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Trade wars, tariffs, Trump’s former associates convicted… Markets don’t seem to care.


  • S&P 500 and Nasdaq hit record highs by week’s end.
  • Federal Reserve Chairman Jerome Powell spoke at the central bank’s annual Jackson Hole retreat. Mr. Powell’s message was bullish for stocks, signaling that even as the U.S. economy looks strong, the central bank plans on sticking to a gradual course of interest-rate increases.
  • Tesla will remain a public company according to founder Elon Musk. Stock may be volatile this week.

Global equities rally. ASX odd man out.

  Local currency AUD currency
S&P +0.86% +0.74%
NASDAQ +1.66% +1.53%
Europe +1.62% +1.32%
Nikkei +1.49% +0.61%
Hong Kong +1.68% +1.55
China +2.96% +3.85%
ASX -1.45% -1.45%
WTI Oil 68.72 65.71
AUD/USD 73.39 73.13
Treasury (10 year) 2.80 2.86

Notable economic stats last week

Core capital goods orders (non-defense, ex-aircraft) of +1.4% well ahead of +0.4% estimate and June's +0.6%. Core capital goods shipments (which feed into GDP) up 0.9%.

Economic calendar

  • Wed Aug 29: US consumer confidence (August): expected to fall to 126.2 from 127.4.
  • Thurs Aug 30: US GDP (Q2, 2nd estimate): forecast to be 4.1% QoQ from 2.2%. PCE prices expected to rise 1.8% from 2.5% QoQ, and core PCE prices to rise 2% from 2.2%. Personal Consumption Expenditure (PCE) is the Fed’s preferred measure of inflation, so should be watched.
  • Friday Aug 31: China mfg & non-mfg PMI (August): mfg PMI to rise to 51.3 from 51.2, while non-mfg to fall to 53.7 from 54.

Vue movers

  • +14.8% SPLK-US (Splunk, Inc.): Q2 earnings, revenue, and OM beat; billings growth ahead of consensus; noted ~550 new enterprise customers; analysts positive on transition to subscription model; raised FY revenue guidance and Q3 guide ahead of the Street (Artificial Intelligence Vue)
  • +9.2% ANET-US (Arista Networks): Will enter S&P 500 on 28-Aug (Disruptive Tech Vue)
  • +5.8% NFLX-US (Netflix): Upgraded to buy from hold at SunTrust Robinson Humphrey; cited Q3 domestic and international subscriptions in line to ahead, rising interest in original series in India (Entertainment Vue)

Earnings review (Vue stocks)

3SBio (HKG: 1530)

3SBio reported 1H18 rev. of Rmb2.2bn (+27% YoY) and net profit of Rmb514mn (+31% YoY, or +38% YoY ex. bond issuance and option exp.), both in line with consensus. GM dropped by 503bps to 80.3% vs. 1H17 on lower-margin of Humulin promotion service income consolidated since last July. SG&A exp. ratio improved 255bps to 44.0% while R&D expenses increased by 156bps to 8.2. Flagship drug TPIAO maintained strong momentum in 1H18 w/ sales growth of 71% YoY post NDRL inclusion. The company has finalized clinical study report of Ipterbin for breast cancer (humanized anti-HER2 antibody, Citi est. peak sales: Rmb1,981mn) and resubmitted NDA to CFDA. PhIII trial data of Ipterbin + vinorelbine combo for HER2+ Breast Cancer was superior in PFS of 39 weeks vs. chemotherapy-alone of 14 weeks and ORR of 46.7% vs. 18.45%.

Keysight Technologies (NYSE: KEYS)

Q3 Non-GAAP EPS of $0.89 beats by $0.10; GAAP EPS of $0.63. Revenue of $1.01B (+17.0% Y/Y) beats by $47.27M. Upside guidance for Q4 has revenue from $1B to $1.02B (consensus: $988.37M) and EPS of $0.85 to $0.91 (consensus: $0.85). Strength was from 5G orders, automotive, energy, aerospace & defense end markets. By geography, all regions saw strong y/y growth with Americas +16%, Europe +18%, and Asia Pacific +13% y/y all on a core basis.


Q4 GAAP EPS of $0.18. Revenue of $657.6M (+3.1% Y/Y) beats by $1.66M. Revenues grew just over 3% and net income rose to $43.8M, easily beating consensus (for GAAP net income of $25M). EBITDA came to $324.9M, in line with an expected $324.7M. Operating income rose to $120.2M from $105.4M. Bookings came to $8M; gross installs were $7.7M with net installs at $1.5M, and churn was 1.2%. Revenue breakout: Communications Infrastructure, $546.6M; Allstream, $111M.

Sino Biopharmaceutical (HKG: 1177)

1H18 revenue was up +30% YoY to Rmb9.7bn and NP to shareholder was only up +24% to Rmb1.4bn due to higher MI in 2Q. GM improved by 185bps to 80.9% in 1H18 on higher GM of new launched products and OM improved to 24.5% in 1H18 (vs. 20.6% in 1H17) mainly on lower selling expense as % of total revenue (13.7% in 1H18 vs. 15.4% in 1H17). 1H18 sales of Runzhong grew by 7% YoY to Rmb1.7bn; Entecavir portfolio (Runzhong + Tianding + Ganze) recorded +8% y/y growth. Management are confident to future Entecavir growth with 1) coverage hospital expanding from ~2800 to ~6000 in future and 2) selling more to rural/county. Kaifen (Injection+Cataplasm)/Kaina grew by +35%/+23% YoY. Oncology segment delivered strong 1H18 growth of +29% YoY, also strong sales growth in Raltitrexed (+33% YoY), Dasatinib (+43% YoY) and Decitabine (+35% YoY). Mgmt targeted 14 >Rmb1bn blockbusters by 2020.

Alibaba (NYSE: BABA)

Q1 Non-GAAP EPS of $1.22 beats by $0.01. Revenue of $12.23B (+61% Y/Y) beats by $430M. Q1 beats with a 61% Y/Y revenue growth. Revenue breakdown (in RMB): Core Commerce, 69.19B (+61% Y/Y, FactSet estimate: 70.19B); Cloud Computing, 4.7B (+93%, FS: 4.66B); Digital Media and Entertainment, 5.98B (+46%, FS: 5.51B); Innovation Initiatives and Others, 1.06B (+64%, FS:870.9M). Annual active buyers grew 24M Y/Y to 576M. Mobile MAU on China retail marketplaces totaled 634M compared to 617M in last year’s quarter.


Q2 Non-GAAP EPS of $0.08 beats by $0.03; GAAP EPS of -$0.71. Revenue of $388.3M (+38.7% Y/Y) beats by $29.79M. Splunk sees Q3 revenue $430M-$432M, consensus $427.56MSees Q3 adjusted operating margin roughly 13%. Shares jump 9.8% aftermarket on Q2 beats and positive guidance. Revenue breakdown: License, $200.7M (consensus: $172.2M); Services, $187.6M (consensus: $185.9M).

Sberbank (MCX: SBER)

Q2 GAAP EPS of RUB9.13 (+27% Y/Y). Net interest income of RUB349B (+2.9% Y/Y).

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