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HSI Market closed for Budda’s birthday re-opens Thursday
Markets opened lower and trended lower before a bounce as UK inflation rose in line with expectations but PPI was slightly higher. Eurozone core inflation was slightly higher than F/cast.
European earnings came from E.On, Deutsche Boerse, Uniper, Experian and Premier Foods.
John Laing strong after private equity firm KKR announced that it had agreed to buy the company for £2 billion ($2.84 billion).
Argenx fell more than 6% in morning trading, while Ferguson climbed higher after reporting a 65.4% leap in quarterly profits.
New Car Registrations Apr +218.6% YoY vs +87.3% Mar (F/cast was +200%)
ECB Financial Stability Review out
Core Inflation Rate Apr +0.7% YoY vs +0.9% Mar (F/cast was +0.8%)
Inflation Rate Apr +1.6% YoY vs +1.3% Mar (F/cast was +1.6%)
Inflation Rate Apr +0.6% MoM vs +0.9% Mar (F/cast was +0.6%)
Inflation Rate Apr +1.5% YoY vs +0.7% Mar (F/cast was +1.4%)
Inflation Rate Apr +0.6% MoM vs +0.3% Mar (F/cast was +0.6%)
Core Inflation Rate Apr +1.3% YoY vs +1.1% Mar (F/cast was +1.3%)
Core Inflation Rate Apr +0.3% MoM vs +0.4% Mar (F/cast was +0.3%)
PPI Core Output Apr +2.5% YoY vs +2% Mar revised (F/cast was +1.9%)
PPI Core Output Apr +0.5% MoM vs +0.7% Mar revised (F/cast was +0.3%)
Retail Price Index Apr +2.9% YoY vs +1.5% Mar (F/cast was +2.1%)
Retail Price Index Apr +1.4% MoM vs +0.3% Mar (F/cast was +0.6%)
PPI Output Apr +3.9% YoY vs +2.3% Mar revised (F/cast was +3.5%)
PPI Output Apr +0.4% Mom vs +0.8% Mar revised (F/cast was +0.4%)
PPI Input Apr +9.9% YoY vs +6.4% Mar revised (consensus was +9%)
PPI Input Apr +1.2% MoM vs +1.9% Mar revised (consensus was +1.1%)
Opened Dow -40pts S&P +0.2% and NDX+0.1% then eased but now falling Dow -220pts, NDX -1.2% and S&P -0.8%. Crytpo weak on the PBOC bans cryptos for payment and bars financial companies from providing associated services.
Caution ahead of FOMC minutes and more retail earnings. Earnings season wrapping up means more focus on data; especially inflation related which could put more pressure on large tech.
Pre market Target rallied after sales rallied 23% in the last quarter, follows good numbers from retailers Tuesday.
AHEAD MBA Mortgage Applications and 30 yr Mortgage Rate, EIA Oil Report, FOMC minutes.
Earnings due from Lowe’s, JD.Com, Cisco, Shoe Carnival, TJX, Eagle Materials, Analog Devices, L Brands
CHINA CSI 300 closed -15pts (-0.3%) 5,172
CSI 300 opened and tested down to 5,150 in early trades before rebounding to test yesterday’s closing level but failed to hold and trended lower into lunch @ 5,182. PM dipped to test 5,170 but rebounded, then dipped to test 5,160 before working back to close just above 5,170.
Telco’s +VE as China Mobile aims to sell A shares. Energy weak as data shows Coal Production on the rise as NDRC calls for market approaches to reduce pollution.
Shipping in focus as China State Shipbuilding Corp. Ltd. (CSSC) and China Shipbuilding Industry Corp. (CSIC) plan to combine and form China Shipping Group under a joint restructuring plan approved by the State Council, according to statements issued Tuesday.
China Huarong Asset Management is getting a new president, filling a nearly six-month vacancy as the state-owned company’s bonds come under pressure amid closer scrutiny by investors.
Liang Qiang, a former deputy Communist Party chief and executive director at China Great Wall Asset Management Co. Ltd., was named Huarong’s next president and will start his duties soon.
Overall sentiment weak as EU looks to cancel Investment deal, PBOC says Bitcoin can’t be used for payments and banned financial institutions from providing services related to crypto. Sentiment also hurt as China accused the US of threatening the peace and stability as a guided missile destroyer sailed through the Taiwan Straits.
Shanghai Composite -18pts (-0.5%) @ 3,511
Shenzhen Composite +34pts (+0.2%) @ 14,485
ChiNext Index +17pts (+0.5%) @ 3,105
China on Wednesday reported 14 new mainland coronavirus disease infections on May 18, vs 22 Monday.
The National Health Commission, in a statement, said all of the new infections were imported, originating from overseas. The number of new non symptomatic infections, which China does not classify as confirmed fell to 13 from 20 a day earlier.
Thursday Prime Loan Rate 1 and 5 year, no change expected.
HONG KONG DATA
The Centre for Health Protection (CHP) reported 1 imported new covid cases (vs 1 Tuesday)
Short Selling Tuesday 15.5% vs 16.5% Monday
Top Shorts Shenzhou Int (2313) 36%, Bud Apac(1876) 35%, Bank Comm (3328) 35%, ICBC (1398) 32%, Bank of China (3988) 31%, Country Garden (2007) 30%, Sands China (1928) 26%, Hang Seng Bank (11) 25%, Sinopec (386) 25%.
