Nov 23 Asian Marco Initial Thoughts; Japan closed, Asia mixed, Australia +VE

23 Nov

This and previous notes can be found at  Substack ( Asian Market Sense )
Check out for  interesting research and trading analysis
There is a webinar by PRC Macro Advisors today outlining their Top 5 Economic Predictions for 2022; let me know if you are interested.

Markets encouraged by Biden’s re-appointment as Fed Chair although that probably means a quicker taper and rate hikes. OPEC+ may adjust its plans to raise production if consumer countries go through releases of strategic reserves; undermining their effectiveness. Covid cases and lock down measures remain a concern.

Market tested higher in early trades with Energy names and Miners +VE but Gold names weak as Powell re-noninated which should be good for Financials. PMI data inline with exepctations +VE.
Results due from TechnologyOne and AGM’s from Brickworks Limited (ASX: BKW), Link Administration Holdings Ltd (ASX: LNK), Monadelphous Group Limited (ASX: MND), and Pro Medicus Limited (ASX: PME).
Data out
Manufacturing PMI Nov 58.5 vs 58.2 Oct (F/cast was 58.5)
Services PMI Nov 55 vs 51.8 Oct (F/cast was 54)
Composite PMI Nov 55 vs 52.1 Oct (F/cast was 55)
Markets closed, Labour Thanksgiving Day re-open Wednesday.
S Korea 
Expect markets to open higher with futures +9pts, Consumer Confidence strong and the expectation that Semiconductors will continue to support the market, also likely to see rotation out of metaverse, games and NFT’s.
Market to trade around flat; good employment data and Exports still positive should support the market but news of China fining firms that support Taiwan independence -VE
Market to open lower with concerns over developer debts as banks told to make more loans available to the sector. The number of covid cases a concern for its impact on growth.
Hong Kong 
ADR’s -106pts @ 24,845 broad weakness except Oil names and Utilities; expect further downside with margin call selling on the open too.
Europe  Flash PMI data and resurgence in covid cases over hanging the markets.

Opened flat Dow +40pts, S&P and NDX +0.1%.
AHEAD Redbook, Flash PMI’s (Manufacturing, Services & Composite), Richmond Fed Manufacturing Index, Manufacturing Shipments Index and Services Index.
Earnings   HP, Dell Technologies, Abercrombie & Fitch, Best Buy, Nordstrom, Gap, VMWare, Cracker Barrel, American Eagle Outfitters, Dick’s Sporting Goods, Pure Storage, AutoDesk, Dollar Tree, JM Smucker

DOW +0.05%, NDX -1.26%, S&P -0.32%, Russel 2K -0.5%
Markets opened higher encouraged by Biden re-appointing Powell as Fed Chair which removes one aspect of uncertainty from the equation.  His nomination of Lael Brainard as Vice Chair also +VE  Home Sales were slightly better than exepcted too. Dow then traded sideays in the green but then sold down into the close.  S&P and NDX opened higher but sold down in the AM session, S&P to just above flat for most of the session but sold down into the close.  NDX sold down just into the red and then traded sideways, but again sold off more into the close.  Market seems to be taking the news to mean that rates will start increasing sooner than later in reaction to rising inflation.
Moderna +7% after the FDA last week cleared the company’s booster shot for all U.S. adults.
Activision Blizzard -2.1% on news that CEO Bobby Kotick said he would consider resigning if he can’t fix the company’s culture.

