Nov 1 Asian Macro Initial Thoughts cautiously optimistic trading.

01 Nov

This and previous notes can be found at Substack ( Asian Market Sense )
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Asia likely to see a weak start as China weaker than expected PMI data. Japan +VE as the LDP secured 261 seats (they lost 15 seats) which was better than many had expected. The climate meeting in Glasgow failed to secure any great commitments with India, China and Russia pushing back.

Australia Market opened slightly higher with some caution as the Manufacturing index missed F/casts.   Energy names higher ahead of OPEC meeting but gold and miners weak.
Manufacturing Index Oct 50.4 vs 51.2 Sept (F/cast was 53)
Manufacturing PMI, Home Loans, Job Adverts, Investment Lending for Homes.
Japan Nikkei futures opened  +320pts after the LDP did better than many expected and will now impliment increased spending.  Earnings still in focus this week but sentiment more positive now the election is over.
S Korea Expect markets to open higher following the US but concerns about light trading volumes remain.
Taiwan Market to open higher following the strong US market on Friday
China Expect market to open lower with concerns over the energy crisis even as the Government announces to releases strategic reserves of fuel after some parts of the country introduced rationing.  Covid concerns remain with more outbreaks being reported.
HK ADR’s -55pt at  25,322 broad weakness but Chinese Financials in the green.  Reaction to recent earnings in play
US Futures 
Opened DOW +80pts, S&P +0.25%, NDX +0.3%

DOW +0.25%, NDX +0.33%, S&P +0.19%, Russel 2K -0.03% 
Markets closing out October at new highs and earnings still in focus. Ahead this week the focus will be on the FOMC meeting with the expectation of news on the start of tapering and inflation.
Also the payrolls report on Friday.
USD was stronger as inflation pressure rises. Bitcoin -0.5% @ 61,373.27, VIX -1.6% @ 16.26, US T10 @ 1.561%
OIL Brent +0.07%, WTI +0.92% ahead of OPEC meeting thisweek
Gold -0.86%, Silver -0.73%, Copper -1.76% Platinum +0.08%, Palladium +0.64%.
AHEAD Manufacturing PMI Final, ISM Manufacturing Data (PMI, New Orders, Prices, Employment).

DAX -0.05%, CAC +0.38%, FTSE -0.16%
Mixed closed as traders focused on earnings.   Utilities & Tech weak.
Inflation concerns as Eurozone inflation rose to 4.1%
Inflation Flash Oct 4.1% YoY vs 3.4% Sept (F/cast was 3.6%)
Inflation Flash Oct 0.8% MoM vs 0.5% Sept (F/cast was 0.4%)
Core Inflation Flash Oct 2.1% YoY vs 1.9% Sept (F/cast was 2%)
GDP Growth Rate Q3 2.2% QoQ vs 2.1% Q2 revised (F/cast was 2%)
GDP Growth Rate Q3 3.7% YoY vs 14.2% Q2 revised (F/cast was 3.7%)
GDP Growth Rate Flash Q3 1.8% QoQ vs 1.9% Q2 revised (F/cast was 2.5%)
GDP Growth Rate Flash Q3 2.5% YoY vs 9.8% Q2 revised (F/cast was 3.2%)
GDP Growth Rate Prelim Q3 3% QoQ vs +1.3% Q2 revised (F/cast was 2.3%)
Household Consumption Sept -0.2% MoM vs +0.7% Aug revised (F/cast was +0.3%)
Inflation Rate Prelim Oct 2.6% YoY vs 2.2% Sept (F/cast was 2.4%)
Inflation Rate Prelim Oct 0.4% MoM vs -0.2% Sept (F/cast was +0.2%)
BoE Consumer Credit Sept £0.2B vs £0.5B Aug revised (F/cast was £0.77B)
Mortgage Approvals Sept 72.6k vs 74.2k Aug revised (F/cast was 71k)
Mortgage Lending Sept £9.5B vs £4.4B Aug revised (F/cast was £5.1B)
Net Lending to Individuals Sept £9.8B MoM vs £5B Aug revised (F/cast was £5.2B)
Eurozone No Data due
Germany Retail Sales
France No data due  
UK  Manufacturing PMI Final

