Nov 11 Asian Marco Initial Thoughts; A lower open as inflation worries rise.


11 Nov

This and previous notes can be found at Substack ( Asian Market Sense )
Check out ERI-C.com for  interesting research and trading analysis

Asia
COP26 China and the United States, agreed Wednesday to increase their cooperation and speed up action to rein in climate-damaging emissions, signaling a mutual effort on global warming at a time of tension over their other disputes.

Australia 
Market opened lower following the US but rebounded from initial lows. Employment data due shortly also likely to impact the market. Weakness in Energy names as oil prices drop but Miners may see interest as Iron Ore prices recover and gold moves higher. AGM’s today include BHP, Breville, Nearmap and Nine Entertainment.
Employment Data due at 8:30am HK time.
Japan Nikkei futures opened -205pts  Earnings remain in focus (370 plus companies) but Travel names +VE on news the Govt looking to restart the ‘Go-to’ travel programme
S Korea 
Expect markets to open lower with rising inflation concerns; Foreign selling expected to continue. Financials expected to benefit but with weakness in Tech. EV’s +VE as Rivian sawa strong debut in the US. Earnings in focus too; key today Samsung Life, LG, Krafton and NCSoft. Options Expiry could also influence the market.
Taiwan 
Expect market to open flat as inflation worries are met with good sales.
China 
Expect market to open lower the loans data out after market Wednesday a slight disappointment. Covid, Developers Debt and US relations all concerns for investors. Vehicle sales were also lower.
Hong Kong 
ADR’s -120pts at 24,876 with broad weakness as the threat of inflation rises. Singles day for Baba but expected to be mor muted and with Tencent’s poor results the sector likely to open lower. Evergrande managed to make payments on its bonds thus avoiding a default, slight +VE but we now just wait for the next deadline.
US Futures 
Opened Dow -5pts S&P and NDX +0.1%. Veteran’s day, a holiday but the exchange remains open but likely to see lighter flows.

DOW -0.66%, NDX -1.66%, S&P -0.82%, Russel 2K -1.55%
Market sold down on higher inflation data and a surprise increase in oil inventories.   Broader inflation than expectedworrying the markets that the Fed will need to tighten sooner.
Banks JPMorgan Chase -0.1%, Citigroup -0.04% Wells Fargo +0.9%, Amex +0.9%
Work from home names: Meta -2.3%, Apple -1.9%, Amazon -2.6%, Netflix -1.4%,  Disney -0.4%, Zoom Video -2.8%, Alphabet -2% and Microsoft -1.5%,
Tech NXP Semi -3.1%, Nvidia -3.9%, Micron -2.9%, AMD -6.1%, Skyworks -2.4%
Re-opening stocks  Boeing -1%, Caterpillar -1.5%, Simon Property -2.1%, Kohl’s -2.2%, Nordstrom -2.1%, Gap -3%, United Airlines -2%, Carnival -2.8%, Wynn Resorts -2.2%, Chevron -1.6%, Exxon Mobil -2%,  
Lock down names Campbell Soup +0.3% General Mills +0.6%, JM Smucker +0.02%
After Market
Disney, Beyond Meat, AMC Ent, Bumble weak after earnings but Affirm and Honest Company +VE following earnings.
DATA
MBA Mortgage Applications +5.5% vs-3.3% prior
MBA 30 yer Mortgage Rate 3.16% vs 3.24%
Inflation Data Rate Oct 6.2% YoY vs 5.4% Sept (F/cast was 5.7%)
Inflation Data Rate Oct +0.9% MoM vs +0.4% Sept (F/cast was +0.5%)
Core Inflation Data Rate Oct 4.6% YoY vs 4% Sept (F/cast was 4.1%)
Core Inflation Data Rate Oct 0.6% YoY vs 0.2% Sept (F/cast was 0.3%)
Initial Jobless claims 267k vs 271k prior revised (F/cast was 264k)
Initial Jobless claims 4 week ave 278k vs 285.25k prior revised (F/cast was 276.75k)
Continuing Claims 2.16m vs 2.101m prior revised (F/cast was 2.051m)
Wholesale Inventories Sept +1.4% MoM vs 1.1% Oct (revised) (F/cast was 1.1%)
EIA Gasoline Stocks Change -1.555m vs -1.488m prior (Concensus -1.193m)
EIA Crude Stocks Change 1.001m vs 3.291m prior (Concensus 2.125m)
EIA Gas Stocks Change 7BCf vs 63Bcf prior (Concensus 10Bcf)
Monthly Budget Statement Oct $-165b vs -62b Sept (F/cast was -175b)
USD was weak Bitcoin -4.4% @ 64,463.85, VIX +5.3% @ 18.73, US T10 @ 1.553% spiked as inflation higher than F/cast
OIL Brent -2.7%, WTI -3.5%
Gold +1.3%, Silver +1.7%, Copper -1.7% Platinum +1.3%, Palladium -0.03%.
AHEAD Veteran’s Day

