Nov 22 Asian Macro Initial Thoughts Expect cautious trading this holiday shortened week


22 Nov

This and previous notes can be found at Substack ( Asian Market Sense )
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Asia to open lower following the weakness in US markets Friday. Covid and inflation concerns overhang the markets along with some concern over Biden’s announcement of who will be the FOMC Chair.

Australia Market opened lower, following the weakness in US markets Friday with Energy and Miners weak.  
Japan Expect market to open lower following the US, investors watching for  an announcement releasing strategic oil reserves along with the US.  Chicago futures indicate -5pts.   Expect cautious trading ahead of tomorrows holiday (Labour Thanksgiving day)
S Korea Expect markets to open lower (futures indicate -2.5pts) with inflation concerns and the resurgence in covid cases overhanging the market.   20 day exports data due to be released on the open.
Taiwan Market to open lower but resilience in Tech should limit the downside.  After market Export Orders and Unemployment.
China Market to open lower, Loan Prime Rate no change expected. Concerns over covid, property sector loans and slowing growth overhanging the market.  Govt seen addressing the Yuan strength with a warning to banks.
Hong Kong ADR’s -180pts at 24,869 broad weakness and expect initial margin call selling after two down days. Increasing talk about the closed borders hurting business sentiment.
Europe Covid resurgence a growing concern as Austria imposes national lockdown and Germany considers more social distancing measures and some countries see protests against the clampdowns.
US 
Earnings in focus ahead of the shortened trading week, with markets closed Thursday for Thanksgiving and then half day trading Friday. Biden’s decision on the FOMC chair awaited.


JAPAN
Nikkei Futures open lower following the US.  No earnings today but expect cautious trading ahead of tomorrows holiday.
Yen clsoed 113.98
No data due
Tokyo reported 20 new covid cases (+4 DoD) and 143 nationally. +VE
Japan's Foreign Minister Yoshimasa Hayashi said on Sunday he has been invited to visit China. Hayashi said in an interview on Fuji TV that his Chinese counterpart Wang Yi invited him during a phone call on Thursday. He said he was considering his response and nothing had been decided yet, the network said.
Japan is considering releasing oil from its reserves along with the United States and other countries to help curb rising crude oil prices, Prime Minister Fumio Kishida said Saturday. “We are considering what we can do,” Kishida told reporters in Matsuyama, Ehime Prefecture, when asked about the possibility, as surging prices of gasoline and other fuel products are squeezing households and companies that have already been hit hard by the coronavirus pandemic.
Electric SUVs generally are among the least reliable vehicles on the road, but it's not because of the batteries or electric motors that power them. Instead, it's because of glitch-prone electronics including climate controls and power equipment, the annual auto reliability survey of subscribers by Consumer Reports found. -VE Autos.
The presidents of Mizuho Financial Group Inc, one of Japan's major banking groups, and its banking unit Mizuho Bank will step down to take responsibility for a series of system failures, sources familiar with the matter said Friday. -VE

