Nov 9 Asian Marco Initial Thoughts: Markets to open cautiously higher.


09 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 Summary
Australia Market opened higher but caution ahead of data; Energy names +VE along with resources as Iron Ore prices recover.  Results in focus; NAB +VE on good earnings, also watch James Hardie, Coronado Resources and Ofx Group.  Watch New Crest as it agrees to buy Pretium Resources for C$18.50 per share.
Data due
New Home Sales, Business Confidence
Japan Nikkei futures opened +155pts  Earnings remain in focus; yesterday more beat than missed but the season is drawing to a close and Govt stimulus proposals will be being watched.
S Korea Expect markets to open slightly higher earnings still in focus.  Metaverse names also in focus after  AMD said it signed up Meta as a chip client.  
Taiwan Expect market to open higher on good export data.   News that Mobius is to allocate half his fund to Taiwan and India a +VE boost for sentiment and TSMC likely to move higher as AMD signs up Meta.
China Expect market to open mixed Educations names seeing interest on hopes of licences being issued.  Chinese Developers debt position still overhangs the market.   Investors remain cautious ahead of US inflation data, China loans data and comments from the Sixth Plenum.
HK ADR’s +65pts at 24,828 broad rebound with just Banks seeing weakness.  But after two down days expect some initial margin selling being met with short covering.  Education names +VE on licence hopes
US Futures 
Opened Dow -23pts, S&P and NDX circa -0.1%; PPI data tonight and earnings continue.

DOW +0.29%, NDX +0.07%, S&P +0.09%, Russel 2K +0.23%
Markets opened higher but trended lower with +VE sentiment on Biden’s infrastructure bill being passed +VE Industrial & Materials like  Caterpillar, Deere, United Rentals, Jacob Engineering etc.  Tesla -4.8% after Musk’s polls says he should sell 10% of the company.  
Banks JPMorgan Chase +0.6%, Citigroup -1.3% Wells Fargo +0.9%, Amex +1.9%
Work from home names: Meta -0.7%, Apple -0.6%, Amazon -0.9%, Netflix +0.9%,  Disney +0.7%, Zoom Video %, Alphabet +0.12% and Microsoft %,
Tech NXP Semi -0.5%, Nvidia +3.5%, Micron +2.3%, AMD +10.1% as Meta signs up as a customer, Skyworks +2.3%
Re-opening stocks  Boeing -0.8%, Caterpillar +4.1%, Simon Property -1.8%, Kohl’s +0.6%, Nordstrom +1.7%, Gap -1.7%, United Airlines %, Carnival -0.8%, Wynn Resorts -2.1%, Chevron +0.4%, Exxon Mobil +1.1%,  
Lock down names Campbell Soup +0.2% General Mills -0.02%, JM Smucker -0.6%
DATA
Senior Loan Officers survey
Consumer Inflation Expectations Oct 5.7% vs 5.3% Sept (F/cast was )
USD weaker. Bitcoin +5.9% @ 66,234.26, VIX 11.5% @ 17.22, US T10 1.491% higher ahead of inflation data.
OIL Brent +1.2%, WTI +1.3% as market waits to see if the US will release reserves
Gold +0.5%, Silver +1.6%, Copper +1.4% Platinum +2.3%, Palladium +2.3%.
Ahead NFIB Business Optimism Index, PPI, Core PPI, Redbook, WASTE, API Crude Oil Stock Change.
Earnings: DR Horton, Coinbase, Palantir, Aurora Cannabis, Bayer, Krispy Kreme, DoorDash, Cardinal Health, BioNTech, Poshmark, Unity Software

DAX -0.05%, CAC +0.1%, FTSE -0.05%
Opened flat and traded sideways with concerns over rising covid cases in Europe & China and the mixed Chinese Trade data off setting the re-opening of US flight routes. Earnings still coming and some caution ahead of PPI and CPI data from the US this week. Retail, Travel & Leisure slightly weaker, Basic Resources slightly stronger.
No data but ECB’s Lane speaks and Eurogroup meets.  Earnings from Henkel -5.9%  after lowering guidance.
Siemens Gamesa +9% on FY results, with Darktrace +12.6% on an upgrade.
AHEAD
Eurozone ZEW Economic Sentiment Index
Germany Balance of Trade, Imports & Export, Current Account,ZEW Economic Sentiment Index & Current Conditions
France Balance of Trade, Current Account
UK  BRC Retail Sales Monitor