Nikkei futures opened  +320pts after the LDP did better than many expected.  Earnings still in focus this week but sentiment more positive now the election is over.
Yen currently 114.13
Data due Manufacturing PMI Final
An unprecedented election pledge by Japan's ruling party to double defence spending underscores the nation's haste to acquire missiles, stealth fighters, drones and other weapons to deter China's military in the disputed East China Sea. The Liberal Democratic Party (LDP) included a goal of spending 2% of GDP - about $100 billion - or more on the military for the first time in its policy platform ahead of a national election this month.  +VE for Defense stocks.
Travel agency H.I.S. Co said Saturday it expects to report a record net loss of 53 billion yen for the year ending this month, its second straight year in the red, as the coronavirus wreaks havoc on the industry.  -VE

Expect markets to open higher following the US but concerns about light trading volumes remain.
Data due
Balance of Trade Oct $1.69b (Sept was $4.4b F/cast is $3.9b)
Exports Oct 24% (Sept was 16.7% Consensus is 27%)
Imports Oct 37.8% (Sept was 31% Consensus is 40.1%)
Manufacturing PMI Final
Govt said on Friday it will drop all operating-hour curbs on restaurants and cafes and implement its first vaccine passport for high-risk venues such as gyms, saunas and bars, as it tries to "live with COVID-19".  The first phase will go into effect on Monday and last for a month, officials said, with plans calling for all restrictions to be scrapped by February.
SK Telecom’s nontelecom split-off SK Square will officially launch on Monday, with a focus on semiconductor and new tech businesses, SK Telecom, the world’s largest telecommunication company said Sunday.  The split-off will allow the SK Group company to better respond to changing dynamics in the chip sector through strategic investments, which were partly limited under the fair trade law here.  +VE
An international consortium including GS Engineering & Construction has been chosen as the winner of Australia’s major road project, worth 3.1 billion Australian dollars (2.7 trillion won), the Korean builder said Sunday.

Expect market to open higher following the moves in the US.
Data due Manufacturing PMI Final
Taiwan's air force scrambled on Sunday to warn off eight Chinese aircraft including fighter jets that entered its air defence zone, its defence ministry said, at a time of heightened tensions across the sensitive Taiwan Strait.  Taiwan has complained for a year or more of repeated missions by China's air force near the self-ruled island, often in the southwestern part of its air defence zone near the Taiwan-controlled Pratas Islands.
With the gradual easing of COVID-19 control measures and the effects of the government’s stimulus voucher program, domestic retailers along with food and beverage businesses are expected to experience a continued rebound this quarter, the Ministry of Economic Affairs said on Friday.   “The retail industry has gradually stabilized and the consumer traffic at physical store channels has returned, leading retail sales to return to positive annual growth last month,” the ministry said in a statement.
Smartphone makers shipped 331.2 million units in the third quarter of the year, down 6.7 percent from 354.9 million units per year earlier, as supply chain constraints began to take effect, market research firm International Data Corp (IDC) said in a report last week.   Last quarter’s shipments were higher than the second quarter’s 313.2 million units, and although a slight decline was expected for the seasonally low third quarter, the actual decline for the period from July to September came in at more than twice the IDC’s forecast of a decline of 2.9 percent, it said on Thursday.  Slight  -VE
Taiwan’s electric vehicle (EV) market has several competitive advantages, including a complete supply chain, a Taiwanese trade official said on Friday at a session of the Indo-Pacific Business Forum (IPBF), being held virtually this year.  Taiwan External Trade Development Council Chairman James Huang said that EVs are on track to mainstream market acceptance, and Taiwan is well-positioned to capitalize on its advantages.  They include a complete EV industry supply chain and supportive government policies, along with Hon Hai Precision Industry Co’s EV platforms, which help partners meet goals quickly and at low cost, he said. +VE
CPC Corp, Taiwan (CPC) and Formosa Petrochemical Corp yesterday said that gasoline prices this week would rise by NT$0.1 per liter and diesel prices by NT$0.7.  It is the fifth consecutive week that the companies are raising their fuel prices to reflect rising international crude oil prices.