SOUTH KOREA
Expect markets to open lower with inflation concerns and the resurgence in covid cases overhanging the market.  It’s expected that the BoK may raise rates this week.
Data due 20 day exports data due to be released on the open.
President Moon Jae-in said Sunday that he is worried about a recent jump in new COVID-19 cases as the nation eased some social-distancing rules and urged people to strictly comply with containment rules despite higher vaccination rates.  New coronavirus cases stayed above 3,000 for the fifth consecutive day Sunday amid concerns over the full-fledged reopening of schools and a virus resurgence ahead of winter. -VE
South Korean health and beauty chain CJ Olive Young said on Friday it was looking to raise around $1 billion in an initial public offering, as the company seeks to tap a booming market for new listings.
South Korea's military said on Friday it scrambled fighter jets after two Chinese and seven Russian warplanes intruded into its air defence identification zone during what Beijing called regular training.
South Korea’s central bank is expected to carry out its second rate hike in the pandemic era this week, and is likely to raise it by 25 basis points to 1 percent, experts said Sunday.
Samsung Electronics is reportedly planning to unveil its $17 billion foundry investment plan in the US this week, as its leader Vice Chairman Lee Jae-yong returns home after a series of high-profile meetings with White House officials and key lawmakers that might have finalized the plan. According to Samsung Electronics Sunday, the vice chairman was invited to the White House on Friday, US time, and met with top officials to discuss how the South Korean tech giant could help resolve the global chip supply chain risks. They also exchanged ideas on federal-level incentives for semiconductor companies.
Korea Gas Corp. is undergoing a paradigm shift from a fossil fuel resource developer to a hydrogen-based eco-friendly company by pushing forward its hydrogen as well as natural gas businesses. +VE
Market data showed Friday that LG Electronics has shipped out over 10 million of its premium OLED TV shipments since the launch in 2013, doubling from just a year ago amid a rapidly expanding market. The Korean TV maker shipped 899,000 TVs in the third quarter, a sharp rise by 80 percent on-year, and the most in a quarter, according to the data from market analysis company Omdia. +VE
Global investment firm Carlyle Group’s buyout fund Carlyle Asia Partners V has inked a deal to acquire 100 percent ownership of South Korea’s No. 2 coffee chain, A Twosome Place, officials said Friday.
Doosan Group said Sunday it will develop a hydrogen power pack for commercial vehicles, signaling its entry into the hydrogen bus and truck markets. +VE

TAIWAN
Expect market to open lower although continues strength in Tech should limit the downside.
Data due after market 
Export Orders Oct (Sept was 25.7% YoY F/cast is 23.5%)
Unemployment Rate Oct (Sept was 3.92% F/cast is 3.78%)
Data out Friday after market 
Current Account Q3 $26.1 vs 28.04b Q2 (F/cast was $26b)
As exports remained strong, even though export growth slowed from a year earlier due to increased raw material prices and capital equipment imports, the central bank said on Friday.
Taiwan is to start producing geothermal energy on a commercial scale for the first time in nearly 30 years tomorrow, when an Yilan County facility begins operations.  The 4.2 megawatt Cingshuei Geothermal Power Plant in Datong Township; the first privately built geothermal power plant in Taiwan — was granted commercial license by the Bureau of Energy on Oct. 27, county authorities told the Central News Agency on Tuesday.  +VE
The United States and Taiwan next week will hold a second session of an economic dialogue launched last year in the face of increasing pressure on the island from China, the State Department said on Friday. The announcement comes days after a virtual meeting between U.S. President Joe Biden and Chinese leader Xi Jinping. After the meeting, Xi warned that supporters in the United States of Taiwanese independence were "playing with fire." +VE
The majority of respondents in a survey about Taiwan-China relations support maintaining the “status quo” across the Taiwan Strait, the Mainland Affairs Council said on Thursday. In a poll of 1,072 people, 84.9 percent said they supported maintaining the “status quo” between Taiwan and China, while 6.8 percent said that Taiwan should declare independence as soon as possible and 1.6 percent said they supported unification with China.
Gasoline prices are to decrease by NT$0.3 per liter this week, and diesel prices are to drop by NT$0.2 per liter, CPC Corp, Taiwan (CPC) and Formosa Petrochemical Corp  announced separately Sunday. Slight +VE
The Financial Supervisory Commission (FSC) has requested Shin Kong Financial Holding Co to investigate whether former chairman Eugene Wu had contravened a commission-imposed ban on his involvement in the firm’s management.  FSC Chairman Thomas Huang told a meeting of the legislature’s Finance Committee on Thursday that it has tasked the firm’s three independent directors to lead the investigation, after the Banking Bureau was days earlier tipped off about Wu allegedly giving instructions to the management. -VE
Hon Hai Industry Precision Co is to establish a semiconductor design center in a “smart” industrial park in New Taipei City as part of its effort to develop electric vehicles (EV).   It said it plans to open a semiconductor design center in the Baogao Science and Intellectual Park in the city’s Sindian District to develop software used in self-driving, smart connectivity and smart cabins for EV production. +VE