DAX +0.17%, CAC +0.03%, FTSE +0.91%
Opened flat after the weakness in Asia and ahead of the US inflation data, which was higher than expected. FTSE trended slightly higher through the day, DAX traded around flat all day and CAC initially trended lower but worked better into the close. Tech names saw weakness
Earnings still in focus with Credit Agricole, Engie, Alstom, EDF, Allianz, Continental, Dialog, E.On, Infineon, Siemens Energy, ABN Amro, Thomas Cook among others reporting.
Marks & Spencer surged 16.5% on strong third-quarter earnings and ITV +15% after record FY ad sales but S4 Capital -10% after its trading update.
Adidas -3.7% after trimming its full-year forecast due to supply chain constraints; slight -VE for Yue Yuen etc.
Data
Eurozone Non Monetary Policy Meeting
Germany 
Inflation Rate Oct 4.5% YoY vs 4.1% Sept (F/cast was 4.5%)
Inflation Rate Oct 0.5% MoM vs 0% Sept (F/cast was 0.5%)
AHEAD
Eurozone ECB Economic Bulletin
Germany No data due
France No data due  
UK  Balance of Trade, GDP Growth Rate, GDP, Industrial & Manufacturing Production, Business Investment, Constructions Orders, NIESR Monthly GDP Tracker.

JAPAN
Nikkei futures opened lower -205pts  Earnings remain in focus (370 plus companies) but Travel names +VE on news the Govt looking to restart the ‘Go-to’ travel programme
Yen 113.90
Data due 
PPI Oct Sept was 6.3% YoY (F/cast is 7%)
PPI Oct Sept was +0.3% MoM (F/cast is 0.4%)
Out after market Wednesday
Machine Tool Orders +81.5% YoY vs 71.9% Sept (F/cast was 68%)
LDP decides to exclude higher income households from the cash & voucher scheme for children.
PM Kishida vowed on Wednesday to compile a pandemic-relief stimulus package worth "several tens of trillion yen" by the end of next week that will include cash payouts to households hit by the coronavirus crisis +VE.
Japan has detected its first outbreak of bird flu for the 2021 winter season, with confirmation of a case of "highly pathogenic avian influenza" at a poultry farm in the northeast of the country, the agriculture ministry said on Wednesday. -VE

