June 12 Asian Marco Initial Thoughts US Worst day since March !
Covid-19 Globally over 7.4m cases, 417k deaths
Mnuchin says US can’t close economy again as covid-19 cases rise. Trump was warned of the risks of re-opening too quickly but ignored them. May be a big swing factor in the US Presidential Election.
Global sell off with safe havens of Japanese Yen and Swiss franc seeing gains
Expect stay at home names especially gaming stocks to see defensive interest
Dow Futures opened +100pts after Thursday sell off.
DOW -6.9%, NDX -5.3%, S&P -5.9%, Russel 2K -7.6% Markets opened lower as initial claims missed but PPI. thoughtweak was better that forecast but worries about a second covid-19 wave in the US as the cases and hospitalisations increase after the US as lock-downs are relaxed scared the market. Worth noting the S&P and DOW, despite the sell off are still +37pts from their March lows.
'Back to work’ stocks sold off; United Airlines -16%, Delta -14% American -15.5%, SouthWest -11.6% Carnival -15.3% Norwegian -16.4% Boeing -16.4% Gap -8%, Khols -11.2%. Even the stay as home stocks were under pressure: Netflix -2%, Amazon -3.4%, Activation Blizzard -3.4%, Facebook -5.2%,
Zoom +0.5% despite having temporarily shut the account belonging to a group of US-based Chinese activists after they held an event to commemorate the 31st anniversary of China’s Tiananmen Square crackdown, the activists said on Thursday.
A US development agency proposed lifting restrictions on the financing of advanced nuclear energy projects for export, a move the Trump administration hopes will help the industry compete with state-owned companies in China and Russia.
Many had warned about the potential for a second wave but were ignored and may cause embarrassment to many who had said as recently as yesterday that the worst was over!
Initial Claims 1.542m vs 1.897k prior (F/cast was 1.5m)
PPI May +0.4% MoM vs -1.3% Apr (F/cast was 0%) [May -0.8% YoY vs -1.2% Apr (F/cast was -1.2%)]
Core PPI May -0.1% MoM vs -0.3% Apr (F/cast was -0.2%) [May +0.3% YoY vs +0.6% Apr (F/cast was +0.2%)]
EIA Natural Gas Stocks Change 93 Bcf vs 102Bcf prior (Consensus was 93Bcf)
USD was weaker vs Yen & Euro. Bitcoin -6.3% @ 9274.71, VIX +48% @ 40.8,
US T10 0.666% on fears of a second wave
OIL Brent -7.7%, WTI -8.2%
Gold +1.1%, Silver -3.1%, Copper -0.6%
AHEAD Import and Export Prices, University of Michigan Prelim Consumer Report (Expectations, Current Conditions, Inflation Expectations, 5 year Inflation Expectations), Baker Hughes Total Oil Rig Count.
DAX -4.5%, CAC -4.7%, FTSE 4% Markets opened lower in reaction to the sell off in Asia, reacting to the Fed’s decision to take a ‘wait and see but still fully committed stance’ and news of a potential second wave of covid-19 in the US. Having initially traded sideways they sold down as US opened significantly lower. Markets closed at day lows.
Lufthansa -9% announced to 26,000 jobs still at risk despite the government bailout
CineWorld -17% and Carnival -12% on news of a potential second wave in the US.
Unilever -1% having initially rallied on new it would merge its dual HQ structure to allow for greater M&A flexibility. But sold off with the rest of the market from mid morning on US second wave worries.
Just Eat Takeaway -3.8% on announcing a £5.8 billion ($7.3 billion) deal to buy rival GrubHub (Uber was -10% )
FRANCE Non Farm Payrolls Q1 -2% QoQ vs +0.4% prior (F/cast was -2.8%)
Private Non Farm Payrolls Q1 -2.5% QoQ vs +0.5% prior (F/cast was -2.3%)
EUROZONE Industrial Production
GERMANY No data due
FRANCE Inflation Rate
UK Balance of Trade, Construction Output, Industrial Production, Manufacturing Production,
JAPAN Expect Nikkei to open lower, Yen strengthened currently 106.8 -VE Exporters
Data due at 10:30 HK time Industrial Production, Capacity Utilisation
PM Abe says it was "very regrettable" that Taiwan was not accepted to take part as an observer at the World Health Organization assembly last month.
