnaround from a net loss of 23.3 billion won a year earlier, the key unit of retail giant Lotte Group said in a regulatory filing. +VE
Kumho Asiana Group and Asiana Airlines’ offices were raided by prosecution officers to secure documents for its probe into alleged unfair internal transactions. -VE
Renault Samsung Motors said Friday it launched a revamped model of its bestselling sports utility vehicle QM6. +VE
TAIWAN Expect market to open higher on the US election results investors will be watching to see signs of continued or increased support for Taiwan even if the US is less hawkish on China.
Data due after market Monday Balance of Trade, Exports, Imports.
US trade pact talks still likely: The deputy minister of economic affairs said more people in the US are urging US firms to invest in Taiwan and US officials from various parties support a deal +VE
The central bank has again warned of speculation by foreign institutional investors in the local foreign-exchange market, as it would further raise the value of the New Taiwan dollar against the US dollar. In the past few sessions, foreign institutional investors have seemed keen to buy reverse exchange-traded funds (ETFs), which bet on the local equity market declining, as a way to reduce possible losses if the spot equity market moves lower, the central bank said.
The four major subsidiaries of Formosa Plastics Group on Friday posted combined revenue of NT$93.61 billion (US$3.24 billion) for last month, +3.3% MoM, but -19.6% YoY.
FPCC’s revenue fell MoM due to maintenance and a drop in production, while the other three units all saw revenues increase. The company attributed the rise to increased demand in China after long national holidays, higher overseas sales orders, reduced exports to Asia due to Hurricane Laura in the US and increased demand for solar encapsulation films, which boosted prices of polyvinyl chloride, ethylene-vinyl acetate, acrylonitrile and acrylic esters by 9 percent to 13 percent compared with the previous month. Slight +VE
Acer was the top seller of ultra-portable laptops in Taiwan in the first nine months of this year, with a market share of nearly 30%, a global survey found. The company beat out Apple Inc by about 2 percentage points for laptops that are thinner than 18mm, according to a recent survey by a global research firm that asked not to be named. Acer on Tuesday unveiled several new products in Taiwan, including its 14-inch Swift 5 ultra-thin laptop lineup and a 1.2kg Porsche Design Acer Book RS laptop.
Taiwan Mobile Friday said it has seen a 25% jump in the monthly fee for subscribers upgrading to 5G services since their debut in July, boding well for a further lift in its average revenue per user (ARPU). +VE
HTC Corp Friday reported revenue of NT$430 million (US$14.89 million) for last month, -47% MoM and -34% YoY. Revenue in the first 10 months of the year -47.7 % YoY. HTC has been moving into virtual reality, forming a strategic partnership with Valve Corp in 2015 in hopes of reviving its fortunes but that has yet to happen and it continues to rely on it mobile phones business.
Rakuten International Commercial Bank, a Web-only bank that is expected to begin operations by the end of this year, aims to sign up 500,000 digital savings accounts next year, but it would not launch a price war to attain its goal, chairman Chien Ming-ren said on Thursday.
CPC Corp, Taiwan and Formosa Petrochemical Corp Sunday announced that they would increase their gasoline and diesel prices, effective today. CPC said that it would raise gasoline prices by NT$0.1 per liter to NT$21.6, NT$23.1 and NT$25.1 for 92, 95 and 98-octane unleaded respectively, while the cost of premium diesel would increase by NT$0.1 per liter to NT$19.
CHINA Expect market to open higher on good trade data at the weekend but investors will be cautious over what to expect from Biden who at times has been even tougher on China than Trump was and it likely to build a united front against China. Tariffs and sanctions are unlikely to be changed although China hopes to re negotiate the trade deal.
Data out Saturday
Balance of Trade Oct 58.44b vs 37b Sept (F/cast was 42b)
Exports Oct +11.4% YoY vs +9.9% Sept (F/cast was 9%)
Imports Oct +4.7% YoY vs 13.2% Sept (F/cast was 10.5%)
Foreign Exchange Reserves Oct 3.12bn vs 3.143tn Sept (F/cast was 3.14t)
Medical equipment still a major driver for exports. But the recent resurgence of covid in the US and Europe mean that exporters may see weakness ahead. Imports down as companies finished buying ahead of US sanctions.
With a resurgence of covid cases in Europe and the US exports outside of medical and electronics may see a downturn.
