Oct 10 Things to know before trading Asia on Monday


10 Oct

This and previous notes can be found at Substack ( Asian Market Sense )
Check out ERI-C.com for  interesting research and trading analysis

US Q3 earnings season starts again this week. Which comes as Bridgewater Associates warns that high inflation has arrived and central banks may be unable to control it; which would hurt the global recovery.
More than 130 countries have agreed on sweeping changes to how big global companies are taxed, including a 15% minimum corporate rate designed to deter multinationals from stashing profits in low-tax countries. The deal announced Friday is an attempt to address the ways globalization and digitalization have changed the world economy. It would allow countries to tax some of the earnings of companies located elsewhere that make money through online retailing, web advertising and other activities.
Vietnam reports tens of thousands of migrant workers have left Ho Chi Minh City in the week since it eased a Covid-19 lockdown, stoking fears of a labour shortage in one of Asia’s biggest manufacturing centres. -VE Tech assembly firms.
The Economist theme is the Shortage Economy; the premise being that spending is about to come roaring back. But it also notes that it is a product of decarbonisation and a switch away from coal along with increased protectionism.
It also looks at China’s motives for wanting to join the CPTPP, and the barriers it faces in having its application accepted which includes disputes with existing members who could veto its application along with a requirement to remove state subsidies from its SOE’s and allow cross border data flow. Some CPTPP members think China is too big a bully to join. China’s bet is that, for a decisive number, it is too big to keep out.
It also has an article on Stagflation; Is the world economy going back to the 1970s?  Despite some eerie echoes, the past is not the best guide to the present.  Noting that as in the 1970’s energy & food costs are rising and spreading.  Along with shipping rates and labour costs.  They also see similar policies regarding inflation from allowing the economy to run hotter to solve supply-side issues. But it notes the differences,  the reduction in labour union power being a prime one.  Also productivity advances are still happening today.  Lastly the willingness of central banks to rein in inflation.  It concludes; ‘Past experience, therefore, is not the clearest lens through which to view the forces buffeting the global economy. The world has changed dramatically since the 1970s, and globalisation has created a vast network of interdependencies. The system now faces a new, unique test.’

Asian data this week 
Australia New Home Sales, Business Confidence, Consumer Confidence, Unemployment data, Inflation Expectations,
Japan Machine Tool Orders, Bank Lending, PPI, Tankan Index, Machinery Orders, Capacity Utilisation, Industrial Production, Tertiary Industry Index
S Korea Interest Rate Decision, Unemployment Rate, Export Prices,
Taiwan market closed Monday.  No data due this week.
China  Balance of Trade, Exports, Imports, Vehicle Sales, Inflation Rate, PPI, New Loans, Outstanding Loan Growth, Total Social Financing, M2 Money Supply, FDI (YTD)
HK Market will be closed Thursday.
Europe ZEW Economic Sentiment Index, Inflation Rate, Industrial Production, New Car Registrations, Balance of Trade
Germany Wholesale Prices, ZEW Economic Sentiment & Current Conditions Index
France Inflation Rate
UK BRC Retail Sales  Monitor, Employment & Wages Data, Balance of Trade, GDP, Industrial & Manufacturing Production, Construction Output,  NISER monthly GDP Tracker, BoE Credit Conditions Survey,
US NFIB Business Optimism, JOLT’s job openings, Consumer Inflation Expectations, WASDE report, Inflation Rate, FOMC minutes, PPI and Core PPI, Monthly Budget, Retail Sales, Import & Export Prices, Empire State Manufacturing Index, Michigan Prelim Data (Inflation Expectations, 5 yr Inflation Expectations, Current Conditions) Business Inventories,