Expect market to open lower with concerns over the energy crisis even as the Government announces to releases strategic reserves of fuel after some parts of the country introduced rationing.  Covid concerns remain with more outbreaks being reported.
Data due Manufacturing PMI Final
Data out Sunday
Manufacturing PMI Oct 49.2 vs 49.6 Sept (F/cast was 50)
Non Manufacturing PMI Oct 52.4 vs 53.2 Sept (F/cast was 53)
Xi Jinping tells G20 ‘developed countries’ should lead on global emissions. Developed nations should ‘fully accommodate the special difficulties’ of developing countries in global effort to reduce emissions, Chinese leader says.  China has the world’s second-largest economy and highest carbon emissions, but it remains a developing country under UN criteria.
U.S. Secretary of State Antony Blinken told his Chinese counterpart on Sunday that the United States opposed actions by China that have increased tensions across the Taiwan Strait, a senior State Department official said.   During an hour-long meeting with Chinese Foreign Minister Wang Yi on the sidelines of a Group of 20 summit, Blinken made "crystal clear" that Washington opposes any unilateral changes by Beijing to the status quo there, the official said.
China's Ministry of Education, along with the Publicity Department of the Central Committee of the CPC, Cyber Administration of China, Ministry of Industry and Information Technology (MIIT), Ministry of Public Security (MPS) and State Administration for Market Regulation (SAMR), and other departments, jointly issued a notice on strengthening the management works for the relevant measures designed to prevent secondary and primary school students from developing an addiction for online games, demanding all local publication management departments to strictly implement the approval procedures for online games and to supervise the online game companies, so as to ensure that the published games do not contain any content that may damage the physical and mental health of the students.
Shanghai Disneyland said on Sunday that it has suspended entry to cooperate with Covid-19 investigations linked to other Chinese provinces and cities.  Guests currently in the park are required to undergo Covid-19 tests at the exit when they leave, Shanghai Disneyland said on its Chinese social media account. Entry to the nearby Disneytown has also been halted, Shanghai Disneyland said.

ADR’s -55pt at 25,322 broad weakness but Chinese Financials in the green. Reaction to recent earnings in play
Data due after market GDP Growth Rate

SHORT SELLING HSI Friday 15.3% vs 18.6% Thursday
Top shorts 
Hang Seng Bank (11) 42%, Haidilao (6862) 41%, Country Garden (2007) 39%, Techtronic (669) 38%, China Life (2628) 38%, Sands China (1928) 35%, Mengniu Dairy (2319) 34%, Wharf REIC (1997) 31%, Geely (175) 31%, CKI (1038) 26%, BoC (3988) 26%, ICBC (1398) 26%, Ali Health (241) 26%, Petrochina (857) 25%,Henderson Land (12) 25%, HSBC (5) 25%.

CK Asset (1113) opened a second price list for 62 flats at #Lyos in Yuen Long's Hung Shui Kiu with an average per-square-foot price of HK$15,655 after discounts.  
The prices were said by the developer to be roughly the same as for the first batch after taking into account factors such as better views offered. CK Asset has now received more than 3,000 checks for 150 units and sales are expected to start at the weekend at the earliest.
Kowloon Development (0034) sold at least 351 out of 438 homes offered in a first round of its Manor Hill project in Tseung Kwan O over the weekend. The developer also said it has struck a deal with the government to exchange a 19,335-square-meter lot at 35 Clear Water Bay Road in Ngau Chi Wan for a New Kowloon lot with a site area of 22,373 sq m. It is expected to be developed with five residential towers over a retail shopping mall.
Sales are also expected to be launched this month by Sun Hung Kai Properties (0016) at phase two of Wetland Seasons Bay in Tin Shui Wai.
In contrast to the primary market the second-hand sector was sluggish with only nine transactions recorded in Centaline Property Agency's top 10 housing estates over the weekend, which was down nearly 20 percent on the previous weekend. Centaline also said 150 homes in the estates changed hands in October - a 22-month low that was attributed to the attention going on the first-hand market.