China GDP; President Xi Jinping says it is ‘completely possible’ to double size of economy by 2035, despite foreign hostility. China can become a high-income country by 2025 and double size of economy by 2035 he said. Additional the country can rely on its domestic market for growth as the world grows less friendly. Xi said he did not include numerical targets in the plan so Chinese officials would focus on “quality and efficiency”, instead of speed. According to a speech published in the Xinhua News. Many think that is possible as it would only require a 5% pa growth rate; which is about what China currently does.
China’s northern port city of Tianjin said on Sunday it plans to carry out tests on some cold storage facilities and their staff after a confirmed coronavirus case involving a worker who had handled frozen pork imported from Germany.
Some Chinese academics are warning that if Trump loses the Presidential election he may seek to further sabotage US/China relations in his last months in power. -VE for sentiment
China tells Australia to ‘reflect on its own deeds’ as the new import ban comes into effect. Beijing says its moves are justified and blames Canberra for the deterioration in relations. -VE
General Motors Co plans to sell full-size sport-utility vehicle (SUV) models in China for the first time, and will import a range of models to beef up its product lineup into the world's biggest car market, its China chief told Reuters.
Huawei Technologies has appealed against Sweden’s decision to exclude it from 5G networks, the Swedish telecom regulator PTS said Friday.
China's smartphone shipment -14.3% YoY to 84.8 million units in the third quarter, reported IDC. In terms of brand, XIAOMI-W (01810.HK)'s shipment +13.4% to 11 million units.
HONG KONG ADR’s +135pts at 25,847 but HSBC, CNOOC, CCB and CKHutch ADR’s closed in the red. However with Biden now president elect I would expect the market to open higher on optimism of a new agenda.
No data due
Government announced 10 new covid cases Sunday vs 6 on Saturday; with Tai Po residents warned about hidden transmission chains in the district.
IPO NEW ORIENTAL-S (09901.HK), to be listed Monday, closed at $1,380 in gray market, up $190 or 16% against the listing price of $1,190, on volume of 86,400 shares, PhillipMart data showed. Excluding the handling fees, a book gain of $1,900 was reported per board lot of 10 shares.
REMEGEN-B (09995.HK), whose shares will be listed Monday, closed at $59.9 in gray market, up $7.8 or 15% against the listing price of $52.1, on volume of 6.42 million shares and turnover of $373 million, PhillipMart data showed. Excluding the handling fees, a book gain of $3,900 was reported per board lot of 500 shares.
SHORT SELLING Friday 14.4% vs 17.4% Thursday
Top Shorts Ping An (2318) 43%, BoC (3988) 33%, Petrochina (857) 33%, CCB (939) 33%, Wharf REIC (1997) 32%, AAC Tech (2018) 30%, Country Garden (2007) 28%, BOC HK (2388) 27%, Hang Seng Bank (11) 27%, China Res Land (1109) 27%, Mengniu Dairy 26%, Galaxy Ent (27) 24%
Centaline Property Agency recorded 15 secondary transactions at 10 blue-chip housing estates over the past weekend, +87.5% WoW +VE
Hong Kong Ferry (0050) and Empire Group collected HK$413 million after selling 88 out of 123 units on offer at Starfront Royale in Tuen Mun as of 7pm yesterday. +VE
New World Development (0017) sold all 337 units on offer in phase two of The Pavilia Farm in Tai Wai on Saturday. The developer also released 343 units in the second price list in phase two at an average HK$20,399 per sq ft after discounts, 2.8 percent higher than the first price list. +VE
China Evergrande (3333) has terminated a restructuring plan with ShenZhen Special Economic Zone Real Estate & Properties, effectively ending the debt-laden developer's four-year bid to seek a backdoor listing in Shenzhen. -VE
DEXIN CHINA (02019.HK) announced that October contracted sales amounted to RMB3.26 billion, -16.6% yearly.
KAISA GROUP (01638.HK) October contracted sales amounted to RMB11.79 billion, +47.9% yearly.
HK Government says it has opened 29,000 time-limited jobs as part of the government's anti-epidemic fund aimed to create 30,000 temporary positions across different sectors within two years. A spokesperson of the Bureau said around 10,000 people have been recruited as of late-October.
CHINA UNICOM (00762.HK) announced that CUCL, a wholly-owned subsidiary of the Company, has agreed to acquire 51% equity interest in FAW Communication Science and Technology from Unicom Group, the parent company of the Company, for RMB131 million.
PW MEDTECH (01358.HK) has resolved to declare special DPS of US$0.2034 (roughly HK$1.5764), subject to approval at the EGM.