CHINA
Expect market to open lower. Loan Prime Rate on the open with no change expected. Concerns over covid, property sector loans and slowing growth overhanging the market.  Further cold  weather could put pressure on the energy sector.
Data due Loan Prime Rate no change expected
China's National Health Commission reported 23 confirmed cases of COVID-19 Friday, with three of them being local infections. increasing suspicion regarding the number of cases being reported from China. -VE
In a statement, International Monetary Fund (IMF) said China must cope with financial risks in a clear and coordinated manner, while urging Beijing to temporarily change its contractionary fiscal policy approach for 2021 to a neutral stance.
China announced Friday after market to cut gasoline and diesel retail prices wef Saturday -VE for the Energy names.
China's revenue in the national general public budget was RMB18.15 trillion for the first ten months of 2021, growing 14.5% year-on-year, announced by the Ministry of Finance (MOF).
During January to October 2021, the accumulative amount of foreign exchange settlement and sales by banks was RMB13.23 trillion and RMB11.96 trillion, respectively, with an accumulative surplus of RMB1.27 trillion.
In October 2021, the amount of foreign exchange settlement and sales by banks in China was RMB1.2 trillion and RMB1.09 trillion, respectively, with a surplus of RMB106.2 billion, according to the statistics of the State Administration of Foreign Exchange (SAFE).
Chinese's loans across categories increased by RMB17.9 trillion in the first ten months of 2021, up RMB78.3 billion from a year ago, said a spokesperson for China Banking and Insurance Regulatory Commission. The fund supply was reasonable and ample, effectively meeting the real economy's fair capital demand. Of which, the reasonable real estate loan demand had been satisfied as well. Slight +VE
China downgraded its diplomatic ties with Lithuania on Sunday, expressing strong dissatisfaction with the Baltic State for allowing Taiwan to open a de facto embassy there and raising tensions in a row that has dragged in Washington. -VE
The United States on Friday called Chinese actions in using water cannon against Philippine resupply boats in the South China Sea "dangerous, provocative, and unjustified," and warned that an armed attack on Philippine vessels would invoke U.S. mutual defense commitments. State Department spokesman Ned Price said Washington stood by its treaty ally the Philippines amid an "escalation that directly threatens regional peace and stability." -VE
The Philippines' defence chief said on Sunday a military resupply mission for the country's troops stationed on an atoll in the South China Sea will resume this week, after it was aborted last week when it was blocked by Chinese coast guard. Slight -VE for sentiment.
Beijing’s reshuffle of officials in Xingjiang might herald a hardening of repression against Uighurs, an academic at the Institute for National Defense and Security Research said. Since 2018, the Chinese Communist Party (CCP) has replaced a slew of top officials in Xinjiang’s communist party, researcher Shih Chien-yu wrote in a Nov. 9 post on the institute’s blog.
China's market regulator on Saturday said it was fining companies including Alibaba, Baidu and JD.com for failing to declare 43 deals that date as far back as 2012 to authorities, saying that they violated anti-monopoly legislation. Enterprises involved in the cases would be fined 500,000 yuan ($78,000) each, it said, the maximum under China's 2008 Anti-Monopoly Law. -VE
China Foreign Exchange Committee tells banks to limit speculative trading as yuan surges  The currency reached a 6-year high and is the best performer in emerging markets this year. Lenders have been told to be risk neutral when making foreign exchange trades, sources say -VE

HONG KONG 
ADR’s -180pts at 24,869 broadbased weakness and expect initial margin call selling after two down days.
Data due after market
Inflation Rate Oct (Sept was 1.4% YoY (-2.3% MoM) F/cast is -0.7% YoY)

Short Selling HSI Friday 22% vs 23% Thursday
Top shorts 
CG Services (6098) 58%, Country Garden (2007) 56%, CM Bank (3968) 48%, Bud APAC (1876) 47%, China Res Land (1109) 39%, Ali Health (241) 37%, Galaxy Ent (27) 36%, HSBC (5) 36%, PingAn (2318) 35%, Longfor (960) 35%, Petrochina (857) 33%, BoC Hong Kong (2388) 30%, Hang Seng Bank (11) 28%, Shenzhou (2313) 28%, ICBC (1398) 28%, SHKP (16) 27%, HKEX (388) 27%, Sands China (1928) 26%, BoC (3988) 26%, Haidilao (6862) 26%, Henderson Land (12) 25%, CKI (1038) 24%.

