Oct 11 Asian Macro Initial Thoughts S Korea & Taiwan closed other markets to open cautiously high but Aus weaker on casino allegations.


11 Oct

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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.
Australia Market opened, Casino Stocks weak after local press alledges money laundering, racketering etc.  Wider market more positive as lockdown restrictions are eased in  NSW +VE re-opening and property names.  Oil and Iron Ore higher but Gold eased.
Japan Nikkei Chicago  futures opened +155pts but have eased back from those initial highs.  Machine Tool Orders data out later
S Korea Market closed re-opens Tuesday
Taiwan Market closed re-opens Tuesday
China Market to open lower with concerns over Evergrande (and others in the sector), the energy shortages and the heavy rains.
Hong Kong ADR’s +152pts @ 24,989 but expect some initial upside as recent short cover.  Chinese Banks seeing some weakness.
Europe No data due so expect to be cautious.
US Futures opened Dow -71pts, S&P -0.28% and NDX -0.33% caution as Q3 earnings season gets under way (JPM, GS, BoA, MS, Wells Fargo and  Citi on Wednesday) and after the weak jobs report Friday and GS lowering their growth forecast.

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.   Other  concerns remain the Chinese economic outlook and impact from Evergrande.
Yen closed 112.22
Data due  Machine Tool Orders at 2pm Sept (Aug was 86.2% YoY  F/cast is 80%)
Tokyo Saturday reported 82 new covid cases (-56 DoD) 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
PM Fumio Kishida, said on Sunday he won’t seek to change the country’s taxes on capital gains and dividends for now as he intends to pursue other steps for better wealth distribution, such as raising wages of medical workers.  +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 +VE
A fire at a major substation facility near Tokyo run by East Japan Railway Co (JR East) caused a power outage on Sunday, forcing the operator to temporarily suspend train services on a number of lines in the Tokyo metropolitan area and affecting around 236,000 people, the company said. -VE
Honda output cuts to remain through October due to chip shortages and the impact of the virus.
Daikin says it will phase out rare earths from its air-conditioners +VE

SOUTH KOREA
Market closed Monday re-opens Tuesday; this week likely to see limited upside after the  weak US jobs data and potential weaknesses in the Chinese economy  along with caution on US earnings getting underway.
No data due
KDCA reported 1,594 new covid cases on Sunday remaining 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’.  Heavy rains hit Shanxi province -VE
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
New residential floor space sold in mainland cities monitored on a regular basis was -33% YoY during the National Day holiday.  While transactions among top-tier cities were little changed over the 12 months it was a different story in second-to-fourth-tier cities. They slid by over 40 percent on average, data from the China Index Academy showed. That also extended the monthly wait-and-watch sentiment.  This trend showed in the year-on-year sales performance of China Vanke (2202), which posted a 33.8% drop in contracted sales to 36.1 billion yuan (HK$43.6 billion) involving a contracted sales area of 2.28 million square meters. -VE
China to raise gasoline and diesel prices Slight -VE
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 Chinese Banks and continued concerns over Chinese Developers.
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
Tai Hung Fai Enterprise's Sheung Shui low-priced residential project Artique sold out in 90 minutes flat yesterday, 
amid speculation over the government's Northern Metropolis development plan.  The 30-home project is considered to have the smallest floor plan available in the Northern district, with prices as low as parking spaces in private housing estates.  It consists of 24 studios and six one-bedroom flats with areas from 138 square feet to 259 sq ft. The discounted selling price ranged from HK$2.43 million to HK$5.12 million, and the average discounted price was HK$18,454 per sq ft.

Zijin Mining(2899) is buying a lithium company for about HK$6 billion.  The company said in an exchange filing that it has agreed to buy Argentina-focused lithium company Neo Lithium for CAD$6.5 (HK$40.57) per share in cash, with a total amount of CAD$960 million (HK$5.9 billion).  The acquisition is subject to approval at a special meeting of shareholders of Neo Lithium as well as effective approvals, notices or waivers from the Chinese government or its authorised departments, and the relevant regulatory authorities and courts in Canada  +VE

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

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

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