Oct 21 Asian Macro Initial Thoughts Expect mixed, cautious trading


21 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 higher Futures had indicated +12pts helped by rising oil prices +VE Energy names and Gold moving higher too.
In focus today Wesfarmers Ltd (ASX: WES) is holding its annual general meeting later today and is likely to provide a trading update at the event. Also scheduled to hold annual general meetings are casino and resorts operator Crown Resorts Ltd (ASX: CWN) and energy company APA Group (ASX: APA).
Japan Nikkei Chicago futures opened -25pts and expect cautious trading ahead of the elections and earnings kicking off next week
S Korea Expect markets to open flat but watch for the Export data to give the market direction.  EV/Batttery names rallied Wednesday but may see a pull back after Tesla’s revenue missed; it said its shifting to lithium iron-phosphate batteries globally, which may signal the severity of the pricing/shortage situation. .
Taiwan Expect market to open higher after strong exports orders and no new covid cases Wednesday.
China Expect market to open lower following the US with concerns over Evergrande continuing.
HK ADR’s +16pts at 26,152 with weakness in Chinese Financials and Ecommerce names.  Chinese Developers likely to see weakenss as Evergrande and Hopson resume trading after announcing their proposed deal was off.    
US Futures 
Opened lower Dow -35pts S&P and NDX -0.1%

DOW +0.43%, NDX -0.05%, S&P +0.37%, Russel 2K +0.61%
Markets opened slightly higher and saw cautious trading but the DOW closed at a new high helped by good earnings and the S&P close to a new high.
Verizon +2.4% after earnings topped estimates for the third quarter. and it raised its forecast because of growing 5G adoption. Biogen shares edged lower even after it beat estimates on earnings and revenue and raised its full-year guidance.
United Airlines -0.5% also posted quarterly results after the bell on Tuesday, with the company beating analysts’ expectations on the top and bottom line amid an ongoing rebound in travel demand.
PayPal -4.9% on a report that it could buy the social media company Pinterest +12.7%.
After market 
Tesla -0.7% after hours even after the electric-car maker posted record earnings and revenue in the third quarter that beat expectations.
IBM -5% reported a revenue miss.
CSX +3% in extended trading following a stronger-than-expected earnings report.
Banks JPMorgan Chase +1.35%, Citigroup +2.36% Wells Fargo -0.36%, Amex +1.29%
Work from home names: Facebook +0.23%, Apple +0.34%, Amazon -0.84%, Netflix -2.2%,  Disney -0.37%, Zoom Video -0.25%, Alphabet -1% and Microsoft -0.27%,
Tech NXP Semi +0.29%, Nvidia -0.84%, Micron +1.04%, AMD +0.05%, Skyworks +0.54%
Re-opening stocks  Boeing +0.1%, Caterpillar +1.52%, Simon Property +1.48%, Kohl’s -0.25%, Nordstrom +0.56%, Gap -0.17%, United Airlines -0.58%, Carnival +0.45%, Wynn Resorts -0.74%, Chevron +1.31%, Exxon Mobil +0.55%,  
Lock down names Campbell Soup +1.13% General Mills +1.65%, JM Smucker +0.68%
DATA
Beige book
MBA Mortgage Applications -6.3% vs +0.2% prior and 30 yr rate 3.23% vs 3.18% prior
EIA Gasoline stocks change -5.368m vs -1.958m prior (Consensus -1.267m)
EIA Crude oil stocks change -0.431m vs 6.088m prior (Consensus was 1.857m)
USD trended lower. Bitcoin +2.9% @ 65,796.17 a new high as the ETF gains more traction; although its an expensive way to get exposure. VIX -1.3% @ 15.49, US T10 @1.66% the highest since Mid May.
OIL Brent +0.94%, WTI +1.55% as US stockpiles drop
Gold +0.69%, Silver +2.02%, Copper +0.62% Platinum +0.58%, Palladium -1.6%.
AHEAD Philadelphia Fed Manufacturing Index, Initial Claims, 4 week average and continuing claims, Existing Home Sales, EIA Gas Stocks report, CD Leading Index, 5yr TIPS Auction.
Earnings: AT&T, Intel, Blackstone, Union Pacific, Chipotle Mexican Grill, Snap, Whirlpool, Celanese, Southwest Airlines, AutoNation, American Airlines, KeyCorp, Crocs, Marsh and McLennan, Ally Financial, Freeport-McMoRan, Nucor, Quest Diagnostics, Mattel, Genuine Parts, Alaska Air, Tractor Supply

