This and previous notes can be found at Substack ( Asian Market Sense )
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Asia worth noting that a cold front passing through north Asia which will put power supplies under pressure and despite China saying coal supplies back to normal levels a surge could hurt Chinese Industrials. It also comes as a new surge in covid cases occurs. The liquidation of one of Snow Lake Capital’s funds, focused on Japan and S Korea could put pressure on some names; it’s demise is being linked to MGM China where it had a large holding; it is also said to have bought stocks associated with the Archegos liquidation.
US lifting a 19 month travel ban +VE for Airlines but Chinese ones likely to see weakness due to more covid related lockdowns.
The passing of the US Infrastructure bill will prompt investors to look at companies with exposure; I like Techtronics (669 HK) for its exposure to US power tools; recent shorts likely to be squeezed; closed Friday HK$159.10; recent high was HK$180.
Australia Market opened higher following the +VE moves in the US. Energy names and gold miners +VE ANZ and Macquarie go Ex Div. Watch CQR as it holds its AGM and SGP has a strategy day.
Data this week includes New Home Sales, Business Confidence, Consumer Confidence, Building Permits, Unemployment data and Consumer Inflation
Japan Nikkei expect a higher open, testing 29,900 with tourist and re-opening names +VE.
Data this week includes BoJ Summary of Options, Foreign Exchange Reserves, Preliminary Leading Economic Index Coincident Index, Cash Earnings, Current Account, Bank Lending, Eco Watchers Survey, Tankan Index, Machine Tool Orders and PPI data.
S Korea Expect markets to open higher following the US but watch Kakao Bank as 3 month lock-up expires and could put it under pressure. Ship builders +VE on new Qatar order.
Data this week Unemployment data, Export & Import Prices
Taiwan Market to open higher with focus on Tech for the moves in the US and good China trade data.
Data this week includes Balance of Trade, Imports & Exports,
China Market open likely to be flat the trade data out Sunday was mixed Balance beat but imports were light, which could reflect the slowdown in China as it seeks to contain emissions and rising commodity prices. But covid concerns and Property sector debts a drag. Sixth plenum starts today likely to set the stage of Xi continued rule.
Data this week includes Inflation, PPI, and we could get Vehicle Sales, New Yuan Loans, Outstanding Loan Growth, Total Social Financing and M2 Money Supply.
HK ADR’s -52pts at 24,818 with Chinese banks and Ecommerce weak and track lower with concerns about a slowing China and rising covid cases in China.
Data this week GDP Growth Rate.
Eurozone Data and meetings including Eurogroup meeting, ECB Non policy meeting, ZEW Economic Sentiment Index, ECB Economic Bulletin & Projections, Industrial Production and a number of ECB speakers.
Data includes Balance of Trade, Imports & Exports, ZEW Economic Sentiment Index & Current conditions, Inflation
Data includes Balance of Trade, Current Account,
Data includes; BRC Retail Sales Monitor, Balance of Trade, GDP Growth, GDP, Business Investment, Industrial & Manufacturing Production, Construction Output and Labour Productivity.
Futures opened Dow and S&P flat, NDX -0.3%
Sentiment generally +VE after a good jobs report and Biden’s US$1tn infrastructure bill was passed by Congress +VE infrastructure plays. A shortened trading week for bond markets closed Thursday for Veterans Day. This week focus on PPI and CPI data with rising costs expected. Senior Loans Officers survey, Consumer Inflation Expectations, NFIB Business Optimism, WASDE report, MBA data, Wholesale Inventories, Consumer Sentiment, JOLTS data and Michigan Prelim data. Fed speakers will be watched, with Clarida, Williams, Montgomery, Evans, Daly and others scheduled. Earnings still in focus.
JAPAN Nikkei expect a higher open with tourist and re-opening names +VE as quarantine measures eased and expectations of a Y100,000 cash for under 18yr olds and other stimulus packages. Earnings still in focus; Softbank’s amongst them likely to be poor. Investors will also be watching the changes to the cabinet with former education minister Yoshimasa Hayashi expected to be appointed foreign minister.
