ASIAN MACRO INITIAL THOUGHTS June 22
Covid-19 Globally over 8.82m cases, 465k deaths.
US reports more than 30k cases in 2 days and Germany’s covid reproduction rate rises to 2.88 -VE
China reveals some details of HK National Security Law -VE for sentiment
US has three carrier groups operating around the edges of the South China Sea
US Futures Dow opened -230pts but have risen slightly now just -130pts S&P and NDX all still -VE but off initial lows
DOW -0.8%, NDX +0.03%, S&P -0.56%, Russel 2K -0.59% opened higher with quadruple witching but trended lower before selling down around mid-day. As Fed Quarles finished he speech and Powell started his. Early Boston Fed’s Rosengren said that more fiscal and monetary support was needed for the US economy. Markets then saw choppy sideways trading into the close.
Over the weekend Trumps rally in Oklahoma failed to attracted the expected number; the stadium was only one third full and the overflow event canceled.
Trump fires Manhattan prosecutor but is facing a probe now regarding his purge of the Justice department.
Current Account Q1 $-104.2b vs -104.3b prior (revised) (F/cast was -106b)
Baker Hughes Total Oil Rig Count 266 vs 279 prior
USD was slightly weaker vs Yen & Euro. Bitcoin +0.1% @ 9,301.04,
VIX +6.6% @ 35.12, US T10 0.694%
OIL Brent +1.7%, WTI +2.34% on supply cut hopes.
Gold 1.5%, Silver +1.8%, Copper +0.7%
AHEAD Chicago Fed National Activity Index, Existing Home Sales
DAX +0.4%, CAC +0.42%, FTSE +1.1% Markets opened higher and rose through the morning but then eased back in the PM session as EU ministers discussed the 750bn Euro recovery fund to tackle covid-19.
UK retail sales were better than expected but Public sector debt rose to surpass GDP for the first time since 1963. Investors were still monitoring new covid-19 cases in the US.
Wirecard -35% as the accounting scandal continued and the CEO (and major shareholder) resigns as E&Y refuses to sign off on the accounts with $2.1m ‘missing’ maybe due to fraud.
EUROZONE Current Account Apr Euro 10.2b vs 40.7b Mar (F/cast was 22.2b)
GERMANY PPI May -0.4% MoM vs -0.7% Apr (F/cast was -0.4%) [May -2.2% YoY vs -1.9% Apr (F/cast was -0.4%)]
UK Retail Sales May +12% MoM vs -18% Apr (revised) (F/cast was +6.4%) [May -13.7% YoY vs -22.7% Apr (revised) (F/cast was -18%)]
Retail Sales Ex Fuel May +10.2% MoM vs -15% Apr (revised) (F/cast was +5.6%) [May -9.8% YoY vs -18.5% Apr (revised) (F/cast was -14%)]
Public Sector Net Borrowing May GBP-54.5b vs -47.77b Apr (Revised) (F/cast was -45.6b)
EUROZONE Consumer Confidence Flash, EU China summit
GERMANY Bundesbank monthly report
FRANCE No data due
UK No data due
JAPAN Expect Nikkei to open lower with concerns over China and covid; Japan Nikkei 225 futures -1.2% Yen currently 106.85
No data due
Public support for PM Abe’s cabinet rose 9% pts to 36% despite the recent arrest of his former justice minister on suspicion of vote-buying, a poll by the Mainichi Shimbun daily showed on Sunday. But one by Kyodo News showed it had dropped to 36.7%.
Daikin reports a surge in demand for its Urusara X range which actually brings fresh air into a room from outside, although it doesn’t remove inside air out. Its top of the range model is equipped with virus killing air purification technology. +VE
Uniqlo stores saw queues of shipping and it website crashed as it began selling face masks with breathable fabric used in the brand’s popular underwear. Uniqlo’s online store apologised for crashing and later selling out of the washable Airism masks. +VE
Nissan Motor Friday said it will cut more shifts at its three assembly plants in Japan due to falling demand, as the automaker struggles to recover from a drop in sales triggered by the coronavirus pandemic. -VE. But press reports that a number of lapsed drivers are returning to driving to avoid public transport due to the risk of covid; which could be +VE.