GEELY AUTO (00175.HK) total sales volume for October 2020 was 140,000 units, + 8% YoY and +11% MoM
Spot USD/CNY closed at 6.6215, up 185 bps and once hitting a 28-month high. As at 16:53, USD/CNY was 171 bps in the night session. USD/CNH stood at 6.6127, -18 bps.
Centa-City Leading Index (CCL) last posted at 177.66, up 0.46% weekly.
CCL was significantly dented by choppy luxury home prices, seeing both rally and slide over the past four weeks, said Centaline Property. Particularly, the index was hovering around 176 to 177.
DOW -0.24%, NDX +0.04%, S&P -0.03%, Russel 2K -0.96% markets dipped on the open but then recovered and traded around flat for the rest of the day. Energy and Financial were weak.
Biden getting closer to victory but the counting is ongoing and control of the Senate still unclear.
Employment data was good with unemployment falling to 7.9%
Work from home names: Facebook -0.4%, Amazon -0.3%, Apple -0.1%, Alphabet -0.2%, Netflix +0.2%, Disney +0.4%, Zoom +0.7%.
Nvidia +2.8%, Micron +1.1%, AMD +3.5%, Skyworks -1.6%
Re-opening stocks Boeing +0.4%, Caterpillar -1.1%, Simon Property -2.5%, Kohls -0.6%, Nordstrom +1.3%, Gap +0.6%, United Airlines -1.9%, Carnival -2.5%, Wynn Resorts -0.1%
Lock down names Campbell Soup -0.2%, General Mills +0.8%, JM Smucker +0.7%
Non Farm Payrolls Oct 638k vs 672k Sept revised (F/cast was 510k)
Unemployment Rate Oct 6.9% vs 7.9% Sept (F/cast was 7.7%)
Ave Weekly Hours Oct 34.8 vs 34.8 Sept revised (F/cast was 34.6)
Ave Hourly Earnings Oct 4.5% YoY vs 4.6% Sept revised (F/cast was 4.6)
Ave Hourly Earnings Oct 0.1% MoM vs 0 Sept revised (F/cast was +0.1%)
Participation Rate Oct 61.7% vs 61.4% Sept (F/cast was 61.5%)
Wholesale Inventories Sept +0.4% MoM vs +0.5% Aug revised (F/cast was -0.1%)
Baker Hughes Total Oil Rig Count 300 vs 296 prior
US Consumer Credit Change Sept vs -7.22b Aug (F/cast was +9.4b)
USD was weaker vs Yen & Euro. Bitcoin -0.8% @ 15,564.79, VIX -9.9% @24.86, US T10 %
OIL Brent -3.7%, WTI -4.3% concerns on demand as covid cases surge.
Gold +0.24%, Silver +2.04%, Copper +1.27%
AHEAD Consumer Inflation Expectation.
DAX -0.7%, CAC -0.46%, FTSE +0.07% open lower rallied but then sold down again on the prospect that the US results are going to take longer as Trump reverts to legal action. Data was mixed and there was caution ahead of the US payrolls number. Late morning the markets bounced into lunch with the FTSE back into the green but DAX and CAC remained in the red. They all traded sideways before the DAX and CAC rallying into the close and the FTSE selling down. Earnings in focus along with covid as UK endures its second day of lockdown and Italy and Greece announce similar measures. Resources firm but Autos weak . Insurers mixed Alliance +0.7% on good earnings but Aveva Group -3% on new of a rights issue. Travel & Leisure falling. Richmond +8% on good earnings. AMS +0.4% after good results but opened lower and worked better
GERMANY Industrial Production Sept +1.6% vs +0.5% Aug revised (F/cast was +2.5%)
FRANCE Balance of Trade Sept Euro -5.8b vs -7.7 Aug (F/cast was -6.7b)
Current Account Sept Euro -5.7bn vs -4.7bn Aug (F/cast was -3.6bn)
Private Non Farm Payrolls Q3 +1.8% QoQ vs -0.9% Q2 revised (F/cast was +0.4%)
UK Halifax House Price Index Oct +0.3% MoM vs +1.5% Sept (F/cast was +0.8%)
Halifax House Price Index Oct +7.5% YoY vs +7.3% Sept (F/cast was +8.3%)
EUROZONE No data due
GERMANY Balance of Trade, Imports, Exports, Current Account
FRANCE No data due
UK No data due