Aug 25 ASIAN MACRO INITIAL THOUGHTS. US Futures Flat, Asia to open higher.

27 Aug

Aug 25 ASIAN MACRO INITIAL THOUGHTS. US Futures Flat, Asia to open higher.

I’ll be on RTHK’s Money Talk this morning, Starts just after 8am HK time do please tune in if you have time.

Covid-19 Globally over 23.5m cases, 810k deaths
HK man was reinfected with covid four moths after recovering from a first bout -VE
US Futures Flat

DOW +1.35%, NDX +0.6%, S&P 1%, Russel 2K +1.03%
Nasdaq opened on its high and saw initial selling before trade sideways for most of the day. S&P and Dow both traded sideways for most of the day with all three seeing an uptick going into the close. Markets opened higher with Apple +1.2% a new high but off initial high on stock split hopes. Tech names were strong Facebook +1.6%, Amazon +0.7%, Alphabet +0.6% (all off initial highs). Back to work names also +VE in hope that a covid vaccine could be available shortly after the FDA issued an emergency use authorisation on Sunday to use convalescent plasma and a decline in the number of new cases in the US. Plus Trump may fast track a UK vaccine for use ahead of the US election. United Airlines +9.9%, Delta +9.3% and Southwest +6.4%, Carnival +10.2%. Norwegian Cruise Line +7.6% and Royal Caribbean +4.7%.
Best Buy +3%, Deere +3% and Lululemon +2% on broker upgrades but Pinterest -3.8% on a broker downgrade
Medtronic +1.4% as it increased its dividend
Chicago Fed National Activity Index Jul +1.18 vs +5.33 Jun revised from 4.11 (F/cast was +2)
USD was flat vs Yen & Euro. Bitcoin +0.7% @ 11,743.71, VIX -0.8% @ 22.37, US T10 0.654%
OIL Brent +1.8%, WTI +0.7% with two storms hitting the US Gulf Coast
Gold -0.1%, Silver +0.2%, Copper unch
AHEAD Redbook, Case-Shiller Home Price, House Price Index, New Home Sales, Consumer Confidence, Richmond Fed Manufacturing Index, API Crude Oil Stocks.

DAX +2.36%, CAC+2.28%, FTSE +1.71% but covid overhangs the markets as Trump look to accelerate approval of the UK’s vaccine AstraZeneca
Grifols +1.6% the blood plasma products specialist, climbed in response to the US Food and Drug Administration allowing Covid-19 patients to be treated with convalescent plasma on an emergency use basis.
BT +7.1% on news it was a target over target for a number of rivals and buyout firms.
Cineworld +6.8% following on buying from Friday’s rally.
No Data released
EUROZONE No data due
GERMANY GDP Growth Rate, Ifo data (Business Climate, Current Conditions, Expectations)
FRANCE No data due
UK CBI Distributive Trades

JAPAN Expect Nikkei to open higher Yen currently 105.97 drifting higher slight +VE Exporters
Typhoon Bavi is approaching Japan but unlikely to disrupt markets
No data due

PM Abe in hospital again He says he wants to take care of his health and do his utmost at his job, he said on Monday, after a second hospital visit within days sparked concern whether he could stay on as leader of the world's third biggest economy. -VE for sentiment
Covid cases in Tokyo drop to 95 for the first time since July 8 +VE for sentiment
Takeda Pharmaceutical agreed to sell its Japanese consumer health care business for ¥242 billion ($2.3 billion) to Blackstone Group Inc., which plans to take the over-the-counter medication unit public +VE but the company needs to sell more to get debt under control.
Government planning to ease its ban of foreign residents retuning to Japan; which has to an extent undermined its business competitiveness and damages Tokyo’s reputation as a financial centre.

SOUTH KOREA Expect markets to open higher, Consumer Confidence data +VE although covid concerns remain a concern and the approach of Typhoon Bavi may also limit the upside. Monday’s turnover was moderate.
Data out 
Consumer Confidence Aug 88.2 vs 84.2 Jul (F/cast was 84)
Highest since February on Govt stimulus and easing of social distancing. Five of the six sub-indexes increased: current domestic economic conditions (+5 points to 54), future household income (+2 points to 92) and future household spending (+4 points to 99), future domestic economic conditions (+5 to 75), and future living standards (+2 to 89). Only current living standards remained unchanged at 85 points. BUT it was before the most recent outbreak of covid cases.
Government has mandated face masks to be worn in all public places cope with the surge in covid cases.
Apple Inc.'s South Korean unit has proposed measures to address antitrust concerns and offered to provide 100 billion won ($84.02 million) worth of support programmes for small businesses, consumers and others, the country's competition watchdog said on Monday.
Samsung Display could commercialize its next-generation Quantum Dot displays for televisions as early as the third quarter of next year, according to a market researcher Monday.
JTI Korea is introducing a same-day delivery service for its tobacco-infused vapor device Ploom Tech, via Naver Shopping, the company said Monday.