MINSHENG BANK (01988.HK) announced that for the first three quarters ended 30 September 2021, 
net profit fell 4.9% YoY to RMB35.487 billion. EPS equaled RMB0.75.

COSCO SHIP HOLD (01919.HK) announced that for the first three quarters, net profit climbed 16.51 times YoY to RMB67.59 billion. EPS equaled RMB4.23.

SWHY (06806.HK) announced that for the first three quarters ended September 30, 2021, net profit climbed 13.5% YoY to RMB7.409 billion. EPS equaled RMB0.3.

ANGANG STEEL (00347.HK) announced that net profit for the first three quarters burgeoned 4.65 times YoY to RMB7.489 billion.
EPS equaled RMB0.796.

TENCENT (00700.HK) announced earlier a US$1.27-billion deal to acquire British videogame company Sumo Group. The Committee on Foreign Investment in the United States (CFIUS) has stepped in to investigate the takeover, according to Sumo Group.

PAX GLOBAL (00327.HK) announced that on 26 October, officers from the Federal Bureau of Investigation (FBI) and the Customs and Border Protection of the U.S. executed a court-authorized search to seize certain items at the Florida office and warehouse of Pax US, a wholly-owned subsidiary of the Company, and carried out interviews with certain employees of Pax US.  Pax US has resumed normal operations. While the publicity surrounding the search and the media articles have attracted interest and enquiries from the Company’s business partners, amongst others, the Company has not observed any material adverse change to its operations or business. The Company does not envisage any material financial impact on the Company.  Application has been made by the Company for the resumption of trading of the Shares with effect from 1 November.

HI SUN TECH (00818.HK) announced a significant drop in the price of the shares of its approximately 33.1% owned associate, PAX GLOBAL (00327.HK) , on 27 October. The Company’s share of results of PAX, which are accounted for in the financial statements of the Company using the equity method, contributed to 5% of the Company’s unaudited profit for the first half of 2021.
The Company does not envisage any material financial impact.
Application has been made by the Company for the resumption of trading of the Shares with effect from 1 November.

GCL-POLY ENERGY (03800.HK)  announced that as all the conditions set out in the Resumption Guidance have been fulfilled, the Company has made an application to the Stock Exchange for the resumption of trading in the Company’s shares with effect from 1 November.

CCB (00939.HK) announced the result for the nine months ended 30 September 2021. 
The Group reaped net profit of RMB232.153 billion, up 12.79% year over year.  EPS  equaled RMB0.93.  For the third quarter, net profit grew 15.61% annually to RMB78.853 billion. EPS equaled RMB0.32.

PING AN (02318.HK) announced that on October 29, it repurchased 6.005 million A shares 
through the Shanghai Stock Exchange at a price of RMB49.26-50.23 per share, involving nearly RMB300 million.

ICBC (01398.HK) announced the first three quarters' results ended September 2021. Operating income amounted to RMB643.895 billion, representing an increase of 7.27% compared with the same period of last year. The net profit amounted to RMB251.821 billion, up 10.1%. EPS was RMB0.69.

BYD COMPANY (01211.HK) would place 50 million H-shares (i.e. 1.7% of its share capital as enlarged) at a placing price of $273.5-279.5 per share, representing a 5.8%-7.8% discount to today's closing price of $296.6, according to market sources. The company would raise up to $13.975 billion, proposing to use it for operation funds, debt repayment, R&D and general corporate purposes.The Hong Kong Association of Banks (HKAB) expressed that the newly launched Cross-border Wealth Management Connect scheme has been operating smoothly as a whole and recording positive feedback from the market.  HKAB believes that the scheme will be able to facilitate the opening up of the Chinese capital market and the internationalization of RMB. The association hopes that, under the principle of maintaining controllable risks, the scheme could gradually expand the varieties and quotas of financial products.

