1) U.S. Virus Relief Set to Vanish in Series of Fiscal Cliffs
2) EU Nations Deadlocked on Details of European Recovery Fund
The InvestQuest’s View: EUR has strengthened from 1.1250 to 1.1430 against USD in the last 10 trading days. If no agreement is reached on Sunday, it is likely that EUR will see some short-term price weakness. The next catalyst for EUR would be on 24 July (Fri), when Germany and France will report on their PMI figures.
3) China’s Stock Bull Run Sparks Fears of another 2015 Meltdown
The InvestQuest’s View: Am in agreement with comments made by Alexious Lee from Jefferies, who mentioned in the article that investors should be particularly cautious about Chinese small-caps that have made sizeable gains this year and should instead look for opportunities in cheaper Hong Kong-traded companies that also have mainland listings.
4) ESR-REIT and Sabana REIT Propose Merger
The InvestQuest’s View: Most brokers seem to be fairly optimistic on the merger. At the very least, the enlarged entity stands a chance for potential inclusion into the EPRA NARREIT Index, which will open the door for greater institutional demand and trading liquidity.
5) Market Monitors: Short-term Overbought Stocks
6) Market Monitors: Corporate Earnings Releases in the Week Ahead
7) Market Monitors: Country Macro Data Releases in the Week Ahead
8) Market Monitors: Asset Managers’ Allocation Views
1) U.S. Virus Relief Set to Vanish in Series of Fiscal Cliffs
America’s leaders face an urgent set of decisions on whether to extend history’s biggest rescue effort — or let parts of it lapse.
The Trump administration wants another relief bill, with a price tag not exceeding $1 trillion, before lawmakers head out of town for summer recess in early August. The Democrat-controlled House already approved additional measures worth $3.5 trillion, but Republicans who have a Senate majority oppose many of them.
Separately, one-third of tenants who responded to the Census Bureau’s Household Pulse survey during the first week of July said they had little or no confidence that they could make next month’s rental payment.
2) EU Nations Deadlocked on Details of European Recovery Fund
European Union leaders failed to unlock an agreement on a 750 billion-euro ($860 billion) response to the coronavirus pandemic after a second day of sparring in Brussels and will come back to try again on Sunday. The dispute is over how much of the package should be disbursed as grants and how much as loans.
Germany and France are insisting that at least 400 billion euros should be handouts, while Dutch Prime Minister Rutte and four other fiscal hawks from northern Europe are pushing for a much lower figure, a French diplomat said.
The 27 EU leaders are meeting in person for the first time since February, when initial talks over the EU’s seven-year, 1 trillion-euro budget also ran into a wall.
The InvestQuest’s View: EUR has strengthened from 1.1250 to 1.1430 against USD in the last 10 trading days. If no agreement is reached on Sunday, it is likely that EUR will see some short-term price weakness. The next catalyst for EUR would be on 24 July (Fri), when Germany and France will report on their PMI figures.
3) China’s Stock Bull Run Sparks Fears of another 2015 Meltdown
The value of Asia’s largest stock market increased by US$1 trillion in the past three weeks. The frenzy reminds some observers of the 2015 run-up – also fueled by liquidity and valuation expansions – which ended in a US$5 trillion wipeout.
Chinese stocks with dual listings in HK have their onshore shares trading at a 36% premium, the widest price gap in 17 months, according to a Hang Seng gauge tracking the difference between the two markets.
The InvestQuest’s View: Am in agreement with the comments made by Alexious Lee from Jefferies, who mentioned in the article that investors should be particularly cautious about Chinese small-caps that have made sizeable gains this year and should instead look for opportunities in cheaper Hong Kong-traded companies that also have mainland listings.
4) ESR-REIT and Sabana REIT Propose Merger
If approved by shareholders, is expected to create a sizeable S-REIT of about $4.0 billion in assets under management (AUM) and with a market cap of $1.8 billion, making it the fifth largest industrial S-REIT. This will allow the enlarged REIT to better compete for capital and benefit from a broader institutional base over time.
The deal requires approvals from the unitholders of both REITs and is expected to be completed by Oct-Nov 2020.
The InvestQuest’s View: Most brokers seem to be fairly optimistic on the merger. At the very least, the enlarged entity stands a chance for potential inclusion into the EPRA NARREIT Index, which will open the door for greater institutional demand and trading liquidity.
5) Market Monitors: Short-term Overbought Stocks
The below is a shortlist of the “Overbought” stocks from our Global Stock Watchlist, primarily sorted by the stocks’ traded currency.
We have shortlisted stocks which are currently trading with RSI >70 or have breached their upper Bollinger Band. These are two commonly followed technical trading indicators.
A number of these stocks are reporting their earnings in the next two weeks (dates shown in the rightmost column in the table below). The elevated technical price levels puts them more at risk of a sell-off in the event of an earnings miss or weaker than expected forward guidance.