Secretary for Security John Lee Ka-chui warned fugitives who fled overseas that they may become “disposable” when they have no political value, and authorities will pursue them for the rest of their lives he said in an interview. When asked about how the government will make use of that HK$8 million provided in the budget for national security , Lee said “These are essential information that are on par with intelligence during war,”
News since market closed Tuesday
Liu Guangyuan has been named the commissioner of the Ministry of Foreign Affairs in Hong Kong, replacing Xie Feng, state media Xinhua announced Wednesday. He previously served in Poland and before that was director general of the department of external security affairs between 2014 -2018
NCI (01336.HK)’s shareholder Swiss ReDirect Investments placed about 77.9 million shares of the company at a price of $28.8-29.1 per share, a discount of about 4.9-5.9% to today's closing price of $30.6, according to relevant document. Morgan Stanley is one of the placing agents.
BIDU-SW 1Q21 Non-GAAP NP Adds 39.4% YoY to RMB4.297B
The Financial Services Development Council (FSDC) published the market study report on REITs. Although Hong Kong is one of the earlier markets to have rolled out its REITs regime in 2003, it is still falling behind other markets so far. FSDC proposed the authorities to refine the REITs value proposition and regulatory system, hence attracting REITs from across the globe to list in Hong Kong. Equally, it proposed to include REITs as eligible securities under the Stock Connect schemes, thereby allowing two-way REITs investment.
NTES-S (09999.HK) announced its financial results for the first quarter ended March 31, 2021. Net income was RMB4.439 billion, up 25% yearly. Diluted net income per share equaled RMB1.31. A dividend of US$0.06 per share (US$0.3 per ADS) was declared.
CHINA TAIPING (00966.HK) announced that the gross premium income of Taiping Life Insurance, Taiping General Insurance and Taiping Pension for the first four months of 2021 aggregated RMB80.751 billion, up 3.53% yearly.
The Chinese government is in initial stages of rectifying CHINA HUARONG (02799.HK), who has more than US$40 billion of debt inside and outside China, The New York Times citing two insiders. In other words, both domestic and foreign bondholders could be subject to significant investment losses.
The Hong Kong Tourism Board (HKTB) announced that the provisional visitor arrivals for April were 5,706, a 38.3% increase on the same month in 2020.
ZIJIN MINIG (02899.HK)'s gold mine in Buritica, Colombia is exposed to output loss due to illegal mining, said Reuters. Losses amounted to 20% of the total production, a local executive told the press.
ASX 200 opened lower as indicated by the futures, found initial support around 6,950 level saw a slight bounce as the data was released but then drifted lower; and clsoed -134pts (-1.9%) @ 6,932.
All sectors weak declines led by Materials (Miners warned of potential labour shortages and concerns China looking for alternative sources ) and Energy (on news Iranian oil may be allowed back into the market). Banks were also weak.
EML Payments -46% after the Central Bank of Ireland flagged additional regulation for a subsidiary previously monitored by British authorities. Meanwhile, Appen is up 13.7%
Consumer Confidence Index May 113.1 vs 118.8 Apr (F/cast was 117)
Inflation Expectations May -4.8% vs +6.2% Apr (F/cast was -1.5%)
Lending Index Q1 +0.6% QoQ vs +0.6% Q4 (F/cast was +0.7%)
Wage Price Index Q1 +1.5% YoY vs -1.3% Q4 (F/cast was +2.2%)
Sentiment hurt by Okinawa asked to be put into emergency state.
Nikkei opened lower at 28,031 and tested 27,840 level before bouncing back to 28,000 and then working higher to test 28,200 but failed to hold and eased back to 28,000 at lunch. PM initially traded flat but dipped to 27,860 but worked back and ticked higher to close -362pts (-1.3%) @ 28,005
Topix traded in a similar pattern open 1,888, tested 1,884, worked up to 1,903 and closed -13pts (-0.7%) @ 1,895
Data out at lunch
Industrial Production Mar +1.7% MoM vs -1.3% Feb (F/cast is +2.2%)
Industrial Production Mar +3.4% YoY vs -2% Feb (F/cast is +4%)
Capacity Utilisation Mar +5.6% MoM vs -2.8% Feb (F/cast was +3%)
Tomorrow we get Trade Data and Machinery Orders
Markets closed Budda’s Birthday re-open Thursday
News report 400k AstraZenica vaccines to arrive this afternoon.
Taiex opened lower at 16,112 but initial rallied to 16,225 before reversing and trended lower to test 16,010 mid morning then worked back to 16,240 around noon and then trended lower to close -13pts (-0.1%) @ 16,133
Old economy names in focus lead by steel (as iron ore prices rallied in China), shipping (Bulk especially), airlines and textiles. Tech still seeing selling pressure.
Turnover was moderate at NT$438.31 billion (US$15.71 billion) with foreigners turning net sellers.
After market CECC raised the covid alert to level 3 nationwide after recording over 100 locally transmitted cases for a fifth day.