Yen closed 113.4
Data due BoJ Summary of Options, Foreign Exchange Reserves and later Preliminary Leading Economic Index Coincident Index
Tokyo reported 29 new covid cases Saturday (+4 DoD) nationwide was 100 (-3 DoD)
COVID-19 outbreak in Japan has slightly subsided, with over 70% of the country's population already having received vaccination. Japan's Ministry of Foreign Affairs announced Friday (5th) that, starting from the coming Monday (8th), the anti-pandemic border restrictions will be substantially relaxed. Under the new changes, for designated groups of people such as short-term business travelers, Japanese nationals and foreign residents returning to the country, the quarantine period will be shortened from ten days to three days if they have taken vaccine jabs approved in Japan. +VE
Japanese automakers Honda Motor Co, Nissan Motor Co and Toyota Motor Corp's sales in China tumbled again in October as a microchip shortage hit vehicle production in the world's biggest car market. -VE
Honda to start a battery sharing service for tricycle taxi’s in India; slight +VE but Honda recorded a 31% drop in its Q2 profit, to 166.6 billion yen ($1.5 billion) from 240.9 billion yen last year. Quarterly sales slipped 7% to 3.4 trillion yen ($30 billion). It downgraded its FY outlook -VE
Glass Lewis & Co on Friday recommended shareholders of Japan's Shinsei Bank Ltd (8303.T) vote for the lender's plan for a poison pill defence against an unsolicited $1.1 billion bid from SBI Holdings Inc (8473.T). Mid-sized bank Shinsei opposed SBI's approach last month, saying that the partial takeover offer could hurt interests of minority shareholders and that the offer price was too low. SBI, which owns an online brokerage and a bank, holds around 20% of Shinsei and wants to raise that to up to 48%.
Itochu Corp (8001.T) unveiled a new dividend policy on Friday, promising a minimum annual payment of 110 yen a share in the current financial year to March 2022, rising to 120 yen in the following fiscal and 130 yen the next. Net profit in the period from April to September nearly doubled to 500.6 billion yen ($4.4 billion) from a year earlier and the company lifted its full-year outlook by 36%, to a record 750 billion yen. +VE
SoftBank founder Masayoshi Son is facing pressure to unveil a new stock buyback programme next week, after the Japanese technology group’s slumping share price created “deep frustration” among shareholders, people with knowledge of the matter said.
SOUTH KOREA Expect markets to open higher. Market exepcted to trade in a tight range with earnings still in focus with CJ Cheiljedang, KT, SK Telecom's, NCSoft and Krafton among those set to report.
No data due.
KDCA reported 2,224 new covid cases Sunday (-24 DoD) but still above the 2,000 for a 5th day raising concerns about a new wave.
About 90 percent of firms in South Korea are undecided on their investment plans for next year amid lingering uncertainty despite the country's move back to normalcy under the "living with COVID-19" scheme, a poll showed Sunday. -VE
South Korea's economic recovery momentum has weakened due to the slowdown in the manufacturing sector; "The recovery in manufacturing weakens as global supply chains remain clogged, since an improvement of external conditions lost steam," the Korea Development Institute (KDI) said in a monthly economic assessment report. Slight -VE
KAKAO BANK 3 month lock-up of 20.3m shrs expires today (circa 4.3% of o/s). Slight -VE
QATAR orders six LNG vessels – four from DSME and two from SAMSUNG HEAVY– as part of its $19bn deal for LNG tankers from Korea. +VE
NCSOFT’s new MMPORG ‘Lineage W’ launched on Nov 4 ranked no. 1 on Google Play in terms of revenue (as of Nov 6). +VE
KKR said on Friday it had bought 2.4 trillion won ($2 billion) worth of newly issued redeemable convertible preferred shares of South Korean energy company SK E&S Co Ltd. +VE
Samsung Electronics (005930.KS) and SK Hynix (000660.KS) plan to leave out detailed information when supplying Washington with data related to the global chip shortage as they want to protect trade secrets, two sources briefed on the matter said.
