Nov 19 Asian Macro Initial Thoughts expect a flat open; a number of stock pick +VE but Baba disappoints -VE China Ecommerce


19 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
The United Nations warned Thursday that a surge in container freight rates could mean higher prices for consumers next year unless pandemic-fueled problems are untangled.  The U.N.'s trade and development agency (UNCTAD) said global import price levels could increase by 11 percent and consumer price levels by 1.5 percent between now and 2023.
The Biden administration has asked some of the world's largest oil consuming nations - including China, India and Japan - to consider releasing crude stockpiles in a coordinated effort to lower global energy prices, according to several people familiar with the matter.

Australia 
Market trended higher in early trades to 7,390 level before pulling back. Sentiment +VE Energy +VE but Iron Ore futures remain weak
Japan
Nikkei futures opened  +40pts on the expectation that the Govt stimulus to be higher than expected.  But inflation data slightly weaker  than expected -VE.  Remember Russell/Nomura index review implimented MOC today so expect some closing volatility.
S Korea 
Expect markets to open lower as inflation worries with PPI hitting a 13 year high and rising covid cases overhang the market. But Apple auto related names +VE and Hyundai Motor announced buyback details.
Taiwan 
Expect market to open higher with focus on Tech after strong moves in US markets after the Nvidia results.
China 
Expect market to open lower with concerns over ECommerce, Developer Debts and covid overhanging the marketMarket to open
Hong Kong
ADR’s -182pts at 25,137 having closed lower Thursday expect some initial margin call selling;  ECommerce mixed as Alibaba numbers missed (ADR was -10%) and it cut its guidance -VE but JD.Com beat.
US Futures 
Opened Dow +20pts, S&P and NDX both +0.1%

DOW -0.17%, NDX +0.45%, S&P +0.34%, Russel 2K -0.56%
Markets opened flat,initially dipped before rebounding, DOW traded n the red around flat.  S&P and NDX worked slightly better.
Nvidia +8.3% post earnings and +VE cross read to others in the sector. but Cisco weak.
Apple +2.9% to an all-time high on news its refocusing its electric vehicle efforts on self-driving capabilities. Amazon +4% as its first cashierless coffeeshop, partnered on with Starbucks opened in New York. Macy’s +21% and Kohl’s +10.6% smashed quarterly profit and revenue estimates, much like their peers who reported earlier in the week.
Bath & Body Works +5% and Victoria’s Secret +14%. CVS +2% after announcing to closed 900 stores over the next three years to roll out a more digital strategy for shoppers and turn brick-and-mortar locations into destinations for healthcare services like flu shots and diagnostic tests. Deere +1% lift too after it came to a resolution with workers who had been on strike since Oct. 14
Banks JPMorgan Chase -0.9%, Citigroup -0.1% Wells Fargo +0.1%, Amex -1.9%
Work from home names: Facebook -0.6%, Apple +2.9%, Amazon +4.1%, Netflix -1.4%,  Disney -1.1%, Zoom Video -3%, Alphabet +1.2% and Microsoft +0.6%,
Tech NXP Semi +1.2%, Nvidia +8.3%, Micron +2.1%, AMD +2.4%, Skyworks flat
Re-opening stocks  Boeing +0.3%, Caterpillar -0.8%, Simon Property +1.1%, Kohl’s 10.6%, Nordstrom +5.4%, Gap +4.4%, United Airlines -2.7%, Carnival -1.8%, Wynn Resorts -4.8%, Chevron -0.8%, Exxon Mobil -1.1%,  
Lock down names Campbell Soup -1.4% General Mills -0.4%, JM Smucker -1.5%

