June 11 ASIAN MACRO INITIAL THOUGHTS Dow futures falling
Covid-19 Globally over 7.3m cases, 412k deaths
Concerns of a possible second wave in the US as Texas reports three days of record hospitalisations. OECD warns of the economic scars from covid-19.
Dow futures opened flat but sold down in early trading, currently -230pts
DOW -1.04%, NDX +0.7%, S&P -0.5%, Russel 2K -2.6% Markets opened higher, DOW and S&P sold down and then worked higher to flat/slightly positive before the Fed announcement but then sold off. Nasdaq opened higher, worked sideways and rallied pre fed but sold down after. Fed kept rates unchanged and policy supportive. It said it expects the economy to contract by 6.5% in 2020 before expanding by 5% in 2021. Covid second wave concerns rising as Texas reports three days of record breaking covid hospitalisations. Tech continued to drive higher for its defensive qualities Nvida +3.6% Salesforce +4.3% and Qualcomm +1.4%
Tesla +9% hit a new high on new of bringing its truck into full production
Taubman Centres -20% after Simon Property -4% seeks to scrap the deal to buy it.
Apple +2.6% on broker upgrade
MBA 30 yr Mortgage Rate 3.38% vs 3.37% prior
MBA Mortgage Applications +9.3% vs -3.9% prior
Core Inflation Rate May +1.2% YoY vs +1.4% Apr (F/cast was +1.2%) [May -0.1% MoM vs -0.4% Apr (F/cast was -0.1%)]
Inflation Rate May +0.1% YoY vs +0.3% Apr (F/cast was +0.2%)[May -0.1% MoM vs -0.8% Apr (F/cast was -0.1%)]
EIA Gasoline Stocks Change +0.866m vs +2.796m prior (Consensus was +0.071m)
EIA Crude Stocks Change +5.72m vs -2.077m (Consensus was -1.738m)
FOMC Rate Unchanged as expected
USD was weaker vs Yen & Euro. Bitcoin +1% @ 9887.54,
VIX unch @ 27.57,
US T10 0.736% dropped as Fed said no rate hike until 2022
OIL Brent +0.8%, WTI +1.7% having fallen 2% earlier on the inventory build. US said it bought 126k barrels for strategic reserves
Gold +0.8%, Silver +2.3%, Copper +0.8% Gold continued to rise after market
AHEAD Initial Claims PPI, Core PPI, EIA Natural Gas Stocks Change, WASDE report
DAX -0.7%, CAC -0.82%, FTSE -0.1% having opened higher the markets sold down and traded sideways ahead of the Fed rate decision. Economy opening stocks were weak.
Inditex +1.9% Net Income Loss 409m Euro which included 308m Euro provision for store optimisation. Impacted but online +50% for the period
Just Eat -13% confirmed in talks with Grubhub +2% after Uber -4.8% withdrew from talks on anti trust concerns.
SEB +6% regulator to conclude anti-money laundering probe.
Adidas -1.3% says that 30% of all its new hires in the U.S. would be black or Latino people, amid anti-racism protests that have rocked the country for nearly two weeks.
Lufhansa -5.7% on broker downgrade
FRANCE Industrial Production Apr -20.1% MoM vs -16.2 Mar (F/cast was -21.3%)
GERMANY No data due
FRANCE Non Farm Payrolls
UK No data due
JAPAN Expect Nikkei to open lower following the US Fed decision with Exporters under pressure as Yen stronger currently 107.08. But market likely to work higher with focus on Tech.
Data due BSI Large Manufacturing, Foreign Bond & Stock Investments, Machine Tool Orders.
Fujifilm Holdings Corp will spend $928 million to double capacity at a drug manufacturing facility in Denmark, which it has pledged to use in producing COVID-19 treatments, as the Japanese company steps up its pivot towards healthcare. +VE
AnGes Inc expects its coronavirus vaccine to be ready as early as the first half of 2021, if it can overcome supply chain and production hurdles, the company's founder said.
Japan Airlines said Wednesday it will ease domestic flight reductions from later this month as it expects a recovery in travel demand following the lifting of a state of emergency over the new coronavirus epidemic in May. +VE
ANA Holdings Inc. President Shinya Katanozaka told The Yomiuri Shimbun the airline will maintain its independence even as an increasing number of foreign governments have provided support to their domestic airlines.
SOUTH KOREA Expect markets to open lower but work higher after US FOMC leaves rates unchanged and policy supportive.
No data due
Government said it would take legal action against two organisations that send propaganda and contraband into the North.
Apologies my normal sources are not available today.
TAIWAN Expect market to open flat but work higher with a focus on Tech
No data due
Taiwan’s relations with the US are better than ever, President Tsai has a chance to make progress on a US-Taiwan free-trade agreement (FTA) this year, American Chamber of Commerce in Taipei (AmCham) chairman C.W. Chin said yesterday. +VE
Chunghwa Telecom Co yesterday said that it expects its number of 5G subscribers to reach 1 million within a year of the new wireless technology’s commercial launch, adding that the uptake of 5G would be similar to that of 4G. +VE
Largan Precision yesterday gave a conservative outlook for business next quarter amid a global economic slowdown. “The third quarter is traditionally a high season [for the electronics industry]. We hope that it will be the same this year,” Largan chief executive officer Adam Lin told an online news conference, following an annual general meeting yesterday However, order visibility is low, Lin said. Slight +VE
TPK Holding Co yesterday gave a lukewarm outlook for the second half of this year, as the COVID-19 pandemic has upended the industry’s seasonal patterns. The company also saw robust demand for silver nanowire touch modules for 85-inch electronic whiteboards from schools, Chiang said, adding that TPK expects shipments of silver-nanowire touch modules used in large electronic whiteboards to grow 30 percent annually this year. +VE
Delta Electronics yesterday said that the construction of its plant in India is back on track as the South Asian nation emerges from a more than two-month lockdown. +VE
CHINA Expect market to open lower with disappointment at the New Loan data.