Samsung Heavy Industries Co. said Friday that its net losses widened in the third quarter from a year earlier due to one-off costs. Its net losses widened to 124 billion won ($105 million) in the July-September period from a loss of 7.3 billion won a year ago, the company said in a regulatory filing. -VE
Korea Shipbuilding & Offshore Engineering Co. (KSOE) said Friday it has obtained a 748 billion-won ($632 million) deal to build three LNG carriers. The vessels will be delivered to an Oceania customer from the second half of 2024, the company said in an emailed statement. +VE
LG Uplus Corp., South Korea's third-largest mobile carrier, said Friday its third-quarter net profit fell 47.7 percent from a year earlier due mainly to the sale of its business unit. Net profit for the three months that ended in September fell to 211 billion won ($177.1 million) from a profit of 403.4 billion won in the year-ago period, the company said in a regulatory filing. -VE
The global DRAM market for 2022 is expected to log similar yearly sales on solid demand despite falling prices, a recent report has said.
Market researcher TrendForce said in its latest report released Thursday DRAM sales are expected to grow 0.3 percent to reach $91.54 billion next year. +VE
TAIWAN Expect market to open higher following the +VE data from the US on Friday and strong Chinese export data.
Data due after market
Balance of Trade, Imports and Exports
After Market Friday Data
Inflation Rate Oct 2.58% YoY vs 2.63% Sept (F/cast was 2.6%)
Inflation Rate Oct -0.06% MoM vs +0.51% Sept (F/cast was +0.6%)
Wholesale Prices Oct 14.78% vs 11.96% Sept (F/cast was 12.2%)
Foreign Exchange Reserves Oct $546.7b vs 544.9b Sept (F/cast was 546.4b)
It was the fifth consecutive month that the inflationary gauge climbed above the central bank’s 2 percent alert level to the second-highest in eight-and-a-half years. The wholesale price index (WPI) saw the steepest increase in 41 years, the statistics agency said.
Hon Hai Precision Industry a major assembler of Apple Inc’s iPhones, Friday posted a 5.95% monthly decline in consolidated revenue to NT$550.89 billion (US$19.76 billion) for last month, as industry-wide component shortages caused a slowdown in production.
However, demand remains healthy; “People are waiting in line to buy our customers’ products,” the company said. “Demand is still there, and we see the parts-shortage crisis turning a corner.” +VE
Freight forwarder T3EX Global Holdings Corp saw net profit soar 368 percent annually to NT$808 million (US$28.98 million) last quarter, thanks to strong demand for cargo and record-high sea shipping rates. +VE
China Steel Corp (CSC), the nation’s largest steelmaker, reported NT$19.76 billion (US$708.7 million) in net profit for last quarter from a loss of NT$696.69 million a year earlier, as strong demand boosted prices. That translated into earnings per share of NT$1.28, marking an all-time high. The company lost NT$0.04 in the third quarter last year.
Gross margin surged to 22.3 percent last quarter from 3.9 percent in the third quarter last year, the steelmaker’s financial statement showed. +VE
Sunday’s Trade data was mixed, Balance was better than expected as Exports continue to do well but softer Imports is a concern. Reserves gained probably as US$ strengthened. There will also be caution ahead of the sixth plenum which is expected to include a major resolution on the party’s achievements and pave the way for next year’s leadership reshuffle. Covid cases and property sector debt remain concerns.
