Oct 19 Asian Macro Initial Thoughts; Cautious open Apple supply chain names in focus.


19 Oct

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

Asia

Australia Market opened an initially tested higher before pulling back but then rallied.  Watch CSL as it holds its annual R&D day and provide guidance on its current developments.  Also Senex Energy Ltd having received a $605 million takeover proposal from POSCO International Corp and saying it was opening up its books to the South Korean trader with the aim of gaining a sweeter offer.  IDP Education AGM today, hit a new high Monday so comments will be closely watched.  Oil slightly weaker along with Gold but Iron Ore futures slightly higher.
Out later RBA meeting minutes due 11:30am local Aus time.
Japan Nikkei futures opened lower lower but currently just +VE;  expect caution in the run up to the election.  Apple chain names in focus after the product launch.
S Korea Expect markets to open slightly higher with focus on Apple supply  names after the product launch key will be if foreigners remain net buyers.
Taiwan Expect market to open flat following a mixed US market overnight.  TSMC saw heavy selling but could see a rebound today following the Apple product launch and ahead of tomorrows Export data.
China Expect market to open higher as Golden Dragon Index closed +1.4% (+150pts) but upside likely to be muted by concerns about the Property sector and energy as China braces for an early cold spell.  That could impact the wider changes that President Xi is wanting to make to the economy.
HK ADR’s 4pts at  25,413 with Financials and Energy names mixed but support from Ecommerce names.
US Futures 
Opened Dow futures -30 points. S&P 500 futures fell less than 0.1% and Nasdaq 100 futures were down about 0.05%.
Earnings ahead : Netflix, Johnson & Johnson, Procter & Gamble, Travelers, United Airlines, Synchrony Financial, Halliburton, Manpower Group, Kansas City Southern, Bank of NY Mellon, Fifth Third, Intuitive Surgical
Data Housing starts, Building Permits, Redbook.
Fed Speakers Daly and Bostic

DOW -0.1%, NDX +0.84%, S&P +0.34%, Russel 2K %
Markets opened lower on after weak China data and weak US industrial & manufacturing data but then worked better; S&P and NDX throughout the day but the DOW hit resistance at Friday’s closing level.  Earnings in focus.
Banks JPMorgan Chase flat, Citigroup -0.3% Wells Fargo +2.2%, Amex +0.6%
Work from home names: Facebook +3.3%, Apple +1.2%, Amazon +1.1%, Netflix +1.54%,  Disney -3% broker downgrade, Zoom Video +3%, Alphabet +1% and Microsoft +1%,
Tech NXP Semi +1.3%, Nvidia +1.7%, Micron -0.6%, AMD +3.8%, Skyworks +0.5%
Re-opening stocks  Boeing flat, Caterpillar -0.4%, Simon Property +3.1%, Kohl’s +3.5%, Nordstrom +5.5%, Gap +4.6%, United Airlines -1.7%, Carnival -2.3%, Wynn Resorts +0.1%, Chevron -0.1%, Exxon Mobil -0.1%,  
Lock down names Campbell Soup -0.7% General Mills -1%, JM Smucker -0.5%
DATA
Industrial Production Sept 4.6% YoY vs 5.7% Aug revised (F/cast was 5.7%)
Industrial Production Sept -1.3% vs -0.1% Aug revised (F/cast was +0.3%)
Capacity Utilisation Sept 75.2% vs 76.2% Aug revised (F/cast was 76.5%)
Manufacturing Production Sept 4.8% YoY vs 5.6% Aug revised (F/cast was 5.8%)
Manufacturing Production Sept -0.7% MoM vs -0.4% Aug revised (F/cast was +0.4% )
NAHB Housing Market Index Oct 80 vs 76 Sept (f/cast was 75)
Monthly Budget Statement Sept $ vs -171B Oct (F/cast was -120B)
Foreign Bond Investment Aug $30.7 vs 10.2B July
Net Long-Term Tic Flows Aug $79.3 vs 2B July
Overall Net Capital Flow Aug $91b vs 126B July
USD was weaker. Bitcoin +2% @ 61,801.58 with the expectation that an ETF will be approved shortly, VIX +0.06% @ 16.31, US T10 @ 1.591%
OIL Brent -0.9, WTI flat as US factory data raises demand issues.
Gold -0.2%, Silver -0.53%, Copper -0.35% Platinum -1.95%, Palladium -2.87%.
AHEAD Housing Starts, Building Permits, Redbook.
Earnings from Netflix, Johnson & Johnson, Procter & Gamble, Travelers, United Airlines, Synchrony Financial, Halliburton, Manpower Group, Kansas City Southern, Bank of NY Mellon, Fifth Third, Intuitive Surgical
Fed Speakers Daly and Bostic.