DATA
Initial Claims 268k vs 269k prior revised (F/cast was 263k)
4 week Average Claims 272.75k vs 278.5k prior revised (F/cast was 276k
Continuing Claims 2.08m vs 2.209m prior revised (F/cast was 2.14m)
EIA Natural Gas Report 26 Bcf vs 7 Bcf prior (Consensus was 25 Bcf)
Philly Fed Data
Manufacturing Index Nov 39 vs 23.8 Oct (F/cast was 21)
Prices Paid Nov 80 vs 70.3 Oct
Business Conditions Nov 28.5 vs 24.2 Oct
Capex Index Nov 31.1 vs 32.4 Oct
Employment Nov 27.2 vs 30.7 Oct
New Orders Nov 47.4 vs 30.8 Oct
Leading Index Oct 0.9% MoM vs 0.1% Sept (F/cast was 0.7%)
Kansas Fed
Composite Index Nov 24 vs 31 Oct (F/cast was 27)
Manufacturing Index Nov 17 vs 25 Oct (F/cast was 23).
USD was weaker. Bitcoin -4.4% @ 57,681.15, VIX +2.8% @ 17.59, US T10 @ 1.587% as initial claims data in-line
OIL Brent +1%, WTI +0.6% despite expectation of releases from strategic reserves
Gold -0.5%, Silver -1.2%, Copper +0.9% Platinum -1.4%, Palladium -2.3%.
AHEAD Baker Hughes Rig Count

DAX -0.18%, CAC -0.21%, FTSE -0.48%
Markets opened mixed UK lower with miners weak. DAX and CAC higher but inflation concerns and a resurgence of covid cases overhanging the markets. Markets traded sideways around flat for most of the day but dipped in the last 30mins before a small uptick into the close. Automakers +0.3% but Oil/Gas -1.8%
Evotec +5% after announcing a new drug discovery alongside U.S. peer EQRx.
Earnings come from Thyssenkrupp +6.3%, Royal Mail +9.7% after earnings both raised outlook and Royal Mail to return £400 million ($539.8 million) to shareholders.
InPost -15.2%, continuing Wednesday’s steep decline after cutting its full-year guidance amid slower-than-expected growth in the e-commerce market. Rotork -7.2% after a trading update.
DATA
Eurozone
New Car Registrations Oct -30.3% YoY vs -23.1% Sept (F/cast was -28%)
AHEAD
Eurozone Current Account
Germany PPI
France Unemployment
UK  Retail Sales, Public Sector Net Borrowing

JAPAN
Nikkei futures opened  +40pts on the expectation that the Govt stimulus to be higher than expected.  But inflation data slightly weaker  than expected -VE.  Remember Russell/Nomura index review implimented MOC today so expect some closing volatility.
Yen currently 114.24
Data due 
Inflation Rate Oct 0.1% YoY vs 0.2% Sept (F/cast was 0.1%)
Inflation Rate Oct -0.2% MoM vs 0.4% Sept (F/cast was 0.1%)
Core Inflation Rate Oct 0.1% YoY vs 0.1% Sept (F/cast was 0.1%)
Inflation Rate Ex Food/Energy Oct -0.7% YoY vs -0.5% Sept (F/cast was -0.3%)
Japan's supreme court dismissed on Thursday a request to block a plan by Tokyo Kikai Seisakusho Ltd for a "poison pill" takeover defence, in a closely watched ruling with implications for future hostile bids in the country.  Slight  -VE
The government is hurrying to establish a legal framework to provide subsidies to Taiwan Semiconductor Manufacturing Co. (TSMC), in response to the firm’s announcement of a plan to build a new chip plant in Kumamoto Prefecture. +VE


