Nov 4 Asian Marco Initial Thoughts expect markets to move higher after Fed decision.


04 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 Markets closed Singapore, Malaysia and India. OPEC+ under pressure from many countries to increase supplies

Australia Market to open higher testing 7,420 in early trades.
Data due Balance of Trade, Exports, Imports, Retail Sales
Japan
Nikkei futures re-opened  +55pts Earnings still in focus with 145 companies due to report.  Easing of entry requirements seen as +VE
S Korea 
Expect markets to open higher following the US moves. Earnings still in focus, Kakao Q3 Revenue beat but OP missed by 19% -VE. EV’s also in focus with news Hyundai to starting production in US in 2022. OEM’s +VE as Vietnam resuming plant operations.
Taiwan 
Expect market to open higher following US.
China 
Expect market to open lower with concerns over covid and international relations. Officials are down playing the threat of war with Taiwan after the MOC recommending stocking up with supplies.
HK 
ADR’s +9pts @ 25,033 expect an initial squeeze higher concerns still over growth in China and the current covid outbreak
US Futures 
Opened Dow flat, S&P +0.08% and NDX +0.17%

DOW +0.29%, NDX +1.04%, S&P +0.65%, Russel 2K +1.8%
Markets traded sideways ahead of the FOMC rate decision but then rallied as the Fed says the economy strong enough to slow pandemic bond buying.  It also re-iterated no rush to raise rates.  It revised its take on inflation saying ‘that price increases have been more rapid and persistent than central bankers had expected. However, the Fed’s statement still characterized the rising prices as “transitory,” which could push the timeline for interest rates hikes further into the future.’
Lyft +8.2% on strong third-quarter results and CVS Health +5.7% on better-than-expected earnings.
Zillow -24.8% after announcing it will close its home buying and flipping business.
Bed Bath & Beyond +15.2% on new of a partnership announcement with Kroger but likely fueled by a short squeeze.
Activision -14.1% after it said the launch of two games would be delayed. The company also issued a weaker holiday outlook though it did beat profit estimates for the quarter.
Banks JPMorgan Chase +0.04%, Citigroup +3.5% Wells Fargo +1.4%, Amex -0.3%
Work from home names: Facebook +1.1%, Apple +1%, Amazon +2.2%, Netflix +1.6%,  Disney +0.2%, Zoom Video +1.9%, Alphabet +0.8% and Microsoft +0.3%,
Tech NXP Semi +4.5%, Nvidia +0.8%, Micron +0.7%, AMD +2.3%, Skyworks +1.6%
Re-opening stocks  Boeing +0.3%, Caterpillar -1.7%, Simon Property +4.6%, Kohl’s +8%, Nordstrom +4.7%, Gap +5.4%, United Airlines +2.2%, Carnival +1.1%, Wynn Resorts +2.1%, Chevron -0.7%, Exxon Mobil -1.4%,  
Lock down names Campbell Soup +3% General Mills +0.8%, JM Smucker +1.3%
DATA
MBA Data
Mortgage Rate 30yr 3.24% vs 3.3% prior
Mortgage Applications -3.3% vs +0.3% prior
MBA Purchase Index 271.1 vs 275.6 prior
Mortgage Refinance Index 2645 vs 2763.8 prior
Mortgage Market Index 623.8 vs 645.1 prior
ADP Employment Change Oct 571k vs 523k Sept (F/cast was 370k)
Composite PMI Oct 57.6 vs 55 Sept (F/cast was 57.3)
Services PMI Oct 58.7 vs 54.9 Sept (F/cast was 58.2)
Factory Orders Sept +0.2% MoM vs +1% Aug (F/cast was +0.1%)
Factory Orders Ex Transport Sept +0.7% MoM vs +0.5% Aug (F/cast was +0.4%)
ISM Non Manufacturing Data
PMI Oct 66.7 vs 61.9 Sept (F/cast was 61.9)
Prices Oct 82.9 vs 77.5 Sept (F/cast was 77.8)
New Orders Oct 69.7 vs 63.5 Sept (F/cast was 63)
Employment Oct 51.6 vs 53 Sept (F/cast was 52)
Business Activity Oct 69.8 vs 62.3 Sept (F/cast was 62)
EIA Gasoline Stock Change -1.488M vs -1.994M prior (Consensus was -1.333m)
EIA Crude Oil Stock Change 3.291M vs 4.267M prior (Consensus was 2.225M)
Fed Rate Decision
USD dipped after Fed decision. Bitcoin -0.5% @ 63,192.90, VIX -5.8% @ 15.1, US T10 @ 1.603% as Fed set to taper this month.
OIL Brent -4.2%, WTI -4.5% on a big build in US Inventories.
Gold -1.1%, Silver +0.2%, Copper -0.4% Platinum -0.7%, Palladium -0.1%.
AHEAD Challenger Job Number, Balance of Trade, Unit Labour Costs, Non Farm Productivity, Initial Claims, 4 wk Ave Claims, Continuing Claims, Exports, Imports, EIA Natural Gas Change,

