ASIAN MACRO INITIAL THOUGHTS 15 June Dow futures open -300pts
Covid-19 Globally over 7.8m cases, 431k deaths
Larry Kudlow says there is not second wave of covid-19 in the US, although a number of US states have reported increased hospitalisations
IMF expects to revise down its forecasts in its June 24 report
US Futures opened -320pts lower but have eased to -300pts with the S&P and NDX also lower but sentiment is weak with more covid-19 cases being reported -VE
DOW +1.9%, NDX +1%, S&P +1.3%, Russel 2K +2.3% but off initial highs. Markets opened at the highs and sold down, small bounce, sold down, small rally into the close. Airlines rallied as American Airlines +16.4% said it expected demand to return and stem its cash burn; latest estimate of $40m per day, $10m less than previous estimate. United +19%, Delta +11.9%, SouthWest +9.3%, Boeing 11.5%, Carnival +14.6%, Royal Caribbean +12.2%
PVH -5.9% owns Calvin Klein and Tommy Hilfiger Q1 loss greater than expected and guidance disappointed saying revenue to decline because some stores were rejecting shipments due to high inventories
Tesla -3.9% on broker downgrades
Import Prices May -6% YoY vs -6.8% Apr (F/cast was -6.5%) [May -1% MoM vs -2.6% Apr (F/cast was +0.5%)]
Export Prices May -6% YoY vs -6.8% Apr (revised from -7%) (F/cast was -6.4%) [May +0.5% MoM vs -3.3% Apr (F/cast was +0.3%)]
University of Michigan Prelim Consumer Report
Expectations Jun 73.1 vs 65.9 May (F/cast was 71)
Sentiment Jun 78.9 vs 72.3 May (F/cast was 75.9)
Current Conditions Jun 87.8 vs 82.3 May (F/cast was 83)
Inflation Expectations Jun 3% vs 3.2% May (F/cast was 2.9%)
5 year Inflation Expectations Jun 2.6% vs 2.7% May (F/cast was 2.5%)
Baker Hughes Total Oil Rig Count 279 vs 284 prior
USD was stronger vs Yen & Euro. Bitcoin -0.5% @ 9395.96, VIX -11.5% @ 36,
US T10 0.71% small rebound after Thursday’s market selloff
OIL Brent -0.4%, WTI -0.2% but moved higher in after market. Second wave of covid-19 raises concerns that demand could fall again.
Gold +0.4%, Silver -1.1%, Copper +1.1% but gold turned weaker after hours
AHEAD NY Empire State Manufacturing Index, Foreign Bond Investment, Net Long Term TIC flows, Overall Net Capital Flows.
DAX -0.2%, CAC +0.5%, FTSE +0.5% Markets opened lower and bounced but then saw a small sell off before continuing to climb higher. Around mid day most markets then drifted lower. Data was mixed UK GDP saw is largest fall on record. Eurozone Industrial Production was weak but beat forecasts and French Inflation was higher than expected. Travel stocks saw interest after American Airlines announced they expected to see better demand.
Pearson +12% on news Cevian Capital had taken a 5.4% stake.
Games Workshop +8% after forecasts sales of GBP270m for the year ending 31 May.