Banks JPMorgan Chase +2.1%, Citigroup +6.4% Wells Fargo +3.1%, Amex -1.5%
Work from home names: Facebook -1.2%, Apple +0.3%, Amazon -2.8%, Netflix -2.9%,  Disney +0.1%, Zoom Video -3.6%, Alphabet -1.8% and Microsoft -1%,
Tech NXP Semi +0.3%, Nvidia -3.1%, Micron +1%, AMD -1.9%, Skyworks -2.3%
Re-opening stocks  Boeing -2%, Caterpillar +1%, Simon Property +0.8%, Kohl’s +1%, Nordstrom -1.3%, Gap -0.5%, United Airlines +0.8%, Carnival -0.8%, Wynn Resorts +4%, Chevron +1.8%, Exxon Mobil +1.4%,  
Lock down names Campbell Soup +1.2% General Mills +1.4%, JM Smucker +1.7%
Existing Home Sales Oct 0.8% vs 7% Sept (F/cast was -1%)
USD was stronger. Bitcoin -5.8% @ 56,077.65, VIX +7% @ 19.17, US T10 @ 1.632%
OIL Brent +0.5%, WTI +0.5% as OPEC + says it may cut production if countries release reserves, OPEC meets next week; releases could come this week.
Gold -2.5%, Silver -2.4%, Copper -0.5% Platinum -2.1%, Palladium -5.6%.
AHEAD Redbook, Flash PMI’s (Manufacturing, Services & Composite), Richmond Fed Manufacturing Index, Manufacturing Shipments Index and Services Index.
Earnings   HP, Dell Technologies, Abercrombie & Fitch, Best Buy, Nordstrom, Gap, VMWare, Cracker Barrel, American Eagle Outfitters, Dick’s Sporting Goods, Pure Storage, AutoDesk, Dollar Tree, JM Smucker

DAX -0.27%, CAC -0.1%, FTSE+0.44 %
Markets opened flat and trading sideways in the green for the morning but sold down around lunchtime and then worked better in the afternoon but then dipped into the close. An increase in protests against covid lockdowns as some nations tighten up social distancing requirements -VE Travel & Leisure. Telco’s +VE with KKR bidding 10.8bn Euro for Telecom Italia +30% and Ericsson -5.6% announced buying Vonage a cloud communication company for US$6.2bn)
Julius Baer -4.8% after its latest earnings
Consumer Confidence Flash Nov -6.8 vs -4.8 Oct (F/cast was -6)
Eurozone Flash PMI’s (Manufacturing, Services & Composite)
Germany Flash PMI’s (Manufacturing, Services & Composite)
France Flash PMI’s (Manufacturing, Services & Composite)
UK  Flash PMI’s (Manufacturing, Services & Composite)

Markets closed re-open Wednesday
Yen weakened to 114.86
No data due
Japanese and Indian officials are working on ways to release national reserves of crude oil in tandem with the United States and other major economies to dampen prices, seven government sources with knowledge of the plans told Reuters.
A Japanese district court on Monday granted an injunction against Kansai Super Market Ltd’s planned merger with H2O Retailing Corp.  Supermarket operator OK Corp, which was also interested in buying Kansai Super Market, had sought the injunction over alleged irregularities with Kansai Super Market’s vote counting process at the shareholder meeting that approved the deal.
OK Corp released a statement welcoming the court’s decision. Kansai Super Market said it was disappointing.
East Japan Railway Co (JR East) on Monday launched onboard "office cars" on certain shinkansen (bullet trains) on lines connecting Tokyo and the country's northern and central parts to meet growing demand for a new work style amid the coronavirus pandemic.  For no additional charge and only on weekdays, passengers on the No. 8 cars on the Tohoku, Joetsu, and Hokuriku lines can now talk on the phone and participate in online meetings from their seats -- activities that are discouraged on the rest of the train.
Candidates vying for the leadership of Japan's largest opposition party suggested Monday the alliance with other opposition forces should be maintained ahead of the upper house election next summer but changes should be made to how they cooperate.

Expect markets to open lower but downside may be limited by the strong consumer confidence number.
Data out
Consumer Confidence Nov 107.6 vs 106.8 Oct (F/cast was 103)
For the first time since South Korea began battling its coronavirus outbreak in early 2020, all schools across the country resumed full-time in-person classes on Monday.  +VE
The head of Korea’s disease control agency said Monday that the state of the COVID-19 outbreak here has gone from “low risk” to “high risk” over the last three weeks as the country began its phased return to normal.
The United States' recent restriction on South Korean chipmaker SK hynix's plan to bring advanced equipment to a Chinese factory was made out of "legitimate concerns," and more such moves could be possible, Washington's top trade official has said.  SK hynix CEO Lee Seok-hee said Monday that the company will respond "wisely" to the US-China trade tension that could cloud the chipmaker's plan to upgrade its Chinese plant.  -VE
Trade Minister Yeo Han-koo said on Monday that he called on the US to begin talks on revising restrictions on steel imports from South Korea during last week‘s meeting with his US counterpart.
Celltrion Inc. said Monday its COVID-19 antibody treatment has won an emergency approval from Peruvian authorities. +VE
Prices are rising for ramyeon, milk, and other everyday foods and drinks, as the pandemic has disrupted supply chains and pushed up the prices of agricultural goods.  According to data from the Bank of Korea released Monday, consumer prices in the third quarter rose 2.6 percent from the same period last year. It was the steepest on-year increase in nine years, the institution said.  Further inflation pressures -VE for sentiment.
Semiconductor firms rose sharply Monday over market prospects on recovery of memory chip price on intensifying global race to adopt metaverse technology.  Memory chips are a critical component in the metaverse, in which users interact with each other in digital worlds, which could offset the bearish forecast for memory chip prices.
Samsung Electronics +5.2% Monday, SK hynix +7.2%.

