Nov 16 Asian Macro Initial Thought Cautious start as Biden/Xi summit starts


16 Nov

This and previous notes can be found at Substack ( Asian Market Sense )
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Asia expect a cautious open as Biden/Xi virtual summit starts at 7:45pm Eastern time (8:45 HK time). Bloomberg Economic Forum starts in Singapore, Dubai Air show continues. US retail data in focus tonight.
Iron Ore prices weak but coal rallied. Lots of talk about the Fed being behind the curve and may need to taper quicker -VE for sentiment.

Australia 
Market opened lower with caution ahead of RBA minutes, Energy names weak along with Iron Ore futures and Gold -VE but Coal prices continue to surge in US.
Data
RBA Meeting Minutes
Japan
Nikkei futures indicated a flat open but easing lower (Sing Nikkei -30pts). Mitsubishi UFJ +VE as raises FY forecast and good results from Recruit on the plus side but expect cautious trading.  
S Korea Expect markets to open flat; saw resistance at 3,000 on Monday so holding that level would be +VE.   Talk with US on Steel +VE  Samsung Electric annual investor forum in focus.
Taiwan 
Market to open flat, Chip makers expect gross margins to decline -VE and Freight rates dropping although still high -VE for the outlook (-VE cross read to Japan/SKorean shippers and chip names).
China 
Market to open lower with caution on summit outcome, surging covid cases and Developer debts.
Hong Kong 
ADR’s -43pts @ 25,347 broad weakness with caution ahead of the Biden/Xi summit. Kaisa companies (Kaisa Prosperity (2168), Kaisa Health (0876), and Kaisa Capital (0936)) resume trading, saying business is normal but expect weakness.
US Futures 
Opened flat Dow +18pts, S&P and NDX just +VE

DOW -0.04%, NDX -0.04%, S&P flat, Russel 2K -0.45%
Markets opened around flat, NDX dipped lower initially but rebounded into the close.  DOW dfrifted lower through the day, S&P traded around flat.  Investors cautious ahead of Retail data and outcome of Biden/Xi virtual summit.   Tesla weak following Musk’s recent sales. Target +1.6% ahead of earnings but Lowes -0.5% and Walmart and Home Depot both weak ahead of earnings.
Dollar Tree +14% on news activist Mantle Ridge had built a stake.
Boeing strong on news its got an order for two freighters from Emirates and is in talks for a large order from Saudi Arabian Airways, Airbus said to also be in talks.
After market Biden signed the infrastructure bill into law.
Banks JPMorgan Chase -0.2%, Citigroup +1.6% Wells Fargo +0.2%, Amex +0.7%
Work from home names: Facebook +2%, Apple flat, Amazon +0.6%, Netflix -0.5%,  Disney -0.8%, Zoom Video +3.4%, Alphabet -0.2% and Microsoft -0.2%,
Tech NXP Semi -1%, Nvidia -1.2% (weak ahead of earnings), Micron -0.7%, AMD -1%, Skyworks -0.8%
Re-opening stocks  Boeing +5.5%, Caterpillar -0.8%, Simon Property +0.9%, Kohl’s +1.8%, Nordstrom -1.1%, Gap +0.1%, United Airlines +1.3%, Carnival -0.3%, Wynn Resorts +4.4%, Chevron +2.3%, Exxon Mobil +0.9%,  
Lock down names Campbell Soup +0.4% General Mills +0.7%, JM Smucker +1.4%
DATA
NY Empire State Manufacturing Index Nov 30.9 vs 19.8 Oct (F/cast was 20)
Biden/Xi virtual summit.
USD was stronger; at 16 month high. Bitcoin -0.5% @ 63,874.88, VIX +1.2% @ 16.49, US T10 @ 1.62%
OIL Brent -0.07%, WTI +0.21% with questions over whether Biden will release the strategic reserves.
Gold -0.2%, Silver -0.8%, Copper -0.9% Platinum +0.7%, Palladium +2.2%.
AHEAD Retail Sales, Export & Import Prices, Redbook, Industrial Production, Manufacturing Production, Capacity Utilisation, Business Inventories, NAHB Housing Market Index, Retail Inventories, Foreign Bond Investment, Overall Net Capital Flows, Net Long Term TIC flows, API Crude Oil Stock Change.
Earnings Walmart, Home Depot, La-Z-Boy, Vodafone, Aramark, NetEase, TransDigm
Fed Speakers Richmond Fed President Thomas Barkin, Atlanta Fed President Raphael Bostic, Kansas City Fed President Esther George, Minneapolis Fed President Neel Kash