DOW -0.03%, NDX -0.51%, S&P -0.19%, Russel 2K -0.76%
Dow and S&P traded around flat all day, NDX drifted lower though the day.  Energy names +VE as West Texas Intermediate rose above $80 for the first time since November 2014.  The jobs data missed but the unemployment rate dropped to 2016 levels and August’s number was revised up to 336k from 235k.  The question is now whether the weak number impacts the Fed’s tapering plans.  Sentiment helped by the resolution of the govt Debt ceiling.
Banks 
JPMorgan Chase +0.08%, Citigroup -0.21% Wells Fargo +0.5%, Amex +0.49%
Work from home names: Facebook +0.25%, Apple -0.27%, Amazon -0.42%, Netflix +0.13%,  Disney -0.55%, Zoom Video -0.48%, Alphabet +0.4% and Microsoft unch,
Tech NXP Semi -1.83%, Nvidia -1.16%, Micron -0.6%, AMD -1.31%, Skyworks -0.85%
Re-opening stocks  Boeing -0.04%, Caterpillar -0.3%, Simon Property -1.44%, Kohl’s -1.88%, Nordstrom -0.48%, Gap -1.82%, United Airlines -0.73%, Carnival -2.69%, Wynn Resorts +0.67%, Chevron -2.24%, Exxon Mobil -2.51%
Lock down names Campbell Soup +0.02% General Mills +0.23%, JM Smucker -0.17%
DATA
Non Farm Payrolls Sept 194k vs 366k Aug revised (F/cast was 475k)
Unemployment Rate Sept 4.8% vs 5.2% Aug (F/cast was 5.1%)
Manufacturing Payrolls Sept 26k vs 31k Aug revised (F/cast was 29k)
Government Payrolls Sept -123k vs 34k Aug (F/cast was 30k)
Average Weekly Hours Sept 34.8 vs 34.6 Aug (F/cast was 34.7)
Participation Rate Sept 61.6% vs 61.7% Aug (F/cast was 61.8%)
Average Hourly Earnings Sept +4.6% YoY vs 4% Aug revised (F/cast was +4.7% )
Average Weekly Hours Sept +0.6% MoM vs +0.4% Aug revised (F/cast was +0.5%)
Wholesale Inventories Sept +1.2% MoM vs +0.6% Aug (F/cast was +1.2%)
Baker Hughes Oil Rig Count 433 vs 428 prior
Baker Hughes total Rig Count 533 vs 528 prior
USD was steady. Bitcoin +0.5% @ 54,910.12, VIX -3.94% @ 18.77, US T10 @ 1.612% despite the weak jobs report.
OIL Brent +0.54%, WTI +1.34%
Gold -0.11%, Silver +0.12%, Copper +0.82% Platinum +4.28%, Palladium +5.73%.
AHEAD Pre Market Total Vehicle Sales
Factory Orders, Factory Orders Ex Trans.

DAX -0.29%, CAC -0.61%, FTSE +0.25%
Markets opened slightly higher and traded around flat for most of the day but the FTSE worked slightly better in the PM, whereas the CAC and DAX turned lower after the US jobs number disappointed.
Auto’s gained but Tech was weak. German trade balance missed slightly but that seemed to have little impact
Stellantis is reportedly mulling splitting off two of its Opel plants in Germany, one of which is temporarily closing next week due to the global semiconductor shortage.
Faurecia +4.4% to lead the Stoxx 600 by mid-afternoon deals.
Tui -15% as further flight and holiday cancellations continued to bite. It is planning a 1.1 billion euro capital increase to service a spike in demand for holidays.
DATA
GERMANY
Balance of Trade Aug €10.7B vs €17.9B Jul revised (F/cast was €14.4B)
Current Account Aug €11.8B vs €17.9B Jul revised (F/cast was €15.1B
Exports sa Aug -1.2% vs +0.6% Jul revised (Consensus was +0.5%)
Imports sa Aug +3.5% vs -3.6% Jul revised (Consensus was +1.8%)
UK
BoE Quarterly Bulletin
AHEAD
EUROZONE No data due
GERMANY No data due
FRANCE No data due  
UK  No data due

JAPAN
Market expected to trade 27,700 - 28,500 with 28,000 seen as  the consolidation level.  Institutions likely to focus on earnings and watch for details on PM Kishida’s stimulus package.
Yen closed 112.22
No data due
Tokyo reported 82 new covid cases (-56 DoD) Saturday with the national total being 777.
Taiwan's TSMC (2330.TW) and Japan's Sony Group Corp (6758.T) are considering jointly building a chip factory in Japan, with the government ready to pay for some of the investment of about 800 billion yen ($7.15 billion), the Nikkei reported on Friday. The plant in Kumamoto, southern Japan, is expected to produce semiconductors for automobiles, camera image sensors and other products which have been hit by a global chip shortage, and is likely to start operations by 2024, the report said.  Denso (6902.T) is also looking to participate through such steps as setting up equipment at the site, the report said. The Toyota Motor group member seeks stable supplies of chips used in its auto parts.  +VE
PM Fumio Kishida said on Friday he had agreed in his first talks with Chinese President Xi Jinping since taking office on the need to work together on issues of shared concern.  "I frankly raised concerns between both countries from my side, and I suggested we should continue dialogue in the future," Kishida said in comments aired by public broadcaster NHK after he spoke with Xi on the telephone. +VE
Japanese Prime Minister Fumio Kishida's ruling Liberal Democratic Party (LDP) made no mention of reviewing financial income tax in its campaign platform for the Oct.31 general elections, a draft obtained by Reuters showed.  But will call for a sharp rise in defence spending