Expect market to open lower with broad weakness.
Data due after market Industrial Production and Retail Sales.
After market Monday
Export Orders Oct 14.6% vs 25.7% Sept (F/cast was 23.5%) +VE but slowing as normal patterns upset by supply bottlenecks. Normally October sees a surge with Christmas orders.
Unemployment Rate Oct 3.84% vs 3.92% Sept (F/cast was 3.87%
the unemployment data +VE and expected to continue to recover.
Beijing plans to intensify its unification campaign, a Mainland Affairs Council (MAC) official said yesterday in an assessment of statements by Chinese leaders, while stressing the importance of consensus among Taiwanese.  At a conference on Chinese development and security prospects in the Taiwan Strait, MAC Deputy Minister Chiu Chui-cheng noted key developments in Chinese Communist Party (CCP) rhetoric.
MediaTek Inc yesterday unveiled the world’s first ultra-high-resolution 8K TV system-on-chip made with Taiwan Semiconductor Manufacturing Co’s (TSMC) 7-nanometer technology, as the next-generation TVs are excepted to hit the global market

Expect market to open lower
No data due
China fined Far East Group operations in China for supporting Taiwan independance.   Taiwan firms operating in China need to draw a line between themselves and independence supporters, China's government said on Monday after punishing a major Taiwanese firm ostensibly for business violations.  Whilst targeted at Taiwanese firms it will impact others and increases the risks of having operations in China -VE for sentiment especially Taiwanese firms.
Chinese outbound tourism numbers are set to jump by more than 25% this year from 2020 but remain "basically at a standstill" compared to pre-pandemic levels, state broadcaster CCTV reported on Monday, citing official projections.  -VE Chinese Airlines
Greenland said on Monday it has stripped a Chinese mining company of its licence to an iron ore deposit near the capital Nuuk, dealing a blow to attempts by Chinese companies to gain a foothold on the resource-rich Arctic island.  General Nice, a Chinese coal and iron ore importer, took control of the Isua mine project in 2015, replacing previous owner London Mining, which went bankrupt. The licence was withdrawn because of inactivity at the site, the government said in a statement, adding it will be offered to new interested companies once it has formally been handed back. -VE
China is urging some local governments to embark on pilot programmes next year to improve medical and care services for the elderly, with the goal of rolling out the scheme nationwide in 2023.
Of the 31 provinces, regions and municipalities in mainland China, 15 should launch their local pilot schemes for better medical and care services for the elderly next year, the National Health Commission (NHC) said in a statement on Monday. +VE Healthcare operators

ADR’s -106pts @ 24,845 broad weakness except Oil names and Utilities; expect further downside with margin call selling on the open too.
No data due but after market Monday
Inflation Rate Oct 1.7% YoY vs 1.4% Sept (F/cast was 1.3%)
Inflation Rate Oct 2.8% MoM vs -2.3% Sept (F/cast was 2.3%)
The larger year-on-year rate of change in the Composite CPI in October was mainly attributable to the lowering of the ceiling of rates concession, from $1,500 per quarter for each rateable tenement to $1,000 starting from October 2021. Netting out the effects of all Government's one-off relief measures, the year-on-year rate of increase in the Composite CPI (i.e. the underlying inflation rate) in October 2021 was 1.1%, marginally larger than that in September 2021 (1%). The larger increase was mainly due to the enlarged increases in electricity charges as well as the prices of fresh vegetables.