SOUTH KOREA
Expect markets to open lower as inflation worries with PPI hitting a 13 year high and rising covid cases overhang the market. But Apple auto related names +VE and Hyundai Motor announced buyback details.  
Data out 
PPI Oct 8.9% YoY vs 7.6% Sept revised (F/cast was 8.4%)
PPI Oct 0.8% MoM vs 0.4% Sept revised (F/cast was 0.5%)
South Korea saw the highest number of new COVID-19 cases since the start of the pandemic Thursday, just 17 days into its return to normal scheme with 3,292 cases reported on Thursday.  Govt to meet with hospital heads to discuss. -VE
South Korea's financial regulator said Thursday that it will convene an emergency meeting this week with officials of major banks to look into how they determine interest rates on lending amid worries over recent steep hikes in borrowing costs.
Samsung Electronics unveiled its strategy to strengthen the foundry industry ecosystem as it announced new design tools and technologies crucial for 3-nanometer process for its foundry customers at a forum on Thursday.
Samsung Electronics Vice Chairman Lee Jae-yong met with Noubar Afeyan, co-founder of Moderna, at the headquarters of Flagship Pioneering, a biopharmaceutical investment firm invested by Afeyan in Cambridge, Massachusetts, Tuesday.   Lee discussed cooperation measures for the COVID-19 vaccine with the Moderna co-founder, as Samsung Biologics is currently bottling Moderna’s vaccine at its plant in Songdo, Incheon, Samsung said. +VE
LGE(066570), LG INNOTEK(011070), LG DISPLAY(034220), MOBIS(012330), MANDO(204320) have previously been named as potential suppliers to the Apple Car and should benefit from news that Apple is accelerating development of its electric car and is refocusing the project to create a fully autonomous vehicle.  Press reports Under software executive Kevin Lynch, the company's car team is moving away from creating a model with limited self-driving capabilities that focused on steering and acceleration.  
Hanwha Solutions said Thursday that the company has invested $160 million in securing low-carbon photovoltaic materials amid a growing demand for renewable energy in the United States. +VE
Hyundai Motor  announced to buyback a combined W505bn worth of treasury shares across commons and prefs, the largest buyback in 16 years. From Nov 19, 2021 - Feb 18, 2022, it plans to buyback W442.3bn worth of common shares (2.14mn shares, equivalent to 1% of O/S) and W62.2bn worth pref shares (total 633k shares including HMC P(005385) 244k shares, HMC 2P(005387) 365k shares, HMC 3P(005389) 24k shares) +VE.
The government said Thursday it will launch a system to monitor some 20 key raw materials, such as magnesium and tungsten, to ensure stable supplies and prevent the recurrence of a crisis similar to the urea solution supply crunch. +VE

TAIWAN
Expect market to open higher with focus on Tech after strong moves in US markets after the Nvidia results.
Data due after market Current Account
A 4 percent salary raise for public employees that has been approved by the Executive Yuan would benefit about 1 million people, including contract workers, after its implementation on Jan. 1 next year, government officials said yesterday. +VE
Genius Electronic Optical yesterday said that it is looking to metaverse-related optical products as a future engine for growth as sales of smartphones are softening.  The company, which counts Apple Inc among its major customers, told an investors’ conference that it has started shipping some lenses for metaverse-related gadgets and that it hopes to start mass production by next year. +VE
Radium Life Tech Co expects to return to profitability this quarter from booking profit from two newly completed residential projects in Taipei and Taoyuan.  Radium, known for its MRT joint development projects, reported net losses of NT$168.77 million (US$6.07 million) in the first three quarters of the year, or losses of NT$0.19 per share, as rental income took a hard hit from a local COVID-19 outbreak, company spokesperson Christine Chen said yesterday. +VE

CHINA
Expect market to open lower with concerns over ECommerce, Developer Debts and covid overhanging the market
No data due but Monday we get Loan Prime Rate
Japanese foreign minister Yoshimasa Hayashi on Thursday emphasised to his Chinese counterpart that peace and stability in the Taiwan Strait are important, while also expressing "deep concern" about the situation in Hong Kong and Xinjiang.
With over $66 billion in total capital, China has passed Japan to become the second largest contributor to the system of development banks that provide some $200 billion in subsidized loans to poor countries each year, a new report said Thursday.
China is expediting her plan to substitute the technologies from the U.S. and other foreign countries, as Bloomberg had previously reported. Chinese Foreign Ministry Spokesperson Zhao Lijian yet responded that the related report was untrue, and that it was an absolute misinformation. Zhao claimed that China had not formulated any plans for technology substitution, let alone authorization to local governments on investigating local suppliers and formation of white list. China has always been welcoming foreign enterprises to provide on-par technological products and services.
China's Ministry of Commerce has joined hands with relevant authorities year-to-date to actively guide the solid offshore trade development in local regions, said MOC spokeswoman Shu Yuting. In the next step, MOC aims to support offshore trade buildout in local regions in three ways, including financial service optimization. Equally, it will encourage banks to boost their complex business review ability with the People's Bank of China, the State Administration of Foreign Exchange and other units.
On another note, Shu projected a double-digit growth in foreign investment absorbed by China this year should there be no special circumstances. The country could hence achieve its full-year foreign capital target.
According to the Anti-monopoly Guideline for Active Pharmaceutical Ingredients (API) published by the State Council's Anti-Monopoly Committee (AMC), the dominant market position of accredited API operators shall be determined based on the Anti Monopoly Law, or by analyzing market-dominant factors and situations concerning these operators.  The AMC will make considerations after incorporating API sector features, including operators' market share, relevant market competition, actual output capacity and volume, as well as their ability to control the API sales or procurement markets.