DAX +0.03%, CAC +0.34%, FTSE -0.36%
Opened flat slightly -VE ahead of the Fed rate decision. FTSE drifted lower, DAX traded sideways and the CAC traded slightly higher. Oil & Gas weak but miners rebounding along with the Iron Ore price.
TeamViewer was the strongest performer on the Stoxx 600.
Bottom was Vestas Wind Systems plunged more than 18% after missing third-quarter earnings expectations and cutting its profit forecast, as supply chain issues and inflation continue to weigh on the Danish wind turbine maker.
Earnings out from Suez, BMW, Zalando, Lufthansa, Geberit, Wolters Kluwer, Next, Smurfit Kappa and Intesa Sanpaolo on Wednesday.
Data
Eurozone 
Unemployment Rate Sept 7.4% vs 7.5% Aug (F/cast was 7.5%)
France 
Budget Balance Sept €-175.12B vs €-178.05B Aug (F/cast was €-176B)
UK 
Nationwide Housing Prices Oct +9.9% YoY vs +10% Sept (F/cast was +9.5%)
Nationwide Housing Prices Oct +0.7% MoM vs +0.2% Sept (F/cast was +0.5%)
Composite PMI Oct 57.8 vs 54.9 Sept (F/cast was 56.8)
Services PMI Oct 59.1 vs 55.4 Sept (F/cast was 58)
AHEAD
Eurozone Services and Composite PMI, PPI
Germany Factory Orders, Services and Composite PMI, New Car Registrations
France Services and Composite PMI
UK  Services and Composite PMI, New Car Sales, Construction PMI, BoE Rate Decision

JAPAN
Nikkei futures re-opened  +55pts Earnings still in focus with 145 companies due to report.  Easing of entry requirements seen as +VE
Yen currently 113.98
Data due Services and Composite PMI
Nintendo weak as it cuts Switch target by 20% due to chip shortages.
Toyota has come joint last in a Greenpeace ranking of carbon emission efforts by auto firms, according to a list published Thursday during the COP26 climate summit.  The campaign group gave Toyota and US-European firm Stellantis "F minus minus" grades for decarbonization efforts including phasing out engines that burn planet-warming fossil fuels in favor of electric vehicles.  Also reported today is preparing to roll out its first fully electric global model, the bZ4X, by mid 2022, as part of moves toward a decarbonized society.
FamilyMart Co has launched a new private food brand "Famimaru" after an older version "Okasan Shokudo" -- meaning mother's diner -- drew criticism for potentially causing a bias that women should cook for their families.
Japan Airlines Co forecast Tuesday a net loss of 146 billion yen ($1.3 billion) for the business year ending March and said it will reduce its workforce by around 2,500 through attrition amid a later-than-expected recovery in air travel demand from the COVID-19 fallout.

SOUTH KOREA Expect markets to open higher following the US moves.  Earnings still in focus, Kakao Q3 Revenue beat but OP missed by 19% -VE.  EV’s also in focus with news Hyundai to starting production in US in 2022.   OEM’s +VE as Vietnam resuming plant operations.
No data due
Government to ramp up COVID-19 testing at schools after a sharp rise of infections among children, weeks ahead of a plan to fully reopen schools nationwide.
Samsung Group’s leader Lee Jae-yong will have to pay a 70 million won ($59,200) fine for illegal use of propofol, an anesthetic medication, judicial sources said Wednesday.  Slight -VE
CJ Group said on Wednesday it would invest more than 10 trillion won over the next three years to cultivate four growth engines -- culture, platform, wellness and sustainability. +VE
South Korean technology conglomerates are making last-minute preparations ahead of submitting their semiconductor-related data to the US as the deadline approaches, industry insiders said Wednesday.  +VE

