Oct 13 Asian Marco Initial Thoughts HK T8 delaying open. Other markets expect a weak open as IMF reduces F/casts


13 Oct

This and previous notes can be found at Substack ( Asian Market Sense )
Check out ERI-C.com for  interesting research and trading analysis  They are holding a Reaserch Conference today; let me know if you would like details.

IMF downgrades growth forecasts due to supply chain issues and covid persistance. In its World Economic Outlook, i trimmed its 2021 global growth forecast to 5.9% from the 6.0% forecast it made in July. It left a 2022 global growth forecast unchanged at 4.9%. "This modest headline revision, however, masks large downgrades for some countries," the IMF said in the report, adding that worsening pandemic dynamics have darkened the outlook for low-income developing economies, while wealthy countries are struggling with supply disruptions. -VE
Apple warns that chip shortages will hurt iPhone 13 production -VE for Apple supply chain names

Asia Summary
Thailand closed.
Australia 
Market opened flat but sold down in early trades; with weakness in energy prices although Gold moved higher, Iron Ore prices are steady.
Ex Div includes BlueScope Steel Limited (ASX: BSL), News Corporation (ASX: NWS), and TPG Telecom Ltd (ASX: TPG).
Japan
Nikkei futures opened lower with caution ahead of earnings and the IMF reducing its growth forecast.  Apple supply chain names especially weak.  Tankan data weak and Machinery orders due pre open
S Korea 
Expect markets to open lower with inflation concerns and weakness in Apple supply chain names. LG and LG Chem weak on provision levels for GM battery recall but that may prompt rotation into Samsung. Re-opening names and rate hike beneficiaries +VE
Taiwan 
Expect market to open lower with Tech under pressure after Apple supply chain warning.
China 
Expect market to open lower with caution ahead of the trade data due this morning. Concerns over power shortages and the debt overhang in the property sector hurting sentiment.
Hong Kong
T8 still in force morning session unlikely to happen.  If T8 still up at noon no trading.  ADR’s -30pts at  24,932 but having dropped 360pts Tuesday expect some initial margin calls should the market open today.  T8 currently in force not expected to be taken down until late morning.  If taken down after 7am then market opens on the half hour 2 hours later. If not taken down by 12 noon trading for the day cancelled.  If re-opens no North bound connect flows ahead of HK holiday Thursday.
US Futures 
Opened lower Dow -56pts, S&P -0.3% and NDX -0.4%. US House voting on debt ceiling increase.

DOW -0.34%, NDX -0.14%, S&P -0.24%, Russel 2K +0.61%
Markets opened around flat and traded around there for most of the day but then sold down into the close for a second day; with caution ahead of JPM and Delta earnings, inflation data and Fed minutes.
Banks JPMorgan Chase -0.8%, Citigroup -0.7% Wells Fargo -1.3%, Amex +0.8%
Work from home names: Facebook -0.52%, Apple -0.9%, Amazon +0.03%, Netflix -0.33%,  Disney -0.2%, Zoom Video +0.6%, Alphabet -1.8% and Microsoft -0.5%,
Tech NXP Semi -1.5%, Nvidia -0.1%, Micron -3.6%, AMD +0.3%, Skyworks -0.5%
Re-opening stocks  Boeing -1.3%, Caterpillar -1.5%, Simon Property +1.6%, Kohl’s +1%, Nordstrom +2%, Gap +2.8%, United Airlines +1%, Carnival +1.9%, Wynn Resorts +2.8%, Chevron flat, Exxon Mobil -0.5%,  
Lock down names Campbell Soup -0.3% General Mills +0.7%, JM Smucker +0.4%
DATA
NFIB Business Optimism Index Sept 99.1 vs 100.1 Aug (F/cast was 100)
Redbook 14.8% YoY vs 16.4% prior
JOLTs Job Openings Aug 10.439m vs 10.934m Jul (F/cast was 10.8m)
Consumer Inflation Expectations Sept 5.3% vs 5.2% Aug (F/cast was 5.3%)
WASDE report
USD hits one year high. Bitcoin -2.4% @ 56,225.18, VIX -0.8% @ 19.9, US T10 1.57% ahead of US inflation due out today.
OIL Brent -0.32%, WTI -0.15% but remain at three year highs
Gold +0.1%, Silver +0.3%, Copper -0.1% Platinum -0.3%, Palladium unch.
AHEAD MBA Mortgage Applications and 30 yr Mortgage Rate, API Crude Oil Stock Report, Inflation Rate, FOMC minutes,