DAX +0.34%, CAC +0.53%, FTSE +0.05%
Markets opened flat and traded sideways resources weak retail and utilities closed higher as investors try to make sense of the Japanese and Chinese economic data and corporate earnings.
Philips -10.5% after it said that it is speaking to U.S. regulators following a recent inspection at one of its facilities over the recall of ventilators owing to the use of parts alleged to contain a potentially hazardous foam.
Airbus trimmed its 20yr commercial aircraft demand forecast but increased its freighter demand.
Data
Eurozone 
Balance of Trade Sept €7.3B vs €4.8B Aug (F/cast €10.7B)
AHEAD
Eurozone No data due
Germany Employment Change, GDP Growth Rate
France Inflation Rate
UK  Unemployment Rate, Claimant Count Change, Employment Change, Average Earnings, Labour Productivity,

JAPAN
Nikkei futures indicated a flat open but easing lower (Sing Nikkei -30pts). Mitsubishi UFJ +VE as raises FY forecast and good results from Recruit on the plus side but expect cautious trading.  
Yen currently 114.12
Data due at 12:30 HK time.
Tertiary Industry Index Sept (Aug was -1.7% MoM F/cast is -2%)
Japan is set to begin administering booster shots of COVID-19 vaccine from Dec 1 after a health ministry panel approved the move on Monday, joining other countries in taking steps to prevent protection from waning over time.   The vaccine developed by Pfizer Inc and BioNTech SE will initially be the only one used for the third doses, meaning individuals who have received either of the other two types used in Japan -- Moderna and AstraZeneca -- will need to "mix and match." +VE
Mitsubishi Estate Co and Chinese online travel agent Trip.com Group Ltd have agreed to cooperate to help regional tourism in Japan recover from the impact of the COVID-19 pandemic.  Under an agreement signed Sept 1, they plan to jointly conduct promotional drives, develop new travel service products and attract airlines to airports operated by Mitsubishi Estate, the Tokyo-based real estate company said. +VE
Mazda Motor Corp expects the rollout of three new sport-utility vehicles, starting with the CX-50 next year, will help the Japanese automaker boost U.S. new-vehicle sales by a third by mid-decade, the company's North American chief executive said on Monday.

SOUTH KOREA
Expect markets to open flat; saw resistance at 3,000 Monday so holding that level would be +VE.   Talk with US on Steel +VE
No data due but Finance Ministry to release monthly public finance data investors will watch the excess tax revenue on hopes of another round of cash handouts.
Ministry of Health and Welfare, said Monday that the relevant ministries as well as the Korea Disease Control and Prevention Agency were “discussing which metrics would be used in deciding whether to halt or move forward with the phased return to normal,” the details of which will be unveiled the following day.  Comes as over 75% of Seoul  ICU beds filled with new covid cases; the trigger point for emergency response -VE.
Celltrion’s Truxima, the first biosimilar of Roche’s blockbuster cancer drug Rituxan (rituximab), has a market share close to 50 percent in major European countries, the company said Monday. +VE
South Korea said Monday local firms have inked deals to import urea solution from other countries, including Malaysia and Mexico, a move expected to help ease a supply shortage of the key fluid needed in diesel cars to cut emissions. +VE
Hyundai Electric & Energy Systems Co. (HE) said Monday it will launch a 26.6-billion won ($22.5 million) project to build an eco-friendly electricity generation and supply system in an industrial complex in South Korea. +VE
Small business revenue has returned to pre-pandemic levels after the government kicked off the “living with COVID-19” scheme designed to gradually open up the economy, according to new data. According to Korea Credit Data’s database on Monday, revenue from small businesses during the first week of November saw a 10.4 percent jump on average compared to the same time one year ago. It was also up 2.6 percent compared to the previous week. +VE
The number of small shareholders in global tech giant Samsung Electronics surpassed 5 million amid massive stock investment by local retail investors, data showed Monday.  Market watchers said a considerable number of local retail investors had bought into Samsung Electronics this year, given foreigners' continued selling of the most coveted stock in the country.  Slight +VE
South Korean game companies with new business plans to develop games using nonfungible tokens saw their share prices surge Monday, despite concerns over the market being overheated without actual plans laid out to materialize such a big agenda, experts said Monday. +VE
Tire makers 3Q earnings sharply declined outlook -VE short term as raw material prices of natural/synthetic rubber rise.  Also logistics issues and demand from auto industry hit but disruptions to auto makers on chip shortage.  Worth watching to accumulate on weakness and chip shortage eases and auto deliveries increase.
Krafton’s new mobile game PUBG ‘New State’ tops the mobile game popularity ranking in 165 countries after launching on Nov 11.