SOUTH KOREA
Expect a muted open with concerns on the weak US jobs data and potential weaknesses in the Chinese economy which could also impact growth.
No data due
KDCA reported 1,953 new covid cases on Saturday back below 2,000 +VE
Samsung Electronics defied the global supply chain challenges to forecast a near-30-percent jump in third-quarter operating profits on Friday.  The world's biggest smartphone maker said it expected its operating profits to reach around 15.8 trillion won ($13.3 billion) in a regulatory filing, up 27.9 percent year-on-year.  The company is the flagship subsidiary of the giant Samsung group, by far the largest of the family-controlled empires known as chaebols that dominate business in South Korea, the world's 12th largest economy.
The family of late Samsung Group Chairman Lee Kun-hee plans to sell stakes in group affiliates worth 2 trillion won ($1.6 billion) to pay inheritance taxes, regulatory filings showed Saturday.

TAIWAN
Market closed for National day will re-open Tuesday.
No data due but after market Friday 
Balance of Trade Sept $6.45b vs 3.48b Aug (F/cast was 2.5b)
Exports Sept 29.2% vs 26.9% Aug (consensus was 25%)
Imports Sept 40.4% vs 46.2% Aug revised (Consensus was 41.2%)
Exports were driven by demand for electronics used in digital transformation and new technology applications increased, the Ministry of Finance said yesterday.  Non-tech sectors also benefited from inventory replenishment demand, fueled by a continuing global recovery that allowed their growth to be faster than technology products
President Tsai Ing-wen will pledge to defend the island's sovereignty and democracy in a major speech on Sunday, saying it faces challenges more complex and severe than ever, at a time when tensions with China have risen.  On Friday she said Taiwan does not seek military confrontation, but will do whatever it takes to defend its freedom, amid a rise in tensions with China that has sparked alarm around the world.
TSMC announced that its revenue in September NT$152.685 billion, up 11.1% MoM, or 19.7% YoY, setting an all-time high in a single month.
Nanya Technology Corp Friday said that the memorychip industry is heading into a moderate correction period through early next year after a booming third quarter, during which its net profits almost quadrupled from a year earlier.  The nation’s biggest DRAM chipmaker expects the latest downturn would be short-term on the back of a slim inventory of chip supplies and relatively robust demand from servers, commercial computers and high-end consumer electronics such as smart speakers and networking devices.
A nearly 4 percent pay raise for public employees is on the cards, the first time government payrolls would increase by more than 3 percent in the past two decades, Executive Yuan sources said on Friday.