DAX -0.34%, CAC -0.34%, FTSE -0.23%
Markets opened lower but worked back towards flat through the day. ZEW survey for Germany weak for a fifth month -VE as bottlenecks hurt the economy. Sentiment hurt by IMF cutting global growth forecasts and caution ahead of US earnings. But UK payrolls hit a new high.
Healthcare, Retail and Basic Resources Weak.
Data
Eurozone
ZEW Economic Sentiment Index Oct 21 vs 31.1 Sept (F/cast was 20)
Germany:
Wholesale Prices Sept +13.2% YoY vs +12.3% Aug (F/cast was +12.7%)
Wholesale Prices Sept +0.8% MoM vs +0.5% Aug (F/cast was +0.3%)
ZEW Economic Sentiment Index Oct 22.3 vs 26.5 Sept (F/cast was 22.6)
ZEW Current Conditions Index Oct 21.6 vs 31.9 Sept (F/cast was 25)
UK:  
BRC Retail Sales Monitor Sept -0.6% vs+1.5% Aug
Employment Change Jul 235k vs 183k Jun (F/cast was 225k)
Ave Earnings Inc Bonus Aug +7.2% vs 8.3% Jul (F/cast was +7.1%)
Ave Earnings Ex Bonus Aug +6% vs +6.8% Jul (F/cast was +6%)
Unemployment rate Aug 4.5% vs 4.6% Jul (F/cast was 4.6%)
AHEAD
Eurozone Industrial Production
Germany  Inflation Rate
France No data due  
UK  Balance of Trade, GDP, Industrial & Manufacturing Production,

JAPAN
Nikkei futures opened lower with caution ahead of earnings and the IMF reducing its growth forecast.  Apple supply chain names especially weak.  Tankan data weak and Machinery orders due pre open
Yen currently 113.60
Data out 
Tankan Index Oct 16 vs 18 Sept (F/cast was 20)
Due Pre market
Machinery Orders Aug YoY vs 11.1% Jul (F/cast is 13%)
Machinery Orders Aug MoM vs 0.9% Jul (F/cast is 1.3%)
Earnings remain in focus
The Kremlin said on Tuesday it disagreed with comments by new Japanese PM Kishida that Japan's sovereignty extended to a chain of islands known by Tokyo as the Northern Territories, and that they were in fact part of Russia.
Liberal Democratic Party (LDP) unveiled on Tuesday its manifesto for an Oct. 31 election with a focus on ending the coronavirus pandemic, promises to rebuild the middle class and defend against an increasingly assertive China with a boost to defence spending beyond 2% of GDP (+VE for Defence stocks)
The Japanese government is working on starting COVID-19 booster shots by year-end, deputy chief cabinet secretary Yoshihiko Isozaki said at a news conference on Tuesday.
Toyota Motor Corp. said Tuesday it will aim to equip its cars with highly efficient solar power generation systems as part of its shift to focus to electric vehicles to achieve carbon neutrality.
KFC Japan suspends French fry sales due to a shortage of potatoes.