TAIWAN Expect market to open higher lead by Tech but good data out after market Monday also helping Retail names
No data due but after market Monday

Unemployment Rate Jul 3.9% vs 3.97% Jun (F/cast was 4%)
Industrial Production Jul 2.65% YoY vs 7.19% Jun Revised (F/cast was +1.5%)
Retail Sales Jul +2.5% YoY vs -1.3% Jun (F/cast was +1.5%)
M2 Money Supply Jul +5.89% YoY vs +5.42% Jun (F/cast was 5.6%)
Unemployment beats as a seasonal increase in first-time jobseekers more than offset a drop in the number of people losing jobs to downsizing and closures.
Industrial production posted a sixth consecutive month of growth, with high tech supporting the wider industrial sector +VE
Nearly 60% of Taiwanese disagreed with a statement by former president Ma Ying-jeou that if Beijing were to wage war against Taiwan, “the first battle will be the last,” a survey released yesterday by the Taiwan Foundation for Democracy showed.
More than half of Taiwanese are willing to buy products from social enterprises at higher prices to show their support for such businesses, a survey released yesterday by DBS Bank Taiwan showed. +VE
TSMC revenue this quarter is forecast to increase 21% YoY, higher than a projected 14% growth for the global foundry industry, TrendForce Corp said Monday. +VE
FT report on MediaTek today -VE outlook for the company as US tightened its sanctions on Huawei -VE

CHINA Expect market to open higher following the US but concerns remain over US/China relations and concerns over the bank bad debt issues. ChiNext reform triggered some interesting moves Monday and will be watched closely again today.
No data due
US Justice Department announced the arrest Monday of researcher professor Zhengdong Cheng in Texas 
for allegedly hiding his paid participation in a Chinese government talent recruitment programme while conducting scientific research for Nasa, the US space agency. -VE
ByteDance’s TikTok sued the US govt Monday as expected. The court case will be watched closely not just for TikTok but on the use of presidential powers in general.
India phasing out Huawei and other Chinese equipment from its Telco networks, although not a formal ban Indian telco under pressure from the government and public opinion. -VE Huawei and ZTE

HONG KONG ADR’s -122pts to open at 25,429 but with short selling Monday still elevated I think the market will see an initial squeeze. Earnings still in focus which today includes Country Garden, Daphne, Antra, Goodbaby, Dawnrays Pharma, New China Life and expect a raft of broker revisions on stocks that have already reported.
No data due

Public sentiment against the government rises 
as secretary for justice believes there is not a reasonable prospect of convictions in the private prosecution cases brought by Democratic Party lawmaker Ted Hui Chi-fung against a taxi driver who allegedly rammed protesters with his vehicle last October as well as a policeman who shot a student protester in November. -VE

Short Selling HSI Monday 21% vs 20.7% Friday
Top Shorts Hang Lung Ppty (101) 52% (stock hit a new high), Ping An (2318) 49%, CLP (2) 40%, ICBC (1398 ) 38%, Sands China (1928) 35%, HSBC (5) 35%, Wharf REIC (1997) 34%, Sino Land (83) 34%, CCB (939) 34%, China Mobile (941) 32%, Want Want (151) 31%, Hang Seng Bank (11) 30%, China Res Land (1109) 30%, Country Garden (2007) 29% Sinopec (386) 27%, China Life (2628) 26%, NWD (17) 25%, Henderson Land (12) 25%

EARNINGS today include Regal Hotels (78 HK), Kunlun Energy (135 HK), Shenzhen Int (152 HK), IDT Int (167 HK), Daphne (210 HK), Glorious Sun (393 HK), China Foods (506 HK), Shimao Group (813 HK), Guangzhou Baiyunshan Pharmaceutical (874 HK), China Taiping Insurance (966 HK), Chongqing Iron & Steel (1053), TCL Electronics (1070 HK), Goodbaby (1086 HK), CGN Mining (1193 HK), China Resources Gas (1193 HK), New China Life Insurance (1336 HK), Best Food Holding (1488 HK), Livzon Pharmaceutical (1513 HK), Yihai International (1579 HK), COFCO Meat (1610 HK), China Datang Corporation Renewable Power (1798 HK), Zhaojin Mining (1818 HK), Sunac China (1918 HK), SIM Tech (2000 HK), SSY Group Ltd. (2005 HK), Country Garden (2007 HK), ANTA Sports (2020 HK), Shanghai Fosun Pharmaceutical (2196 HK), Wison Engineering Services (2236 HK), Dawnrays Pharmaceutical (2348 HK) Jutal Offshore Oil Services (3303.HK), China Yongda Automobiles (3669 HK), China Harmony New Energy Auto (3836 HK).