HONG KONG  ADR’s -182pts at 25,137 having closed lower Thursday expect some initial margin call selling;  ECommerce mixed as Alibaba numbers missed (ADR was -10%) and it cut its guidance -VE but JD.Com beat.
No data due

Short Selling HSI Thursday 23% vs 21.3% Wednesday
Top shorts 
Country Garden (2007) 58%, Petrochina (857) 45%, PingAn (2318) 41%, CM Bank (3968) 39%, Bud APAC (1876) 38%, Sino Biopharm (1177) 36%, HSBC (5) 36%, Ali Health (241) 34%, Sands China (1928) 34%, Wuxi Bio (2269) 34%, China Res Land (1109) 34%, CSPCPharma (1093) 34%, Anta Sports (2020) 31%, Baba-SW (9988) 31%, ICBC (1398) 30%, China Overseas (688) 29%, Hengan (1044) 28%,  Galaxy Ent (27) 28%, Haidilao (6862) 28%, Xinyi Solar (968) 27%, Li Ning (2331) 26%, Xiomi (1810) 26%, Sunny Optical (2382) 26%, CKI (1038) 25%, Tencent (700) 24%

WATCH
Alibaba Group Holding Ltd  said that its profit for the most recent quarter tumbled 81 percent, as it grappled with a government crackdown on the nation’s big tech champions.  
Net profit came in at 5.37 billion yuan (US$833 million) for the July-to-September period, falling from 28.77 billion yuan a year earlier, the company said. It made no reference to the clampdown, instead blaming the decline largely on “increased investments in key strategic areas,” such as the lower-tier segment of its consumer markets and its international operations. -VE

CK ASSET (01113.HK) announced that a wholly-owned subsidiary of Li Ka Shing (Global) Foundation acquired a total of 280,000 shares in CK Asset
at the average price of HK$46.6315 per share on 12 November 2021. As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK Asset have increased from 46.26% to 46.27% and increased from 46.33% to 46.34%, respectively.

CATHAY PAC AIR (00293.HK) issued a statement, remarking that the airline recognises the concerns that have arisen following the recent confirmed COVID-19 cases involving three of its freighter pilots returning from Frankfurt. After investigation into these cases, regrettably, the findings indicate a serious breach of requirements during crew overseas layovers. The individuals concerned are no longer employed by Cathay Pacific, the statement added.

Hong Kong Disneyland Park will re open today (November 19) with health and safety measures. All guests entering the park are required to undergo temperature screening, wear face masks and scan the “LeaveHomeSafe” QR code or register contact details as required by the regulations.

The Hong Kong Monetary Authority (HKMA) announced the composite interest rate at the end of October 2021. The composite interest rate remained unchanged at 0.19% at the end of October 2021 as the weighted funding cost for deposits was steady during the month.

The U.S. trade representative Katherine Tai told Financial Times that the U.S. is in need of a course correction in the the Asia-Pacific region. 
Tai, however, contended that the U.S. will be able to devise alternative methods to better address challenges and strengthen ties with its allies without rejoining the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP).

A screenshot saying "Zhengzhou Evergrande Is Dissolved" has been spiraling online swiftly, Sina Finance reported. However, the related personnel of Zhengzhou Evergrande clarified that they have not received any notice in this regard, saying hence it should be deemed as rumor. The personnel did not illustrate further on the issue.


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