6) Market Monitors: Corporate Earnings Releases in the Week Ahead
Summarizing the date and times of key company earnings for the week of 20- 24 July 2020. This list is updated weekly on this page.
| Stock Name | Exchange Country | Expected Release Date | Release Time (GMT +8, Singapore Time) |
| Mapletree Logistics Trust | Singapore | 20/7/2020 | Aft-mkt |
| Koninklijke Philips NV | Netherlands | 20/7/2020 | 13:00 |
| Halliburton Co | USA | 20/7/2020 | Bef-mkt |
| International Business Machine | USA | 20/7/2020 | Aft-mkt |
| Nidec Corp | Japan | 21/7/2020 | 14:15 |
| Keppel DC REIT | Singapore | 21/7/2020 | |
| Mapletree Industrial Trust | Singapore | 21/7/2020 | Aft-mkt |
| Coca-Cola Co/The | USA | 21/7/2020 | Bef-mkt |
| Lockheed Martin Corp | USA | 21/7/2020 | Bef-mkt |
| Prologis Inc | USA | 21/7/2020 | Bef-mkt |
| Philip Morris International In | USA | 21/7/2020 | 19:00 |
| Texas Instruments Inc | USA | 21/7/2020 | |
| Intuitive Surgical Inc | USA | 21/7/2020 | Aft-mkt |
| United Airlines Holdings Inc | USA | 21/7/2020 | Aft-mkt |
| Obic Co Ltd | Japan | 22/7/2020 | 14:00 |
| LINE Corp | Japan | 22/7/2020 | |
| CapitaLand Mall Trust | Singapore | 22/7/2020 | 08:00 |
| Keppel REIT | Singapore | 22/7/2020 | |
| Iberdrola SA | Spain | 22/7/2020 | 15:00 |
| Thermo Fisher Scientific Inc | USA | 22/7/2020 | Bef-mkt |
| Biogen Inc | USA | 22/7/2020 | Bef-mkt |
| HCA Healthcare Inc | USA | 22/7/2020 | Bef-mkt |
| KeyCorp | USA | 22/7/2020 | Bef-mkt |
| Baker Hughes Co | USA | 22/7/2020 | 19:00 |
| Microsoft Corp | USA | 22/7/2020 | Aft-mkt |
| Las Vegas Sands Corp | USA | 22/7/2020 | Aft-mkt |
| Kinder Morgan Inc | USA | 22/7/2020 | Aft-mkt |
| Align Technology Inc | USA | 22/7/2020 | Aft-mkt |
| Equifax Inc | USA | 22/7/2020 | Aft-mkt |
| Fujitsu Ltd | Japan | 23/7/2020 | |
| CapitaLand Commercial Trust | Singapore | 23/7/2020 | |
| Suntec Real Estate Investment | Singapore | 23/7/2020 | |
| Frasers Centrepoint Trust | Singapore | 23/7/2020 | |
| Ascendas Real Estate Investmen | Singapore | 23/7/2020 | Aft-mkt |
| Mapletree Commercial Trust | Singapore | 23/7/2020 | Aft-mkt |
| OUE Commercial Real Estate Inv | Singapore | 23/7/2020 | Aft-mkt |
| Croda International PLC | England | 23/7/2020 | Bef-mkt |
| Unilever PLC | England | 23/7/2020 | |
| RELX PLC | England | 23/7/2020 | |
| Daimler AG | Germany | 23/7/2020 | |
| Unilever NV | Netherlands | 23/7/2020 | 14:00 |
| Chipotle Mexican Grill Inc | USA | 23/7/2020 | 04:10 |
| Whirlpool Corp | USA | 23/7/2020 | 04:10 |
| Danaher Corp | USA | 23/7/2020 | 18:00 |
| AT&T Inc | USA | 23/7/2020 | 19:00 |
| Hershey Co/The | USA | 23/7/2020 | 19:00 |
| Union Pacific Corp | USA | 23/7/2020 | 20:00 |
| Kimberly-Clark Corp | USA | 23/7/2020 | Bef-mkt |
| Dow Inc | USA | 23/7/2020 | Bef-mkt |
| Southwest Airlines Co | USA | 23/7/2020 | Bef-mkt |
| Twitter Inc | USA | 23/7/2020 | Bef-mkt |
| Freeport-McMoRan Inc | USA | 23/7/2020 | Bef-mkt |
| American Airlines Group Inc | USA | 23/7/2020 | Bef-mkt |
| Intel Corp | USA | 23/7/2020 | Aft-mkt |
| Edwards Lifesciences Corp | USA | 23/7/2020 | Aft-mkt |
| FirstEnergy Corp | USA | 23/7/2020 | Aft-mkt |
| Hangzhou Hikvision Digital Tec | China | 24/7/2020 | |
| Informa PLC | England | 24/7/2020 | |
| Pearson PLC | England | 24/7/2020 | |
| Centrica PLC | England | 24/7/2020 | |
| Verizon Communications Inc | USA | 24/7/2020 | Bef-mkt |
| NextEra Energy Inc | USA | 24/7/2020 | Bef-mkt |
| Honeywell International Inc | USA | 24/7/2020 | Bef-mkt |
| American Express Co | USA | 24/7/2020 | Bef-mkt |
| Schlumberger Ltd | USA | 24/7/2020 | 19:00 |
| T-Mobile US Inc | USA | 24/7/2020 | |
| American Electric Power Co Inc | USA | 24/7/2020 | |
| Royal Caribbean Cruises Ltd | USA | 24/7/2020 |
7) Market Monitors: Country Macro Data Releases in the Week Ahead
Summary of most important macro data releases for the week of 20 – 24 July 2020. This is updated weekly on this page.