WATCH

Hong Kong's blue-chip estates saw 16 secondary transactions over the weekend, rising by 33.3 percent to a 13-week high.  City One Shatin recorded six deals, the best among the 10 estates, followed by Mei Foo Sun Chuen in Lai Chi Kok, which saw five over the same period. Louis Chan Wing-kit, the Asia-Pacific vice-chairman of the residential division at Centaline Property Agency, said that sales of popular new projects in Kowloon and New Territories have come to the end of a phase, with only a few flats available during the weekend, switching the focus to the secondary market.
In the primary market, developers sold nearly 80 percent of the flats at Kennedy 38 with 101 of 130 units snapped up in the first round of sales on Saturday.   Jointly developed by Wheelock, Sun Hung Kai Properties (0016) and Henderson Land Development (0012) in Kennedy Town, the project sold all the one-bedroom flats on offer, raking in HK$800 million, said Victor Lui Ting, the deputy managing director of SHKP.  The developers have now launched 40 more one-room flats in the fourth price list with an average price of HK$28,988 per square feet, two of which are special flats. The cheapest flat will cost HK$7.87 million after discounts and the second round of sales will kick off on Wednesday.  Meanwhile, SHKP's other residential project in Yuen Long is expected to launch sales early next month.
In the commercial market, Hong Kong recorded 126 transactions in October, down 13.7 percent month-on-month, said Midland IC&I (0459), quoting data from the Land Registry.

BILIBILI-SW (09626.HK) announced the pricing of US$1.4 billion in aggregate principal amount of convertible senior notes due 2026. The initial conversion rate is 10.6419 ADSs per US$1,000 principal amount of Notes (which is equivalent to approximately US$93.97 per ADS and represents a premium of approximately 40% above the closing price on November 18). Application has been made for the resumption of trading in the Company's shares with effect from November 22.
Hong Kong's stock market regulators are examining plans by Russian aluminium producer Rusal (0486) to spin off its high-carbon smelters and refineries into a separate company that will be listed in Moscow, the Financial Times reported yesterday.  The decision to investigate the proposed demerger was set into motion by a complaint from Odey Asset Management, the report said, citing emails seen by the newspaper.
IDG ENERGY INV (00650.HK) is expected to record a net loss of approximately HK$200 million for the six months ended 30 September 2021, against a loss of HK$25.6 million in the same period of 2020. +VEGREEN ECONOMY (01315.HK)  is expected to record a net profit of approximately HK$39 million for the six months period ended 30 September 2021, compared to a net profit of HK$1.2 million for the six months period ended 30 September 2020. Such increase in profit was mainly attributable to the increase in gross profit of HK$33.9 million and the net decrease in expenses of HK$12.1 million. +VE

SINO-OCEAN GP (03377.HK) announced that the Company subscribed 30% of the share capital of Sino-Ocean Logistics at an aggregate consideration of RMB780 million.

NEW ORIENTAL-S (09901.HK) announced that the Company further repurchased the 2.125% Bonds due 2025 
in an aggregate principal amount of US$75.5 million, representing approximately 25.2% of the initial principal amount of the Bonds. +VE

COASTAL GL (01124.HK) is expected to record a loss for the six months ended 30 September 2021 
of not more than HK$470 million as compared to a loss of HK$65 million for the six months ended 30 September 2020. -VE

BEIJING ENT (00392.HK) announced the Company entered into a term loan facility agreement with a bank for a term loan facility in the amount of HK$4.2 billion. 
The Loan Facility is for a term of 60 months. The Company shall apply all amounts towards refinancing the existing indebtedness of the Company. +VE

EVERG VEHICLE (00708.HK) announced the top-up placing of 900 million shares. 
The new shares involve 8.3% of the enlarged share capital. The placing price of HK$3 represents a discount of 15.01% to the closing price on the last trading day. The net proceeds are expected to be HK$2.646 billion. Slight -VE

CITIC (00267.HK) announced that the Company proposes to spin-off CITIC Metal Co, a wholly-owned subsidiary of the Company, by way of separate listing of its shares on the Shanghai Stock +VE

Exchange.Evergrande Real Estate's Shenzhen branch has so far resumed construction work fully for more than ten projects in six places, namely Shenzhen, Dongguan, Jiangmen, Shanwei, Zhuhai and Zhongshan, as EVERGRANDE (03333.HK) +0.140 (+5.303%) Short selling $16.49M; Ratio 8.302% disclosed on its public WeChat account.

