Nov 13 Things to know before trading Asia on Monday.

13 Nov

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

The week ahead will focus on the Biden/Xi summit. Also of note will be US Retail sales and earnings from Alibaba, Baidu, JD, Nvidia, Applied Materials, Target and Walmart. Tension rises US warns Russia about the build up of Russian forces on the Ukraine border. Earnings will ease and data will become more important, with quite a lot of Asian data out Monday.

FT has an article Probe into Evergrande’s regional bank links adds to pressure on developer  Reports on a probe that is nearing completion about the relationship with Shengjing Bank, a Hong Kong-listed regional bank it part-owned.    Potential that there were regulatory violations by both Shengjing and Evergrande over the threshold of allowable debts owed by a single borrower.  
The probe could be a re-run of the incident ‘Baoshang Bank was taken over by the government in 2019 after it collapsed following excessive lending to companies controlled by Tomorrow Group, a financial and investment conglomerate led by billionaire financier Xiao Jianhua, who also held a large stake in the bank. Xiao disappeared after being abducted by Chinese security agents from a suite in Hong Kong in 2017.’
This is likely to put other regional banks under pressure as investors turn more cautious.

It also re-runs a book review from earlier in the week:  Pearl and dragon
Victor Mallet looks at three books that grapple with Beijing’s increasingly draconian control of the territory and offer differing perspectives on the outlook for freedom under the communist regime.
Well worth a read.

The Economist has Evergrande is not the only looming danger in China’s financial system  Crony capitalism has flourished among the country’s small and mid-tier banks.   It concludes:-
‘The expanding reach of state control may prevent a full-blown panic, because it shows that almost all banks are underwritten by the government. But it fails to acknowledge an important truth about the economy.
Many of the distortions that plague China’s markets were created by rigid state control. In plenty of private firms, insider dealing with lenders has been a way to cope with a state-dominated banking system that discriminates against them. Mr Xi may succeed in averting a sudden bad-debt crisis by reasserting state authority. But his reluctance to be bound by rules, treat state and private firms equally, and offer predictability to investors will ensure that the financial system is doomed to suffer yet more dangerous distortions in the future.’
Also read Attack on the tycoons  China attempts to clean up its sleaziest regional banks

Also on China
China still steals commercial secrets for its own firms’ profit
Despite saying it wouldn’t engage in cybertheft, it is ramping up its efforts
Behind bars, Hong Kong’s democrats remain popular
The city’s jails are filling up with dissidents
Chaguan China will stick to a zero-covid policy, for now
Harsh rules will enjoy support, as long as life feels safe for the majority
Also China and the pandemic  The non-zero costs of zero-covid  In business, China is becoming a world unto itself
On Asia
South Korea’s climate targets will mean remaking its economy
Its industrial centres will have to transform or disappear
Banyan How the game of Go explains China’s aggression towards India

For Monday
Market to opens higher following the US, but with caution ahead of the China Industrial numbers with miners weak as Iron Ore prices remain -VE
Nikkei likely to opened higher following the US but with caution ahead of the Japanese GDP data and Chinese Industrial production data.
S Korea 
Expect markets to open flat with caution ahead of the Chinese Industrial data.
Expect market to open higher on good results and positive moves in the US markets on Friday.
Expect market to open lower with caution ahead of the China data.
Hong Kong
ADR’s -1pt at 25,326 with financials weak and caution ahead of the China data.
Europe  Ahead Balance of Trade.   Concerns remain over rising covid cases as Austria plans to impose lockdowns on unvaccinated people.
US Data due NY Empire State Manufacturing Index.  

