Asia at HK lunch: Chip makers remain under pressure
Market opened higher, initially to 7,610 level and then worked higher to test 7,630 around midday and then drifted lower. Currently +36pts (+0.5%) @ 7,623. Tech and Healthcare leading the market higher. Wesfarmers and Macquaries strong in early trades.
Weakness in Iron Ore miners BHP, Rio Tinto (exDiv yesterday), Fortescue Metals, and Mineral Resources as iron ore prices fell and CBA, also Baby Bunting on a sales warning.
Data New Home Sales Jul -20.5% MoM vs +14.8% Jun (F/cast was +13%)
Nikkei opened higher but sold down in early trade on the Mini SQ at the open. Traded in a tight range around flat for most of the morning before a bounce into lunch. Opened lower after lunch and trading sideways Currently +9pts (flat) @ 28,022 Expect caution into the close ahead of GDP data out pre market Monday.
Recruit +11% & Suntory +11% post earnings but Mercari -7% post earnings. Another big earnings day
Topix Opened higher and trended higher in choppy trading through the morning. Currently +5pts (+0.3%) @ 1,958
Leaders Services, Iron & Steel
Laggards Transport, Textiles
Market trading lower for a seventh day; Tech weak and rotation into Chemicals. Yesterday’s leaders weak today.
Kospi opened pre market data -VE and covid cases remain high. Market trended lower for the first 70 minutes to 3,147 level before finding support and then traded sideways in a tight range; currently -45pts (-1.4%) @ 3,163
Kosdaq traded in a similar pattern currently -17pts (-1.6%) @ 1,038
Import Prices Jul +19.2% YoY vs +14% Jun
Export Prices Jul +16.9% YoY vs +12.7% Jun
Taiex opened flat after good numbers from Hon Hai but sold down in the first 15 minutes, first support at 17,070. Then traded sideways for a couple of hours and then sold down again; currently -219pts (-1.3%) @ 17,008
CSI 300 opened lower and dipped before working higher to 4,994 but hit resistance and sold down, slight support at flat but then sold down again to -32pts (-0.6%) @ 4,942 going into lunch.
China announced reviewing a draft law on how companies should handle data; adding to the concerns/confusion of Govt policy. Covid concerns overhang the market with news that Ningbo Port had a closure because of a positive covid case.
Expect more caution ahead of data due Monday House Price Index, Retail Sales, Industrial Production, Unemployment and Fixed Asset Investment.
Pre market opened 26,296 -222pts vs -120pts ADR’s but then worked better but hit resistance at yesterday’s closing level around 10:30am. Then sold down to 26,220 before a slight bounce into lunch; -186pts (-0.7%) @ 26,332
Expect market to open lower following Asia
Ahead Eurozone Balance of Trade, German Wholesale Prices and French Inflation.
Opened flat Dow +20pts, S&P and NDX flat
Ahead Export and Import Prices, Michigan Prelim Data (Consumer Senitment, 5yr Inflation Expectations, Comsumers Expectation, Inflation Expectations, Current Conditions) Baker Hughes Rig Count.
FT Front Page
Zambia’s test for democracy Key is whether the poll is fair and then if the results are trusted.
Taliban offensive gathers pace as UK sends troops to evacuate staff
• Islamists sweep over Afghanistan • Provincial capitals fall • UN warns of humanitarian crisis.
Suggests a massive misreading of the on the ground politics. The US has shown its naievity and lack of understanding in its the negotiations with the Taliban.
But also high lights the coruption within the government and the fact that a lot of the machinery had been kept going by ‘contractors’ rather than local workers.
Another lesson in how not help a country and the real shame is that it is the ordinary citizens that will suffer.
See also Biden accused of ‘wishful thinking’ that the Taliban can be tamed on page 2
Spate of catastrophic weather events delivers $40bn blow to global insurers
An interesting read and a good reason not to be involved in the sector.
China unveils five-year plan to assert control
Party beefs up rules for strategic sectors to meet ‘demands for a good life’
Looks at how Beijing has outlined how it intends to control the private sector going forward. Investors have been shocked and the shares have sold off. Now they are trying to access how to value these stocks going forward and whether the new guidelines will stifle the growth prospects. The Government is not wrong to try and regulate the sector but it is a fine line between regulating and stifling growth going forward.
It is also worth remembering that many of these departments are new and so finding their way and ‘flexing their muscles’; all of which means that the Ecommerce sector is likely to see continue volatility in the coming months.
It will also be interest to see how much heed they take of public opinion regarding their proposed regulation. In that regard, the recent use of state media, suggest they are seeking a sounding board ahead of implimenting policy.
Hong Kong population declines as crackdown stokes exodus
89,200 people is much higher than previous years; interestingly the article say’s ‘“There are many reasons for people leaving, there is some concern about the education of their children, the national security law and how it might affect them . . . [as well as] economic reasons,” Paul Yip, a professor at the University of Hong Kong and population health expert, said.
The concern is that it is younger families moving out which will drain Hong Kong’s skills markets and exaccerbate the aging population. There is also a drain on the MPF which is a concern too. Talking to the High Net Wealth (HNW) managers whilst they are not seeing money being withdrawn from Hong Kongless it is notable that HNW clients are not repatriating as much money back to Hong Kong.
It is a shame to see and the risk is that it impacts companies decision to locate to Hong Kong if they cannot find the staff they need.
Fed official sees stimulus taper starting as soon as this year
An interview with Mary Daly, president of the San Francisco Fed, and a known ‘dove’.
A good read but worth remember the FOMC is made up of 12 members. Seven Fed Reserve Board, President NY Fed and four of the other eleven regional Fed Reserve Bank presidents (who serve one year terms in rotation). Good to note that there are varying views and opinions.
Companies and Markets
Robust smartphone demand lifts Foxconn Looks at the Foxconn (or Hon Hai as its know in Taiwan) results. Strong numbers beating expectations but with less clarity on the outlook. Stock is currently flat.
China’s worrying build-up of missile silos
Expanding nuclear arsenal justifies bringing Beijing into arms talks
Notes the recent change in position from its historic ‘minimum deterrence’ to a more assertive stance. Key is that all the nuclear powers should talk.
FT series Central banks face little pressure to tackle house prices when they rise Nice quote ‘Inflation-obsessed central bankers are growing sympathetic to the plight of millions of buyers squeezed out of property markets by soaring house prices. But taking action is another matter.’
Crypto divided over what to do with the bad guy
Questions the recent heist and return of crypto from the Poly Network