EUROZONE Industrial Production Apr -28% YoY vs -13.5% Mar revised (F/cast was -31.2%) [Apr -17.1% MoM vs -11.9% Mar revised (F/cast was -20.6%)]
FRANCE Inflation Rate Final May +0.4% YoY vs +0.3% Apr (F/cast was +0.2%) [May +0.1% vs +0.0% Apr (F/cast was +0.0%)]
Balance of Trade Apr GBP 0.31b vs -3.96b Mar (F/cast was -6.2b)
Construction Output Apr -44% YoY vs -7.1% Mar (F/cast was -38.7%)
Industrial Production Apr -24.4% YoY vs -8.2% Mar (F/cast was -22%) [Apr -20.3% MoM vs -4.2% Mar (F/cast was -18%)
Manufacturing Production Apr -28.5% YoY vs -9.7% Mar (F/cast was -21%) [Apr -24.3% MoM vs -4.6% Mar (F/cast was -17%)
GDP 3 month Ave Apr -10.4% vs -2% Mar (f/cast was -12%)
GDP Apr -20.4% vs -5.8% Mar (F/cast was -20%)
Goods Trade Balance Apr GBP -7.49b vs -11.85b (revised) (F/cast was -11b)
NIESR Monthly GDP Tracker May -17.6% vs -10.3% Apr (revised from -11.8%) (F/cast was -16%)
GERMANY No data due
FRANCE No data due
UK No data due
JAPAN Expect Nikkei to open lower with caution after news of 47 new covid-19 cases in Tokyo on Sunday. BoJ interest rate decision Tuesday is likely to keep some cautious, although the expectation is for more assistance for the economy, especially the SME's. Yen weaker in US trading, closed Friday US at 107.34
Data due later Tertiary Industry Index (F/cast is -14.3% vs -4.2% Apr)
Govt to launch smartphone covid-19 tracking app next week
Reuters survey shows many expect Japan to slip back into recession this quarter -VE
Immigration authorities quietly published criteria that will allow some foreign residents to re-enter Japan despite a covid-19 entry ban covering 111 countries.
SoftBank FT reports it has invested more than $500m into Credit Suisse investment funds that make big bets on the debt of struggling start-ups backed by its Vision Fund.
Separate press report shows that it has bought back nearly US$3B worth of shares from March to Date.
Honda -VE as explosion hits its plant in Cental Japan, hospitalising two workers but its overseas plants that were hit by a suspected cyber attack have resumed operations.
Nintendo Switch sales in S Korea +30% in Q1 +VE
Shionogi boss has called for a longer-term international strategy to develop and distribute coronavirus vaccines, warning that political hopes for a quick solution may be disappointed. “Politicians may not want to hear this but everything will not go according to script and back-up plans will be needed,” Isao Teshirogi, who is heading efforts at Shionogi to develop a Covid-19 vaccine as well as an antiviral drug for infected patients, said in an interview. -VE for sentiment.
SOUTH KOREA Expect markets to open flat but to see continued focus on TECH, the weak US futures a drag on sentiment. Watch the banks after Commercial banks cut savings and checking rates to near zero on Sunday. Sentiment weak as jobless rate hit record high data showed on Sunday
No data due. On Sunday Statistcs Korea released data showing number of jobless people who had been seeking to find jobs for less than three months reached 735,000 in May, up 107,000 from the previous year. The highest since June 1999 when the data was first complied. -VE for sentiment.
Korean commercial banks had cut their yields on savings and checking accounts to near zero as of Sunday. Shinhan, KB Kookmin and NH Nonghyup have lowered their yields on one-year savings and checking accounts to a range of 0.3% to 0.75% in recent days. Foreign banks followed suit.
The Korea Exchange, said Sunday its daily average of gold transactions had doubled this year as investors sought safe assets and a tax benefit took hold in January.
SPC Group, the operator of Korea’s leading bakery franchise Paris Baguette, said Sunday it will enter Canada by launching the flagship Paris Baguette brand next year. +VE
SsangYong Motor -VE as Mahindra & Mahindra, the Indian automaker that owns a 75% stake has hinted at giving up control of the struggling South Korean automaker amid snowballing losses from COVID-19, industry sources said Sunday.
