Check out the key picks for this week by SaxoStrats team

STOCK FOCUS – introducing NASDAQ FANG Futures

  • Due to client demand, as well as being incredibly thematic & important for the plus 9yr bull market, Saxo has added the FANG futures onto its trading platform
  • The FANG futures are based on a basket of the hottest equity names in the tech space, including Alphabet (google), Amazon, Apple, Nvidia [These first 4 make up +40% of the weighting], Baidu, Alibaba, Facebook, Netflix, Tesla & Twitter
  • A lot of different strategies as well as hedges can be put together using these futures – for instance, one may be long the Nasdaq or the S&P 500 but wants to limit their exposure to the FANGs
  • As well as just outright directional views; a long if one thinks the space has sold off too much, or a short if one thinks there is a lot more downside to come
  • TRADE YOUR VIEW WITH SAXO - FAANG:xcbf

FX FOCUS – Yen on JGB moves + continued RMB weakness?

USDJPY

  • The much-anticipated Bank of Japan meeting came & went, with Kuroda buttoning down the dovish hatches by committing to more forms of easing despite rising global bond yields
  • USDJPY continues to be very range bound at these 110.50 to 112.80 levels, with the advent of LDP elections before Sep 20, Fed hike meeting Sep 26, next BoJ Meeting Sep 19 & Nov 6 US mid-term elections we are likely to see the DollarYen above or below this tightening range
  • Bulls (bears) could look to play one touch options with a 115 strike (109) with a Nov 15 expiry, which can be closed earlier
  • TRADE YOUR VIEW WITH SAXO - USDJPY

USDCNH

  • The tri-factor of US tariffs on China, continued easing by the PBOC & potential slowdown in China seems to be leaving USDCNH with only one direction which is upward
  • Next key level of support is the 20 day moving average of 6.7470, whereas next key level of resistance should be 6.90. Most recent multiyear high was 6.9895 at the start of 2017
  • TRADE YOUR VIEW WITH SAXO - USDCNH
  • China Tower wants to raise up to $8.7 billion with the greenshoe exercised on strong demand the deal could raise up to $10bn with a possible listing date on the HKEX of 08/08/18. If a 15 percent over-allotment option is exercised, that would bring the deal size to about $10 billion
  • The offering may place China Tower ahead of Xiaomi, as the world’s biggest IPO this year and the largest since Alibaba
  • China Tower was formed by combining the transmission facility assets of China Mobile, China Unicom, and China Telecom in 2015 as part of a broader plan to reform the nation’s state-dominated wireless industry. The company is the world’s largest owner of telecom tower infrastructure, per the prospectus
  • When you consider China Tower as a giant telecom stock with a monopoly position, the attraction is reasonably obvious. Couple this with superior organic growth prospects in the world’s second-largest economy along with an expanding middle class in both size and wealth increasing demand for internet of things applications and mobile data
  • However, With China Tower’s largest shareholders — China Mobile Ltd., China Unicom Group Corp. and China Telecom Corp. — also accounting for 99.4 percent of revenue, there’s a clear conflict of interest that may not necessarily align with the interests of shareholders.
  • TREADE YOUR VIEW WITH SAXO – [00788:xhkg] 8/8/18

STOCK FOCUS – China Easing bias

  • PBOC easing bank capital requirements: the “structural parameter” in the Macro-Prudential Assessment of their balance sheets will be lowered by around 0.5 points, reducing required capital buffers, to support credit supply due to rising uncertainty from trade tensions and slowing growth momentum due to deleveraging campaign
  • The China easing bias is now in place revealing a limited tolerance for risks to growth. We haven't switched to full scale easing monetary policy, but the PBOC has a large toolbox they can use to manipulate liquidity: we have had three reserve ratio requirement cuts this year, we saw a record medium-term lending facility liquidity injection last week, and the fiscal stimulus package including 65 billion yuan in tax cuts, expanding the preferential policy for small firms to all firms plus an infrastructure spending package all aimed at boosting domestic demand
  • Tactical - lean into policy driven sectors = Industrials and banks have been sold off heavily, double barrelled fiscal and monetary stimulus package should, all things being equal, support these sectors in coming months
  • TRADE YOUR VIEW WITH SAXO – ICBC (01398:xhkg, 601398:xssc), CCB (00939:xhkg, 601939:xhkg)

Weekly Most Traded A shares *

Stock CodeStock NameSaxo CodeAverage Daily Value Traded RMB (26 Jul-1 Aug)
601318 CH EquityPING AN INSURA-A601318:xssc2,468,442,138
000063 CH EquityZTE CORP-A000063:xsec2,074,544,566
600519 CH EquityKWEICHOW MOUTA-A600519:xssc1,926,843,939
000636 CH EquityGUANGDONG FENG-A000636:xsec1,875,118,149
600309 CH EquityWANHUA CHEMIC-A600309:xssc1,823,938,018
000735 CH EquityLUONIUSHAN CO-A000735:xsec1,593,185,348
000725 CH EquityBOE TECHNOLOGY-A000725:xsec1,573,368,013
600585 CH EquityANHUI CONCH-A600585:xssc1,520,313,966
000333 CH EquityMIDEA GROUP CO-A000333:xsec1,498,369,037
000651 CH EquityGREE ELECTRIC-A000651:xsec1,485,137,394

* Source: Bloomberg