DAX -0.72%, CAC -0.81%, FTSE -0.42%
Markets opened slightly weaker and drifted lower for most of the day before rallying slightly into the close; following the weak China data, oil prices continue to rise; fueling inflation concerns and with caution ahead of more US earnings this week. Auto’s were the laggards but all sectors closed in the red.
THG +20% on Monday after announcing founder Matthew Moulding will surrender his “golden share” in the company and move it to the premium segment of the London Stock Exchange in 2022.
Finnish retailer Kesko -5.7% while Belgian miner Umicore -4% after cutting its profit forecast.
No DATA
AHEAD
Eurozone Construction Output
Germany No data due
France No data due  
UK  No data due

JAPAN
Nikkei futures opened lower lower but currently just +VE;  expect caution in the run up to the election.  Apple chain names in focus after the product launch.  Weak Yen still+VE for exporters
Yen currently 114.31
No data due 
PM Kishida said on Monday his plan to create a government agency to better fight infectious diseases has not changed but it may not come into existence before the pandemic is over. Slight +VE
The government said Monday it will begin conducting trials this week using proof of COVID-19 vaccinations or negative test results at eateries in preparation for another possible wave of infections this winter.
Mitsubishi Corp will invest 2 trillion yen ($17.54 billion) by 2030 in alternative energies such as renewables and hydrogen to drive its decarbonisation efforts and cut emissions, it said on Monday. +VE
Toyota, unveiled plans on Monday to invest $3.4 billion in automotive batteries in the United States and build a factory there +VE
Sharp Corp is considering making inroads into the U.S. television market starting in the spring of 2022 with plans to use a factory of its Taiwan parent company Hon Hai Precision Industry Co, sources familiar with the matter said Monday. +VE

SOUTH KOREA
Expect markets to open slightly higher with focus on Apple supply  names after the product launch key will be if foreigners remain net buyers.
No data due
South Korea on Monday officially committed to reducing national carbon emissions by 40% of 2018 levels by 2030 ahead of the upcoming U.N. COP26 climate summit in Glasgow, a "very challenging target" compared to an initial 26.3% goal.
Australian coal seam gas producer Senex Energy Ltd said it had received a $605 million takeover proposal from POSCO International Corp and was opening up its books to the South Korean trader with the aim of gaining a sweeter offer. +VE
SK E&S Co., the natural gas provider under SK Group, said Monday it will invest some 500 billion won ($421 million) in its US affiliate, SK E&S Americas, to buy a stake in a US renewable energy firm. +VE
Smartphone makers and subscription service providers are expected to face increasing competition from Google, as the tech giant is set to introduce a subscription-based bundle that includes a phone and various Google services, to lock more users into its ecosystem. -VE
Gas prices in South Korea have continued to rise as oil prices hit a seven-year high amid the global economic recovery, data showed Monday.  The average gasoline price nationwide stood at 1,724.7 won ($1.45) per liter Monday, marking the highest since December 2014, according to the data compiled by the state-run Korea National Oil Corp. (KNOC). -VE