TAIWAN Expect market to open higher following US.
No data due. 
The climate gauge for the nation’s manufacturing sector in September remained “yellow-red” for the fifth consecutive month, reflecting fast growth, even though port congestion and supply chain disruptions posed uncertainty and drove up operational costs, the Taiwan Institute of Economic Research (TIER) said yesterday.
Indonesian ride-hailing platform Gojek on Tuesday said that it would launch a pilot program with Gogoro Inc, allowing its drivers to use electric scooters made by the Taiwanese company. 
The program would be launched in Jakarta with 250 scooters and four battery swap stations developed by Gogoro, Gojek said in a statement, without specifying a timeline. +VE
Ambassador Hotels and Restaurants on Tuesday approved plans to seek urban renewal for its property in Kaohsiung, following a similar move last year for its flagship hotel in Taipei to cope with a business slowdown caused by the COVID-19 pandemic, the company said in a regulatory filing. +VE
Advantech Co yesterday said revenue for this quarter would likely slide 1.2 to 4.8 percent from last quarter’s NT$15.51 billion (US$556.85 million) due to component shortages.  Gross margin is expected to come in at 36.5 to 38.5 percent, compared with the previous quarter’s 37.6 percent, it said.  The component shortages have plagued the electronics industry this year amid recovering global demand. While the problem is improving, it is still an issue for the industry, the company said. -VE
Hotai Motor Co, which distributes Toyota and Lexus vehicles in Taiwan, has raised prices for five imported models by 2 to 3.4 percent to reflect rising costs amid a global chip shortage and high raw material prices.  +VE but reflects inflation.

CHINA
Expect market to open lower with concerns over covid and international relations.   Officials are down playing the threat of war with Taiwan after the  MOC recommending stocking up with supplies.
No data due
China's treatment of Lithuania is a "wake up call" for Europe, Lithuania's deputy foreign minister said on Wednesday, calling for the European Union to be united in dealings with Beijing.  China demanded in August that Lithuania withdraw its ambassador in Beijing after Taiwan announced that its office in Vilnius would be called the Taiwanese Representative Office in Lithuania. -VE
The Pentagon on Wednesday sharply increased its estimate of China's projected nuclear weapons arsenal over the coming years, saying Beijing could have 700 warheads by 2027 and possibly 1,000 by 2030.  While the numbers would still be significantly smaller than the current U.S. nuclear stockpile, they represent a significant change in the U.S. projection from just last year, when the Pentagon warned the Chinese arsenal would top 400 by the end of the decade.
Nominee for US ambassador to China wins committee approval, heads to full Senate vote.   Nicholas Burns, a career diplomat and foreign policy adviser to Democratic and Republican administrations, draws just one vote in opposition.  The US has gone without an envoy in Beijing for more than nine months.  +VE
Certain products of the Chinese solar power technology company, LONGi (601012.SH)  have been detained by the U.S. Customs at the country's border, reported Chinese media. LONGi expressed that it is currently attempting to clarify the situation.  Multiple solar manufacturers such as JinkoSolar, Canadian Solar and Trina Solar (688599.SH), have had their products detained by the U.S. Customs in August this year, the report added. -VE
Tesla's Chinese consumers can buy vehicles with zero down payment under financial leasing model, announced the EV maker on its China official website. As an illustration, the Tesla Model 3 Standard Range Plus is priced at RMB235,900 each in China, which can be leased at RMB4,718 per month in 60 installments.
Former world No.1 tennis doubles player Peng Shuai, one of China's biggest sporting stars, has publicly accused Zhang Gaoli, a former Chinese vice premier of forcing her into sex several years ago in a social media post that was later deleted. -VE


HONG KONG 
ADR’s +9pts @ 25,033 expect an initial squeeze higher concerns still over growth in China and the current covid outbreak
No data due

SHORT SELLING HSI Wednesday 19.8% vs 16.4% Tuesday
Top shorts 
Wharf REIC (1997) 46%, Country Garden (2007) 46%, Hengan (1044) 44%, Hang Seng Bank (11) 43%, CG Services (6089) 41%, Sinopec (386) 40%, ICBC (1398) 39%, BoC HK (2388) 36%, CKI (1038) 32%, Xinyi Glass (868) 30%, BoC (3988) 29%, China Life (2628) 28%, HSBC (5) 28%, Xinyi Solar (968) 28%, HKEX (388) 27%, CM Bank (3938) 27%, Wuxi Bio (2269) 27%, HK & China Gas (3) 25%.

