Oct 22 Asian Macro Initial Thoughts Muted trading into the weekend.

22 Oct

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


Australia Market tested lower in early trades but working better after good PMI data.
Weakness in BHP & Rio Tinto as Iron Ore prices continue to fall. Energy names weak and Gold flat. Expect interest in the re-opening names as lockdown restrictions are eased
Data out
Flash PMI data
Manufacturing Oct 57.3 vs 56.8 Sept (F/cast was 56)
Services Oct 52 vs 45.5 Sept (F/cast was 48)
Composite Oct 52.2 vs 46 Sept (F/cast was 48.5)
Japan Nikkei Chicargo futures opened -100pts but falling Inflation data and PMI data to set the tone.  Re-opening names in focus as Toky o rolls back restrictions.
S Korea Expect markets to open slightly lower futures -0.6pt little to drive the market higher; Intel weak a slight -VE for Tech and expect EV battery plays to remain weak.  Games/Ent to continue to see interest and pricing of the Kakao Pay IPO pricing will be watched along with Earnings.
Taiwan Expect market to open flat and trade in a tight range Intel’s weakness a slight +VE for TSMC.
China Expect market to open lower with continued concerns over potential  property defaults.  Key will be  whether ‘Team China’ active to support the market ahead of the weekend.
HK ADR’s +13pts at  26,030  with Energy weak and Financials and ECommerce mixed.
US Futures 
Opened Dow -26 points. S&P 500 futures -0.3% and Nasdaq 100 futures - 0.5%.
Earnings: Honeywell, American Express, Schlumberger, Regions Financial, Roper, VF Corp, HCA Holdings, Seagate Technology

DOW -0.02%, NDX +0.6%, S&P +0.3%, Russel 2K +0.3%
Dow traded sideways in the red, S&P and NDX worked better; with Tesla +3.2% on strong earnings but IBM -9.5% after it reported a revenue miss late Wednesday.
WeWork +13.4% in their trading debut on Thursday +VE for Softbank.
HP Inc. +6.9% on strong earnings and raised guidance for 2022.
Nvidia +2.6%, and Netflix +4.4%.
Outside of tech, American Airlines added 1.9% after it posted a profit due to federal aid for the third quarter.
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
Banks JPMorgan Chase -0.8%, Citigroup -2.1% Wells Fargo +0.3%, Amex -1.2%
Work from home names: Facebook +0.3%, Apple +0.2%, Amazon +0.6%, Netflix 4.5%,  Disney +0.5%, Zoom Video -0.3%, Alphabet +0.1% and Microsoft +1.1%,
Tech NXP Semi +1.9%, Nvidia +2.7%, Micron +0.5%, AMD +2.5%, Skyworks +0.8%
Re-opening stocks Boeing -0.9%, Caterpillar -1%, Simon Property -0.7%, Kohl’s +0.6%, Nordstrom +1.8%, Gap -0.4%, United Airlines +1.7%, Carnival -0.5%, Wynn Resorts +0.2%, Chevron -1.3%, Exxon Mobil -1.8%,  
Lock down names Campbell Soup -1.6% General Mills -0.4%, JM Smucker +0.03%
Philadelphia Fed Manufacturing Index  Oct 23.8 vs 30.7Sept (F/cast was 25)
Business Conditions Oct 24.2 vs 20 Sept
Capex Index Oct 32.4 vs 23.6 Sept
Employment Oct 30.7 vs 26 Sept
New Orders Oct 30.8 vs 15.9 Sept
Prices Paid Oct 70.3 vs 67.3 Sept
Initial Claims 290k vs 296k prior revised (F/cast was 295k)
4 week Average Claims 319.75k vs 335k prior revised (F/cast was 320.25k
Continuing Claims 2.481m vs 2.603m prior revised (F/cast was 2.475m)
Existing Home Sales Sept +7% MoM vs -2% Oct (F/cast was +1.2%)
EIA Gas Stocks Change 92 Bcf vs 81 Bcf prior (Consensus was 90Bcf)
CD Leading Index Sept +0.2% vs +0.8% Aug revised (F/cast was +0.5%)
5yr TIPS Auction -1.685% vs -1.416% prior
USD was firm. Bitcoin -5.6% @ 62,734.39, VIX -3.1% @ 15.01, US T10 @ 1.696% after lower initial claims.
OIL Brent -1.2%, WTI -1% having hit $86 it pulled back
Gold -0.1%, Silver -0.9%, Copper -3.7% Platinum +0.1%, Palladium -3.2%.
AHEAD Flash PMI, Baker Hughes Oil Rig Count

