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International Summary

"CAPIS Global Recap – 8/8/2018"

posted by Clayton Duff on 08/08/2018 at 6:47 am

by Clayton Duff

08/08/2018 at 6:47 am

Asian Headlines

Asian markets ended mixed today with mainland China giving back a good bit of yesterday’s gains.  Apart from Energy all sectors fell on the Shanghai, led by Consumer Discretionary names.  Elsewhere moves were limited with small gains seen in Hong Kong, South Korea, and Australia.   On the tariff front $16B of goods from China is expected to be assessed on starting August 23rd.  Related, Chinese exports grew 12.2% in July, ahead of the 10.0% growth expected and stronger than the prior 11.2% revised reading.  Imports rallied 27.3%, well ahead of the 16.5% growth rate expected.  On that the Trade surplus fell to $28.05B from the prior $41.46B reading.

  • The Shanghai will institute a call auction similar to the one used in Hong Kong and on the Shenzhen starting August 20th.  Over the final 3 minutes of trading orders will not be allowed to be retracted and will determine the closing price.
  • China’s NDRC is pushing for debt to equity swaps and will use targeted RRR cuts to support the move.
  • China Tower IPO’d today, closing flat on the day.  $6.9B was raised in the deal for the company which operates 1.9M cell phone towers across the country.
  • Nippon Telegraph and Telephone +3.6% pushed the telco space to lead on the Nikkei after reporting solid 1Q earnings.  The firm is reorganizing its structure and will create a venture capital fund of up to $500M.
  • The AUD held steady after RBA Gov Lowe said the board sees no reason to move rates over the short term.  He again noted the next move will likely though be to the upside assuming the economy moves as expected with inflation seen at 2.5% by the middle of 2020.
  • Commonwealth Bank rallied 2.6% as profit and AUM grew. Post money laundering and other scandals executives at the bank though lost out on $100M, mainly in bonuses, with the board holding them responsible last year.

European Headlines

European indices are essentially flat on the session with little moves away from flattish levels sector-wise.   Tech and Autos are up small with Health Care down ~75bps.  370 names on the SXXP 600 are in the green with turnover on the day down a dismal 25%.

The Pound is again lower, touching lows not seen since last August as it is under 1.29 vs the Dollar.  Earlier the BoE’s McCafferty said  it was reasonable to expect a couple more rate hikes over the next two years.  With the Dollar on the upswing today oil is pulling back.

On the earnings front Glencore -1.1% is trading lower after 1H adj ebit missed views.  the CEO further said trading results for the 2H could be down as well.

Novo Nordisk -4.3% is weighing on the Health Care sector on missed 2Q ebit and sales.  The firm sees average prices in the US lower next year as well while announcing they are paring ~200 positions in manufacturing.

Prudential +2.7% reported 1H op profit ahead of views noting their Asian biz is fast growing and they will not sell it.  However later in the session headlines hit that Ping An is considering acquiring said unit as it has already visited with the Chinese gov concerning the matter.

Also in the insurance space Munich Re -2.5% confirmed their FY view despite a weaker 2Q.  The firm cited man-made losses such as the Columbian dam breach.  Even though premiums were up their combined ratio hit 102 as they paid out more than premiums paid-in.

Event Survey Actual Prior Revised
JN 35) BoP Current Account Balance Jun ¥1222.2b ¥1175.6b ¥1938.3b
JN 36) BoP Current Account Adjusted Jun ¥1866.7b ¥1762.4b ¥1850.0b
JN 37) Trade Balance BoP Basis Jun ¥826.8b ¥820.5b -¥303.8b
JN 38) Bank Lending Incl Trusts YoY Jul 2.00% 2.20%
JN 39) Bank Lending Ex-Trusts YoY Jul 2.00% 2.10%
AU 40) Home Loans MoM Jun 0.00% -1.10% 1.10% 1.00%
AU 41) Investment Lending Jun -2.70% -0.10%
AU 42) Owner-Occupier Loan Value MoM Jun -1.00% 0.70%
CH 43) Trade Balance CNY Jul 227.10b 176.96b 261.88b 260.89b
CH 44) Exports YoY CNY Jul 5.60% 6.00% 3.10% 3.00%
CH 45) Imports YoY CNY Jul 12.50% 20.90% 6.00%
CH 46) Trade Balance Jul $38.92b $28.05b $41.61b $41.46b
CH 47) Exports YoY Jul 10.00% 12.20% 11.30% 11.20%
CH 48) Imports YoY Jul 16.50% 27.30% 14.10%
SK 49) Bloomberg Aug. South Korea Economic Survey (Table)
JN 50) Bankruptcies YoY Jul -1.68% -2.26%
IT 51) Bank of Italy Report on Balance-Sheet Aggregates
JN 52) Eco Watchers Survey Current SA Jul 48 46.6 48.1
JN 53) Eco Watchers Survey Outlook SA Jul 49.9 49 50
SW 54) Prospera Swedish Inflation Expectations Survey
FR 55) Bank of France Ind. Sentiment Jul 101 101 101
AU 56) Foreign Reserves Jul A$69.1b A$75.8b
SP 57) Industrial Output NSA YoY Jun -2.00% 1.60% 1.30%
SP 58) Industrial Output SA YoY Jun 1.90% 0.50% 1.60% 1.30%
SP 59) Industrial Production MoM Jun -0.20% -0.60% 0.90% 0.80%
PO 60) Unemployment Rate 2Q 6.70% 7.90%

About the Author

ClaytonDuffFVP,Senior International Trader

Clayton Duff joined the firm in 2008. He has worked in the industry since 1994 and held various trading and sales positions before CAPIS, including four years as a trader for First Southwest. He earned his bachelor’s degree from the University of Texas Arlington. Clayton maintains Series 3,...

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