No data due but on Sunday Trade data
Balance of Trade Oct $85.54b vs $66.76b Sept (F/cast was 62b)
Exports Oct 27.1% vs 28.1% Sept (F/cast was 25%)
Imports Oct Sept 20.6% vs 17.6% Sept (F/cast was 26%)
Foreign Exchange Reserves Oct $3.218tn vs $3.201tn Sept (F/cast is 3.2tn)
China's National Health Commission reported 68 confirmed cases of COVID-19 Friday, plus 22 additional infections that didn’t cause any symptoms. The latest outbreak continues to grow as it shifts east through the nation’s rust belt, prompting officials to implement increasingly stringent prevention measures in an effort to control it. Heilongjiang province in the northeast, which accounted for more than one-third of the total, has become the latest epicenter as a mysterious cluster that emerged in the northern border town Heihe ballooned despite a city-wide lockdown.
China had given 1.072 billion people complete COVID-19 vaccine doses by Nov. 5, Mi Feng, spokesman at the National Health Commission, told a briefing on Saturday. That accounts for 75.96% of the nation's 1.41 billion people, Reuters calculation showed. +VE
China's state news agency Xinhua lauded President Xi Jinping on Saturday as a tireless, selfless and scholarly servant of the people, ahead of a key meeting of the ruling Communist Party that is expected to further cement his authority.
China will hold those who support "Taiwan independence" criminally liable for life, it said on Friday, provoking anger and ridicule from the democratic island at a time of heightened tension across the sensitive Taiwan Strait. For the first time China was spelling out the punishment that awaits people deemed to back independence for Taiwan, top officials of the self-ruled island among them, as tension rises over what China regards as a province of its own. -VE
CATL to Spend $2.3 Billion Building Two Battery Plants in China +VE
China cracking down on ‘characteristic towns’ that misused land, real estate while racking up massive debt An initiative to develop towns outside megacities was launched five years ago as part of China’s urbanisation push, but improper planning has plagued projects. Latest move comes as Beijing is striving to reduce high local government debt and excess that collectively pose a serious threat to China’s economy +VE for longer term
Visibility in parts of Beijing was less than 200 metres (219 yards) on Friday as heavy pollution shrouded the Chinese capital, forcing the closure of some highways. Beijing issued its first heavy pollution alert for the fall and winter on Thursday, requiring the suspension of some outdoor construction, factory operations and outdoor school activities.
An American federal jury has convicted a senior Chinese intelligence officer Xu Yanjun of trying to steal secrets from General Electric, the first time a Ministry of State Security official was extradited to the US for trial.
ADR’s -52pts at 24,818 with Chinese banks and Ecommerce weak but the open the positive Chinese export data a slight +VE. Ecommerce in focus with Tencent earnings (Wednesday) and Alibaba’s single day event. Chinese developers debt issues remain an overhang.
No data due
Short Selling HSI Friday 17.2% vs 18.4% Thursday
Top shorts Country Garden (2007) 65%, Hang Seng Bank (11) 39%, CM Bank (3938) 34%, Hengan (1044) 33%, CKI (1038) 33%, Henderson Land (12) 33%, Li Ning (2331) 29%, Petrochina (857) 29%, Shenzhou Int (2313) 29%, BoC (3988) 28%, ICBC (1398) 28%, Wharf REIC (1997) 27%, Xinyi Glass (868) 26%, Longfor (960) 25%, Geely Auto (175) 25%, PingAn (2318) 25%.
CHINA VANKE (02202.HK) announced to spin-off Onewo, the non wholly-owned subsidiary of the Company, for separate listing on the main board of the Stock Exchange.
CENTRAL CHINA (00832.HK) announced that, in October, the Group achieved property contracted sales of RMB2.998 billion, down 70.7% YoY. -VE
SIHUAN PHARM (00460.HK) announces that, on 5 November, the Company repurchased a total of 6.791 million Shares of the Company on market at an average price of HK$1.483 per Share, involving around HK$10.07 million in total.
TEXHONG TEXTILE (02678.HK) announced to sell a 100% stake in Great Triumph Investments, a yarn production subsidiary, to independent third party Sinowin Holding at the cash consideration of RMB810 million. It is expected that the Company will record a loss of about RMB10 million from the Disposal. -VE
Shimao Group has told investors its sales this year will be 12% below target due to a national credit tightening, and it could consider selling assets, investors told Reuters. In an investor call on Friday, Shimao a executive said that to boost confidence, the company would start repurchasing some shares and bonds, according to two people who joined the call. Shimao said it would consider selling come commercial and hotel assets if prices were good, the investors said.