NIRAKU (01245.HK) announced results for the six months ended 30 September 2021. Net profit was JPY1.209 billion, turning around from a loss of JPY1.648 billion in the same period last year. Basic
earnings per share was JPY1.01. No interim dividend was declared.

WAN KEI GROUP (01718.HK) is expected to record profit attributable to Shareholders of approximately HK$1.6 million for the six months ended 30 September 2021, as compared to a loss of HK$5.7 million for the same period of 2020.
A & S GROUP (01737.HK) announced the results for the six months ended 30 September 2021. Net profit grew 53.4% yearly to HK$20.07 million. EPS was HK2.01 cents. No interim dividend was declared.
I-CONTROL (01402.HK) announced the results for the six months ended 30 September 2021. Net profit declined 68.3% yearly to HK$3.01 million. EPS was HK0.28 cents. No interim dividend was declared.
INT'L ENT (01009.HK) announced that independent third parties have approached Brighten Path, a controlling shareholder of the Company, regarding the possibility of the sale of up to 66 million shares in the Company, representing approximately 4.82% of the share capital of the Company. +VE

SUNWAH KINGSWAY (00188.HK) announced that, during the period from 12 January 2021 to 19 November 2021, the Company, through its wholly owned subsidiaries, conducted on the Stock Exchange a series of on-market transactions to dispose of an aggregate of 293,000 CHINA MOBILE (00941.HK) Shares in the range of an average daily price between HK$41 and HK$56.8 per China Mobile Share for an aggregate consideration of approximately HK$14.833 million. The Disposals realised a loss of approximately HK$100,000.

Macau's Novel Coronavirus Response and Coordination Center announced that, as at 11 am today (19th), the overall vaccination rate of Macau has reached 70%, with that of the targeted group of people reaching 78.8%.
Hang Seng Indexes Company Limited today announced the results of its review of the Hang Seng Family of Indexes for the quarter ended 30 September 2021. All changes will take effect on 6 December 2021 (Monday). There is no change to the constituents of the Hang Seng TECH Index. The total number of constituents remains unchanged at 30. The total number of HSI constituents will increase from 60 to 64. While CHINA RES BEER (00291.HK), ENN ENERGY (02688.HK), JD-SW (09618.HK) and NTES-S (09999.HK) will be added to the HSI, there is no deletion to the HSI index family.

Centa-City Leading Index (CCL) last printed at 188.34, up 1.22% WoW, with the upsurge being the sharpest in 29 weeks. 
CCL (large units) last reported at 188.62, up 1.97% WoW, with the largest increment in 26 weeks.
CCL Mass last stood at 190.35, up 1.22% WoW. CCL (small-and-medium units) came in at 188.29, up 1.08% WoW.
Prior to the U.S. announcement on shrinking bond-buying scale, the four major CCL indices marked notable rebound altogether in a single week, showing signs of home prices snapping losing streak, analyzed the research department of Centaline Property. Looking ahead, housing prices were expected to seek support in near term and stabilize at peak level.