MCC (01618.HK) (601618.SH) announced that in accordance with the Chinese Accounting Standards for Business Enterprises, net profit climbed 33.01% YoY to RMB6.128 billion for the first three quarters ended 30 September 2021. EPS was RMB0.26.

CPIC (02601.HK) announced that, for the first three quarters of 2021, the Group realised net profit of RMB22.686 billion, up by 15.5% yearly. Basic EPS was RMB2.36.

The Hong Kong Monetary Authority (HKMA) announced that the total assets of the Exchange Fund amounted to HK$4.5327 trillion as at September 30, 2021, HK$123.9 billion lower than that at the end of August 2021. Hong Kong dollar assets decreased by HK$78.1 billion and foreign currency assets decreased by HK$45.8 billion.
The decline in Hong Kong dollar assets was mainly due to a decrease in Exchange Fund Bills and Notes issued but not yet settled and the mark-to-market revaluation on Hong Kong equities. The decline in foreign currency assets was mainly due to a decrease in the month-end balances of unsettled purchase of securities and the mark-to-market revaluation on foreign currency investments.

BOC HONG KONG (02388.HK) announced that in the first nine months of 2021, the Group’s net operating income before impairment allowances decreased by 12.4% year-on-year to HK$37.607 billion. If the funding income or cost of foreign currency swap contracts were included, net interest margin would have decreased by 28 basis points year-on-year to 1.1%; while net interest income would be HK$24.685 billion, representing a year-on-year decrease of 11.9%.

COSCO SHIP PORT(01199.HK) announced first three quarters result ended September 2021. The revenue rose 19.1% year on year to US$861 million. The net profit amounted to US$262 million, up 5% year on year. EPS was US7.9 cents.

BANKCOMM (03328.HK) announced that in accordance with International Financial Reporting Standards, the net operating income rose 7.85% YoY to RMB200.21 billion in the first three quarters of this year. Net profit gained 22.1% YoY to RMB64.36 billion. Basic EPS was RMB0.8 For the third quarter alone, net profit lifted 37.85% YoY to RMB22.341 billion. Basic EPS was RMB0.26.

SANY INT'L(00631.HK) announced first three quarters result ended September 2021. The revenue rose 37% year on year to RMB7.541 billion. The net profit amounted to RMB1.113 billion, up 23.4% year on year. Over 3Q, the company's revenue amounted to RMB2.557 billion, up 51.4% year on year. 3Q net profit likewise hiked 7.9% year on year to RMB284 million.  

GREATWALL MOTOR (02333.HK) announced that, in accordance with China Accounting Standards for Business Enterprises, net profit declined 1.72% yearly to RMB1.42 billion for the third quarter ended 30 September 2021. Basic EPS was RMB0.15.

KOWLOON DEV (00034.HK) announced to have accepted the Land Exchange Offer from the government, pursuant to which the company will surrender the surrendered lot located at No. 35 Clear Water Bay Road, with a total site area of about 19,335.5 square metres, to the government. The government will subsequently grant the regranted lot as the New Kowloon Inland Lot No. 6458, with a total side area of about 22,373 square metres, to KOWLOON DEV, for a premium of HK$9.658 billion.

Huawei announced the operating results for the first three quarters of 2021, with revenue of RMB455.8 billion and profit margin of 10.2%.

Centa-City Leading Index (CCL) last posted 186.17, down 0.18% WoW.
CCL Mass likewise dropped 0.07% WoW to post at 188.77. CCL (small-and-medium units) and CCL (large units) lost 0.09% WoW and 0.72% WoW, to post at 186.81 and 182.76 respectively. The four major indices all receded for five consecutive weeks for the first time since October 2019.
Investors are advised to closely monitor the CCL reading for next week as it would reflect whether the Hong Kong home price could stabilize the drop and regain momentum after the announcement of the latest Policy Address, expressed the research department of Centaline Property.

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