CAPIS Global Recap – 6/17/2019
Asian Headlines Trading in the far east started the week in an uninspiring fashion with summer doldrums certainly in play. Scant moves away from the flatline were evident across the board with turnover noticeably lower. Communication names were general winners with IT mostly lower. Health Care and Financials worked higher in Hong Kong with CE…
Trading in the far east started the week in an uninspiring fashion with summer doldrums certainly in play. Scant moves away from the flatline were evident across the board with turnover noticeably lower. Communication names were general winners with IT mostly lower. Health Care and Financials worked higher in Hong Kong with CE Lam backing down protesters and shelving the extradition bill for now. Throughout Asian hours oil held steady but is a bit lower in early European trading.
The PBoC enacted another RRR cut today with CNY100B in funds being released. This helped Financials in Shanghai as well with several headlines referring to regulators working through the takeover and restructure of Baoshang Bank. It has been reported corporate creditors have received full repayment while interbank creditors have received less so.
Down Under, Vocus Group -25% weighed on the Communication sector after AGL Energy pulled its bid for the firm. This is now the 4th potential acquirer that has looked behind the curtain and said no thanks. To note, tonight RBA minutes from June will be released.
- Samsung -.2% shook off earlier weakness post noting it sees memory chip demand “unlikely” to recover until the end of the year. Post the close headlines hit than Samsung may win a CPU manufacturing contract from Intel. Related, Huawei said they are prepping for a reduction in shipments of their phones to the tune of 40-60M. This is of course a direct fallout related to the White Houses’ target of the firm. The company’s marquee phone, the Honor 20, if expected to be launch this week but it may be pulled with poor sales expected. Evidently France’s two largest carriers are not preparing to sell it. That certainly is no help to their supplier Japan Display -7% which continues to drop. Also, TPK said they will not invest into the firm with JD now looking elsewhere for up to ¥80B.
Like Asia, moves in Europe are slight with with volume down by over 25% on the Stoxx 600 currently. The split of sectors and names up vs down is even with Banks and Insurers somewhat better but Travel lags. Adding to the summer slowdown traders await Wednesday’s Fed meeting and whether rates will be cut.
Pulling the Travel space lower Lufthansa -11% said lower earnings are expected this year with several points noted. Amid a price fare war their low-cost offering, Eurowings, is seeing disappointing revenues. This lead to the firm to pare ebit guidance to 5-6.5% from the prior 6.5-8% view. Higher fuel prices were also cited with a local tax issue prompting a €340M provision. On that the sector is weaker with Ryanair -6%, EasyJet -5.3%, and Wizz Air -4%. Majors ICA and Air France are also lower, down -3% and 4.6% respectively.
Construction firm Kier Group is off 17% post its announcement that net debt will be higher than anticipated. On that the firm said they are offloading non-core activities, adding they will suspend their dividend payment and lower headcount by 1200 employees.
Babcock International is up 4% after it rejected Serco’s earlier bid. They said the hookup would not have developed strategic merit and did not benefit shareholders.
Hennes & Mauritz -2.4% reported a bit better 2Q sales number, up 11% and ahead of estimates. It appears that inventory levels are being reduced.
|UK||1)||Rightmove House Prices MoM||Jun||—||0.30%||0.90%|
|UK||2)||Rightmove House Prices YoY||Jun||—||0.00%||0.10%|
|JN||3)||Tokyo Condominium Sales YoY||May||—||-10.40%||-39.30%|
|NO||6)||Trade Balance NOK||May||—||11.3b||17.6b|
|FR||7)||SURVEY REPORT: France Economic Forecasts in June 2019|
|SP||8)||SURVEY REPORT: Spain Economic Forecasts in June 2019|
|PO||9)||SURVEY: Portugal’s Economy to Expand 1.6% in 2019; Prior…|
|SZ||10)||Total Sight Deposits CHF||14-Jun||—||578.5b||578.1b|
|SZ||11)||Domestic Sight Deposits CHF||14-Jun||—||467.6b||469.1b|
|IT||12)||General Government Debt||Apr||—||2373.3b||2358.8b|
|EC||13)||Labour Costs YoY||1Q||—||2.40%||2.30%|