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Asia expect a broad based rebound; FED kept policy unchanged but didn’t give a taper timeline, results in focus and China seeking to re-assure investors that the recent policy crackdown was targeted. The trouble is that whilst it wasn’t meant to impact other sectors; it did. Moreover it highlights that Beijing can, in the future, decide to target any sector. That said we are likely to see a strong rebound today with Team China active initially.
Australia Futures indicate market to open +19pts but news of extended lockdowns -VE. Oil & Gold companies +VE, Rio Tinto could see pressure; good earnings but missed estimates. NEXTDC in focus on news it intends to expand further in Sydney.
Data after the open; Export and Import Prices
Japan Nikkei local futures +20pts, Chicago futures -30pts Earnings in focus 159 companies report including; Renesas, Tepco, Murata, Fujitsu, Omron, Panasonic and others.
TOPIX re-weight on the close
S Korea Expect markets to open higher. Earnings in focus, especially Samsung and LG names.
Taiwan Market to open higher with Tech in focus. TSMC likely to react inline with Samsung’s results.
China Market to open higher after Securities Regulators held a meeting with major bankers to explain the policy on Education and ease concerns about wider crackdowns.
HK ADR’s +709pts at 26,182 and futures strong; a broad based rebound and short squeeze with Ecommerce names strong as China seeks to re-assure investors that there will be limited downside. Baba’s ADR +4% and Tencent’s +7.4%, Meituan +11%
Opened Dow +40pt, S&P and NDX -0.2%, initial claims, GDP and PCE data in focus
DOW -0.36%, NDX +0.7%, S&P -0.02%, Russel 2K +1.51%
Dow and S&P traded sideways around flat, NDX saw an early rally and then traded higher as Tech heavyweights report good earnings.
Sentiment helped by news of a deal on the infrastructure bill; good for construction names.
Pfizer +3.2% as earnings beat.
Banks JPMorgan Chase +0.2%, Citigroup +0.9% Wells Fargo +0.8%, Amex -1.7%
Work from home names: Facebook +1.5%, Apple % warned on chip shortages, Amazon +0.1%, Netflix +0.1%, Disney -0.2%, Zoom Video +0.5%, Alphabet +3.2% (adverstising revenue +69%) and Microsoft -0.1%,
Tech NXP Semi +2.2%, Nvidia +1.5%, Micron +1.8%, AMD +7.5% earnings beat and raised guidance, Skyworks +2.1%
Re-opening stocks Boeing +4.2% (first profit since 2019), Caterpillar +0.7%, Simon Property %, Kohl’s -0.3%, Nordstrom +1.5%, Gap -1.9%, United Airlines %, Carnival +0.1%, Wynn Resorts +1.8%, Chevron +0.6%, Exxon Mobil +0.7%,
Lock down names Campbell Soup -1.3% General Mills -1.2%, JM Smucker -0.9%
Facebook -3.9% as it warned on revenue ahead on advertising revenue as Apple changed its policy.
Qualcomm +2.4% after earnings expect supply side improvements for the rest of the year; focused on 5G networks +VE.
MBA Mortgage Applications +5.7% vs -4% prior
MBA 30yr Mortgage Rate 3.01% vs 3.11% prior
Goods Trade Balance Adv Jun $-91.21b vs -88.16b May (F/cast was -87b)
Wholesale Inventories Adv Jun +0.8% MoM vs +1.3% May (F/cast was +0.8%)
EIA Gasoline Stocks Change -2.253m vs -0.121m prior (Consensus was -0.916m)
EIA Crude Oil Stocks Change -4.089m vs +2.108m prior (Consensus -2.928m)
Fed Interest Rate Decision no change and no taper timeline but economy is better.
USD was weaker vs Yen & Euro. Bitcoin +5.5% @ 40,115.96, VIX -5.4% @ 18.31, US T10 @ 1.238% as Fed leaves rates and policy unchanged but says economy is better. No timeline for tapering.
OIL Brent +0.42%, WTI +1% as inventory’s dropped although there are demand concerns as covid cases surge.
Gold +0.34%, Silver +1.4%, Copper -1.53%, Platinum +1.52%, Palladium +0.84%.
AHEAD GDP Growth Rate & Price Index, Initial Claims, 4 week Ave Claims, Continuing Claims, PCE Prices, Core PCE Prices, Pending Home Sales, EIA Natural Gas Stocks Change,
DAX +0.33%, CAC +1.19%, FTSE +0.29%
Expect markets opened flat; FTSE and DAX traded sideways around flat but the CAC trended higher. Earnings were in focus with British American Tobacco, GlaxoSmithKline, Rio Tinto, BASF and Santander publishing results. Also in focus was the US Fed decision.
Travel & Leisure +VE on news of UK easing restrictions and good results from WizzAir +8%. Tech sector +2.3%.
Deutsche Bank -1.1% despite a big beat as its all-important investment banking arm suffering a slide in revenues. The German lender reported a net income of 692 million euros ($818 million), smashing through analyst estimates of 328 million euros.