No data due but after market Wednesday
New Yuan Loans May CNY 1480bn vs 1700 bn Apr (F/cast was 1750bn)
Outstanding Loan Growth May +13.2% YoY vs 13.1% Apr (F/cast was +13.4%)
Total Social Financing May CNY 3190b vs 3090 Apr (F/cast was 3250bn)
M2 Money Supply May 11.1% vs 11.1% Apr (F/cat was 11.4%)
New Loans slightly weaker that F/cast. Household loans, mostly mortgages, rose to CNY 704.3 billion from CNY 666.9 billion in April, while corporate loans fell to CNY 845.9 billion from CNY 956.3 billion. Other credit growth indicators suggested the central bank continued to step up efforts to support the economy hit by coronavirus pandemic. Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, quickened to 12.5% in May, from 12% in April. Broad M2 money supply rose for a second consecutive month by 11.1 percent, the most in over three years, and outstanding yuan loans grew 13.2%, compared to April's 13.1%.
Softbank Group Corp’s Arm Ltd and its Chinese chip venture yesterday clashed publicly over whether the venture’s chief executive officer had been fired, a dispute that threatens to disrupt a company central to the global semiconductor industry. The British firm on Tuesday said that the board of Arm China jointly owned by Arm and investors including China’s sovereign wealth fund, voted to remove chief executive officer Allen Wu and replace him with a pair of co-CEOs. Hours later, Arm China posted a statement on its WeChat account asserting that Wu was still in charge and the venture was operating normally. -VE
CHINA is offering some SOE employees the option of being inoculated with one of two vaccines being developed if they are intending to travel overseas for work. One is being developed by a subsidiary of SinoPharm Group(1099 HK).
FT reports Beijing is facing a public outcry over its claim to have “basically won” the war on poverty after the premier admitted more than two-fifths of Chinese people made less than $140 a month.
HONG KONG ADR’s -35pts to open at 25,014 but I think we could see more downside after the weaker than expect China loan data.
No data due
Short Selling HSI Wednesday 17.8% vs 16.9% Tuesday
Top Shorts Wharf REIC (1997) 46%, Hang Seng Bank (11) 44%, HK & CHINA GAS (11) 38%, China Res land (1109) 34%, CK Asset (1113) 33%, AAC Tech (2018) 32%, Sinopec (386) 30%, Hang Lung Ppty (101) 29%, Country Garden (2007) 29%, Hengan (1044) 29%, ICBC (1398) 27%, Sands China (1028) 26%, MTRC (66) 26%, Bank of China (3988) 26%, Ping An (2318) 25%
IPO NTES-S (9999.HK), debut closed at $129.9 in gray market up $6.9 or +5.6% against the listing price of $123, on volume of 2.26 million shares and turnover of $295 million, PhillipMart data showed. Excluding the handling fees, a book gain of $690 was reported per board lot of 100 shares.
ELECTION The election date for the 7th Legislative Council (LegCo) with the nomination period from 18 to 31 July
JD-SW (09618.HK), the fourth WVR to list in Hong Kong, will close its HK IPO at noon tomorrow. At around 6 pm today, 12 brokers granted over $75.6 billion of margin in total in three days for the IPO. Among which, Phillip Securities' margin increased to $18.8 billion, and BRIGHT SMART granted almost $14.2 billion. The public offering was over-subscribed by approximately 47.2 times based on the fundraising amount of around $1.5694 billion in public offering.
POU SHENG INT'L (3813.HK) net consolidated operating revenue in May 2020 was RMB2.39 bn, +8.1% YoY.
CK ASSET (1113) released the sales brochure for Sea to Sky in Tseung Kwan O a project the offers 1,422 units (434 sq ft to 1,077 sq ft)
MACAU While the gaming operation licence contracts will expire in June 2022, Macau's Secretary for Economy and Finance Lei Wai Nong said the government is intensely making preliminary preparation for the licence rebidding, with the public consultation paper to roll out timely.
As HKD re-hit the Strong-side Convertibility Undertaking during local trading hours, the HKMA undertook US$285 million selling orders to inject HK$2.209 billion into the market.
CHINA RES LAND (1109.HK) contracted sales month ended 31 May 2020 RMB21.22 bn, -0.4% YoY
GREATWALL MOTOR (2333.HK) has been informed by the controlling shareholder Innovation Great Wall that it had pledged 33 million unrestricted tradable A shares of the Company held by it to Baoding Branch of China Minsheng Bank. -VE
Centa-Salesman Index (CSI) last posted at 59.39. Despite lowering 0.36 pts from 59.75 in the previous week, the index maintained above the critical point of 55. Earlier on, the index had grossed 10.78-pt decline for a single week in wake of social unrest flare-ups, but the market sentiment had not exacerbated further.
JD-SW (09618.HK) announced that its JD Supermarket and MENGNIU DAIRY (02319.HK) plans to step up strategic cooperation. Both sides will team up in omni-channel user operation, new product customisation, supply chain and other fields, as MENGNIU DAIRY aims to record T/O of more than RMB20 billion in JD Supermarket in the coming three years.