S Korean Chipmakers +VE forecast through to Q3 despite aggravating economic conditions from COVID-19 impact. Robust demand for memory chips upon the growing non contact market. Semiconductor exports +22.6% from June 1 to 10, YoY, DRAM exports were +17% and DRAM prices have been rising +VE for Samsung and SK Hynix
Samsung enjoyed the highest average selling price (ASP) of its smartphones in six years in the first quarter of the year, driven by robust demand for foldable phones and its flagship smartphones, industry data showed on Sunday. +VE
Daewon Media, which retails more than half of all Nintendo Switch game consoles here, said Friday that sales of the Japanese game consoles spiked 30% in Q1; thanks to the nationwide popularity of the hit game Animal Crossing: New Horizons amid the coronavirus outbreak. +VE
TAIWAN Expect market to open flat following the US rebound on Friday but the weak opening of the US futures; Sentiment on Tech still +VE
No data due.
Gasoline and diesel prices are to increase by NT$0.8 per liter this week, effective today, CPC Corp, Taiwan and Formosa Petrochemical Corp announced yesterday. That marks the seventh consecutive week of hikes.
Gigabyte Technology Friday said it was optimistic about its business this year, as it expects to post a double-digit percentage growth in shipments. “Our shipments of motherboards, servers and graphics cards [so far] this quarter are better than what we expected considering the COVID-19 pandemic,” Gigabyte chairman Dandy Yeh said at the company’s annual shareholders’ meeting in Taoyuan. Pointing to current order visibility, Yeh said that shipments next quarter are expected to remain healthy and continue on an upward trend. +VE
United Microelectronics Corp Friday said it would appeal a local district court’s ruling that found it and three employees guilty of stealing and misappropriating trade secrets from Micron Technology Inc’s local units. The Taichung District Court yesterday imposed a NT$100 million (US$3.36 million) penalty against the world’s No. 3 chipmaker, after ending two-and-a-half years of investigations. -VE
Taishin Financial Holding Co Friday asked the Ministry of Finance to let it take over state-run Chang Hwa Bank and end their legal dispute over the management of the bank, Taishin chairman Thomas Wu told a shareholders’ conference in Taipei. Wu made the remark after CHB shareholders said they were concerned about the position Taishin would take on CHB’s board during its shareholders’ meeting next week.
Employers remain positive about hiring plans next quarter, despite a job growth forecast that is expected to be the weakest in 11 years, as the COVID-19 pandemic clouds the economic outlook, a survey by ManpowerGroup Inc showed. The human resource firm’s employment outlook gauge posted a 3 percent increase after seasonal adjustment, the slowest since 2009 and 18 percentage points lower than a year earlier. Companies in six of seven industries plan to modestly increase headcounts, but restaurants and hotels intend to cut staff, the quarterly survey found.
CHINA Expect market to open lower on the news of 57 new Covid-19 cases with 38 of them in Beijing. The rise in cases comes as it starts ding mass testing. 19 cases involved overseas travellers with 17 of them arriving from Guangdong. Data out this morning will also influence the market.
Data due House Price Index on the open (F/cast +4.9% vs 5.1% in Apr),
then at 10am; NBS press conference, Fixed Asset Investment (YTD) (F/cast -6.2% vs -10.3% Apr),
Industrial Production (F/cast +4.5% vs +3.9% Apr),
Retail Sales (F/cast -2.6% vs -7.5% Apr) and Unemployment (F/cast +6.2% vs 6% Apr)
FT reports the Global Times reported the virus was detected on cutting boards used for imported salmon; fuelling the idea the virus did not originated in China and was brought in by foreigners. That may be another reason for China’s reluctance to an investigation
Shanghai listing review committee of Sci-tech Innovation Board in Shanghai passed the IPO application of Ninebot on the Board, with XIAOMI-W (1810.HK) as one of the substantial shareholders through People Better. Upon the effectiveness of the registration at China Securities Regulatory Commission (CSRC), Ninebot will become first red-chip CDR (Chinese Depositary Receipt) of the Board and A shares.
China has finalised new rules for companies looking to list on Shenzhen’s ChiNext board, streamlining the listing process and allowing IPO pricing to be fully determined by the market. Spurred on by the trade war with the United States, China has sought to make it easier for startups, particularly tech firms it sees as strategically important, to gain access to domestic capital and to be less reliant on other venues such as New York and Hong Kong.