PM Abe and Tokyo Governor seek to simplify Olympic Games due to covid-19 +VE but looks increasingly likely they may not take place -VE regarding all the investment that has already been made.
Tokyo decided to move to the third and final stage of its plan to reboot businesses and reopen society on Thursday +VE
Japan plans to ease its covid-19 travel restrictions by letting in up to around 250 business travelers per day from Australia, New Zealand, Thailand and Vietnam, government sources said Thursday.
Nissan; Renault says its partnership has entered an "incredibly positive" phase after episodes of strained relations in recent years, the French carmaker's chairman Jean-Dominique Senard said on Thursday.
Takeda Pharmaceutical Co Ltd has agreed to sell a portfolio of over-the-counter and prescription drugs marketed in the Asia Pacific region to South Korea's Celltrion Inc for $278 million, it said on Thursday
Coca-Cola Bottlers Japan Inc. said Thursday that it will make some 30,000 of its about 700,000 vending machines resistant to virus and bacteria in response to growing hygiene awareness among the public amid the new coronavirus crisis.
SOUTH KOREA Expect markets to open lower following the global sell off but certain stocks likely to see interest. Export data already remains weak too.
Data out Export Prices May -8.2% YoY vs -5.9% Apr
Import Prices May -12.8% YoY vs -14.1% Apr
Two North Korean defector-run groups targeted for legal action by South Korean authorities say they intend to continue sending propaganda leaflets and humanitarian aid into North Korea, despite criticism from the governments of both countries.
Celltrion +VE on news that Takeda Pharmaceutical agreed to sell a portfolio of over-the-counter and prescription drugs to it for marketed in the Asia Pacific region for $278 million. ALSO said it will begin clinical trials of its anti-inflammatory drug Remsima on COVID-19 patients in the UK this month. +VE
SK Engineering and Construction was handed a $68.4 million penalty by a US court Thursday on charges of bribing an official to win an Army contract. -VE
Samsung Electronics Co.'s market share in the global foundry industry is expected to increase in the current quarter from the previous three months, a report showed Thursday, with growth in the 5G smartphone market.
Kia Motors halted its two domestic plants Thursday, as two workers at the plants near the capital were confirmed to have contracted the new coronavirus. -VE
SK Telecom said Thursday it has signed deals with major tech firms to develop security products for self-driving vehicles, internet of things-devices and smartphones using its new quantum-powered security chipset.
Unity Technologies report says the number of people playing PC and console-based games jumped by nearly 50% globally this year as the new coronavirus pandemic has confined more people to their homes +VE Gaming stocks
WeWork’s Korean subsidiary has offered its employees a voluntary retirement last week as part of its restructuring plan -VE
TAIWAN Expect market to open lower with broadband selling but some Tech names to see interest.
No data due
A group of Chinese warplanes flew into the Taiwan Strait and briefly approached Taiwan, just hours after a US transport plane passed over the island on Tuesday. Taiwan scrambled its warplanes to warn off the People’s Liberation Army fighter jets which crossed the median line in the Taiwan Strait on Tuesday morning, to defend its national territory.
MediaTek expects revenue in the 1H 2020 to grow 10% YoY thanks to a rapid growth in 5G chip shipments this quarter, chief executive Rick Tsai said yesterday. Also said that the COVID-19 pandemic affected the Chinese market in Q1 and the effect is lingering this quarter, but it is confident about expansion of the 5G chip market.