CHINA
Expect market to open lower following the US and the disappointing US jobs data.  Concerns over the Chinese economy and the fallout from Evergrande remain with the FT reporting that almost 50% of China’s 30 biggest developers are in breach of its ‘three red lines’.
No data due
China's National Health Commission reported 17 COVID-19 confirmed cases Friday (8th), 
with all of them being imported cases.
Chinese President Xi Jinping says peaceful reunification with Taiwan is in country’s best interests.  In speech marking 110th anniversary of the revolution that established the first Chinese republic, Xi urges Taiwan to ‘stand on the right side of history’. Taipei condemned the speech as a ‘distortion of history’ and calls on Beijing to stop threatening the island
China has added cryptocurrency mining to a draft list of industries in which investment is restricted or prohibited, although it reduced the number of sectors on the list overall, a document released by the state planner showed on Friday. The "negative list" details sectors and industries that are off-limits to both Chinese and foreign investors.  Regulators in China banned cryptocurrency trading and mining this year, with the country's central bank vowing to purge "illegal" cryptocurrency activities last month. The crackdown has prompted cryptocurrency exchanges to cut ties with Chinese users.
Chinese President Xi Jinping has held a phone conference with the new Japanese Prime Minister Fumio Kishida today (8th) through which both parties agreed on maintaining constant communication to steer the relationship between the two nations onto the right direction, reported CCTV.  Xi stressed the geographic proximity between China and Japan, stating that upkeeping a friendly cooperative relationship is beneficial to the basic interests of the people of both nations, as well as to safeguarding world peace. China expressed its willingness to strengthen communication and cooperation with Japan, in order to forge a China-Japan relationship suitable to the needs of the new era.
Yang Jiechi, a member of the Communist Party's Politburo, met with the U.S. national security adviser Jake Sullivan in Zurich, Switzerland, said Chinese Foreign Ministry Spokesman Zhao Lijian at a regular news conference. Both sides had a comprehensive, candid and thorough exchange of views on Sino-US relations, as well as international and regional problems of common concern. Zhao said the meeting was constructive and salubrious to boosting mutual understanding.
China ordered miners in Inner Mongolia to ramp up coal production and oil prices jumped on Friday as a record surge in the cost of gas revived demand for the most polluting fossil fuels to keep factories open and homes heated.  The rebound in economic activity from coronavirus restrictions has exposed alarmingly low supplies of natural gas leaving traders, industry executives and governments scrambling as the northern hemisphere heads into winter.  China instructed 72 local miners to expand capacity by 100m tonnes, according to a report by Securities Times, a state-controlled newspaper.
Li Keqiang, Premier of China's State Council, proposed a reform on the coal-generated electricity tariff and stressed the importance of establishing a system for perfecting the market-driven power tariff.  Li expressed that, under the premise of ensuring stable power tariff for citizens, agricultural activities and charity works, the upwards and downwards fluctuation range of the market trading power tariff will be revised from no more than 10% and 15% respectively to no more than 20%.  Slight -VE
Heavy rain across northern China this week has delayed the corn harvest, submerged fields in water and raised concerns about the quality of the crop in the world's second largest producer, analysts and farmers said on Friday.   China is expected to harvest one of its largest corn crops in years this season after tight supply last year pushed prices to record levels.  But rare heavy rainfall earlier this week hit swathes of northern China just as the harvest was due to start, hampering gathering of the crop and drying of the grain.
Tourism revenues in China during the Golden Week holiday that ended on Thursday fell by almost 5% year-on-year, state media reported, while lingering coronavirus curbs also saw a decline in the total number of trips undertaken.  The sluggish data weighed on the outlook for China's overall retail sales, which have slowed much more sharply than expected when new COVID-19 outbreaks struck a handful of Chinese cities over summer.
Jiangsu Communications Administration expressed that, in light of the recently released notice by National Development and Reform Commission (NDRC), Ministry of Industry and Information Technology (MIIT) and Ministry of Public Security (MPS) on strengthening the regulation on the "mining" activity of virtual currency, the department will fully cooperate and scale up the investigation on local "mining" activity.  The administration added that, the number of internet IP addresses involved in "crypto mining" in the local area of Jiangsu amounted to 4,502 in total.

HONG KONG 
ADR’s +152pts @ 24,989 with weakness in some Chinese Banks.
No data due

SHORT SELLING HSI Friday vs 20.5% Thursday
Top shorts 
Country Garden (2007) 51%, Wharf REIC (1997) 46%, SHKP (16) 39%, Bud Apac (1876) 39%, BYD (1211) 38%, AIA (1299) 37%, CKII (1038) 35%, HK & China Gas (3) 33%, Henderson Land (12) 32%, Haidilao (6862) 31%, China Overseas (688) 30%, Meituan (3690) 29%, HKEX (388) 28%, AAC Tech (2018) 27%, Sunny Optical (2382) 26%, Techtronics (669) 26%, China Res Land (1109) 26%, Sinopec (386) 26%, Xiaomi (1810) 26%, CLP (2) 25%, MTRC (66) 25%.

National Security Law
A Hong Kong university attempting to remove ‘Pillar of Shame’
a memorial to the Tiananmen Square massacre from its campus has hired US law firm Mayer Brown.