AMEX gets final approval from PBoC to operate in China via a JV with LianLin DigiTech.
The PBoC also approved Mastercard's JV to conduct bank card clearing operations but it has yet to get a network clearing licence. VISA’s application is still awaiting approval
Zijin Mining (601899.SS) (2899.HK) said on Friday it would acquire Guyana Goldfields (GUY.TO) for C$323 million ($238 million), bringing an end to a protracted takeover battle for the Canada-listed gold miner. They are paying a premium to the Silvercorp offer and it could still be subject to Canadian Govt approval Slight -VE
A tanker truck explosion in southeast China killed 19 and injured 172, it was carrying liquefied petroleum gas and exploded at a highway exit in Taizhou in Zhejiang province on Saturday afternoon.
Press reports that many companies have taken loans and invested the cheap money in structured deposits; the volume of which grew by 2bn Yuan last month. There are also reports of Shenzhen start ups funnelling money into real estate, where secondary sales were +38% YoY. Raising questions about how much money is reaching the real economy. Beijing has instructed some banks to limit their structured deposit offerings and to monitor how companies use subsided loans. -VE for the Banks and potentially the economy
HONG KONG ADR’s -37pts to open at 24,263 with most ADR’s effectively flat but the weak US Futures and news of a covid outbreak in China likely to prompt more initial selling. The China Data out this morning will be a further influence for the direction of trading. Friday’s protests passed off peacefully but the planned referendum was postponed due to weather concerns but overhangs the market.
No data due Monday but After Market Friday
Industrial Production Q1 -4.6% YoY vs -0.5% Q4 (F/cast was -1.5%)
It was the largest decline in manufacturing activity since the last quarter of 2009, amid the coronavirus pandemic.
Output dropped in paper products, printing & reproduction of recorded media (-4.2% vs 1% in Q4 2019);
Miscellaneous manufacturing industries (-1.8% vs 0.7%).
Production of food, beverages and tobacco fell further (-10.1% vs -1.9%).
In contrast, output decreased less for metals, computers, electronics & machinery (-3.2% vs -0.8%) while rose at a faster pace for textiles and wearing apparel (0.8%vs 0.5%).
Short Selling HSI Friday 20.7% vs 19.3% Thursday
Top Shorts Hang Seng Bank (11) 42%, Wharf REIC (1997) 38%, Hang Lung Ppty (101) 38%, HSBC (5) 34%, Sino BioPharm (1177) 34%, ICBC (1398) 33%, HK & China Gas (11) 33%, China Res land (1109) 31%, Link REIT (823) 29%, Bank of China (3988) 29%, Country Garden (2007) 27%, NWD (17) 24%.
LONGFOR GROUP (960.HK) said major shareholder Charm Talent on 9 June acquired 740,000 shares on the open market, involving $27.05 mn.
PHOENIX TV (2008.HK) said that Liu Changle, the chairman and substantial shareholder of the Company, through Today’s Asia, bought in the market an aggregate of 2.2 mn shares between 9-11 June 2020.
ORIENTAL PRESS (18.HK) made a supplemental announcement to profit warning, expecting to record a loss within the range of HK$10m to 15m for the year ended 31 March 2020, vs the profit of HK$81.105m for the year ended 31 March 2019.
OP FINANCIAL (1140.HK) is expecting a net loss for the year ended 31 March2020 as compared with net profit recorded for the year ended 31 March2019. -VE
POLITICS Justice minister Teresa Cheng indicated in clear terms for the first time the forthcoming national security law for Hong Kong will not be completely inline with the common law system. This is likely to raise more concerns over its introduction -VE
Chief Secretary Matthew Cheung said the administration will not turn a blind eye to civil servants joining a strike referendum against the national security law. He said "The government will not sit idly by for acts that blatantly damage theinterest of society and the reputation of the civil service," he said.He called on civil servants to "tell fact from fiction and remain rational" to live up to the expectations of the general public. Slight -VE whilst I would expect civil servants to administer their duties without political bias I do believe that they have the same rights of freedom of expression as all other Hong Kong citizens outside of their work hours.