SOUTH KOREA
Expect markets to open lower with rising inflation concerns; Foreign selling expected to continue.  Financials expected to benefit but with weakness in Tech.  EV’s +VE as Rivian sawa strong debut in the US.  Earnings in focus too; key today Samsung Life, LG, Krafton and NCSoft.  Options Expiry could also impact the market.
Data due 
Customs releases 1-10 Nov Exports data.
Government encouraging citizens to take COVID-19 booster shots on Wednesday, as more of the elderly fell ill and reported vaccine breakthrough infections, driving serious and critical cases to a record.
About 18,700 metric tons of urea that China was holding back will be shipped to South Korea soon, temporarily alleviating an acute shortage of an essential additive used to cut emissions from diesel vehicles.   China has confirmed that it will proceed with the export process for 18,700 tons of solid urea that was previously contracted to Korean firms, the Foreign Ministry said Wednesday. +VE
The Ministry of Food and Drug Safety said Wednesday it will revoke licenses of six botulinum toxin products manufactured by Hugel and Pharma Research Bio for failing to obtain due authorization. Hugel, however, said it would fight the ministry’s move, saying their products, produced for overseas sales, were not subject to the regulation. -VE
Kakao Pay said Wednesday that it logged a net loss in the third quarter due to increased expenses and investments.  The company’s third-quarter revenue rose 73 percent on-year to 331.2 billion won ($280 million) on the growth of transaction volume and financial business. With an operating loss of 1.01 billion won, however, its net loss came to 1.8 billion won in the July-September period, data from the company showed. -VE
Korea Electric Power Corp. and its six power generation subsidiaries on Wednesday announced a gradual but complete exit from coal by 2050.  Kepco and the six subsidiaries -- Korea Hydro & Nuclear Power, Korea South-East Power, Korea Midland Power, Korea Western Power, Korea Southern Power and Korea East-West Power -- together discharged 269.6 million tons of carbon in 2018, accounting for a whopping 37 percent of South Korea‘s total emissions. +VE
Rolls-Royce’s latest model in its bespoke cars lineup, the Black Badge Ghost, was unveiled in Seongsu-dong, eastern Seoul, Wednesday.   The new model is a redesign of the New Ghost released last year. It is topped with a 6.75-liter twin turbo V12 engine and boasts a maximum 600 horsepower.  Retail prices start at 550 million won ($423,000).

TAIWAN Expect market to open flat as inflation worries are met with good sales.
No data due
The total number of workers in the industrial and service sectors grew by 24,000, or 0.3 percent, to nearly 8.12 million in September, as hotels, restaurants and retail shops emerged from a local COVID-19 outbreak, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.  +VE
TSMC posted NT$134.54 billion (US$4.86 billion) in consolidated sales in October, -11.9% MoM. (+12.8% YoY) +VE outlook
Macronix International the world’ biggest supplier of NOR flash memory chips, expects chip supply constraints, especially for automotive chips, to extend into next year, leaving ample room for further price increases.  The growing uptake of 5G-related applications, electric vehicles, medical devices, servers and data centers should continue to drive demand for high-density NOR flash memory chip shipments next year, Macronix said. As more data are generated through multiple devices, demand for memory chips is increasing at a faster pace than thought, it said. +VE
Asustek Computer yesterday reported that its net profit rose 7.82 percent year-on-year to NT$11.33 billion (US$407.77 million) last quarter thanks to robust demand for laptops, but fell 0.35 percent from a quarter earlier. Earnings per share were NT$15.25, up from NT$13.48 a year earlier and NT$15.31 in the second quarter. Revenue for the third quarter was NT$130.09 billion, up 8.07 percent quarter-on-quarter and 8.76 percent year-on-year, while gross margin was 18.58 percent, down 2.85 percentage points from a quarter earlier, but up 0.89 percentage points from a year earlier. +VE
Fubon Financial Holding Co yesterday reported that net profit last month dipped 11 percent from a year earlier to NT$5.6 billion (US$201.55 million), as profit declines at its insurance and banking units offset gains of NT$90 million from newly acquired, 58.04 percent-owned Jih Sun Financial Holding Co.  Fubon Life Insurance Co’s net profit fell 23.8 percent from a year earlier to NT$3.08 billion, while Taipei Fubon Commercial Bank’s dropped 12.7 percent to NT$1.35 billion, Fubon Financial said. -VE