Earnings from Kuaishou (1024), Xpeng (9868) CTF (1929)

Short Selling HSI Monday 19.5% vs 22% Friday
Top shorts  Bud APAC (1876) 57%, HSBC (5) 43%, China Res Land (1109) 40%, PingAn (2318) 40%, Techtronics (669) 38%, SHKP (16) 38%, Sino Biopharm (1177) 38%, Citic (267) 37%, China Life (2628) 37%, Country Garden (2007) 33%, Galaxy Ent (27) 32%, Sands China (1928) 32%,  Shenzhou (2313) 31%,  CM Bank (3968) 31%, BoC Hong Kong (2388) 30%, Henderson Land (12) 30%,   China Overseas (688) 29%, Petrochina (857) 29%, CG Services (6098) 29%, ICBC (1398) 29%,  Hengan (1044) 28%, HKEX (388) 26%,  Wharf REIC (1997) 26%, Longfor (960) 26%, CKI (1038) 25%, MTRC (66) 25%,  CKH (1) 25%, Hang Seng Bank (11) 25%.

Macau plans to restart land sales for private residential buildings by late this year or early next year.  
Macau has not carried out any land sale in over a decade.  The relaunch is aimed at generating more revenue and addressing budget deficits incurred over two consecutive years, said chief executive Ho Iat-seng in a question and answer session after earlier delivering his policy address in the Legislative Assembly this month.

ALLTRONICS (00833.HK)  issued a profit warning. 
The Group expected that the net profit for the year ending 31 December 2021 will deteriorate and may decrease by approximately 30% to 40% as compared to the net profit for the year ended 31 December 2020.

As Ant Group continues to rectify its products, the "Jiebei" brand within the Alipay app is now called "Credit Loan" after segregation.
In addition, some Huabei (Ant Check Later) users have recently seen a service upgrade agreement via notification feeds that requires them to sign an authorization letter and agree to inquiries from and reports by financial credit information basic database, according to Chinese media. Huabei users are still enjoying services jointly provided by Ant Consumer Finance, banks, as well as local financial bodies and other financial agencies engaging in microcredit and commercial factoring, the sources said. Going ahead, however, Ant Group will implement brand segregation and differentiate consumer credit services offered by different institutions in compliance with regulators' requirements.

The Zhuhai Command Center for COVID-19 Prevention and Control issued a notice to adjust the prevention and control work on Zhuhai-Macau border, reported Radio Macau.  Based on current needs and the consensus of Zhuhai-Macau joint prevention and control mechanism, travelers entering the points of entry between Zhuhai and Macau must present their negative NAT results within seven days starting 1am on 23 November. Existing departure measures will remain intact.

CHINA TELECOM (00728.HK) announced the operating statistics for the month of October. Mobile subscribers exceeded 371 million. Net increase of mobile subscribers for the month was 1.58 million, easing from the 2.86-million net addition in September. Of which, 5G package subscribers exceeded 168 million. Net increase of 5G package subscribers for the month was 12.95 million, accelerating from the 8.92-million net addition in September.

CHINA MOBILE (00941.HK) announced that in October, the total number of customers for mobile business was 957 million, representing a net additional customers of 1.4 million monthly, decelerated from 4.606 million in September. Among which, 5G package customers accounted for 356 million, a net addition of 24.299 million monthly, slackened from 27.076 million in September.

CHINA UNICOM (00762.HK) announced that the aggregate number of mobile billing subscribers for the month of October 2021 was around 317 million, with a net addition of 1.282 million subscribers. The cumulative net addition for the year was 11.024 million. The aggregate number of 5G package subscribers was 143 million, with a net addition of 6.568 million subscribers for the month, decelerating from a 7.884-million net addition in September. The cumulative net addition for the year was 72.683 million.TONGCHENG-ELONG (00780.HK) announced the result for the third quarter ended September 30, 2021. Revenue increased by 1.3% year-to-year to RMB1.939 billion. The net profit amounted to RMB231 million, down 6.6% yearly.Standard & Poor's lowered BABA-SW (09988.HK)'s revenue growth forecast for the fiscal year ending March 2022 from 25%-35% to 20%-23%, conforming with the latest guidance of the company. Among which, EBITDA margin and larger scale of share buyback were assumed to be dampened by escalated competition and slackened economic growth in China. These two factors will reduce the net cash balance of the group by RMB10-20 billion. It was estimated that operating cash flow of BABA-SW from FY2022 to FY2023 will be between RMB200-240 billion, compared with RMB237 billion in FY2021.

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