Property Secondary sales rose to 22 deals said Midland a four week high; helped by the lack of primary launches .
7ROAD (00797.HK) 2019 annual results. Net profit RMB10.79m vs RMB98.03 million loss a year ago. EPS equaled 0.44 fen. No final dividend was declared.
PING AN (2318.HK) accumulated gross premium incomes of its four subsidiaries for the period from January 1, 2020 to May 31, 2020 aggregated RMB382.761 billion, -1.4% YoY
Tencent Music announced acquisition of 8 million Class A shares, or 10.4% stakes, in Warner Music.
CATHAY PAC AIR (293.HK) said it has applied for Employment Support Scheme after prudent consideration. The flagship carrier, with 28,200 employees in Hong Kong, may receive $761 million in salary subsidy, based on the subsidy ceiling set at $9,000 per worker.
HKD re-hit the Strong-side Convertibility Undertaking during New York trading hours, the HKMA undertook US$185 million selling orders to inject HK$1.434 billion in the market. The balance of the banking system will increase to HK$123.561 billion on Tuesday (16 June).
JD-SW (9618.HK)'s self-owned automobile brand, Jauto, logged an all-time high in turnover again in June by growing 77% yearly. The brand had earlier launched ten new products, including motor oil, start-stop battery and tire, to further enrich its product lines.
China's mobile game market in May, grew 11.9% MoM to a scale of RMB17.68 billion, meaning the YTD growth momentum is continuing, according to Gamma Data's report. TENCENT (700.HK)'s Honor of Kings remained the top-grossing title during the month, followed by PUBG Mobile. BABA-SW (9988.HK)'s Three Kingdoms Strategic came as the third.
NTES-S (9999.HK) Hang Seng Indexes said it meets the Fast Entry Rule of the Hang Seng Composite Index, it will be included to Hang Seng Composite Industry Index - Information Technology, Hang Seng Composite LargeCap Index and Hang Seng Composite LargeCap & MidCap Index under Hang Seng Composite Index; as well as Hang Seng Internet & Information Technology Index. The changes of relevant indexes will be made after market close on 24 June 2020. All changes will come into effect on 26 June 2020.
SUCCESS UNIVERSE (487.HK) business tumbled at least 90% since the COVID-19 outbreak, said Deputy Chairman Ma Ho Man, Hoffman. However, it started improving last month and had returned to around 20% of normal levels. It is paying roughly tens of million dollars of monthly expenses with barely any revenue. Still, Ma emphasized that the firm's cash flows are healthy and free of pressure. Regarding is relationship with SJM (880.HK) it has worked smoothly for more than a decade, without any impact or change in arrangement at the moment. He expects the Macao government to reopen its border in phases, hence seeing little chance of reviving last year's results. However, he was confident in the market improvement in the second half of year, adding health code would be the first step towards the Guangdong-Hong Kong-Macao border reopening.
PROPERTY All of the four major CCL indices declined this week following a two-week uptrend, as sentiment towards the housing market was briefly undermined by the flare-ups of social unrest. Looking ahead, they expect an upswing struggle of home price trend. The ramifications from the Fed's unchanged interest rate decision and easing policy until end-2022 will impact Hong Kong's housing prices and begin to be reflect on the CCL in early July 2020.
CCL last posted at 178.64, down 0.89% weekly.
CCL Mass last stood at 182.23, down 0.89% weekly.
CCL (small-and-medium units) last reported at 179.84, down 0.82% weekly.
CCL, CCL Mass and CCL (small-and-medium units) eased back after a four-week upswing. CCL (large units) last printed at 172.30, down 1.3% weekly, which also softened after two-week rise.