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International Summary

"CAPIS Global Recap – 1/2/2018"

posted by Clayton Duff on 01/02/2019 at 6:42 am

by Clayton Duff

01/02/2019 at 6:42 am

Asian Headlines

Asian indices closed lower on the day with Japan shut until Friday.  The Hang Seng fell nearly 3% with traders disappointed in the Caixin China PMI Manufacturing reading.  The result of the contractionary 49.7 reading was probably not a surprise though after the official reading from Sunday night.  That reading came at 49.4 vs the 50.0 expected and was the 1st contraction since July of 2016. (The official non-manu PMI reading actually rose, at 53.8, vs the 53.2 expected and 53.4 prior reading).

All sectors finished lower in Hong Kong with IT, Health Care, and Energy off ~5%. Galaxy -4.9% and Sands China -4.4% both saw sizable losses despite December casino revenues up 16.6% YoY in Macau.   Sinopec -2.7% fell again, giving back Monday’s small rebound gains.   This of course is after the firm suspended two officials on what is said to be a sizable loss related to oil futures.  The loss has prompted the country’s asset regulator to inspect derivative trading accounts at several of the other large state-owned firms.

Lower oil prices also weighed Down Under with the sector down over 2.5% while Energy fell 5.5% in Taiwan.  The TWSE fell 1.8% with President Xi making it clear that Taiwan is a part of China with ‘no space’ for independence activities. Manufacturing PMI there also remained in contraction with a 47.7 reading for December, down from 48.4 previously.  While still not in expansion South Korea delivered a PMI reading of 49.8, ahead of the prior 48.6 result.

Hyundai -3.8% upped their view for expected worldwide vehicle sales for 2019 to 7.6M.  Last year though they expected to sell 7.55M vehicles, instead only reaching 7.4M units.  Kia -2.7% sees 2.92M units in sales next year.

European Headlines

Apart from Switzerland all European markets are open and back trading today.  Markets sold off early with most locales though shaking off earlier weakness somewhat.  Banks are underperforming, down 1.6%, with insurers down a bit over a percent as well.  Ahead of US traders returning to their desks volumes on the Stoxx 600 are lower by 20%.

With China’s disappointing PMI leading to weaker sentiment worldwide, readings are somewhat better in Europe with the UK reporting a solid beat. Italy too reported a better reading as well.  France and Germany met expectations with Spain and Sweden both light.  (Results below).

News in individual names is light today but there are a few highlights.   The UK’s Ophir Energy is up 28 % as both they and Indonesia’s Medco Energi confirm Medco is close to a cash offer for Ophir.

Property developer Hammerson -3.3% said they see FY results inline with estimates but worried investors by pausing their buyback plan until February.  Next month the firm will present FY results along with an update to their capital allocation plan.

In the banking space, Italy’s Banca Carige – halted- has been placed under administration by the government. Like several other local banks there bad debt holdings are insurmountable with the government to offload balance sheet risk.  Last month the bank’s largest shareholder rejected plans for a capital raise with much of the bank’s board of directors subsequently resigning.

Event Survey Actual Prior Revised
AU 1) CBA Australia PMI Mfg Dec F 54 53.7
AU 2) CoreLogic House Px MoM Dec -1.30% -0.90%
SK 3) Nikkei South Korea PMI Mfg Dec 49.8 48.6
CH 4) Caixin China PMI Mfg Dec 50.2 49.7 50.2
IN 5) Nikkei India PMI Mfg Dec 53.2 54
AU 6) Commodity Index AUD Dec 121.2 122.1 120.5
AU 7) Commodity Index SDR YoY Dec 10.50% 14.90% 13.40%
IR 8) Investec Manufacturing PMI Ireland Dec 54.5 55.4
SW 9) Swedbank/Silf PMI Manufacturing Dec 56.2 52 56.7 55.4
NO 10) DNB/NIMA PMI Manufacturing Dec 56 55.9 56.1 56.2
NE 11) NEVI Netherlands Manufacturing PMI Dec 55.6 57.2 56.1
SP 12) Markit Spain Manufacturing PMI Dec 52.4 51.1 52.6
IT 13) Markit/ADACI Italy Manufacturing PMI Dec 48.4 49.2 48.6
FR 14) Markit France Manufacturing PMI Dec F 49.7 49.7 49.7
GE 15) Markit/BME Germany Manufacturing PMI Dec F 51.5 51.5 51.5
EC 16) Markit Eurozone Manufacturing PMI Dec F 51.4 51.4 51.4
GR 17) Markit Greece Manufacturing PMI Dec 53.8 54
UK 18) Markit UK PMI Manufacturing SA Dec 52.5 54.2 53.1 53.6
DE 19) Danish PMI Survey Dec 58.1 58.2 57.9

 

About the Author

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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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