Takeda Pharmaceutical's consumer drug business in Japan; Bidders include Blackstone, Bain Capital and Taisho Pharmaceutical. The deal that could be worth up to 400 bn yen ($3.7 billion), Reuters reports
Mitsubishi UFJ Financial Group will ban the provision of financing for the production of nuclear and other weapons of mass destruction, according to it's recently revised guidelines. The revisions to Mitsubishi UFJ's Environmental and Social Policy Framework will take effect July 1, 2020.
Fujitsu Ltd has developed an artificial intelligence (AI) monitor it says would ensure healthcare, hotel and food industry workers scrub properly. ITs developers an AI which can recognise complex hand movements and even detect when people are not using soap, for Japanese companies implementing stricter hygiene regulations, it said. +VE
JAL plans to provide up to ¥150,000 ($1,400) in special allowances to some 36,000 people, or almost all employees of the carrier and its group companies, in early July, company sources said Sunday. +VE for sentiment
FT reports that Japan is exploring packages to attack Hong Kong finance professionals including visa waivers and free office space but taxation seems to be the biggest issue.
SOUTH KOREA Expect markets to open lower following the US sell off and the weak open of US futures but to work higher.
No data due
North Korea pledged to push ahead with its campaign to send propaganda leaflets into South Korea, saying it is not bound to any inter-Korean agreements, state media said on Sunday.
South Korea Unification Minister resigned on Friday. Little impact
Household debt levels rose at the fastest pace among major economies in 2019, Bank for International Settlements data showed Sunday. Household debt in South Korea accounted for 95.5% of the country’s gross domestic product as of the fourth quarter last year, increased by 1.6 percentage points from a year earlier.
SK Energy said Sunday it has launched an integrated car management app called Muffin that offers services including non-face-to-face refueling, car wash, valet parking, insurance and maintenance on a single platform. +VE
Hyundai Engineering & Construction has been selected as a contractor for Hannam newtown district 3 by the association of housing redevelopment of the region in Yongsan-gu, Seoul, Sunday. +VE. Other bidders were Daelim Industrial and GS Engineering & Construction may see weakness.
LG Chem Ltd. is considering shutting down its production line in the southeastern tip of the country due to oversupply, industry and company sources said Sunday. +VE
Optimus Asset Management is being probed by financial authorities over allegations that it had breached contracts with fund investors in its portfolio construction. -VE
TAIWAN Expect market to open lower following the US but downside limited but continued interest in Tech
Data due After market Unemployment Rate (prior was 4.1% f/cast is 4.1%)
Out Saturday Export Orders May +0.4% YoY vs +2.3% Apr (F/cast was +1.5%) as solid demand for tech devices offset the effects of the COVID-19 pandemic on the old economy sector, the Ministry of Economic Affairs said on Saturday.
Domestic gasoline and diesel prices are to increase by NT$0.3 per liter today, the eighth consecutive week of hikes, said CPC Corp, Taiwan and Formosa Petrochemical Corp
Foreign direct investment (FDI) in Taiwan approved by the government in the first five months of this year totaled US$3.42 billion, +11.95% YoY, according to Investment Commission data. +VE
Quanta Storage Inc and HP Inc have reached an out-of-court settlement over price-fixing allegations, with both agreeing to withdraw lawsuits. +VE
Far EasTone Telecom Friday said that it aims to expand its 5G coverage to potentially cover up to 50% of the nation’s population by the end of this year, after its service debuts early next month. It plans to launch its 5G service “within days” of when the nation’s biggest telecom operator, Chunghwa Telecom Co introduces its service next month. +VE
Macronix plans to invest NT$8.5 billion (US$286.6 million) in Taiwan to diversify risk while upgrading equipment at its 12-inch wafer fab in the Hsinchu Science Park the Ministry of Economic Affairs said on Thursday. +VE
Epistar Corp and Lextar Corp are planning to restructure under a holding company, which analysts said would help them compete with rivals, through improved technologies and sound financial structure. The holding company would be created through a share swap, with the firms becoming 100%-owned subsidiaries of the new entity, but they would continue to operate independently. +VE
Evertrust Rehouse the nation’s largest real-estate broker by number of offices, on Thursday said it would raise administrative staff wages by an average of 3% and hire 3,000 more workers in the second half of the year. +VE
CHINA Expect market to open lower but it is likely that Beijing will instruct Team China to support the markets to limit the downside.