| Date / Time (GMT +8, Singapore time) | Country | Event | Period | Expected | Prior Period (Actual) |
| 07/21 07:30 | Japan | Natl CPI YoY | Jun | 0.1% | 0.1% |
| 07/21 16:30 | Hong Kong | CPI Composite YoY | Jun | 1.1% | 1.5% |
| 07/22 08:30 | Japan | Jibun Bank Japan PMI Mfg | Jul P | — | 40.1 |
| 07/22 19:00 | US | MBA Mortgage Applications | Jul 17 | — | 5.1% |
| 07/22 20:30 | Canada | CPI NSA MoM | Jun | 0.4% | 0.3% |
| 07/22 20:30 | Canada | CPI YoY | Jun | 0.2% | -0.4% |
| 07/22 22:00 | US | Existing Home Sales | Jun | 4.80m | 3.91m |
| 07/23 13:00 | Singapore | CPI YoY | Jun | -0.6% | -0.8% |
| 07/23 20:30 | US | Initial Jobless Claims | Jul 18 | 1293k | 1300k |
| 07/23 22:00 | US | Leading Index | Jun | 2.1% | 2.8% |
| 07/24 13:00 | Singapore | Industrial Production YoY | Jun | -2.6% | -7.4% |
| 07/24 15:15 | France | Markit France Manufacturing PMI | Jul P | 53 | 52.3 |
| 07/24 15:30 | Germany | Markit/BME Germany Manufacturing PMI | Jul P | 48 | 45.2 |
| 07/24 16:00 | Italy | Consumer Confidence Index | Jul | 103.3 | 100.6 |
| 07/24 16:00 | Italy | Manufacturing Confidence | Jul | 86 | 79.8 |
| 07/24 16:30 | UK | Markit UK PMI Manufacturing SA | Jul P | 52 | 50.1 |
| 07/24 20:00 | Brazil | IBGE Inflation IPCA-15 MoM | Jul | 0.53% | 0.02% |
| 07/24 21:45 | US | Markit US Manufacturing PMI | Jul P | 52 | 49.8 |
| 07/24 22:00 | US | New Home Sales | Jun | 700k | 676k |
8) Market Monitors: Asset Managers’ Allocation Views
Summarizing Asset Manager Views across equities and fixed income, based on publicly available sources. This is updated monthly on this page.
Consensus views for sub-asset classes are highlighted in red (Underweight), grey (Neutral) or green (Overweight). To account for differences in how asset managers present their views, mild underweight views are simply categorized as underweight and mild overweights are categorized as overweight. Where the same asset manager has differing views between long-term vs short/medium term views, the latter is used.
On Equities, Asia and US have been consensus overweights for a number of months now. The recent change has been asset managers’ increasing positivity on Europe, with the region being deemed an attractive cyclical play (compared to EM equities) with potential for a coordinated fiscal stimulus.
On Fixed Income, we continue to see consensus optimism on Asia Fixed Income and Investment-grade Corporates. German Bunds is a consensus Underweight.
Sources:
Blackrock Weekly Commentary (6th July 2020), retrieved 12th July 2020 from https://www.blackrock.com/us/individual/insights/blackrock-investment-institute/weekly-commentary#asset-class-views
JPM Global Asset Allocation Views 3Q2020, retrieved 12th July 2020 from https://am.jpmorgan.com/content/dam/jpm-am-aem/americas/br/en/insights/portfolio-insights/global-asset-allocation-views-br-en.pdf
Goldman Sachs Asset Management Market Pulse July 2020, retrieved 12th July 2020 from https://www.gsam.com/content/gsam/us/en/advisors/market-insights/market-strategy/market-pulse/2020/market-pulse-Jul2020.html
HSBC Asset Management Investment Monthly July 2020, retreived 12th July 2020 from https://www.expat.hsbc.com/wealth/insights/market-analysis/investment-monthly/2020-07/
UBS Macro Monthly July 2020, retrieved 12th July 2020 from https://www.ubs.com/global/en/asset-management/insights/asset-class-research/asset-allocation/2020/07-macro-monthly.html?campID=CAAS-ActivityStream
Standard Chartered Global Market Outlook (July 2020), retrieved 12th July 2020 from https://www.sc.com/retail/mce/index.html#/details?lang=en&ctry=SG&channel=PLRB&sapp=PUB&requestId=4270e109-a7d2-479b-b0e7-cad1eefa05d8
Nikko Asset Management Multi-Asset Monthly (July 2020), retrieved 19th July 2020 from https://insights.nikkoam.com/articles/2020/07/multi-asset-202007
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