DOW +0.5%, NDX 1%, S&P +0.72%, Russel 2K +0.11%
Markets opened flat but worked better through the session; inflation concerns continue; as Consumer Sentiment dropped according to the University of Michigan report.  JOLTs revealed record numbers of people leaving their jobs; suggesting people are moving for higher wages.  Johnson & Johnson +1.2% on reports it may split into two with Consumer Health being split off.  Large cap Internet names +VE
The U.S. Securities and Exchange Commission (SEC) rejected VanEck's listing application for a spot bitcoin exchange-traded fund (ETF). The SEC remarked that said ETF is not in compliance with the requirements listed out in the listing regulations.
Financial data provider S&P Global has gained a conditional approval from relevant U.S. regulatory institution for its proposed merger with IHS Markit, according to documents filed to the court by the U.S. Justice Department on Friday.
Banks JPMorgan Chase -0.5%, Citigroup -1.3% Wells Fargo +0.7%, Amex +0.3%
Work from home names: Meta +4%, Apple +1.4%, Amazon +1.5%, Netflix +3.8%,  Disney -1.5%, Zoom Video +3%, Alphabet 2% and Microsoft -1.3%,
Tech NXP Semi -0.6%, Nvidia unch, Micron +3.7%, AMD +1.3%, Skyworks +1.6%
Re-opening stocks  Boeing +0.7%, Caterpillar +0.4%, Simon Property -0.4%, Kohl’s -1.5%, Nordstrom -2.3%, Gap -0.6%, United Airlines -2.9%, Carnival -2.9%, Wynn Resorts -0.5%, Chevron +0.1%, Exxon Mobil -0.8%,  
Lock down names Campbell Soup +1.5% General Mills +0.5%, JM Smucker +0.8%
JOLTs Job Openings Sept 10.438m vs 10.629m Aug (F/cast was 10.1m)
Michigan Preliminary Data
Consumer Sentiment Nov 66.8 vs 71.7 Sept (F/cast was 71)
Current Conditions Nov 73.2 vs 77.7 Sept (F/cast was 77)
Inflation Expectations Nov 4.9% vs 4.8% Sept (F/cast was 4.9%)
Consumer Expectations Nov 62.8 vs 67.9 Sept (F/cast was 67)
5 yr Inflation Expectations Nov 2.9% vs 2.9% Sept (F/cast was 2.9%)
Baker Hughes Oil Rig Count 454 vs 450 prior
Baker Hughes Total Rig Count 556 vs 550 prior
USD dipped. Bitcoin -0.4% @ 63,866.84, VIX -7.8% @ 16.3, US T10 @ 1.57% continues to rise.
OIL Brent -0.8%, WTI -1%
Gold +0.2%, Silver +0.4%, Copper +1.2% Platinum -0.5%, Palladium +2.5%.
AHEAD NY Empire State Manufacturing Index.

DAX +0.07%, CAC +0.45%, FTSE -0.49%
Markets opened flat, FTSE dipped lower and traded sideways in the red DAX traded sideways in the green and the CAC worked better. Euro zone industrial production figures for September better than forecast.
Household goods +VE but Travel and Leisure weak and Oil and Gas the laggards. Earning from AstraZeneca (weak as earnings missed), Richemont (+VE on Strong earnings) , Deutsche Wohnen, Deutsche Telekom and Simcorp (lower after disappointing results).
Daimler announced Thursday that its truck business will be spun off on Dec. 10 as the German automaker looks cut costs and bump up profit margins to double figures by 2025.
European Commission Vice President Margaritis Schinas on Friday welcomed a move by Turkish aviation authorities to limit air traffic to Belarus for certain nationalities as part of efforts to contain the migrant crisis on the EU's eastern borders.
Industrial Production Sept +5.2% YoY vs 4.9% Aug revised (F/cast was +4.5%)
Industrial Production Sept -0.2% MoM vs -1.7% Aug revised (F/cast was -0.7%)
Wholesale Prices Oct +15.2% YoY vs +13.2% Sept (F/cast was +14.6%)
Wholesale Prices Oct +1.6% MoM vs +0.8% Sept (F/cast was +1%)
Eurozone Balance of Trade.
Germany No data due
France No data due  
UK  No data due

Nikkei likely to opened higher following the US but with caution ahead of the Japanese GDP data and Chinese Industrial production data.
Yen closed lower at 113.85
Data due GDP data (Growth Rate, Annualised, Price Index, Capital Expenditure, External Demand, Private Consumption).
Capacity Utilisation, Industrial Production.
Japan's economic stimulus package will require fiscal spending worth 40 trillion yen ($350 billion), the Nikkei business daily reported on Friday, and a draft of the spending plan reviewed by Reuters features steps to ease the pain of rising oil prices.
Japan's new foreign minister, Yoshimasa Hayashi, said on Saturday U.S. Secretary of State Antony Blinken assured him in a phone call that the U.S. commitment to defending Japan, including southern islets claimed by China, was unwavering. +VE
The United States said on Friday it will open talks with Japan that could lead to an easing of tariffs on steel and aluminum imports, a longstanding irritant in trade relations between the two allies.
Toshiba Corp (6502.T) outlined plans on Friday to split into three companies in an attempt to appease activist shareholders calling for a radical overhaul of the Japanese conglomerate after years of scandals.
Toyota Motor Corp, the world's top-selling automaker, said on Friday it would begin making up for production lost from supply shortages in December, with factories at home in Japan returning to normal for the first time in seven months.