Barclays +2% Q2 beat and boosted returns with its investment banking and equities businesses posting record incomes.
St. James’s Place +5.6% on a strong earnings report.
Dutch storage company Vopak -5.9% as earnings missed
Consumer Confidence Aug -0.3 vs -0.3 Jul (f/cast was -2)
Import Prices Jun +1.6% MoM vs +1.7% May (F/cast was +1.2%)
Import Prices Jun +12.9% YoY vs +11.8% May (F/cast was +12.5%)
Consumer Confidence Jul 101 vs 103 May revised (F/cast was 101)
Nationwide House Prices Jul +10.5% YoY vs 13.4% Jun (F/cast was 11.5%)
Nationwide House Prices Jul -0.5% MoM vs +0.7% Jun (F/cast was +0.4%)
Eurozone Consumer Confidence, Sentiment data (Economic, Industrial and Services)
Germany Unemployment data, Inflation Data
France No data due
UK Car Production, BoE Consumer Credit, Mortgage Approval, Net Lending to Individuals
Nikkei local futures +20pts, Chicago futures -30pts Earnings in focus 159 companies report including; Renesas, Tepco, Murata, Fujitsu, Omron, Panasonic and others.
TOPIX re-weight on the close
Yen currently 109.90
Foreign Stock Investment
Foreign Bond Investment
Tokyo has reported 3,177 confirmed COVID-19 cases on Wednesday (+329 DoD), Nationwide was 9,576 cases; setting a new high in the number of confirmed cases. Governors of three prefectures near Olympics host city Tokyo are likely to ask the government to declare states of emergency for their regions after infections rose to a record high in the Japanese capital.
Nissan Motor Co (7201.T) on Wednesday raised its earnings outlook for the year, helped by a weaker yen and favourable demand in the United States and China, after reporting a surprise first-quarter operating profit.
Softbank reported to be selling a third of its Uber stake to cover losses on Didi and other losses from the Chinese policy change. -VE
Expect markets to open higher. Earnings in focus, especially Samsung and LG names.
No data due.
KDCA on Wednesday reported 1,896 new COVID-19 cases for Tuesday, its highest-ever daily increase, as the country struggles to subdue a fourth wave of outbreaks fanned by the more contagious Delta variant of the coronavirus.
North and South Korea are in talks to reopen a joint liaison office that Pyongyang blew up last year and to hold a summit as part of efforts to restore relations, three South Korean government sources with knowledge of the matter said. +VE for sentiment
Government on Wednesday gave the go-ahead for a pilot project to transfer leftover power from electric car batteries to power grids, under a “regulatory sandbox” scheme. The KCCI said, with the V2G service, electric vehicles would be able to charge at hours when there is less power load, and then release the power back to the grid when there is an overload of demand. +VE
LG Display on Wednesday said it has swung to the black in the second quarter of the year on the back of rising LCD panel prices and improvements in the OLED display business. The world's leading large-size OLED display maker reported a net profit of 423.8 billion won ($368.5 million), shifting from a loss of 503.8 billion won a year earlier. +VE
LG Electronics has completed the sale of a 49 percent stake in its electric vehicle part splitoff for $453.3 million to create a joint venture with Magna International‘s Austrian arm, a filing showed Wednesday +VE.
Hankook Tire & Technology, the world‘s sixth-largest tiremaker by sales, is further expanding its portfolio of Original Equipment tires by working with global automakers and ramping up efforts to secure core technology in the field. +VE
iPhones could be made available for purchase at LG Best Shops across South Korea as early as next month, after LG Electronics cleared a key hurdle – opposition from small phone distributors. +VE
Posco will build a nickel refinery plant to produce high-purity nickel for high-volume secondary batteries, the company said Wednesday.
The Korean steelmaker will be plowing about 230 billion won ($199 million) into building the plant, to be built on the premises of its main steel mill in Gwangyang, South Jeolla Province, near where its affiliate company SNNC is located. +VE
Market to open higher with Tech in focus. TSMC likely to react inline with Samsung’s results.
No data due.
CECC reported 18 new domestic covid cases +VE
Academia Sinica yesterday raised its forecast for Taiwan’s GDP growth this year to 5.05 percent, from the 4.24 percent it projected in December last year, as an improving global economy is bolstering exports and private investment is expected to more than offset subdued consumer activity. +VE
United Microelectronics Co (UMC), yesterday raised its chip price forecast for this year to as high as 13 percent year-on-year, amid persistent supply constraints and an improved product portfolio.
The Hsinchu-based chipmaker adjusted its price forecast after posting a record net profit for last quarter, which soared 78.8 percent annually to NT$11.94 billion (US$426.35 million) from NT$6.68 billion a year earlier +VE.
Chunghwa Precision Test Technology Co (CHPT) expects revenue to grow quarterly for the remainder of the year, as it is well-positioned to benefit from the robust demand for processors used in 5G smartphones and high-performance computing devices such as data centers. The growth momentum was disrupted last quarter as CHPT’s engineers were prohibited from visiting customers’ factories for product qualification after the government raised the COVID-19 alert in May to level 3 to curb infections, the company said yesterday +VE.