Data due market open Loan Prime Rate 1yr (prior was 3.85%, F/cast is 3.7%) and 5 yr (prior was 4.65% and F/cast is 4.5%).
China on Saturday announced details of draft national security legislation for Hong Kong, which is expected to be finalised in coming weeks. The power of interpretation to rest with China’s NPC Standing Committee and it will set up a national security office in Hong Kong to ’supervise, guide and support’ the HK Govt administer the new law; along with collecting intelligence and handling ‘crimes’. New local police and prosecution units will be set up to investigate and to enforce the law, backed by mainland security and intelligence officers deployed to Beijing’s new commission. Xinhua said that this was necessary to ‘protect human rights and freedom of speech and assembly’. It also announced the NPC will meet again on 28 June to pass the law; much quicker than normal. I think -VE
China also said to Taiwan the offering protection to "rioters" from Hong Kong will only harm Taiwan's people and is an interference in the Chinese-ruled city's affairs. China has been intensifying its pressure on Taiwan with Chinese warplanes flying into Taiwanese airspace for a sixth day on Friday. It has also deployed fishing boats and sand dredgers into Taiwanese waters (sometimes into conservation areas).
The European Union voted to take China to the International Court of Justice in The Hague if it imposes a new security law on Hong Kong and also called on the bloc to use economic leverage to dissuade China.
US Sec State Pompeo said in future the US would in future treat Hong Kong as a Chinese city rather than an autonomous one to the extent that China treats the territory as a Chinese city. Currently the US is working its way through a decision-making process over who would be held accountable over curbs to Hong Kong’s freedoms. He added that elections due in Hong Kong in September would “tell us everything that we need to know about the Chinese Communist Party’s intentions with respect to freedom in Hong Kong.”
China lost at least 40 soldiers in a clash with India at their disputed border this week, a federal government minister has said, as the nuclear-armed countries remained locked in confrontation on the frontline on Sunday. Likely to raise nationalist demands for retaliatory action.
China said on Friday it had identified a European strain of coronavirus as having sparked the recent Beijing outbreak, while the World Health Organization said only that it had been imported from outside the city and needed further investigation. Beijing also increased the amount of testing bing made available in Beijing which might produce some backlash from other major Chinese cities that have not be provided with the same resources.
China suspended imports of poultry from a plant owned by American meat giant Tyson Foods Inc after a covid-19 outbreak was reported there.
Foreign purchases of onshore Chinese Bonds more than doubled in the May suggesting the world’s second-largest economy with its relatively high yields is becoming a magnet for hot money.
Huawei Expected to get planning permission this week to build a GBP400m R&D plant (Chips) in Cambridge UK. Also FT Opinion article Huawei’s courtship of Moscow leaves west in the cold Looks at how if it establishes control over Russia’s 5G build up it will be well placed to dominate other emerging markets and set the stage two track 5G world.
HONG KONG ADR’s -313pts at 24.330 but expect a lower open on the relates of some details about the new National Security Law which China hopes to impose by July 1 (possibly to stop protests in HK on that day?) and the international reactions. Expect increased margin calls to prompt some mid morning selling.
Data due After market Current Account and Inflation Rate
IPO LITIAN PICTURES (9958.HK), debuts today. On Friday it opened at $2.98 in grey market, +16% against the listing price of $2.56, but last traded at $2.56, flat, on volume of 3.78m shares, PhillipMart data showed. I think it may well struggle today.
Short Selling HSI Friday 18.7% vs 26% Thursday
Top Shorts Sunny Optical (2382) 50%, Wharf REIC (1997) 38%, Henderson Land (12) 37%, Mengniu Dairy (2319) 37%, CK Asset (1113) 35%, HSBC (5) 35%, Hang Seng Bank (11) 27%, Hang Lung PPY (101) 26%, Shenzhou (2313) 26%.
ECONOMY Over 2m people registered for the governments HK$10,000 handout via ebanking by 5pm Sunday.
CK Assert (1113) released another 285 units under a second price list for Sea to Sky Lohas Park at an average price of HK$16,531 psf; 4.5% higher than the first price list. The first batch of flats have been 13x over subscribed.