DAX -0.32%, CAC -0.29%, FTSE -0.45%
Market opened lower and traded sideways just below flat with a focus on earnings but with the overhang of worry about the Chinese Property market
Earnings in focus with Hermes, L’Oreal and Pernod-Ricard reporting their latest sales numbers, and earnings also coming Vivendi, Eurotunnel, Daimler, SAP, Randstad, ABB, Barclays, Unilever and Rentokil reported.
Barclays -0.6% despite good Q3 profits; seeing a significant boost from its investment banking division.
Soitec +8% after raising its full-year outlook on the back of increased activity levels and a robust operating performance.
Rexel -9% after missing third-quarter sales expectations.
Consumer Confidence Oct -4.8 vs -4 Sept (F/cast was -6)
Business Confidence Oct 107 vs 107 Sept revised (F/cast was 105)
Business Climate Indicator Oct 113 vs 111 Sept revised (F/cast was 111)
Public Sector Net Borrowing Sept £-21.8B vs £-16.8B Aug (F/cast was £-24.4B)
CBI Industrial Trends Oct 9 vs 22 Sept (F/cast was 19)
Business Optimism Index Oct 2 vs 27 Sept (F/cast was 15)
UK  Retail Sales data, Flash PMI  
Already released UK Gfk Consumer Confidence Oct -17 vs -13 Sept (F/cast was -14)

JAPAN Nikkei Chicargo futures opened -100pts but falling Inflation data and PMI data to set the tone.  Re-opening names in focus as Toky o rolls back restrictions.
Yen currently 113.99
Data out
Inflation Rate Sept +0.2% YoY vs -0.4% Aug (F/cast was -0.3%)
Inflation Rate Sept +0.4% MoM vs -0.2% Aug (F/cast was -0.1%)
Inflation Rate Ex Food & Energy Sept -0.5% YoY vs -0.5% Aug (F/cast was -0.4%)
Core Inflation Rate Sept YoY vs 0% Aug (F/cast was +0.1%)
Later Flash PMI data
B-R31 Ice Cream Co. (2268 JP)
Chugai Pharmaceutical Co. (4519 JP)
IwaiCosmo Holdings Inc. (8707 JP)
Jafco Group Co. (8595 JP)
Keihanshin Building Co. (8818 JP)
Nafco Co. (2790 JP)
Okinawa Cellular Telephone Co. (9436 JP)
Tokyo Steel Manufacturing Co. L (5423 JP)
The Liberal Democratic Party will be forced to fight hard in the upcoming House of Representatives election, mainly in 213 constituencies where the party has to confront candidates jointly fielded by a coalition of five opposition parties, according to a Yomiuri Shimbun survey on the early stage of the campaign. Slight -VE
The Bank of Japan is discussing phasing out a COVID-19 loan programme if infections in the country continue to dwindle, sources told Reuters, potentially setting the bank up to exit a key crisis-mode policy sooner than investors expect.
Shinsei Bank Ltd said on Thursday it opposed SBI Holdings' $1.1 billion tender offer bid, but could support it if SBI removes the upper limit of its planned share purchases and increases its offer price.
Japan's banking system remains broadly stable but financial institutions could face risks including from a possible increase in credit costs caused by a delay in the economic recovery, the Bank of Japan (BOJ) said in a report on Thursday.
Tokyo will lift curbs on bar and restaurant opening hours as virus cases in the Japanese capital hit their lowest level this year, officials said Thursday. It is the latest softening of virus restrictions in Japan, where cases have been in freefall for weeks, which experts ascribe to a rapid increase in the vaccination rate. +VE
A weak yen typically serves as a boon to the export-driven Japanese economy. But when combined with surging crude oil and raw material prices, it leaves the economy facing a double-whammy that is set to crimp the economic recovery from the pandemic.  The yen's recent slip to a nearly four-year low against the U.S. dollar coupled with a surge in U.S. oil prices to a seven-year high threatens to cut into household spending even as it still feels the impact of COVID-19. -VE

Expect markets to open slightly lower futures -0.6pt little to drive the market higher; Intel weak a slight -VE for Tech and expect EV battery plays to remain weak.  Games/Ent to continue to see interest and pricing of the Kakao Pay IPO pricing will be watched along with Earnings.
No data due
Earnings: Hana Financial, Posco International, Hyundai Engineering & Construction
South Korea's first domestically built space rocket blasted off on Thursday, but failed to fully place a dummy satellite into orbit, delivering mixed results for a test launch that represents a major leap for the country's ambitious space plans. Slight +VE
Hyundai Construction Equipment Co. said Thursday it has signed a deal with its holding company Hyundai Genuine Co. to sell its industrial vehicle division for 136 billion won ($115.8 million).  +VE
LG CNS said Thursday the company has completed the transformation of Korean Air’s corporate information technology system into a public cloud service. The LG affiliate embarked on the project three years ago in partnership with Amazon Web Service. +VE
Samsung Electronics Co., the world’s leading maker of smartphones and memory chips, was ranked fifth among the world’s top 100 corporate brands for the second year in a row, according to a consulting firm Thursday. +VE
Samsung SDI Co. said Thursday it has began its test run of a cathode-producing factory, jointly set up with a local cathode manufacturer+VE
KB Financial Group said Thursday its net profit in the January-September period came to 3.7 trillion won ($3.14 billion), eclipsing last year’s annual net profit.  KB’s net profit in the first nine months of the year jumped 31.1 percent on-year and surpassed last year’s annual net profit of 3.4 trillion won, hitting a record high for the cited period. Onlookers said that the banking group is likely to see a record high for fiscal 2021 as well, likely surpassing 4 trillion won. +VE