TAIWAN
Market to open flat, Chip makers expect gross margins to decline -VE and Freight rates dropping although still high -VE for the outlook (-VE cross read to Japan/SKorean shippers and chip names).
No data due 
The central bank would not consider raising the interest rate unless inflationary pressures become uncontrollable, although it would consider further tightening credit to cool the property market, Governor Yang Chin-long told a meeting of the legislature’s Finance Committee yesterday. +VE
China Steel Corp (CSC), the nation’s largest steelmaker, yesterday announced modestly lower prices for certain products for domestic delivery next month, its first price cut since July last year.  The company’s move reflected its concerns for domestic downstream companies that are facing supply chain bottlenecks and rising shipping costs, as well as pressures for inventory and fund adjustments before the end of the year, it said in a statement. +VE
Hon Hai  said it plans to invest NT$20bn in its "3 plus 3" initiative, spanning electric vehicles, robots and digital healthcare, which are being developed through the application of AI, semiconductors and communications technologies, starting in 2022 as part of efforts to diversify its product portfolio. +VE
Quanta reportedly expects its 4Q21 laptop shipments to rise 10% QoQ, keeps its view that full-year that NB shipments this year will advance at a double-digit clip YoY.  Also expects server shipments to climb QoQ in 4Q21. Quanta said its higher profit margins last quarter were due to higher sales mix for its non-NB business plus effective cost control and economies of scale. Quanta expects 4Q21 gross profit margin to drop on a ramp-up of higher-end models. +VE

CHINA
Market to open lower with caution on summit outcome, surging covid cases and Developer debts.
No data due After Market Monday
For 10M21, the foreign direct investment (FDI) into China amounted to RMB943.15 billion, up 17.8% YoY,
according to data from the Ministry of Commerce To Sept was +19.6% (F/cast was 20%) Slight -VE
China's National Health Commission announced that, in accordance with the Joint Prevention and Control Mechanism of the State Council, the country shall strive for the full vaccination of people aged 3-11 without contraindications by end-December based on the principles of informed consent and voluntary participation.
Beijing Stock Exchange has officially started trading from Monday, closing the market steadily on the first trading day. The full-day turnover of 81 stocks trading on the stock exchange reached RMB9.573 billion.  Notable that the T/O on the other exchanges didn’t drop.
China’s economy showed signs of stabilising in October as retail sales and industrial production bounced back from the previous month and beat expectations, but officials and experts are warning of a bleak outlook in the recovery due to pandemic uncertainties and global supply-chain issues.  Sporadic outbreaks of Covid-19 have dampened economic momentum, said Sheana Yue, an assistant economist with Capital Economics. As the outbreaks continue, movements will continue to be limited, and consumption growth will remain slow. However, “any near-term virus-linked disruptions should prove temporary”, Yue added.  Slight -VE

HONG KONG 
ADR’s -43pts @ 25,347 broad weakness with caution ahead of the Biden/Xi summit. Kaisa companies (Kaisa Prosperity (2168), Kaisa Health (0876), and Kaisa Capital (0936)) resume trading, saying business is normal but expect weakness.
Data due after market Unemployment Rate.