Expect markets to open flat with caution ahead of the Chinese Industrial data.
No data due
South Korea’s domestic demand is on its track for a recovery in line with the rebound in exports and the adoption of the “Living with COVID-19” scheme, 
the Ministry of Economy and Finance said in its monthly report.
KDCA reported 2,325 new covid cases Saturday; concerns of rising caseloads which would prevent adoption of the second phase of ‘living with covid’.  Slight -VE
Europe's drug regulator has recommended the approval of a COVID-19 antibody treatment by Celltrion Inc., paving the way for its sales in the region, the South Korean pharmaceutical giant said Friday. +VE
A computer system failure caused massive delays and cancellations of flights of Jin Air Co., a budget carrier, on Friday. The airline's passenger service system was down for 10 hours from 6:30 a.m., leaving thousands of passengers stranded at airports across the country. -VE
General Motors Co (GM.N) will launch 10 electric vehicles (EVs) in South Korea by 2025, but has no plans yet to manufacture EVs in the country, Steven Kiefer, the head of GM's international operations said on Friday.  The No.1 U.S. automaker, which warned last year that persistent industrial action was preventing further investment in South Korea, builds EVs in the United States and China. It also has plans to build them in Mexico and Canada.  Slightly -VE
Coinone has passed the high bar for official registration while the case of its bigger rival Bithumb remains pending, the country’s top financial regulator said Friday.
South Korea’s financial watchdog on Friday warned online-only lender KakaoBank to improve its monitoring system that protects against money laundering as it lacks a monitoring process, relying only on receiving tips from other teams.
Samsung Fire & Marine Insurance Co., the non-life insurance arm of Samsung Group, reported a 42.2 percent rise in its third-quarter earnings amid a fall in accident-linked insurance payments amid tightened social distancing rules.

Expect market to open higher on good results and positive moves in the US markets on Friday.
No data due 
Commenting on communique after China’s sixth plenum, the MAC on Thursday said that the CCP is accustomed to using internal meetings to emphasize political ideals that would not be accepted by Taiwanese.
Taiwan opposes such acts and will not accept Beijing’s political framework, or the future that such a framework dictates, the MAC said.
Taiwan is not afraid of Beijing’s threats, and will resolutely defend its sovereignty, autonomy and democratic liberties, it added.
Honduras’ outgoing president said on Saturday he hoped his country would continue its friendship with Taiwan, as Taipei seeks to maintain relations with the Central American country amid a diplomatic tug-of-war with Beijing. +VE
It would be "inconceivable" for Australia not to join the United States should Washington take action to defend Taiwan, Australian Defence Minister Peter Dutton said on Saturday.  Follows U.S. Secretary of State Anthony Blinken saying on Wednesday that the United States and its allies would take unspecified "action" if China were to use force to alter the status quo over Taiwan. +VE
The number of local stock investors last month declined for the third consecutive month to 2.94 million, attributable to a plunge in local stock prices and uncertainty over the US’ monetary policy, Taiwan Stock Exchange data showed. -VE Brokers
Hon Hai Precision Industry Co reported third-quarter earnings of NT$36.98 billion (US$1.33 billion), up 24 percent quarter-on-quarter and 20 percent year-on-year, beating its own and analysts’ expectations, the company said Friday.  Strong sales to their biggest customer, Apple Inc, which released its latest iPhone in the period, drove the gains.
Earnings per share rose to NT$2.67 last quarter, up from NT$2.23 in the third quarter of last year. +VE
Dr Wu Skincare Co Ltd reported a net profit of NT$104 million (US$3.74 million) last quarter, up 51 percent from NT$68.72 million a year earlier, driven by strong sales in Taiwan and China.  The skincare company registered revenue of NT$331.45 million last quarter, up 43.45 percent from NT$231.05 million in the third quarter last year, as its Chinese distributors booked more products in August and September, ahead of the annual shopping season around Double 11 Singles’ Day, it said in a statement on Thursday.  Its online sales at home also grew at a double-digit percentage, it said. +VE
Taiwan’s developers and brokers reported a significant pickup in earnings over the past three quarters, as strong real demand and liquidity, as well as low interest rates, helped the housing market recover quickly from a COVID-19-induced slowdown +VE
Yang Ming Marine Transport Corp yesterday reported net profit of NT$50.83 billion (US$1.83 billion) for last quarter — a company record — as high freight rates boosted revenue and gross margin. In the third quarter, the container shipper posted revenue of NT$95.4 billion, up 145 percent from a year earlier, while gross profit totaled NT$64.77 billion, 10 times higher than a year earlier. +VE