Secondary transactions Centaline recorded 18 transactions unchanged WoW.
The Lands Department announced that a site, Tai Po Town Lot No. 243 at Ma Wo Road, Tai Po, New Territories will be disposed of by public tender. The tender invitation for the lot will commence on June 26 and close on July 24. Tai Po Town Lot No. 243 has a site area of about 22,600 square metres and is designated for private residential purposes. The minimum gross floor area and the maximum gross floor area are 43,600 sq m and 72,600 sq m respectively.
CK ASSET (1113.HK) had earlier won the tender for the "starter homes" site at Anderson Road, Kwun Tong at $4.951 billion. The site has a floor price of $4,546/ sq.ft., hitting the lower end of street forecast. It said the second highest tenderer missed the tender price by 9.1%.
SHUI ON LAND (272.HK) PROFIT WARNING said that the outbreak of COVID-19 has caused severe disruptions to global economies and business activities; the operations of the Group’s property businesses have also been greatly affected. As a result, the Group may report a loss for 2020 due to a downward revaluation on the Group’s investment properties; rental concessions and other reliefs offered to the Group’s tenants; and delays in construction and in handovers of residential units to homebuyers.
SMIC's application for listing on Sci-tech Innovation Board in Shanghai was approved by the listing committee, as revealed by the website of Shanghai Stock Exchange.
MIDLAND HOLDING (1200.HK)'s Midland Realty may debut over 20,000 units by a new project launch at end-2020, revealed Sammy Po, Residential Division Chief Executive. The majority of which will be located in Sha Tin and Ma On Shan, accounting for around 4,155 flats. Positives factors like rigid demand, low rates, ample funds and scarce supply were still in place, stressed Po. Together with reviving confidence among homebuyers, he foresaw a stable uptrend development in home prices for the second half of year. He maintained the full-year home price growth forecast at 5%.
Hang Seng Indexes Company announced that as JD-SW (9618.HK) meets the Fast Entry Rule of the Hang Seng Composite Index, JD-SW will be added to Hang Seng Composite Index and its sub-indexes, as well as Hang Seng Internet & Information Technology Index. All changed will come into effect on 6 July.
The Hong Kong Monetary Authority (HKMA) published today (June 19) statistics of payment cards issued in Hong Kong for the first quarter of 2020.
Total number of credit cards in circulation was 19.61 million by the end of Q1/2020. -0.5% QoQ and +0.6% YoY.
The number and value of credit card transactions (including retail sales and cash advances) are susceptible to seasonal factors and the general economic environment, making the trends more prone to fluctuation.
The total number of credit card transactions was almost 203 million for Q1/2020, -5% QoQ and +5.9% YoY.
The total value of credit card transactions was HK$170.4 billion for Q1/2020, -11% QoQ and -11.8% YoY.
Stored Value Facilities (SVF) schemes issued by 18 SVF licensees for the first quarter of 2020.
The total number of SVF transactions was around 1.2 bn for Q1/2020, -20% QoQ.
The total value of SVF transactions was HK$49.0 bn for Q1/2020, -7.5% QoQ
Hong Kong Housing Authority will launch four new Home Ownership Scheme (HOS) estates, namely Kai Cheung Court in Diamond Hill, Kam Chun Court in Ma On Shan, Choi Wo Court in Fo Tan, and Shan Lai Court in Fanling, reported local media. 7,027 units will be offered, the highest number since HOS resumption. These courts will purportedly be launched for sale at a 37% discount to market prices, given the rising median income for non-owner occupied households.
Official Receiver's Office announced that the number of petitions presented for bankruptcy at the Office surged to 2,079 in May, versus only 6 in April. The May's number was much more than the total 1,532 petitions for 4M20, and set the highest record for a single month since May 2003.
Centa-City Leading Index (CCL) last printed at 180.74, a 29-week high, +1.18% WoW
CCL Mass +1.37% WoW and CCL (small-and-medium units) +1.25% WoW, the increment being the sharpest in 31 weeks.
CCL (large units) +0.76% WoW. They estimated the housing prices to remain jumbled in future, yet with uptrend intact. CCL continued to be targeted at 190, only about 5% away from the current reading.