The Hong Kong Monetary Authority (HKMA) announced that it had completed investigations and disciplinary proceedings for four banks under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) (Cap. 615). The Monetary Authority (MA) has imposed pecuniary penalties of a total of HK$44.2 million against China Construction Bank (Asia) Corporation Limited (CCBA), CTBC Bank Co., Ltd., Hong Kong Branch (CTBCHK), Industrial and Commercial Bank of China (Asia) Limited (ICBCA) and UBS AG, Hong Kong Branch (UBSHK), as well as issued orders for remedying the contraventions where warranted

From Friday
DOW -0.75%, NDX +0.4%, S&P -0.14%, Russel 2K -0.86%
US Options Expiried. DOW opened lower, S&P flat and NDX higher and then traded sideways. Retail earnings offset concerns over inflation and covid resurgence with Airlines and leisure stocks underpressure. Energy names under pressure too. Moderna +VE as the FDA approved its booster shot for adults. Good earnings from Intuit saw it rally 10% and Nvidia +4% with continued buying after its good results.
Some caution as the market awaits Bidens decision on the Fed Chair appointment.
Banks JPMorgan Chase -1.3%, Citigroup -0.6% Wells Fargo -2.2%, Amex -1.5%
Work from home names: Facebook +2%, Apple +1.7%, Amazon -0.5%, Netflix -0.5%,  Disney -1%, Zoom Video -1.7%, Alphabet -0.6% and Microsoft +0.5%,
Tech NXP Semi +0.3%, Nvidia +4.1%, Micron +7.8%, AMD +0.3%, Skyworks -1.5%
Re-opening stocks  Boeing -5.8%, Caterpillar -0.5%, Simon Property -1.6%, Kohl’s -8.8%, Nordstrom -6.4%, Gap -2.9%, United Airlines -2.8%, Carnival -2.2%, Wynn Resorts +0.3%, Chevron -2.2%, Exxon Mobil -4.6%,  
Lock down names Campbell Soup -1% General Mills -1.4%, JM Smucker -1.2%
DATA
Baker Hughes Oil Rig Count 461 vs 454 prior
Baker Hughes Total Rig Count 563 vs 556 prior
USD stronger as covid resurges. Bitcoin +1.2% @ 58,800.79, VIX +1.8% @ 17.91, US T10 @ 1.55%
OIL Brent -2.9%, WTI -3.2%
Gold -0.78%, Silver -1.1%, Copper +2.2% Platinum -1.9%, Palladium -3.8%.
AHEAD Chicago Fed National Activity Index, Existing Home Sales

DAX -0.38%, CAC -0.42%, FTSE -0.45%
Markets opened flat but in the green, with UK Retail Sales slightly better than forecast. But the resurgence of covid saw the markets sell down as Austria to enter a lockdown on Monday and complusory vaccinations from Feb 2022. Germany also considering more social distancing measures. But markets did rebound in the PM and closed off the lows. Lagarde confirmed her view that inflation pressure would be temporary and fade in time and that the ECB would not tighten policy which is her view would hamper the recovery, prompting some weakness in the Euro vs the USD. Deutsche Bank -4.9%
Kingfisher weak after poor Q3 but guided that Q4 had started strong.
Ocado and Hermes both strong and InPost +VE after two successive sessions of steep declines. IAG & Rolls Royce weak on travel concerns. THG +VE as Sky News reported investment bank Numis retracted allegations about accounting irregularities at THG.
Eurozone
Current Account Sept €26.9B vs €20.9B Aug revised (F/cast was €32B
Germany 
PPI Oct 3.8% MoM vs 2.3% Sept (F/cast was 1.4%)
PPI Oct 18.4% YoY vs 14.2% Sept (F/cast was 15.7%)
France 
Unemployment Rate Q3 8.1% vs 8% Q2 (F/cast was 8.2%)
UK
GfK Consumer Confidence Nov -14 vs -17 Oct (F/cast was -16)
Retail Sales Oct 0.8% MoM vs 0% Sept revised (F/cast was 0.7%)
Retail Sales Oct -1.3% YoY vs -0.6% Sept (F/cast was -1.6%)
Retail Sales Ex Fuel Oct 1.6% MoM vs -0.4% Sept revised (F/cast was 0.5%)
Retail Sales Ex Fuel Oct -1.9% YoY vs -1.9% Sept revised (F/cast was -1%)
Public Sector Net Borrowing Oct £-18.8B vs £-20.7B Sept revised (F/cast was £-16.4B)
AHEAD
Eurozone Consumer Confidence Flash Nov.
Germany No data due
France No data due  
UK  No data due

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