(Bloomberg) — It was an unusually exciting weekend for traders as Chinese President Xi Jinping unveiled the country’s new policymakers for the next five years on Sunday and told reporters that the country’s economy is “resilient” with plenty of potential. He emphasized that China and the world would benefit from each other and that the country would deeply reform and open up its economy.
Meanwhile, South Korean policymakers held an emergency meeting the same day and pledged to support credit markets by at least 50 trillion won ($34.7 billion) to reduce default risks. Rishi Sunak, the former Foreign Office chancellor who dropped out of the race to lead the ruling Conservative Party in the United Kingdom, is on the brink of becoming the next prime minister.
Investors may want to keep a close eye on a number of key Asian earnings reports this week to assess the impact of a stronger dollar on the market as the Federal Reserve is expected to continue tightening monetary policy.
HSBC Holdings is set to report on Tuesday and it’s worth watching to see if the weak pound has affected group profits. Analysts also want to hear the Korean won and yen sentiments of Samsung Electronics, SK Hynix and Canon to see if gains from currency depreciation are enough to offset the impact of tepid demand and lower product prices.
On the ESG front, the world’s largest solar panel maker Logie Green and Chinese electric car maker BID are scheduled to announce results on Friday. The focus will be on the benefits associated with the Chinese government’s push for a low-carbon economy, as well as cost-cutting measures and market demand.
- To record earnings coverage in your portfolio or other earnings analysis, run the NSUB EARNINGS function on a Bloomberg terminal.
- For more information on what’s going on in other regions, check out the upcoming US Earnings Week or EMEA Earnings Week and ESG Stocks for a selection of environmental, social and governance themes likely to come up on this week’s earnings calls.
- Follow results, analysis and market reaction to reports from HSBC and Samsung in real-time on TOPLive blogs this week.
Top news to watch this week:
Monday: No big income expected.
Tuesday: HSBC (5 HK) is due to announce results around noon. According to Bloomberg Intelligence, the bank’s profit-to-income ratio is below 100% in the UK, so it could face significant weakness. Consensus estimates showed a 1.6% sequential rise in third-quarter adjusted pre-tax profit amid rising uncertainty in the global economy. Cost perspective and credit-loss charges are also taken into consideration. More than the $5.5 billion currently planned, additional cost savings may be needed, analysts including Jonathan Tice wrote. Aided by higher interest rates and higher prices in Hong Kong, mortgage rates are likely to be a key driver of income growth. HSBC is now shedding some non-essential operations and shifting its focus to Asia. Investors will be watching closely for any further comments from the bank on pressure from some shareholders, including Ping An Insurance Group, to end its Asia operations. Any new net zero pledge would also be important, especially after the UK watchdog recently reprimanded HSBC for breaching environmental advertising rules with a poster campaign.
Wednesday: SK Hynix (000660 KS) is set to release third-quarter results before the market opens. The world’s second-largest memory chip maker may report a 39 percent drop in operating profit for the three months to the end of September, while sales are expected to grow 4.8 percent from a year earlier, according to a consensus survey by Bloomberg. The market is looking at production cuts, the forecast for 2023, the timing of chip price revisions and comments on the US export ban on China. A larger-than-expected drop in average DRAM and NAND selling prices offset gains from weak earnings, EBEST Investments & Securities reported. The brokerage also estimated that SK Hynix could post an operating loss of 247 billion won next year after posting a profit of 9 trillion won this year.
- FX Factor: Canon (7751 JP) is set to announce third quarter results after the market close. The Japanese imaging solutions company is expected to report a 59% profit margin, according to consensus estimates in a Bloomberg survey. Bloomberg Intelligence said cameras and printers will be key drivers of sales growth this year as the open office trend and live video streaming accelerate, while medical and chip manufacturing equipment may be muted in 2021, coming off a strong base. The yen weakened from the previous 149. Against the dollar, investors will be keen to see if the company revises its target of 133 yen and raises its full-year forecast accordingly.
Thursday: Samsung Electronics (005930 KS) is set to report net income and segment performance details in the morning along with its full quarterly earnings report. South Korea’s largest company reported third-quarter revenue guidance earlier this month, which rose 32% to 10.8 trillion won for the three months to the end of September, beating analysts’ estimates of 12.1 trillion won. Sales missed estimates, at 76 trillion won. A disappointing third-quarter operating profit left fourth-quarter profit expected to fall by 5%-10% on weak memory chip demand and may not be enough to overcome price cuts, according to Bloomberg Intelligence. During the conference call, scheduled for 10 a.m. local time, investors will focus on the company’s comments on M&A, its shareholder return plan and any production cuts.
Friday: BYD (1211 HK) plans to release third quarter results after the market closes. The Warren Buffett-backed company is expecting a 365% jump in third-quarter profit to 5.9 billion yuan ($815 million). The ability to make batteries and semiconductors on its own has helped BYD avoid disruptions that hurt rivals including Tesla. A strong order book is driving demand for the new models despite higher vehicle prices, writes Bloomberg Intelligence. The Shenzhen-based group and other Chinese EV makers, such as Xpeng and Nio, may be able to extend the zero purchase tax for EVs until 2023 as they pass on high raw material costs and increase demand, Bi added.
- ESG in focus: Longyi Green Energy Technology (601012 CH) reports earnings after market close in Shanghai. On Oct. 13, the solar panel maker reported that its first nine-month advance net income rose 48% year-on-year through September. It cited increased sales of silicon wafers and modules and higher investment returns and foreign exchange earnings as contributing to the profit margin. Citi analyst Pierre Lau wrote in a note that the company’s revenue should increase in the October-December quarter on the back of growth in solar installations globally. The dollar rate also helps because of Long Green’s strong export focus, he said.
–With help from Charlotte Young.
(Updated top graphs with details on China’s Party Congress and South Korea’s loan support.)
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