JAPAN
Nikkei futures opened +155pts  Earnings remain in focus; yesterday more beat than missed but the season is drawing to a close and Govt stimulus proposals will be being watched.
Yen closed 113.21
Data 
Average Cash Earnings Sept +0.2% YoY vs0.7% Aug (F/cast was +0.5%)
Current Account Sept ¥1033.7b vs 1665.6b Aug (F/cast was 1050b)
Bank Lending Oct +0.9% YoY vs -0.6% Sept
Later Eco Watchers Survey Current & Outlook.
Japan recorded no daily deaths from COVID-19 for the first time in more than a year on Sunday, local media said.  Monday Tokyo reported 18 new covid cases and nationwide it was 107. +VE
The government on Monday lowered its assessment of the country’s economy for September to “weakening,” the first downgrade in over two years, based on a key business index that worsened as a global chip crunch and supply chain disruptions hit automakers;  as seen in the coincident index released Monday -VE
PM Kishida vowed on Monday to establish an $88 billion university fund to promote Japan as a science and technology nation as part of a growth strategy needed to distribute wealth to the wider public. +VE
Japan is considering an economic stimulus package worth more than 30 trillion yen ($265 billion) aimed at easing the pain from the COVID-19 pandemic, a plan that would require issuing new debt, Kyodo news reported.  The pledge to deliver a big economic stimulus this year faces challenges, including negotiations within his coalition and a tight schedule to secure funding for the spending.
Toshiba Corp is considering splitting itself into three companies focused separately on infrastructure, devices and memory chips, a spokesperson said on Monday, a move that could address the Japanese firm's persistent conglomerate discount. +VE
Proxy advisory firm ISS followed rival Glass Lewis & Co in recommending shareholders of Japan's Shinsei Bank Ltd vote for the lender's plan for a poison pill defence against an unsolicited $1.1 billion bid from SBI Holdings Inc.  I think slight -VE
SoftBank Group Corp sank into red ink for the July-September period, dragged down by losses on its investments in China, the Japanese technology conglomerate said Monday.  They later announced a share buyback which S&P could cut its rating buffer.

SOUTH KOREA
Expect markets to open slightly higher earnings still in focus.  Metaverse names in focus after AMD said it signed up Meta as a chip client.  
No data due
South Korea is expected to see its national debt grow at the fastest clip relative to the size of the economy among major countries, while its growth rate of potential output per capita will fall to the near-zero range without policy changes, according to economic reports Monday. -VE
South Korea’s Industry and Trade Minister Moon Sung-wook will discuss measures to strengthen the country’s cooperation with the United States on ongoing supply chain issues, at a time when the US is asking chipmakers to reveal their trade secrets.  The list of agenda items includes issues like supply chains, reduction of greenhouse gas emissions and cooperation on nuclear power projects.
Some three-quarters of restaurants say they are experiencing a labor shortage, as young people continue to shun jobs in the service industry while COVID-19 has limited foreign workers from entering the country.  Slight -VE
The automotive semiconductor shortage is expected to continue until 2023, and the government and related industries should be prepared to handle rising demand,  said Korea Automotive Technology Institute, or Katech, Monday -VE
Meritz Securities Co. said Monday its third-quarter earnings rose nearly 18 percent from a year ago on increased fee income.  Net profit stood at 191.2 billion won ($161.3 million) in the July-September period, up 17.7 percent from a year earlier, the company said in a regulatory filing. +VE
Korea Aerospace Industries Co. (KAI), said Monday it has received a US$360 million repair and maintenance deal for trainer jets in Iraq. +VE
Asiana Airlines said Monday it will increase the number of flights to Singapore starting this month as the two countries recently signed a travel bubble agreement. +VE

TAIWAN
Expect market to open higher on good export data.   News that Mobius is to allocate half his fund to Taiwan and India a +VE boost for sentiment and TSMC likely to move higher as AMD signs up Meta.
No data due After market Monday
Balance of Trade Oct $6.12b vs $6.45b Sept (F/cast was 6.6b)
Exports Oct 24.6% vs 29.2% Sept (Consensus was 24.4%)
Imports Oct Sept 37.2% vs 29.2% Sept (Consensus was 30.7%)
Exports last month expanded to a record US$40.14 billion, as a continued global recovery shored up demand for electronics used in new technological applications and digital transformation, the Ministry of Finance said yesterday.  It is the first time outbound shipments exceeded US$40 billion and the 16th consecutive month of annual growth on the back of strong demand for chips for which Taiwanese firms command leadership on the world stage, the ministry said. +VE
Powerchip Semiconductor Manufacturing Corp which primarily makes display driver ICs and power management ICs, yesterday gave a positive outlook for the next few years as most of its capacity has been booked at higher prices amid an ongoing chip crunch.
Powerchip expects the latest semiconductor industry boom to last two to three years, as it has clinched long-term contracts to supply logic and memory chips at fixed prices and shipments, company president Brian Shieh told a media briefing in Taipei +VE.
ChipMOS Technologies Inc, a display driver IC and memorychip tester and packager, expects revenue to drop by a small percentage this quarter as power restrictions in China and uneven component supplies such as wafers could drag down less advanced equipment utilization.  ChipMOS yesterday said that customer demand remains healthy, but wafer supplies continue to be tight.  Slight -VE