EARNINGS OUT After market MondayY
UZHOU GROUP (1628.HK) interim result ended June 2020. The revenue +20.4% YoY to RMB14.007 billion. The net profit amounted to RMB1.019 billion, -37.8% yearly. EPS was RMB18.43 fen. An interim dividend of HK12 cents was declared, flattish yearly.
YUEXIU PROPERTY (123.HK) interim results for the period ended June 2020. Turnover +8.8% YoY to RMB23.714 billion. The net profit amounted to RMB1.995 billion, +6.7% YoY. EPS was RMB0.1288. An interim dividend of HK$0.057 was declared.
REGENT PACIFIC (575.HK) interim results ended June 2020. The loss widened to US$27.155 million from US$23.304 million in the corresponding period of the previous year. LPS was US1.478 cents. No dividend was declared.
TINGYI (322.HK) interim results ended 30 June 2020. Net profit +58.4% yearly to RMB2.38 billion. EPS equaled 42.33 fen. No dividend was declared.
YIXIN (2858.HK) interim results for the period ended June 2020. Turnover -48.6% YoY to RMB1.624 billion. The results swung into loss of RMB1.053 billion. LPS was RMB0.17. No dividend was declared.

AAC TECH (2018.HK)'s management said at the online results conference
that the company will keep polishing its product mix, foreseeing plastic lens to be priced at $4-4.5 for mid-to-long term, given sizeable production efficiency of the company with edges of production cost.  The pricing level may be more favorable with GM at above 40%, assuming WLG to realize mass production and substitute the traditional high-end plastic lens on the market.  The MD voiced confidence that the 20-million-unit production capacity of WLG by the year end is achievable.  As to the investment of XIAOMI-W (1810.HK)  and OPPO in the optical unit, the management found it salubrious to the company, which optimized the shareholder structure of optical segment and improve industry position to increase value.  As to whether AAC Communications will be split off for listing, Mok deemed it as sensitive inside information, for which the board of directors was not aware of any disclosable information or IPO underway that needed to be disclosed.
TENCENT (700.HK) and the strategic partner of the latter's e-sports technology ally, RAZER (1337.HK)  attended the 2020 Global E-sports Summit and Tencent E-sports Annual Conference in Hainan, China today, at which a brand new Razer-Tencent e-sports custom suit was launched.
NEW WORLD DEV (17.HK) had earlier applied for a compulsory sale of the commercial/ residential property, State Theatre Building, at No. 277-291 King's Road, North Point.  The Lands Tribunal granted today an order to allow the sale with a reserve price of $4.7 billion, logging the biggest amount on compulsory sale record. The company's spokesman welcomed the decision.
MTR CORPORATION (66.HK) announced that following the commissioning of the Tuen Ma Line (TML) Phase 1 earlier this year, work for the full opening of the TML has progressed well. The suitable measures for the structures at and near Hung Hom Station Extension are complete and the last section of overhead line was energized in July 2020, followed by commencement of dynamic train testing for the signalling system in August 2020.  The overhead line energization is a critical milestone for the project as it allows train testing to commence along the whole railway alignment, said James Chow, Divisional General Manager – Projects Construction of MTR Corporation. It brings MTR a step closer to the full opening of the TML.
CHINA OVERSEAS (688.HK) has been deploying a prudent financial strategy, whose gearing ratio at 59.77% is relatively low as compared with its peers, said Chairman Yan Jianguo. The company does not seek abrupt expansion as it only pursues high-quality stable growth. Asked if the Chinese developer may achieve its FY20 sales target at $400 billion, General Manager Zhang Zhichao stated that the coronavirus pandemic during 1H20 has rendered the goal challenging, but the group is committed to meeting the target, which may still be achievable as long as the external environment remains fundamentally unchanged.
CHINA TELECOM (728.HK) the number of mobile subscribers was 346.07 million in July 2020. The net increase was 2.60 million, faster than June’s. During the month, the number of 5G subscribers was 49.27 million. The net increase was 11.43 million, up from 7.79 million in June.
At the invitation of counterparts, China's Foreign Minister Wang Yi is going to have formal visits to Italy, the Netherlands, Norway, France and Germany during the period from August 25th to September 1st, a spokesperson for the Ministry of Foreign Affairs announced at a press conference.

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