SUNAC (01918.HK) announced that in October, the Group achieved contracted sales value amounted to RMB50.98 billion, down 27.6% YoY -VE.
RSUN PPT (01996.HK) announced that, for October, contracted sales was RMB7.111 billion, down 7.7% YoY. -VEHAIDILAO (06862.HK) announced that, after reviewing the operating performance of its restaurants, the Group decided to adjust its restaurant expansion planning decisions and shut down or suspend the operation of about 300 Haidilao restaurants with relatively low customer traffic and unsatisfying results of operations gradually by end-2021. The Company will not lay off employees and will properly settle the employees of such restaurants within the Group. +VE stock has been a popular short so may see a squeeze.
CHINA SCE GROUP (01966.HK) announced that in October, the Group together with its joint ventures and associates achieved a contracted sales amount of RMB7.602 billion and a contracted sales area of 597,487 square metres, representing a year-on-year decrease of 32% and 18%, respectively. -VE
R&F PROPERTIES (02777.HK) announced that total contracted sales for the month of October amounted to approximately RMB10.67 billion, up 2% monthly. +VE
MODERN LAND (01107.HK) announced that the Company has appointed Houlihan Lokey (China) Limited as its financial adviser to assess the Group’s capital structure, evaluate the liquidity and explore all feasible remediation solutions to ease its liquidity issue and formulate an overall plan taking into account the interests of onshore and offshore stakeholders. At the request of the Company, trading in the shares of the Company on the Stock Exchange was halted with effect from 21 October 2021, and will remain halted until further notice.
The FY22 Budget submitted by the Macao SAR government to the Legislative Assembly showed the GGR of 2022 was estimated to be MOP130 billion as the city's economic recovery continues to be impeded by the COVID-19 outbreak, reported Macao Daily.
For the first ten months of 2021, Macao's GGR amounted to MOP72.152 billion, up 57.3% YoY, compared to a full-year GGR of MOP60.441 billion and MOP292.455 billion in 2020 and 2019 respectively, according to data from the Gaming Inspection and Coordination Bureau of Macao.
YUEXIU PROPERTY (00123.HK) announced that, in October 2021, the value of the company’s contracted sales (including contracted sales by joint venture projects) amounted to approximately RMB10.528 billion, representing a year-on-year decrease of approximately 28%. The corresponding gross floor area (“GFA”) amounted to approximately 409,200 sq.m., representing a year-on-year decrease of approximately 20%. -VE
MTR CORPORATION (00066.HK) announced that it received a total of 5 tender submissions for the Tung Chung Traction Substation Property Development on 28 October 2021. The corporation has decided not to accept any of the tender submissions and will retender the project in due course, the announcement added.
Responding to the unsuccessful tender of MTR's Tung Chung Traction Substation property development, a government spokesperson expressed that the unsuccessful tender will not bring about any material impact on the total private housing land supply in 2021-22.
To ensure a steady land supply for the market, the government will continue to expedite land and housing production, and put up sites from different sources for sale in the fourth quarter of this year, the spokesperson added. Overall -VE
Centa-City Leading Index (CCL) last posted 186.27, up 0.05% WoW. CCL ended the five-week consecutive decline over the first week after the announcement of Policy Address, remarked the research department of Centaline Property. Adding that the potential impact of the U.S. Federal Reserve's decision to begin tapering the bond-buying program on the housing market will be reflected in the CCL reading from late November. They further predicted that CCL could soon garner support and stand firmly at peak.
CCL Mass -0.19% WoW, to post at 188.41.
CCL (small & medium units) likewise -0.15% WoW, to post at 186.54.
CCL (large units), on the other hand, +1.14% WoW to post at 184.85