Expect market to open lower with caution ahead of the China data.
Data due House Price Index, Industial Production, Retail Sales, Employment Rate, NBS Press Conference, Fixed Asset Investment.
Senior Chinese diplomat Wang Yi told U.S. Secretary of State Antony Blinken not to "send wrong signals" to Taiwan pro-independence forces, China's foreign ministry said in a statement on Saturday.
Both men also spoke about the virtual meeting that Chinese President Xi Jinping and U.S. President Joe Biden would have on Tuesday Asia time.
Letters from China’s embassy in Washington have pressed executives to urge members of Congress to alter or drop specific bills that seek to enhance U.S. competitiveness, according to the sources and the text of a letter sent by the embassy’s economic and commercial office seen by Reuters.  Chinese officials warned companies they would risk losing market share or revenue in China if the legislation becomes law, according to the text of the letter. -VE
People's Bank of China (PBOC) expressed during a Party Committee meeting that it will strive to provide appropriate and sufficient support for consumption and investment recovery, with solid monetary policies and better cross-cycle layout. The central bank likewise stressed the importance of restraining the excessively fast price hike, stating that it is vital to fostering high-quality socioeconomic development.
Louis Vuitton is considering opening its first duty free store in China on the emerging luxury island hub of Hainan, according to two sources, in a move that would mark a new approach for the world's largest luxury label.  The brand, which is the main profit engine of French luxury giant LVMH (LVMH.PA), is known for maintaining an iron grip on distribution  and famously never offering discounts on its leather monogrammed bags. +VE
Chinese President Xi Jinping has spoken on phone with US President Joe Biden two times since the beginning of the year at the latter's request, China's Foreign Ministry Spokesperson Wang Wenbin said at the regular press conference today (12th), CCTV reported. Wang voiced that the leaders of both nations agreed to keep regular contacts through various channels. At this juncture, both parties are keeping close communication for the specific arrangement of the physical meeting between the two leaders, Wang furthered, hoping that the China-US relation will return to the right track of healthy and stable development.
A Chinese court ruled on Friday against Kangmei Pharmaceutical Co (600518.SS) and some of its former executives, handing victory to investors in China's first class-action lawsuit against corporate fraud.
The ruling by the Intermediate People's Court of Guangzhou was hailed by China's securities regulator as a "milestone" event in the country's capital markets.
China's National Development and Reform Commission (NDRC) held a special topic video conference in relation to the "mining" activity of virtual currency, during which different parties reported the progress of monitoring and rectification works on the "mining" activity.
The NDRC reminded the local governments to strictly implement the relevant measures to further rectify the activity of virtual currency "mining".

HONG KONG  ADR’s -1pt at 25,326 with financials weak and caution ahead of the China data..
No data due but after market Friday
GDP Growth Rate Q3 0.1% QoQ vs -0.9% Q2 (F/Cast was 0.1%)
GDP Growth Rate Q3 5.4% YoY vs 7.6% Q2 (F/Cast was 5.4%)
Hong Kong's economic recovery became more entrenched in the third quarter alongside the further revival of global economic activity and stable local epidemic situation. Real GDP grew by 5.4% year-on-year in the third quarter, following a 7.6% growth in the second quarter.
Considering the actual outturn in the first three quarters of the year, the real GDP growth forecast for 2021 as a whole is revised to 6.4% in the current round of review, close to the upper bound of the forecast range of 5.5%-6.5% as announced in mid-August, the report added.

National Security 
Hong Kong has refused to renew the visa of an Australian correspondent from The Economist, the newspaper's chief editor said, as authorities in the Chinese city tighten a crackdown on free speech and dissent.

The Centre for Health Protection (CHP) of the Department of Health (DH) said that according to the latest analysis of whole genome sequencing conducted by the DH's Public Health Laboratory Services Branch on imported cases involving mutant strains, it is confirmed that the virus strain of imported case 12382 matched the Delta strain sub-lineage AY.4.2, with the identical genetic sequences as the imported case 12374, whose virus strain also matched sub-lineage AY.4.2. It suggests that the two cases might be epidemiologically linked.  Both cases stayed at Four Points by Sheraton Hong Kong Tung Chung located in Tung Chung for compulsory quarantine after arrival in Hong Kong from abroad, the announcement added.  According to the CHP's preliminary epidemiological investigations and the whole genome sequencing analysis, the CHP suspects that case 12382 might have acquired the infection during compulsory quarantine at the hotel.