SOUTH KOREA
Expect markets to open lower with inflation concerns and weakness in Apple supply chain names.   LG and LG Chem weak on provision levels for GM battery recall but that may prompt rotation into Samsung.  Re-opening names and rate hike beneficiaries +VE
Data out 
Unemployment Sept 3% vs 2.8% Aug (F/cast was 2.7%)
BoK to release Sept Household lending data later.
MSCI semi annual rebalance may prompt speculation in additions/delations
KDCA reported 1,347 new covid cases on Tuesday but there is the expectation of a surge after reduced testing during the long weekend
Central bank keeps benchmark interest rate steady at 0.75 percent, warns of growing inflationary pressure due to surge in oil prices.  The hawkish nature of the press conference stoking inflation fears -VE
LG Chem Ltd and LG Electronics Inc will be shouldering a combined $1.2 billion for General Motors Co's Bolt electric vehicle recall - the lion's share of the expected costs. -VE
Celltrion said Tuesday that the company has submitted an application to the European Medicines Agency for approval of the sale of its anti-cancer biosimilar candidate CT-P16.  It plans to seek regulatory approval in major markets with an aim of launching the drug candidate starting in 2022. +VE
Samsung Electronics Vice Chairman Lee Jae-yong on Tuesday pledged not to use drugs for any reason at a Seoul court, where he was tried for illegal drug use.  He made the promise while attending the court hearing of his trial at Seoul Central District Court.  Slight -VE
Samsung Electronics started its mass production of the industry’s smallest 14-nano DRAM based on extreme ultraviolet technology.
The South Korean tech giant announced Tuesday that the 5-layer memory product was made with the world’s most advanced technology currently in use. +VE
Units of Intel Corp and Samsung Electronics Co are targeting to resume full operations of their Ho Chi Minh City plants by the end of next month, a move that could provide relief to global supply chains.
Saigon Hi-Tech Park is helping its tenants, many of which are running at about 70 percent capacity, to operate fully next month, park deputy manager Le Bich Loan said in a phone interview. +VE
For the proliferation of electric vehicles in South Korea, it is key to upgrade power systems installed at apartment buildings, the predominant type of housing in urban areas here, according to a recent study. +VE for Power companies and contruction companies

TAIWAN
Expect market to open lower with Tech under pressure after Apple supply chain warning.  
No data due
CECC reported 4 imported covid cases Tuesday.
Machinery exports expanded for a 13th straight month last month, but the industry is facing unpredictable challenges relating to China’s power rationing and a stronger New Taiwan dollar, the Taiwan Association of Machinery Industry (TAMI) 
said yesterday.
Exports grew 28.1 percent to US$2.69 billion from a year earlier, but were 9.3 percent lower than the previous month, TAMI statistics showed.
A Taiwanese official has asked Australia to support its bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) pact, saying Taiwan can boost high-technology trade flows and demand for Australian minerals. +VE
The global DRAM industry next year is expected to enter a new downcycle, with chip prices likely to decline 15 to 20 percent annually amid a supply glut, market researcher TrendForce Corp said yesterday.  Major memorychip makers have conservatively expanded capacity; with the overall DRAM supply next year likely to grow 17.9 percent annually but the growth in supply would still exceed an expected 16.3 percent growth in demand, given lackluster orders for products, especially smartphones, TrendForce said. -VE
Computer sales grew at the slowest rate since the start of the COVID-19 pandemic due to component shortages and logistics snarls, according to the latest report by International Data Corp (IDC).   The key US market shrunk for the first time since sales cratered in the first quarter of last year with the spread of the pandemic, the market researcher said.  Shipments in the US in the third quarter fell 7.5 percent from a year earlier, while the industry recorded overall growth of 3.9 percent. -VE
Property The leasing market for Taipei’s upscale offices was resilient last quarter, as the monthly average rent gained 0.7 percentage points to NT$2,847 (US$101.13) per ping (3.3m2),
although the vacancy rate climbed slightly to 2.4 percent, the local branch of Jones Lang LaSalle Inc (JLL) said yesterday.  The minor increase in vacancy resulted from landlords squeezing extra spaces to meet market needs amid a lack of fresh supply in central locations, JLL senior market director Brian Liu told an online news conference. +VE Landlords
Cathay Financial Holding Co yesterday reported a net profit of NT$8.1 billion (US$287.72 million) for last month, up 73 percent year-on-year, bringing its third-quarter profit to NT$30.7 billion, up 22 percent.  Among its subsidiaries, Cathay Life Insurance Co saw its net profit increase 22 percent annually to NT$22.6 billion during the July-to-September period, as it continued to invest despite high volatility in the financial markets amid the COVID-19 pandemic, central banks’ changing monetary policies, China Evergrande Group’s  debt crisis and rising inflationary pressure, it said.  +VE