WATCH
Henderson Land wins tender to develop new Central Harbourfront with record HK$50.8b bid. 
Three buildings and a rooftop park will be built at new Central Harbourfront.  The tender for Site 3 of the New Central Harbourfront has been awarded to Pacific Gate Development, a subsidiary of Henderson Land on a 50-year land grant, following a two-envelope open tender.  The premium is the highest ever for a government tender, surpassing the previous record set by Henderson Land in 2019 when it paid HK$42.2 billion for a parcel atop the West Kowloon express rail station. Two parts of the Central site will have to be completed by 2027 and 2032, respectively. +VE

Hopson Development (0754) reported to be interested in acquiring stakes in the property management units of China Aoyuan (3883) and Agile Group (3383) after scrapping a buyout plan of China Evergrande's (3333) assets.  Hopson Development is in preliminary talks to buy a 55 percent stake in Aoyuan Healthy Life Group (3662) as Aoyuan embarks on asset disposals to ease liquidity stress, according to a REDD report.  The unit rose 9.4 percent yesterday though Agile's property management arm A Living Smart City Services (3319) only inched up by 0.21 percent. +VE

Wheelock opens the first price list of Monaco One in Kai Tak today, offering at least 99 flats with prices starting HK$7 million.  A 1,471-square-foot special unit with four bedrooms may be put in the first round of sales by tender, said managing director Ricky Wong Kwong-yiu. It is expected to break the record of the highest price per square foot at Kai Tak. +VEKennedy 38, jointly developed by Wheelock, Sun Hung Kai Properties (0016) and Henderson Land Development (0012) will open show flats next week.  Rebuilt from a 46-year-old industrial building, Kennedy 38 has only one block and provides 341 homes, where 30 percent are studios and 60 percent are one-bedrooms. The selling price of the project will take reference from neighboring new projects, which is around HK$33,000 per square foot, said Victor Lui Ting, the deputy managing director of SHKP. +VE

GT STEEL GROUP (08402.HK)  issued a profit warning. The Group is expected to record a loss after tax of approximately S$4.3 million for the nine months ended 30 September 2021 as compared to a loss after tax of approximately S$2.2 million for the nine months ended 30 September 2020.

XIAOMI-W (01810.HK)'s Partner cum President of China, Lu Weibing, said the 10,000th Mi Home commenced business earlier in Shenzhen with a shop area of 600 sq.m. and a high end image.
The company will open up more area for Mi Home in future, preparing itself for car sales, said Lu. At this stage, the company is thinking how to display the automobile products. XIAOMI-W Chairman Lei Jun had previously revealed that Mi Car was expected to enter mass production in 1H24.

Planning to scale up its aircraft leasing business, CK ASSET (01113.HK) has struck deals with Mitsubishi Corp to acquire a 40% stake in the aircraft leasing JV held by the latter, local media reported. Upon completion, CK ASSET's shareholding in the JV will surge to 90%, and the entity's remaining 10% stake will be held by Li Ka Shing Foundation. +VE

SINOTRANS (00598.HK) announced that Wang Hong, a non-executive director of the Company, has been appointed as the Chairman
of the Company with effect from 2 November 2021.HSBC, as one of the major banks in Hong Kong, has been processing 700 million transactions per year, with the monthly amount of transactions processed through mobile banking reaching 12 million, remarked Maggie Ng, Head of Wealth and Personal Banking at HSBC. Ng expressed that 95% of HSBC's retail banking transactions was carried out through electronic channels and that the number of monthly active users of the bank's mobile application reached 1.6 million. Slight +VE

With reference to experts' advice, eligible persons of specified groups may receive the third COVID-19 vaccine shots for free starting next Thursday (11 November), said Secretary for the Civil Service Patrick Nip at news conference. They can start making online appointments from Friday (5 November). He projected approximately 1.86 million eligible persons. With 1.7 million Comirnaty vaccine doses currently available, the Government will order extra vaccine shots from drugmakers if necessary. Cancer patients, organ transplant patients, advanced-stage HIV patients and those with low immunity are recommended to take the third doses at least four weeks after their second shots, Nip pointed out.
There is no direct relationship between such decision and border reopening, he furthered. The Government hopes the residents to return to normal life, with border reboot and cross-border travel as soon as possible, by fighting the disease and putting up protective barriers.

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