CHINA
Expect market to open mixed Educations names seeing interest on hopes of licences being issued.  Chinese Developers debt position still overhangs the market.   Investors remain cautious ahead of US inflation data, China loans data and comments from the Sixth Plenum.
No data due
Education names +VE on news Beijing may issue licences soon to allow after school tutoring.
FT reports the Federal Reserve warned on Monday that stresses in the Chinese real estate sector “posed some risk to the US financial system”, pointing to heavily indebted property companies like Evergrande as a potential source of global contagion. -VE
Russia has signed a contract with China to jointly develop a multipurpose heavy helicopter, state-owned Russian Helicopters said on Monday, in a sign of closer technological cooperation between Moscow and the world's no. 2 economy.  Russia will contribute parts for the aircraft including its transmission, steering screw and anti-icing system, the company's Chief Executive Andrey Boginsky told President Vladimir Putin, according to a transcript on the Kremlin's website of their meeting. Slight +VE
China on Monday labelled the charges against a Chinese citizen convicted in the United States of stealing trade secrets as "pure fabrication".  The U.S. Justice Department said on Friday that Xu Yanjun had been convicted by a federal jury of plotting to steal trade secrets from several U.S. aviation and aerospace companies.

HONG KONG 
ADR’s +65pts at 24,828 broad rebound with just Banks seeing weakness. But after two down days expect some initial margin selling being met with short covering. Education names +VE on licence hopes
No data due

Short Selling HSI Monday 19% vs 17.2% Friday
Top shorts 
Country Garden (2007) 50%, AliHealth (241) 44%, Mengniu Dairy (2319), Baba-SW (9988), PingAn (2318) 39%, CM Bank (3938) 39%, Xinyi Glass (868) 34%, BoC (3988) 31%, HK EX (388) 31%, Sunny Optical (2382) 30%, Bud Apac (1876) 30%, Xinyi Solar (968) 30%, Hang Seng Bank (11) 28%, Haidilao (6862) 26%, China Life (2628) 26%, Hang Lung Ppty (101) 25%, Hengan (1044) 25%, ICBC (1398) 25%, CSPC Pharma (1093) 25%.

WATCH
Tencent Music Entertainment Group (TME.N) beat analysts' estimates for third-quarter profit on Monday, 
as efforts to bolster content attracted more paying users to its Spotify-like music streaming platform. Online music paying users jumped 37.7% to 71.2 million from a year earlier, while it increased by 5 million from the prior quarter. +VE

CHINA AOYUAN (03883.HK) announced that in October 2021,
the Group achieved unaudited property contracted sales of approximately RMB10.13 billion, down 33.2% yearly.

GAC GROUP (02238.HK) announced that in October, the company's automobile production and sales volume dropped 4.48% and 8.11% YoY
to 192,600 units and 192,900 units.

EVERGRANDE (03333.HK) disposed of 200 million HENGTEN NET (00136.HK) shares in the market on 8 November, at an average price of $2.0365, cashing in $407 million as revealed by the Stock Exchange.
Upon completion, EVERGRANDE's shareholding in HENGTEN NET dropped from 22.98% to 20.82%.

The retail sales volume of China's broad-sense passenger vehicles amounted to 1.738 million units in October, down 14.1% YoY but up 8.3% MoM, according to data from China Passenger Car Association (CPCA). The retail sales volume of new-energy passenger cars reached 321,000 units, up 141% YoY but down 3.9% MoM

The Government announced that, in accordance with the Articles of Association of the MTR CORPORATION (00066.HK) (MTRCL) and as the majority shareholder, the Financial Secretary Incorporated has re-appointed Dr Rex Auyeung Pak-kuen as the Chairman of the board of directors of the Corporation for two and a half years. The re-appointment of Dr Auyeung will take effect from January 1, 2022, to June 30, 2024. Dr Auyeung first took up the post of the Chairman of the board of directors of the MTRCL on July 1, 2019.

Comments
* The email will not be published on the website.