DAX +0.05%, CAC +0.54%, FTSE +0.08%
Markets opened slightly lower and traded around flat for most of the day with just the CAC rallying into the close. UK inflation surprisingly eased but it is still above the 2% BoE target.
F&B names moved higher but Travel and Leisure dropped. Earnings in focus.
Husqvarna +8% after beating Q3 profit expectations.
Nestle +2.6% after raising its FY growth outlook following strong Q3 sales growth.
But Tui fell more than 6%.
DATA
Current Account Aug €17.6B vs €30.2B Jul (F/cast was €25.1B)
Core Inflation Sept 1.9% vs 1.6% Aug (F/cast was 1.9%)
Inflation Sept 3.4% YoY vs +3% Aug (F/cast was +3.4%)
Inflation  Sept 0.5% MoM vs +0.4% Aug (F/cast was +0.5%)
Germany
PPI Sept +2.3% MoM vs +1.5% Aug (F/cast was +0.8%)
PPI Sept +14.2% YoY vs +12% Aug (F/cast was +12.5%)
UK
Inflation Rate Sept +3.1% YoY vs +3.2% Aug (F/cast was +3.2%)
Inflation Rate Sept +0.3% MoM vs +0.7% Aug (F/cast was +0.4%)
Core Inflation Sept +2.9% YoY vs +3.1% Aug (F/cast was +2.9%)
Core Inflation Sept +0.4% MoM vs +0.7% Aug (F/cast was +0.3%)
PPI Core Output Sept +5.9% YoY vs +5.4% Aug revised (F/cast was +5.7%)
PPI Core Output Sept +0.5% MoM vs +0.9% Aug revised (F/cast was +0.4%)
PPI Input Sept 11.4% YoY vs 11.2% Aug revised (consensus +11.6%)
PPI Input Sept +0.4% MoM vs +0.5% Aug revised (consensus was 1%)
PPI Output Sept +6.7% YoY vs +6% Aug revised (F/cast was +6.7%)
PPI Output Sept +0.5% MoM vs +0.7% Aug (F/cast was +0.5%)
Retail Price Index Sept +4.9% YoY vs +4.8% Aug (F/cast was +4.9% )
Retail Price Index Sept +0.4% MoM vs +0.6% Aug (F/cast was +0.4%)
AHEAD
EUROZONE Consumer Confidence
GERMANY No data due
FRANCE Business Confidence & Climate Indicator
UK  Public Sector Borrowing, CBI Industrial Trends & Business Optimism Index

JAPAN Nikkei Chicago futures opened -25pts and expect cautious trading ahead of the elections and earnings kicking off next week
Yen currently 114.33
Data due
2pm: Sept. Supermarket Sales YoY, prior -0.1%
3pm: Sept. Machine Tool Orders YoY, prior 71.9%
Earnings
Disco Corp. (6146 JP) 4 p.m.
Koa Corp. (6999 JP)
Nagase Brothers Inc. (9733 JP) 3 p.m
With earnings kicking off in earnest next week many comapnies are in a news black out and so the headlines remain light.
Nikkei poll shows ruling LDP and coalition partner Komeito are within reach of a majority in the general election, though race is tight with LDP in dead heat with rivals in ~40% of single seat districts. 20% were undecided. Kyodo news also reports LDP on track to keep majority, though it remains uncertain if they can hold onto the 276 seats they had
Nippon Paint  announced a $1.3 bil acquisition of a French decorative paint maker, Cromology. Nippon Paint has over $2 bil in cash on their balance  sheet and will use cash and bank loans to finance the deal. The price is about 2x sales and the deal is expected to be accretive +VE.
WeWork’s revised listing Gives SoftBank a Chance to Recoup Its $17Bn investment +VE
FamilyMart to Open Stores at Japan Post’s Offices: +VE