TAIWAN
Expect market to open flat following a mixed US market overnight.  TSMC saw heavy selling but could see a rebound today following the Apple product launch and ahead of tomorrows Export data.
No data due
Lite-On Technology Corp  yesterday said it expects revenue to grow at a quarterly pace of 10 percent this quarter, thanks to shipment delays of some automotive devices, computers and consumer electronics due to key component shortages.  The company’s revenue last quarter grew to NT$41.86 billion (US$1.49 billion) — its highest level in about seven quarters. “The fourth quarter is normally an off-season ... but the third quarter [revenue] was affected by component and material shortages. We believe it should be okay to [expect] 10 percent revenue growth in the fourth quarter,” Lite-On president Anson Chiu told investors in an online conference yesterday. +VE
Wistron Corp plans to invest NT$10 billion (US$356.95 million) in manufacturing facilities at Kaohsiung’s Cianjhen Technology Industrial Park, the Ministry of Economic Affairs (MOEA) said yesterday.  The investment would mainly go toward making automotive and related components, the ministry said in a statement.
It is expected to create 7,000 jobs and generate NT$50 billion in annual output value within five years, the ministry added. +VE
Tanvex BioPharma Inc, which focuses on supplying safe and affordable biosimilars, has obtained marketing approval in Canada for its TX01, a biosimilar of Neupogen (filgrastim), the company said yesterday.  Tanvex has signed contracts with Canada-based Mint Pharmaceuticals Inc authorizing the firm to sell TX01 in Canada, it said in a statement. It is not known when sales of the drug would begin, as discussions with importers are required first and the COVID-19 pandemic might disrupt distribution, Tanvex said.  +VE

CHINA
Expect market to open higher as Golden Dragon Index closed +1.4% (+150pts) but upside likely to be muted by concerns about the Property sector and energy as China braces for an early cold spell.  That could impact the wider changes that President Xi is wanting to make to the economy.
No data due
China's power shortages hit growth in the world's second biggest economy, 
threatening more pain for global supply chains, while Europe's gas squeeze looked set to continue as Russia's Gazprom showed no sign of hiking exports to the region in October.
Coal, oil and gas prices have all rocketed higher in recent weeks hammering utilities and consumers from Beijing to Brussels, raising inflationary pressures and putting at risk a global recovery from the COVID-19 pandemic. -VE
China-exposed luxury stocks including LVMH (LVMH.PA), Kering (PRTP.PA) and Hermes (HRMS.PA) fell between 1.4% and 2.4% in Europe,  hurt by Chinese President Xi Jinping's call for the expansion of a consumption tax. -VE
China's parliament will consider legislation to punish parents if their young children exhibit "very bad behaviour" or commit crimes.
In the draft of the family education promotion law, guardians will be reprimanded and ordered to go through family education guidance programmes if prosecutors find very bad or criminal behaviour in children under their care. -VE
Thailand will stop using the COVID-19 vaccine of China’s Sinovac when its current stock finishes, a senior official said on Monday, having used the shot extensively in combination with Western-developed vaccines.  Thailand used over 31.5 million Sinovac doses since February, starting with two doses to frontline workers, high-risk groups and residents of Phuket, a holiday island that reopened to tourists early in a pilot scheme.

HONG KONG 
ADR’s 4pts at 25,413 with Financials and Energy names mixed but support from Ecommerce names.
No data due but after market Monday
August 2021, the volume of Hong Kong's total exports of goods and imports of goods increased by 18.6% and 21% respectively over August 2020.

EARNINGS
COLI (688 HK) and China Tower (788 HK)

SHORT SELLING HSI Monday 20.9% vs 17.8% Friday
Top shorts 
Country Garden (2007) 57%, Ali Health (241) 38%, Hang Seng Bank (11) 37%, Sunny Optical (2382) 35%, Baba (9988) 32%, BoC (HK) 2388) 32%, China Life (2628) 31%, Sands China (1928) 31%, Shenzhou (2313) 31%, HSBC (5) 30%, BYD (1211) 30%, HK & China Gas (3) 30%, Sino BioPharm (1177) 29%, Hengan (1044) 28%, CK Asset (1113) 26%, Petrochina (857) 26%, HKEX (388) 25%, BoC (3988) 25%, Xinyi Solar (968) 25%, Haidilao (6862) 25%, Bud Apac (1876) 25%.

WATCH
Moody's downgraded R&F PROPERTIES (02777.HK)'s corporate family rating (CFR) from "B2" to "B3", with a negative outlook.  
The rating reflected R&F PROPERTIES' liquidity weakness and high refinancing risks due to sizable debt maturing in the coming 6-12 months, as well as weaker access to offshore funds amid tight financing conditions.

The Monetary Authority of Macao announced the list of the relevant Macau banks which have completed the declaration procedures for the "Cross-boundary Wealth Management Connect", remarking that said banks are allowed to officially initiate relevant business from tomorrow (19th). The participating banks of the scheme include Bank of China, Macau Branch; Bank of Communications, Macau Branch; China Construction Bank, Macau Branch; China Guangfa Bank, Macau Branch; CMB Wing Lung Bank, Macau Branch; Industrial and Commercial Bank of China (Macau); and Luso International Banking.