Wistron NeWeb to invest NT$5.5 billion (US$184.98 million) in Taiwan by setting up a third phase plant in the Southern Taiwan Science Park the Ministry of Economic Affairs (MOEA) said yesterday. +VE
U-Ming Marine Transport shareholders on Tuesday approved a proposal to distribute a cash dividend of NT$1.9 per share, the highest payout in five years. The dividend represents a payout ratio of 99 percent based on earning per share (EPS) of NT$1.92 last year. BUT U-Ming did not fare well in Q1 as the spread of COVID-19 forced many nations to implement lockdowns; it reported a net loss of NT$387 million (US$13.02 million) for Q1 or net losses of NT$0.46 per share, profit per share of NT$0.11; last year. The Baltic Dry Index, averaged 591.56 points in Q1 vs last year’s average of 1,353 points. Overall -VE
CHINA Expect market to open lower with more selling going into the weekend ahead of House Price data on the market open Monday. Followed by NBS Press conference Industrial Production, Retail Sales and Unemployment Rate (F/cast is +6.2% vs +6% in May but it will be crucial)
Data may get FDI (YTD) May (April was -6.1% F/Cast is -2%)
CHINA registered spiking imports of crude oil and soybeans in May based on international market changes, domestic production demand and market principles, reported Ministry of Commerce. Meanwhile, the devaluation of BRL and stronger intention of Brazil exporting soybeans also boosted the soybean import growth of China. Between January-May 2020, China recorded imports of crude and soy at growth of 5.2% and 6.8%, according to General Administration of Customs of the PRC. In May alone, respective imports increased 19.3% and 27.7%.
German Chancellor Angela Merkel has pressed Chinese Premier Li Keqiang to commit to market reforms. She also raised the situation in Hong Kong and human rights issues and “cited the need for further steps regarding market access, reciprocity and equal treatment for foreign companies”, as talks on an EU-China investment deal continue, her spokesman Steffen Seibert said.
US Secretary of State Pompeo will address a forum on democracy next week that will also be attended by Taiwan’s President Tsai Ing-wen and Hong Kong activist Joshua Wong Chi-fung – a combination that is certain to infuriate China.
China warns Australia to keep new foreign investment policy ‘fair and non-discriminatory’ to Chinese firms after the Australian government announced last week that it was moving ahead with sweeping changes to its Foreign Acquisitions and Takeovers Act for the first time since it was introduced 45 years ago. China wants an open and pragmatic investment policy, strengthen communication with foreign investors, maintain transparency, create a fair and non-discriminatory investment environment for foreign investors, and observe the legal rights of all foreign investments, including those from Chinese companies. But China has not offered the same access for companies wishing to invest in China.
HONG KONG ADR’s -589pts to open at 23,891 but expect more downside on margin call selling and worries about further downside going into the weekend.
Data due After market Industrial Production Q4 was -0.5% F/cast is -1.5%
Short Selling HSI Thursday 19.3% vs 17.8% Wednesday
Top Shorts Hang Lung Ppty (101) 54%, Hang Seng Bank (11) 36%, HK & China Gas (11) 35%, China Res land (1109) 35%, ICBC (1398) 33%, MTRC (66) 29%, Bank of China (3988) 29%, HSBC (5) 28%, Country Garden (2007) 28%, China Unicom (762) 27%, Want Want (151) 27%, Ping An (2318) 25%, Shenzhou (2313) 25%
BUYBACKS/INSIDER DEALINGEVERGRANDE (3333.HK) repurchased 3 million shares through the Stock Exchange on 11 June at $18.64 per share, involving $55.92 mn
CHINA AOYUAN (3883.HK) executive director Chan Ka Yeung Jacky bought 350k shares of the company on 11 June at an average price of HK$8.371 circa HK$3 mn.
IPO NTES-S (09999.HK) closed at $130, up $7 or 5.7% against the listing price of $123, on of 54.54 million shares and T/Oof $7.228 billion. Excluding the handling fees, a book gain of $700 was reported per board lot of 100 shares. Seen as +VE for other secondary listing stocks. But I would advise caution because Trump could still bring pressure to bear on US Funds buying into Chinese listings. But good until we hear otherwise!