SOUTH KOREA Expect markets to open flat but watch for the Export data to give the market direction.  EV/Batttery names rallied Wednesday but may see a pull back after Tesla’s revenue missed; it said its shifting to lithium iron-phosphate batteries globally, which may signal the severity of the pricing/shortage situation. .
Data out
PPI Sept +0.2% MoM vs +0.5% Aug revised (F/cast was +0.7%)
PPI Sept +7.5% YoY vs +7.4% Aug revised (F/cast was 7.8%)
Later we get the Korea Customs Service releases Oct. 1-20 trade data at 9am local time; exports gained 63.5% YoY in the first 10 days of Oct.
Earnings: KBFG, Posco Chemical, Hansae, Hyundai Doosan Infracore
Naver’s were in-line
On Wednesday, KDCA reported 1,571 new cases, raising the total caseload to 346,088.
Fitch Ratings said Wednesday that it would maintain South Korea’s stable credit rating and keep its economic growth projection positive, citing the country’s economic resilience. +VE
Samsung Electronics on Wednesday unveiled the Bespoke edition of its Galaxy Z Flip3, offering as many as 49 new color choices for the clamshell-type foldable smartphone.  It presented the new edition on its YouTube channel at 11 p.m. at an event called Galaxy Unpacked, Part 2.   But the stock may see weakness after the  launch of Googles latest smartphone with a  number of unique features and a lower pricing point. Slight -VE
In an industry first, SK Hynix has developed the fourth generation of high bandwidth memory, or HBM3, the company said Wednesday.
HBM is a high value DRAM product with fastened data processing, which combines multiple DRAM chips vertically. +VE
Edison Motors, a little-known electric bus manufacturer, seems likely to emerge as the preferred bidder for SsangYong Motor, South Korea’s longest-running car brand, which has experienced debt troubles in recent years.  The Seoul Bankruptcy Court said a consortium led by Edison Motors is the only remaining bidder, effectively making it the preferred buyer.

TAIWAN Expect market to open higher after strong exports orders and no new covid cases Wednesday.
No data due but after market Wednesday
Export Orders Sept YoY vs 17.6% Aug (F/cast was 17.5%) a new record The growth last month was led by information communications technology (ICT) products, which soared 40.1 percent year-on-year and 39.1 percent month-on-month, the ministry data showed.
Last year’s iPhone 12 was delayed from the usual September release amid the COVID-19 pandemic. While the ministry did not name Apple Inc’s iPhone 13 by name, Department of Statistics Director Huang Yu-ling said that the “delayed release of last year’s model of a popular international handset” compared with this year accounted for the unusually large year-on-year growth.
Demand for laptops and display cards remains strong, the ministry said. +VE for Tech and could push TSMC above $600.
The Chung-Hua Institution for Economic Research (CIER) yesterday raised its forecast for Taiwan’s GDP growth for this year from 5.16 percent to 5.84 percent on stronger exports, and urged policymakers to heed inflationary pressures spurred by a global economic recovery and loose monetary policies.  +VE
Fubon Financial and Cathay Financial are among four lenders planning to bid for Citigroup’s consumer-banking assets in Taiwan as the U.S. bank divests units across five markets in the region, people familiar with the matter say. Bids for Citi’s retail assets in Taiwan, Indonesia, the Philippines and Thailand are due Friday
Acer Inc yesterday said that its “Made in India” strategy is starting to bear fruit, adding that 100,000 desktop computers are expected to be assembled in India next year, while laptop assembly capability would be “introduced as the need arises.”  The Indian government has demanded that at least half of computers purchased as a part of government projects need to be made in India.  By having its own local production capacity, Acer secured “an advantage over half the government tenders,” the company said. +VE