Short Selling  HSI Monday 17.1% vs 15.6% Friday
Top shorts 
Hang Seng Bank (11) 54%, Bud APAC (1876) 44%, Longfor (960) 43%, Country Garden (2007) 41%, Wharf REIC (1997) 39%, CG Services (6098) 37%, Hengan (1044) 37%, Sands China (1928) 35%, China Res Land (1109) 33%, Shenzhou Int (2313) 33%, Ping An (2318) 32%, HSBC (5) 31%, Techtronics (669) 31%, China Overseas (688) 31%, Power Asset (6) 30%, BoC (3988) 30%, CLP (2) 29%, Sunny Optical (2382) 28%, Galaxy Ent (27) 25%, Baba-SW (9988) 25%,

WATCH
JP Morgan Chase & Co. CEO Jamie Dimon arrived in Hong Kong on Monday (15 November), being the  first big Wall Street investment bank boss to visit Greater China  year-to-date. Meanwhile, U.S. President Joe Biden is set to meet with  his Chinese counterpart Xi Jinping at a virtual meeting on Monday.  Dimon was exempted from quarantine, part of Hong Kong's "zero infection"  policy which has been criticized by the business sector. He claimed such  policy has made talent wooing and retainment difficult.

Hong Kong ambition to become Asia’s data hub take another hit as Beijing’s strict cybersecurity rules threatens that. Hong Kong’s outdated data privacy law puts it out of step with Beijing, experts say, as the mainland pushes to restrict cross-border data flows.  A new draft regulation has confirmed that some mainland companies seeking an IPO in Hong Kong would also be subject to a cybersecurity review -VE

TENCENT (00700.HK) unloaded 95 million shares of HENGTEN NET (00136.HK)  at an average price of $1.796 per share on market last Friday (12th),  cashing in $171 million, according to the Stock Exchange's disclosure.PING AN (02318.HK) announced that the accumulated gross premium incomes of Ping An Property & Casualty Insurance for the first ten months of 2021 was RMB220.57 billion, down 8.3% year-over-year. Premium incomes of Ping An Life Insurance fell 3.6% annually to RMB392 billion.

Wheelock Properties released the fourth price list for its Monaco One project in Kai Tak on Sunday, comprising 123 flats at an average discounted price of HK$25,533 per square foot. With prices ranging from HK$8 million to HK$17.89 million, up two percent from the previous price list, the developer could cash in HK$1.22 billion.

The second price list of 50 units for Kennedy 38 was also unveiled and the first round of sales is expected to kick off over the weekend. At an average price of HK$27,677 per sq ft after discounts, this batch provides 18 studio flats and 32 one-bedroom flats.
Co-developed by Wheelock, Sun Hung Kai Properties (0016) and Henderson Land Development (0012), the project has received at least 620 checks for 70 homes offered in the first price list.

Sino Land has cashed in more than HK$31 million by selling three flats of its Silversands project in Ma On Shan. Among these, a 449-sq-ft home with two bedrooms was sold at HK$10.7 million. A total of seven transactions worth more than HK$110 million have been recorded at the project since the beginning of this month.
 
MCC (01618.HK) announced the value of newly signed contracts of the Company amounted to RMB964.46 billion for the first ten months of 2021, 
representing an increase of 20.1% from the same period of last year.

According to the forecast of the Transport and Housing Bureau (THB) as at September 2021, the estimated total public housing production by the Housing Authority and Hong Kong Housing Society in the five-year period from 2021/22 to 2025/26 is about 106,900 flats,
comprising about 73,100 public rental housing/Green Form Subsidised Home Ownership Scheme (PRH/GSH) flats and about 33,800 other subsidised sale flats (SSFs). As compared to the last quarter, the yearly production in 2024/25 and 2025/26 has been adjusted mainly because the completion date of about 3,100 other SSFs has been revised from 2024/25 to 2025/26.

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