Expect market to open flat and trade in a tight range Intel’s weakness a slight +VE for TSMC.  
Data due After Market Unemployment
Production at TSMC’s fabs was not affected by a fire at a construction site for a water recycling facility in the Southern Taiwan Science Park in Tainan.  The world’s biggest contract chipmaker said that the construction site is not adjacent to its fabs, which were unaffected. +VE
AU Optronics Corp (AUO) is planning to invest NT$91.08 billion (US$3.26 million) over the next few years to expand its capacity to domestically produce panels used in premium notebook computers, the Hsinchu-based company said on Tuesday.   The investment would be part of the company’s efforts to boost production resilience and safeguard market share, AUO said in a statement. +VE
Tatung Co is planning to enter the electric vehicle (EV) software and hardware design business, Tatung president Chaney Ho said at an electro mobility trade show in Taipei yesterday.  The company has long been a maker of EV components, especially motors, and is planning to expand the branch and offer powertrain solutions, especially for buses, Ho said.
Nearly 40 percent of Taiwanese expect housing prices to pick up this quarter and 10 percent predict a decline, while many expressed concern over inflation, Chinatrust Real Estate Co said in a survey released yesterday. Thirty-nine percent of respondents said that housing prices would rise in the next few months, Chinatrust Real Estate said, citing internal data. Slight -VE

Expect market to open lower with continued concerns over potential  property defaults.  Key will be  whether ‘Team China’ active to support the market ahead of the weekend.
No data due
China's thermal coal futures fell by their trading limit for the third evening session in a row on Thursday, extending losses triggered by signs Beijing may intervene to cool surging prices and ease a widespread power crunch.
Suppliers to Chinese telecoms giant Huawei and China's top chipmaker SMIC got billions of dollars worth of licenses from November through April to sell them goods and technology despite their being on a U.S. trade blacklist, documents seen by Reuters showed on Thursday.  According to the documents, 113 export licenses worth $61 billion were approved for suppliers to ship products to Huawei (HWT.UL) while another 188 licenses valued at nearly $42 billion were greenlighted for Semiconductor Manufacturing International Corp (SMIC) (0981.HK).  +VE
Dozens of countries kept up pressure on China at the United Nations on Thursday over accusations of rights abuses against Uyghur Muslims and other minorities in the country's Xinjiang region, sparking an angry response from China's U.N. envoy.
Boston Celtics highlights were absent from China's Tencent Holdings Ltd sports platform after their backup center Enes Kanter criticized Chinese President Xi Jinping and China's treatment of Tibet.
Britain's defence minister called on China on Thursday to find a peaceful way to settle its dispute with Taiwan, warning that Chinese incursions into the Taiwanese air defence zone were dangerous and could spark conflict.

ADR’s +13pts at 26,030 with Energy weak and Financials and ECommerce mixed.
Data due After Market Business Confidence & Inflation Rate
After Market Thursday

SHORT SELLING HSI Thursday 20.7% vs 21.2% Wednesday
Top shorts 
Country Garden (2007) 44%, Baba (9988) 36%, CM Bank (3968) 35%, Petrochina (857) 31%, BoC HK (2388) 30%, Hang Seng Bank (11) 30%, Xiaomi (1810) 29%, Ali Health (241) 29%, Bank of China (3988) 29%, Hengan (1044) 28%, Sunny Optical (2382) 28%, Techtronic (669) 27%, Sands China (1928) 26%.

As a result of the slightly relaxed quarantine measures in Macau for most of September, the number of inbound visitor arrivals over the month amounted to 629,000, up 53.7% MoM and 40.1% YoY, 
according to data from Macau's Statistics and Census Service.
The same-day visitor arrivals and overnight visitor arrivals recorded a YoY increase of 20.2% and 76.1% respectively.

SINO BIOPHARM (01177.HK) announced that the Company repurchased 1.7 million shares at around $10.1 million today (21st), reflecting the group's confidence in its development prospects.CHINA UNICOM (00762.HK) announced that, in the first three quarters of 2021, the profit attributable to the equity shareholders of the company amounted to RMB12.923 billion, up by 19.4% year-on-year. The revenue likewise grew 8.5% year-on-year to RMB244.489 billion. Also that for September 2021 the aggregate number of mobile billing subscribers amounted to 316 million, representing a MoM net increase of 2.6 million units, which was significantly greater than the net increase of 1.342 million units in August. The aggregate number of 5G package subscribers, on the other hand, amounted to 137 million, representing a MoM net increase of 7.884 million units, which was slower than the net increase of 7.989 million units recorded in August.

YANZHOU COAL (01171.HK) announced that, for 3Q21, the production volume of saleable coal amounted to 26.8 million tons, 
down 15.3% YoY. The sales volume of saleable coal, likewise plunged 33.15% to 26.56 million tons.CN LOGISTICS (02130.HK)   announced that the Group recorded revenue of approximately HK$1.727 billion for 9M2021, representing an increase of approximately 26.6% as compared to 9M2020. Gross profit amounted to approximately HK$347 million for 9M2021, representing an increase of 25% as compared to 9M2020.

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