CHINA
Expect market to open lower following the US with concerns over Evergrande continuing.
No data due but after market Wednesday
FDI (YTD) Sept +19.6% YoY vs 22.3% Aug
EARNINGS:
Apeloa Pharmaceutical Co. (000739 CH)
China United Network Communica (600050 CH)
Maxscend Microelectronics Co. L (300782 CH)
Ningbo Tuopu Group Co. (601689 CH)
Shandong Sinocera Functional M (300285 CH)
Shede Spirits Co. (600702 CH)
Shenzhen Kangtai Biological Pr (300601 CH)
Peng Huagang, Secretary General of the State-owned Assets Supervision and Administration Commission (SASAC), expressed that the commission will endeavor to implement the relevant requirements outlined in the previously released opinions on propelling the optimization of state-owned economic layout and structural adjustment, while guiding SOEs to carry out reformation works with a market-driven principle.  China will likewise actively push for the professionalization and consolidations for sectors such as rare-earths and logistics, with the aim to forge world-class corporates with global competitiveness through optimized resources allocation, Peng added.
President Joe Biden's nominee to be U.S. ambassador to China, Nicholas Burns, took a tough line on dealings with China at his Senate confirmation hearing on Wednesday, saying "genocide in Xinjiang," abuses in Tibet, and bullying of Taiwan must stop.
Burns, calling China the United States' "most dangerous competitor", said Beijing is "blasting past" its pledge to maintain only a minimum nuclear deterrent, and added that Washington should work with allies in Europe and elsewhere to build economic leverage.
Headlines
PBOC’S Yi: China’s Money Supply In Line w/GDP Growth: Sec. Time
China Is Pouring Everything Into Race for Global AI Supremacy

HONG KONG 
ADR’s +16pts at 26,152 with weakness in Chinese Financials and Ecommerce names. Chinese Developers likely to see weakenss as Evergrande and Hopson resume trading after announcing their proposed deal was off.
Data due after market Unemployment
EARNINGS:
China Unicom Hong Kong Ltd. (762 HK)

SHORT SELLING HSI Wednesday 21.2% vs 19.1% Tuesday
Top shorts 
Henderson Land (12) 58%, CM Bank (3968) 41%, Sunny Optical (2382) 37%, Country Garden (2007) 36%, Hengan (1044) 34%, China Life (2628) 34%, Mengniu Dairy (2319) 34%, Baba (9988) 32%, ICBC (1398) 31%, Shenzhou (2313) 28%, Xinyi Solar (968) 28%, Bud Apac (1876) 28%, Petrochina (857) 27%, Wharf REIC (1997) 27%, CK Asset (1113) 26%, AIA (1299) 26%, PingAn (2318) 25%, Bank of China (3988) 25%.

WATCH
Hopson Dev (754 HK): Evergrande Terminates Deal With Hopson Over Unit Stake Sale

Fosun Int’l (656 HK): Club Med 3Q Sales Jump 120%, Boosting Owner Fosun Tourism
China Mobile’s Profit Rises in Latest Quarter on Steady 5G Gains, 9M Net Income 87.2B Yuan Vs. 81.6B Yuan YoYThe Hong Kong Monetary Authority (HKMA) announced the composite interest rate at the end of September 2021. The composite interest rate, which is a measure of the average cost of funds of banks, remained unchanged at 0.19 per cent at the end of September 2021 as the weighted funding cost for deposits was steady during the month.

Replying media inquiries, Huawei said the rumor about the company forming JV with Volkswagen Group for the project to develop autonomous driving technology was untrue.




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