CCB (00939.HK) announced that on 25 June, the 2020 annual general meeting of the Bank considered and approved the resolution regarding the election of Leung Kam Chung, Antony as independent non-executive director of the Bank. The China Banking and Insurance Regulatory Commission has approved the appointment qualifications of Leung Kam Chung, Antony. Mr. Leung officially takes office as independent nonexecutive director of the Bank and member of each of the Strategy Development Committee, the Risk Management Committee and the Nomination and Remuneration Committee of the board of directors of the Bank.SMIC (00981.HK)(688981.SH) expressed on an interactive investor platform that the company is planning to expand the capacity of mature 12-inch wafer by 10,000 units and that of 8-inch wafer by 45,000 units this year, in order to meet the increasing demand from its customers.

Xiao Yaqing, Minister of Industry and Information Technology, met with a delegation led by Tom Linebarger, Chairman of the U.S.-China Business Council, virtually today (18th).  Xiao mentioned the codependency of both Chinese and American companies in the global industrial chain, adding Beijing welcomes U.S. firms to scale up investment in China for deeper and mutually-beneficial cooperation. He anticipated stronger partnership among U.S. firms and the Chinese sectors in NEV, biomedicine as well as next-generation information and communications. Both sides could achieve win-win development if they jointly push for green and low-carbon industrial transformation.

CK ASSET (01113.HK) announced that Li Ka Shing Foundation Limited acquired a total of 527,500 shares 
in CK Asset at the average price of HK$45.1424 and HK$46.2851 per share on 11 October and 15 October 2021 respectively. As a result, the deemed interests of Li Ka-shing, Victor T K Li and Li Ka Shing Foundation Limited in CK Asset increased from 46.23% to 46.24%; increased from 46.3% to 46.31%; and increased from 11.51% to 11.53%.

ANTA SPORTS-200 (02020.HK) announced that retail sales (in terms of retail value) of ANTA branded products for the third quarter of 2021 recorded low-teens positive growth as compared to the same period of 2020 and mid-teens positive growth as compared to the same period of 2019.

CLP HOLDINGS (00002.HK) announced that electricity sales in Hong Kong increased to 27,506GWh in the first nine months of 2021, 4.1% higher than the same period a year ago. 
The Board of Directors of the Company declared today (18th) the third interim dividend for 2021 of HK$0.63 per share, flattish YoY.

Chinese authorities are considering asking TENCENT (00700.HK), ByteDance, etc. to let competitors access and display their content in search results, Bloomberg reported.  
China's Ministry of Industry and Information Technology is discussing rules to make articles on Tencent's WeChat app available via Baidu and other search engines, according to sources. The MIIT is also weighing up making short videos from ByteDance's Douyin appear in search results.
The Hong Kong Monetary Authority (HKMA) announced today (18 October) 19 eligible banks in Hong Kong which can launch Cross-boundary Wealth Management Connect (WMC) services. These banks, together with their respective Mainland partner banks whose eligibility for providing pilot Cross-boundary WMC services have been confirmed by the relevant Mainland regulatory authorities (to be announced separately by the Mainland authorities today), can start providing Cross-boundary WMC services together tomorrow (19 October) the earliest.Eligible Mainland banks include (in Alphabetical order):
Agricultural Bank of China Limited,
Bank of China (Hong Kong) Limited,
Bank of Communications (Hong Kong) Limited,
Bank of East Asia (The), Limited,
China CITIC Bank International Limited,
China Construction Bank (Asia) Corporation Limited,
China Minsheng Banking Corp., Ltd.,
Citibank (Hong Kong) Limited,
CMB Wing Lung Bank Limited,
Dah Sing Bank, Limited,
DBS Bank (Hong Kong) Limited,
Hang Seng Bank, Limited,
Hongkong and Shanghai Banking Corporation Limited (The),
Industrial and Commercial Bank of China (Asia) Limited,
Industrial Bank Co., Ltd.,
Nanyang Commercial Bank, Limited,
OCBC Wing Hang Bank Limited,
Shanghai Pudong Development Bank Co., Ltd.,
Standard Chartered Bank (Hong Kong) Limited.

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