CHINA
Expect market to open lower the loans data out after market Wednesday a  slight disappointment.  Covid, Developers Debt and US relations all concerns for investors.  Vehicle sales were also lower.
No data due but after market Wednesday
New loans CNY Oct 826.2b vs 1660b Sept (F/cast was 750b)
Outstanding Loan Growth Oct 11.9% YoY vs 11.9% Sept (F/cast was 11.9%)
M2 Money Supply Oct 8.7% YoY vs 8.3% Sept (F/cast was 8.3%)
Vehicle Sales Oct -9.4% YoY vs -19.6% Sept (F/cast was -18%)
Total Social Financing CNY Oct 1590b vs 2900b Sept (F/cast was 1700b
New loans higher than expected especially considering its towards the end of year. Total Social a small miss but data overall +VE
The United States and China, the world's two largest emitters of carbon dioxide, unveiled a deal to ramp up cooperation tackling climate change, including by cutting methane emissions, phasing out coal consumption and protecting forests. +VE
Chinese President Xi Jinping warned on Thursday against a return to Cold War-era tensions in the Asia-Pacific, urging greater cooperation on pandemic recovery and climate change.
Amid growing tensions with the United States over Taiwan, partially offset by a surprise deal between Beijing and Washington on climate, Xi said all countries in the region must work together on joint challenges.
The United States and its allies would take unspecified "action" if China were to use force to alter the status quo over Taiwan, U.S. Secretary of State Antony Blinken said on Wednesday.  -VE for relations.
The Biden administration is getting traction with China in talks over Beijing's compliance with a Trump-era trade deal, U.S. Trade Representative Katherine Tai said on Wednesday, but she declined to predict an outcome while discussions continue. Slight +VE
A “zero tolerance” approach to Covid-19 will not succeed now that the coronavirus has fully adapted to people and cannot be eliminated, according to a renowned scientist whose work helped China avert a second Sars outbreak in 2004.  China should focus on building a shield of protection using vaccines, and should test its population’s immunity level after vaccination to determine which jabs to administer, Guan Yi told Phoenix TV in an interview aired on Monday.  Unlikely to have any impact.

HONG KONG  ADR’s -120pts at 24,876 with broad weakness as the threat of inflation rises. Singles day for Baba but expected to be mor muted and with Tencent’s poor results the sector likely to open lower.  Evergrande managed to make payments on its bonds thus avoiding a default, slight +VE but we now just wait for the next deadline.
No data due

Short Selling  HSI Wednesday 18.5% vs 18% Tuesday
Top shorts 
CM Bank (3938) 53%, Hang Seng Bank (11) 49%, Country Garden (2007) 42%, Xinyi Glass (868) 41%, PingAn (2318) 39%, HSBC (5) 36%, BoC HK (2388) 36%, Baba-SW (9988) 34%, Techtronics (669) 32%, Longfor (960) 31%, Haidilao (6862) 31%, BoC (3988) 31%, Bud Apac (1876) 31%, Wharf REIC (1997) 30%, Shenzhou (2313) 29%, Hengan (1044) 29%, Galaxy Ent (27) 29%, ICBC (1398) 28%, Sands China (1928) 28%, Sunny Optical (2382) 27%, Power Assets (6) 27%, Petrochina (857) 26%, HK & China Gas (3) 26%, China Overseas (688) 26%, Mengniu Dairy (2319) 26%, Geely (175) 25%.

WATCH
Tencent announced its first revenue miss in two years, and adjusted net income first drop in 10 years. 
Q3 Rev. 142.37B Yuan, vs 145.41B Yuan estimate. Q3 Adj Net 31.8B Yuan, Est. 32.35B Yuan. Quick take Gaming revenue weak (but it has largest exposure to kids), Ad revenue missed and under pressure as it opens up. Expect stock to trade lower. Prosus dipped when the news hit.

PING AN (02318.HK) announced that it has repurchased 2.884 million A-shares 
of the company through Shanghai Stock Exchange on 10 November, at a price ranging between RMB48.34 and RMB49.1, involving RMB141 million.

EVERGRANDE (03333.HK)'s chairman Hui Ka Yan has pledged a second luxury house at Black's Link of The Peak to the financial firm "Orix", reported HK01. The property has a market value of approximately $800 million. Sources remarked the relevant luxury house has been a personal residence of Hui, implying that he may be pledging personal assets to rescue the beleaguered property developer.

Wang Wenbin, a spokesperson of China's Ministry of Foreign Affairs (MoFA), expressed during a regular press conference that the Chinese President Xi Jinping has held phone conference with the U.S. President Joe Biden twice within this year and both of them have agreed to maintain constant communication through various means. China and the U.S. are currently communicating closely to cooperate on the detailed arrangement of the upcoming meeting between the two leaders, Wang added.

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