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04.23.2019 15 new posts under Morning Note (8), General (3), International Summary (3), and 1 more category

International Summary

News Trading Desk

International Summary

"CAPIS Coming of Age Day Global Markets 1/14/2019"

posted by Matthew Kiselica on 01/14/2019 at 6:47 am

by Matthew Kiselica

01/14/2019 at 6:47 am

Asian Markets

Chinese trade data is the day’s key driver of trading action.  China suffered an unexpected decline to both Imports and Exports during December.  Both numbers are the lowest result since Dec. 2016.  (All data posted below in our Markets and Macro Section.)  The results are creating two fears.  The trade spat between the U.S. and China is having a negative impact and domestic Chinese demand is slowing.  The overall Chinese trade balance with the U.S. for 2018 was the largest since 2006.  Perhaps the silver lining is this result may compel China to strike a deal with the U.S.  The next talks are scheduled to be held at the end of the month when Prem. Liu comes to the States.  Also on the macro front, FDI suffered a significant slump.

This resulted in each of the major markets ending the day lower.  Australia outperformed with a minor down-tick.  It had underperformed on Friday.  Japan was closed for Coming of Age Day.  All the major sectors ended the day lower with telcos and energy off c. 1%.

Other Important Headlines

  • Geely Auto -3.2% says it has not reduced its 9.7% stake in Daimler -0.2%.  A Bloomberg report from Friday claimed the company had sold half its holding.
  • The trade data sparked an especially sharp response among luxury names: i.e. Prada -4.8%.  A slowdown in China is particularly worrisome with the Chinese New Year looming.
  • Reports allege Chinese pharma companies may have supplied expired polio vaccines.
  • The retail portion of Tencent’s -2.8% telemarketer Weimob IPO is under-subscribed while the institutional tranche saw modestly stronger demand.
  • The Korean Economic Daily states S. Korean duty free shops saw a 34.0% increase in revenues to $17.2b during 2018.
  • Wesfarmer’s -2.15% sees H1 department store sales down y/y.
  • Goldman Sachs upgraded Lenovo +5.3% to buy.
  • CapitaLand (halted) is purchasing Asdendas Pte and Singbridge Pte from Temasek Holdings for S$6b.

European Markets

Europe has been trading in the red since the open.  The markets have other factors contributing to the selling pressure in addition to the Chinese data.   Industrial production in Europe fell more than anticipated during November.  Greek worries have cropped up again.  The Defense Minister resigned.  This is significant because he heads coalition party member, Independent Greeks.  PM Tsipras as called for a confidence vote Wednesday.  Turkey and the Lira have seen pressure after Pres. Trump threatened the nation with “economic devastation” if Kurds are targeted once the U.S. completes its withdrawal from Syria.

This has almost all the major sectors lower.   Technology, personal goods, healthcare, basic resources and banks are down c. 1% or more.  Autos have regained lost ground and are flat with the recently battered suppliers providing the support.

Snippets from the Region

  • Dialog Semi -3.3% has provided some comfort to the market despite Q4 revenues falling below the range.  Despite all the Apple concerns, the company saw non-Apple revenue streams improve reducing its reliance upon the U.S. tech giant.
  • Continental +1.2% is managing to advance despite seeing its FY ’19 EBIT margin below forecasts.  However, it does project the IPO of its powertrain unit to be completed by mid-year.
  • Investors are concerned Premier Oil -9.6% will need to issue rights if it bids for Chevron North Sea assets that are up for sale.

On Our Side of the Pond

  • Newmont Mining is offering to purchase Goldcorp for $10b.  The all stock deal is 0.328 Newmont shares for each Goldcorp share held.
  • Pacific Gas and Electric has notified employees it will officially file for bankruptcy by the end of the month.
  • Citigroup results are due this morning and Shaw Communications north of the border.

Markets and Macro

Markets Snapshot

Event Survey Actual Prior Revised
AU Melbourne Institute Inflation MoM Dec 0.40% 0.00%
AU Melbourne Institute Inflation YoY Dec 1.90% 1.60%
CH Exports YoY CNY Dec 6.60% 0.20% 10.20% 8.70%
CH Imports YoY CNY Dec 12.00% -3.10% 7.80% 7.70%
CH Exports YoY Dec 2.00% -4.40% 5.40% 3.90%
CH Imports YoY Dec 4.50% -7.60% 3.00% 2.90%
CH Trade Balance CNY Dec 345.00b 394.99b 306.04b 286.08b
CH Trade Balance Dec $51.60b $57.06b $44.74b $41.86b
IN Wholesale Prices YoY Dec 4.51% 3.80% 4.64%
GE Wholesale Price Index YoY Dec 2.50% 3.50%
GE Wholesale Price Index MoM Dec -1.20% 0.20%
CH Foreign Direct Investment YoY CNY Dec 24.90% -26.30%
EC Industrial Production SA MoM Nov -1.50% -1.70% 0.20% 0.10%
EC Industrial Production WDA YoY Nov -2.10% -3.30% 1.20%
IN CPI YoY Dec 2.20% 2.19% 2.33%
CA Teranet/National Bank HPI MoM Dec -0.30%
CA Teranet/National Bank HPI YoY Dec 3.10%
CA Teranet/National Bank HP Index Dec 224.74
CA Bloomberg Nanos Confidence 11-Jan 55.5

About the Author

MatthewKiselicaFVP,Manager of International Trading

Matthew Kiselica joined CAPIS in 2010 and has over twenty-five years of industry experience. Prior to CAPIS, he was vice president of Cazenove’s global sales trading desk in New York. Matthew is a board member for the National Psoriasis Foundation. He earned his bachelor’s degrees in fina...

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