UNREST MPF data shows here was a sharp increase in withdrawals late last year amid the social unrest. Many account holders have said they were leaving Hong Kong for good, RTHK reports. Withdrawals exceeded HK$1.4 billion inQ4 2019 +46% YoY -VE
UK Govt says any solution to the unrest in Hong Kong must come from the city and not from Beijing, and it urged China to reconsider a new security law that has sparked renewed protests, Reuters reports.
The policeman who shot a protester is to face a private prosecution over the firing on three counts. The first policeman to be in court over the unrest in connection with the extradition bill.
CHINESE EST H (127.HK) Chairman Lau Ming-wai sold his Century Frontier Limited, which held 476 mn shares of CHINESE EST H, to Solar Bright Ltd. under CHINESE EST H Executive Director Chan, Hoi-wan (Kimbee) on 11 June, according to the disclosure of the Stock Exchange. Upon completion, Lau Ming-wai will cease to hold long position in the company; while Joseph Lau Luen-hung and Kimbee will continue to hold 74.99% stake in the company in the capacity of their child below 18 years old. au Ming-wai's entire shareholding in the company will be taken over by three other children of Joseph Lau Luen-hung, including Josephine Lau Sau-wah and Lau Chung-hok, according to market sources.
CHINA SDHS FIN (412.HK) said that it has been allocated with 620,000 NTES-S (9999.HK) Shares at HK$123 per Share. The total subscription monies paid are HK$77.0285 million.
NWS HOLDINGS (659.HK is applying for a licence to manage non-performing assets in Mainland China, Bloomberg citing sources. The group has purportedly established and registered a Hainan firm to submit the application to China Banking and Insurance Regulatory Commission, expecting to obtain the approval soon.
PICC GROUP (1339.HK) aggregate premiums income as derived from the operating subsidiaries for the first five months of 2020 were PICC P&C RMB200.632 bn, PICC Health RMB18.109 billion and PICC Life RMB61.986 bn. The total premiums income was RMB280.727 bn, +3.3% YoY.
PICC P&C (2328.HK) original insurance premium income for the period from 1 January 2020 to 31 May 2020 aggregated RMB200.632 billion, +3.5% yearly.
NCI (1336.HK) accumulated gross premium income for the period between 1 January 2020 and 31 May 2020 was RMB79.009 billion, +32.1% YoY
CHOW TAI FOOK (1929.HK) annual results ended March 2020. The revenue -14.9% YoY to HK$56.751 bn. The net profit HK$2.901 bn, -36.6% YoY EPS HK$0.29. Final DPS was HK$0.12; full-year DPS was HK$0.24.
Cheung Kong Real Estate Director William Kwok stated that the group has reserved $1bn as standby mortgage capital for potential buyers of 3- or 4-room flats under SEA TO SKY. The LTV ratio can be as high as 85%. Starting from next week, show flats will be open to the public on the 9th floor at Fortune Metropolis, Hung Hom, disclosed Kwok, expecting a detailed price list to be made public very soon.
WING TAI PROP (369 HK) has collected more than HI$1.64bn after selling 60% of the units at Oma by the Sea in Tuen Mun +VE
Centaline said the US Fed stated that it will put the low rate on hold until 2022, meaning Hong Kong's low interest rate environment will be prolonged by at least two years. The city has a clear direction to keep rates constant, favoring the property market. They expected the Centa-City Leading Index (CCL) to hit the historical high (190.48) before Christmas.
Centa Valuation Index (Major Banks) (CVI) last printed at 82.03, -6.9 pts weekly. The index slumped by 8.07 pts in two weeks from 90 to around 80 amid the re-emergence of social movements. The steeper slide this week meant banks were turning less proactive on mortgages. -VE