A solid start to the week with all major indices in the green. The markets in Greater China lead the way. China announced a number of initiatives that pleased investors. Among those are relaxing income tax on overseas income and possible changes to local property tax rules.
All the major sectors gained. Real estate and consumer goods better by more than 2%. Among Chinese consumer goods pork producers and distillers were leaders. Bloomberg Industries notes Chinese consumer trends should bolster prospects. Many other sectors gained more than 1%.
Regarding the Sino-U.S. trade talks, a meeting between Pres. Trump and Pres. Xi is now said to be penciled in for June. Perhaps a sign of decreasing angst between the two parties, Chinese holdings of U.S. Treasuries saw a marginal increase for the 2nd consecutive month. China’s January Treasury holdings are $1.13t vs. $1.12t during December.
Japan’s February trade balance is ahead of expectations. However, that was because imports slumped more than exports.
Other Important Headlines
- It was a tough day for Prada -10.6%. The companies FY sales are better by 6%. However, that is an overall decline from the 9.4% growth during H1. The company notes sales in the Asia Pacific region slowed during H2. It will end price markdowns this year. They are having a negative impact on margins. Several brokers are cutting estimates.
- China Communication Construction +1.9% following Friday’s new business update. FY18 new contracts rose 1.12% to CNY890.873b. Overseas new contracts fell 25.89% to CNY 159.013b.
- Also, WH Group +5.4% released earnings after Friday’s close. Revenues are $22.6b which is inline. But FY NI of $943m lags consensus of $1.04b. The shares traded well despite a Citigroup downgrade to sell with the sector advancing as noted above.
- Chinese cement stocks did not take part in today’s advance. Reports say Chinese authorities are investigating a price hike that occurred last year.
- Chinese February excavator production is better by 68.7% y/y reaching 18,800 unit.
The region has been up small for most of the session and the markets are trading in a fairly tight range. Basic resources and banks are better by more than 1% with most other sectors green. Technology and travel/leisure are off by about 0.5%.
The energy markets are mixed with minimal changes. S. Arabia signaled the OPEC+ production cuts should be maintained.
- Commerzbank +6.9% and Deutsche Bk +4.3% have confirmed they are formally conducting merger talks and reviewing strategic options. Also pertaining to Deutsche Bk, Allianz -0.2% is said to be considering combining its asset management unit with DWS +9.0%. Deutsche Bk holds c. 78.0% of DWS.
- The Bank of Italy is ordering ING -2.4% to halt transactions with new customers. After a review of operations, the BoI says ING is not adhering to anti-money laundering rules.
- Investors are ringing up Worldpay +11.6%. Fidelity National Information Services is making an agreed bid for the online payment processor. Worldpay shareholders will receive 0.9287 FIS share for each WP share held. Additionally, they will receive $11.00 per share held. That equates to a c. +13.6% premium to Friday’s close in the States.
On Our Side of the Pond
- Wednesday’s FOMC meeting will be the dominant theme for investors across the globe. Expectations are the central bank will signal just one rate hike this year.
- Reports allege Eldorado Resorts and Caesers Entertainment are exploring the possibility of a merger.
- Boeing continues to remain in the news. The Dept. of Transportation is investigating the FAA’s approval of the anti-stall system for the 737 Max.
- Pres. Trump heaps harsh criticism upon GM.
Markets and Macro
|JN||Trade Balance Adjusted||Feb||¥86.0b||¥116.1b||-¥370.0b||—|
|UK||Rightmove House Prices MoM||Mar||—||0.40%||0.70%||—|
|UK||Rightmove House Prices YoY||Mar||—||-0.80%||0.20%||—|
|JN||Tokyo Condominium Sales YoY||Feb||—||-6.70%||-1.80%||—|
|JN||Industrial Production MoM||Jan F||—||-3.40%||-3.70%||—|
|JN||Industrial Production YoY||Jan F||—||0.30%||0.00%||—|
|JN||Capacity Utilization MoM||Jan||—||-4.70%||-1.90%||—|
|CH||FX Net Settlement – Clients CNY||Feb||—||-102.3b||103.1b||—|
|EC||Trade Balance SA||Jan||15.0b||17.0b||15.6b||16.0b|
|EC||Trade Balance NSA||Jan||—||1.5b||17.0b||—|
|CA||Int’l Securities Transactions||Jan||—||—||-18.96b||—|
|CA||Bloomberg Nanos Confidence||15-Mar||—||—||55.5||—|
|US||NAHB Housing Market Index||Mar||63||—||62||—|