CHINA
Expect market to open lower with caution ahead of the trade data due this morning.  Concerns over power shortages and the debt overhang in the property sector hurting sentiment.
After market Tuesday
Vehicle Sales Sept -19.6% YoY vs -17.8% Aug (F/cast was -15%)
Data due 11am
Balance of Trade Sept  vs $58.34b Aug (F/cast is $47b)
Exports YoY Sept vs +25.6% Aug (F/cast is 21%)
Imports YoY Sept vs 33.1% Aug (F/cast is 21%)
Thursday 
Inflation data and may also get New Loans, Outstanding Loan Growth, Total Social Financing, M2 Money Supply.
China has the ability to address the issues linked to China Evergrande Group's (3333.HK) indebtedness, 
although there is a risk of the property developer's pain escalating to cause broader financial stress, the IMF said in a report and comments released Tuesday. -VE
China said on Tuesday it will allow coal-fired power plants to charge some customers market-driven prices for electricity, as a worsening energy crisis persuaded authorities to rush through their boldest reform of the power sector in decades.  Responding to shortfalls in power generation brought on by shortages and record high prices for coal, the government has taken a range of steps to boost coal production and manage electricity demand at industrial plants.  +VE but likely to impact inflation despite comments saying that it would not.
Property developers have applied for only 16 of 43 residential sites in the second batch of centralized land bidding in Beijing, meaning 60 percent of plots are in the cold.  Less than 30 companies participated in Beijing's land sales this time around, of among them state-owned developers such as China Overseas Land & Investment (0688) and China Resources Group have become the most active bidders.
The land market is also losing steam in Hangzhou, with the sale of 17 plots terminated due to a lack of valid applications in the second batch of a centralized selling operation. -VE for sentiment and local government financing.
President Xi Jinping announced the launch of a 1.5 billion yuan ($232.47 million) fund on Tuesday to support biodiversity protection in developing countries, as talks continue on a new post-2020 global pact to tackle species loss.  Xi was virtually addressing the COP15 biodiversity summit in Kunming, China, where diplomats, scientists, and conservationists are meeting to lay the groundwork for a global agreement to halt and reverse the destruction of nature, set to be finalised in May next year.

HONG KONG 
ADR’s -30pts at 24,932 but having dropped 360pts Tuesday expect some initial margin calls should the market open today. T8 currently in force not expected to be taken down until late morning. If taken down after 7am then market opens on the half hour 2 hours later.If not taken down by 12 noon trading for the day cancelled
No data due

If trading takes place there will be no Northbound Connect trading ahead of HK being on holiday Thursday.

Typhoon arrangements
https://www.hkex.com.hk/Services/Trading-hours-and-Severe-Weather-Arrangements/Severe-Weather-Arrangements/Trading?sc_lang=en


SHORT SELLING HSI Tuesday 23.6% vs 21.9% Monday
Top shorts 
Wharf REIC (1997) 48%, HK & China Gas (3) 41%, Sunny Optical (2382) 40%, Ali Health (241) 40%, Country Garden (2007) 39%, Hang Seng Bank (11) 37%, Hengan (1044) 36%,  Henderson Land (12) 35%, CM Bank (3968) 35%, Sinopec (386) 35%, China Res Land (1109) 33%, Baba-SW (9988) 33%, Shenzhou (2313) 32%, Xiaomi (1810) 32%, HK Ex (388) 31%, China Life (2628) 30%, Geely (175) 29%, Li Ning (2331) 28%, AAC Tech (2018) 27%, CCB (939) 26%.

WATCH 
Press reports that Hong Kong risks losing its global status to Singapore as it remains closed to business and other travel -VE

China Res Land Sept Contract Sales -23.8% (22.1bn Yuan)
Longfor Sept Contract Sales 20.2bnYuan
Chow Tai Fook Q2 HK & Macau SSS +57.7%, Mainland Sales +58%

CK ASSET (01113.HK)'s low-density residential project located in Hung Shui Kiu -- "#LYOS" has obtained the pre-sale consent and may commence sales within this month. 
CK ASSET expressed during a press conference that, "#LYOS" will become the first residential project to be launched after the Chief Executive's proposal of the "Northern Metropolis" scheme, and that the company is hoping to upload the sales brochure of the project and unveil the sample flats by next week.

Over 35 percent of the Hong Kong people who migrated to the United Kingdom have found jobs, with many working as professionals, skilled workers or in the transportation and logistics sectors.  Hongkongers in Britain, an organization that helps people assimilate into the new country, did an online survey on August 7-31 this year, targeting Hongkongers aged above 18 who have arrived in the UK within the last 24 months.  May spur further migration from HK -VE

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