Short Selling HSI Friday 15.6% vs 13.9% Thursday
Top shorts 
Bud APAC (1876) 48%, BoC (3988) 35%, China Res Land (1109) 34%, ICBC (1398) 34%, HSBC (5) 33%, CM Bank (3938) 33%, SHKP (16) 33%, Ping An (2318) 30%, Shenzhou Int (2313) 30%, Xinyi Solar (968) 30%, CG Services (6098) 30%, Sino BioPharm (1177) 30%, Techtronics (669) 29%, Power Asset (6) 29%, Wharf REIC (1997) 29%, Hengan (1044) 29%, AAC Tech (2018) 27%, China Life (2628) 27%, Longfor (960) 27%, Mengniu Dairy (2319) 27%, Country Garden (2007) 26%, Henderson Land (12) 26%, Baba SW (9988) 25%.

TENCENT (00700.HK) acquired a 90% stake in Wake Up, 
a Japanese creative studio, for JPY5 billion, reported foreign media.

Douyin announced on its official Weibo account that the company has received a request from TENCENT (00700.HK)'s creative service platform, in relation to joining the open internet platform of Douyin. Specifically, TENCENT desired a vast amount of short video content, which is based on its copyrighted films and TV shows, to be allowed to be shown on Douyin.

Sophia Chan, Hong Kong's Secretary for Food and Health, expressed that the government is currently in discussion with the catering industry in relation to requiring the dine-in customers of type B restaurants to use the LeaveHomeSafe application.

Certain companies of the Sunac series are planning to raise USD830 million through share placement, reported foreign media, citing sales document.  SUNAC (01918.HK) is mulling to place 280 million shares, at a price of $15-15.6 per share, representing a discount of 8.5-12% to the closing price on Friday. The placement could raise a maximum of USD560 million.
SUNAC SERVICES (01516.HK), on the other hand, is planning to place 138 million shares, at a price of $14.6-15.2 per share, representing a discount of 8.2-11.8% to the closing price on Friday. The placement could raise USD270 million.

KERRY PPT (00683.HK) announced that Brilliant Prestige Limited (BPL), a wholly-owned subsidiary of the company, has been confirmed as the selected tenderer 
for the Project and to participate in its subsequent grant of land use rights for plots 198-1, 200-3, 064-01, 065-01, 066-01, 067-01, 070-01, 071-01, 072-01, 073-01, Bund Street and the underground space of plot 070-02, Jiangxinan Road, Shandongnan Road, Shengze Road situated at Huangpu District, Shanghai, the People’s Republic of China. The result of the tender of the Lots and details of the Project is subject to the subsequent arrangement for the grant of land use rights and announcement to be made by the relevant land bureau. No legally binding contract in respect of the Lots or the Project has been entered into at this stage.

The Hong Kong Monetary Authority published the credit card lending survey results for the third quarter of 2021. 
Total card receivables increased slightly by 0.7 per cent in the third quarter to HK$124.4 billion at end-September 2021, after an increase of 3 per cent in the previous quarter.
The combined delinquent and rescheduled ratio decreased to 0.29 per cent at end-September 2021 from 0.35 per cent at the previous quarter-end. The quarterly charge-off ratio decreased slightly to 0.46 per cent from 0.47 per cent in the previous quarter.

Market sources suggested that PING AN (02318.HK) is seeking to sell its 44% stake in AUTOHOME-S (02518.HK) (ATHM.US).PING AN, in response, expressed that it has no information in this regard and no comment on said rumors, reported Chinese media.

CHINA LIFE (02628.HK) announced that the accumulated premium income of the Company 
for the period from 1 January 2021 to 31 October 2021 was about RMB574.8 billion, up 1.57% YoY.

The Macao Government Tourism Office (MGTO) announced the Macau Tourism Industry Development Master Plan, 
projecting the city's overall inbound visitors at 36 million to 41 million in 2025, reported Macao Daily. MGTO expected non-gaming spending among travelers, tourism-related employees and hotel occupancy rate to return to pre-epidemic levels, with guest room number exceeding 46,800.

Centa-City Leading Index (CCL) last printed at 186.06, down 0.11% WoW, 
marking the thinnest drop in 24 weeks. CCL Mass last stood at 188.06, down 0.18% WoW. CCL (small-and-medium units) last posted at 186.27, down 0.15% WoW. CCL (large units) last tracked at 184.98, up 0.07% WoW.
In the second week following the Policy Address, the housing prices of New Territories West moved upward close to the all-time high of 179.23, with the current reading only 0.56% away from the peak, highlighted the research department of Centaline Property. New Territories West's CCL Mass last at 178.23, up 0.61% WoW, logging the third record high. New Territories East's CCL Mass last printed at 201.24, up 0.37% WoW.
Wong attributed the thriving markets in New Territories West and East to the fact that the news on Northern Metropolis Development had been spiraled on market before the release of Policy Address.

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