WATCH
XIAOMI-W (01810.HK)'s statement disclosed that, on 8 October, it repurchased 814,800 shares of the company on the Stock Exchange at $20.85-21 per share, 
involving a total of approximately $17.05 million.  YTD, the company has repurchased a total of 124 million shares, accounting for 0.5% of the company's share capital. +VE

SUNAC (01918.HK) announced that, in September 2021, the group achieved contracted sales value amounted to approximately RMB46.65 billion, down 32.3% YoY. The contracted sales area amounted to approximately 3.367 million sq.m., with contracted average selling price of approximately RMB13,860 per sq.m.. -VE

KWG GROUP (01813.HK) announced that, for September 2021, the pre-sales value of the group and its joint ventures and associates amounted to RMB5.26 billion, representing a year-on-year decrease of 49.0%. The pre-sales area amounted to approximately 289,000 square meters, representing a year-on-year decrease of 50.5%.  -VE

YESASIA HLDGS (02209.HK) announced that Lau Kwok Chu, along with his spouse Chu Lai King, who are the controlling shareholders of the company, acquired an aggregate of 935,000 ordinary shares of the company at an average price of HK$1.46 per share in the open market during the period from 30 September 2021 to 7 October 2021, involving approximately HK$1.365 million.
After the purchase, Lau Kwok Chu and Chu Lai King were deemed, or taken to be interested in an aggregate of 147 million shares of the company, representing approximately 37.30% of the total issued shares. +VE

SIHUAN PHARM (00460.HK) announced that it has repurchased 6 million shares of the company on the previous trading day (8th), at an average price of $1.5702 per share, involving a total amount of approximately $9.42 million. +VE

TENCENT (00700.HK) has become the largest shareholder of the Polish game maker Bloober Team with a stake of 22%, reported foreign media. +VE

BYD COMPANY (01211.HK) (002594.SZ) announced that the company's subsidiary Golden Link is planning to join the investment fund Community Fund LP
with an investment of USD300 million. The fundraising scale of the fund is estimated to be less than USD600 million, with an investment focus on
outstanding underlying funds in fields such as technology and medical innovations. +VE

YUZHOU GROUP (01628.HK) announced that for the month ended September 2021, the sales of the Group was RMB9.032 billion, down 22.5% year-on-year. -VE

OOIL (00316.HK) announced that for the third quarter ended 30th September 2021, total revenues increased by 125.3% to USD4.314 billion, as compared to the same period in 2020. This record result was achieved despite severe congestion around the network, which drove down liftings by 7.2% and loadable capacity by 7.6%. The overall load factor was 0.4% higher than the same period in 2020. Overall average revenue per TEU increased by 142.7% compared to the third quarter of last year.  +VE

China's State Administration for Market Regulation (SAMR) announced that it imposed administrative penalty on MEITUAN-W (03690.HK) for its "picking one from two" monopoly practice on online food delivery platform within China.  The regulator ordered the company to stop all illegalities and fully refund the exclusive cooperation deposits of RMB1.289 billion. It also fined MEITUAN-W at 3% of the RMB114.748 billion of domestic sales in 2020, running into RMB3.442 billion.  MEITUAN-W said it sincerely accepted the administrative penalty decision made by the State Administration for Market Regulation on 8 October. The Company is set to resolutely implement the Notice of Administrative Penalty and the Administrative Guidance through comprehensive and thorough self-inspection and rectification, in order to eradicate the "picking one from two" practice.  Slight -VE as less than expected

China Evergrande Group, under siege from creditors, investors and suppliers has taken action against half a dozen company insiders for front-running their wealth management customers, bowing to pressure from furious clients and local authorities across the country.  Comes as advisers to a group of international investors in Evergrande say the heavily indebted Chinese developer has not meaningfully engaged with them or provided details of potential asset sales despite their requests, as they brace themselves for a looming default.  EVERGRANDE (03333.HK)  announced that the six executives of the company have returned the entire amount of funds from the advance redemption of wealth investment products to the designated EVERGRANDE wealth accounts by Friday (8th).

Centa-City Leading Index (CCL) dropped 0.36% WoW to post at 188.93.
CCL Mass last stood at 192.15, down 0.16% WoW.
CCL (small-and-medium units) likewise lost 0.22% WoW to post at 189.58.
CCL (large units) last posted 185.5, down 1.08% WoW.
The research department of Centaline Property, found the Policy Address released on 6 October favorable to the property market and supportive for home prices to stay high and solid. This will be reflected in the CCL starting late October 2021.

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