Tatung Co might return to profitability this year, Tatung chairman Lu Ming-kuang said yesterday. Lu made the remarks after an annual general meeting of Actron Technology Corp, where he is also chairman, at the automotive electronic diode supplier’s headquarters in Taoyuan’s Nankan District, the Central News Agency reported. Slight +VE
Taiwan has signed a contract with the US to purchase airborne reconnaissance systems to be deployed in Hualien, the Ministry of National Defense said yesterday. It did not give any details of the arms, saying only that they are the “latest generation airborne reconnaissance pods.”
Market to open higher after Securities Regulators held a meeting with major bankers to explain the policy on Education and ease concerns about wider crackdowns.
No data due
China told a visiting Taliban delegation on Wednesday it expected the insurgent group to play an important role in ending Afghanistan’s war and rebuilding the country, the Chinese foreign ministry said. Interesting that China is siding with the insurgent group rather than the elected government.
US Secretary of State Antony Blinken on Wednesday warned that Afghanistan would become a “pariah state” if the Taliban took control by force, after he met with India’s premier and top diplomat on the same day a delegation from the insurgent group visited China for talks with its foreign minister.
China's recent policy tightening against the tutoring industry and Internet platforms is good for long-term development of the country, and China remains committed to opening up its capital markets, the official Xinhua News Agency said late on Wednesday.
ADR’s +709pts at 26,182 and futures strong; a broad based rebound and short squeeze with Ecommerce names strong as China seeks to re-assure investors that there will be limited downside. Baba’s ADR +4% and Tencent’s +7.4%, Meituan +11%
No data due
Short Selling Wednesday 11.1% vs 12.4% Tuesday
Top Shorts Country Garden (2007) 42%, Haidilao (6862) 35%, Hang Seng Bank (11) 34%, Hang Lung Ppty (101) 30%, Bank Comm (3328) 30%, CCB (939) 29%, CLP (2) 28%, Bud Apac (1876) 28%, Bank of China (3988) 28%, ICBC (1398) 27%, CK Asset (1113) 27%, Wharf REIC (1997) 27%, Henderson Land (12) 26%, Hengan (1044) 25%, MTRC (66) 25%
The Lands Department announced that the tender for a site, Fanling Sheung Shui Town Lot No. 278 at Area 24, Kwu Tung, New Territories, has been awarded to the highest tenderer, Fruitful Season Investments Limited (parent company: Wheelock Properties Limited), on a 50-year land grant at a premium of $4.185 billion. Based on the highest buildable GFA of approximately 492,400 sq.ft., the price per sq.ft. is approximately $8,499, which is approximately 6.2% higher than the market’s expected ceiling.
Fitch Ratings downgraded the Long-Term Foreign-Currency Issuer Default Ratings (IDR) of EVERGRANDE (03333.HK), and its subsidiaries, Hengda Real Estate Group Co., Ltd and Tianji Holding Limited, to CCC+ from B. The report said the downgrade reflects EVERGRANDE's safety buffer in preserving liquidity is weakening.
HENDERSON LAND (00012.HK) named its residential project at No.1 Shau Kei Wan Road, Hong Kong East as "THE HOLBORN", providing 420 flats. The sales brochure is projected to be uploaded next month. The company said the project features from open-style to three-room units, with 142 open flats, 242 one-room flats, 24 two-room and 12 special featured. The key date is 30 April 2023.
TIMES NEIGHBOR (09928.HK) announced that the company was informed by Best Source Ventures Limited, a controlling shareholder of the company, that Best Source acquired an aggregate of 650,000 shares of the company at an average price of approximately HKD4.77 per share in the open market on 27 July 2021, involving $3.1005 million.
BIDU-SW (09888.HK) launched Apollo Park in Shanghai International Automobile City, marking the birth of another intelligent connected eco base after those in Beijing and Guangzhou. Shanghai Apollo Park will act as the intelligent connected command platform, autopilot driving command center as well as R&D center, with the aim to realize data connection and user connection.
EVERGRANDE (03333.HK)'s residential projects are under investigation of the Ministry of Housing and Urban-Rural Development (MOHURD) in Heze City, Shandong Province, due to underpricing which involved unfair competition, as Chinese media cited a letter circulated online, seemingly issued by the MOHURD.
GEELY AUTO (00175.HK) announced that, Jirun Automobile, a subsidiary of the company, entered into the joint venture agreement with Sunwoda (300207.SZ) and Geely Holding Automobile, pursuant to which the parties agreed to form the joint venture to engage in the development, production and sales of hybrid battery cells, battery modules and battery packs. The registered capital of the joint venture will be RMB100 million, and will be contributed as to RMB41.5 million, RMB30 million and RMB28.5 million by Jirun Automobile, Sunwoda and Geely Holding Automobile, respectively.
This and previous notes can be found at asianmarketsense.com and Substack ( Asian Market Sense )