Oct 28 Asian Macro Initial Thoughts; earnings in focus and volumes to remain light.


28 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 focus will be on earnings with large numbers of companies reporting around the region. BoJ and ECB rate decisions but no change expected.
Volumes likely to remain subdued. Overnight Treasury yields moved back raising concerns about the recovery.
President Biden told Southeast Asian nations on Wednesday the United States would stand with them in defending freedom of the seas and democracy and called China's actions towards Taiwan "coercive" and a threat to peace and stability.

Australia 
Market opened lower with weakness in Energy names but Gold slightly higher. ANZ reported bumper numbers but outlook less clear, Fortecue due to release a Q1 update.
Data due Export & Import Prices
Japan
Nikkei futures opened +40pts  Earnings in focus today with a large number due including Sony, Keyence, Advantest and Takeda; and analysts changes in reaction to yesterday’. BoJ no change expected.  Topix rebalance on close
Retail data a slight +VE
S Korea 
Expect markets to open lower following the US but earnings remains in focus with Samsung in focus today with numbers due pre open.
Taiwan 
Expect market to open flat following the US markets but local results +VE so limited downside.
China 
Expect market to open lower with continued caution over the impact of the energy crunch and concerns over the property sector. Covid cases also a worry.
HK 
ADR’s -159pts at 25,469 broad weakness, expect some more initial downside due to some margin call selling. Another day of earning likely to keep investors sidelined and T/O light although Futures Expiry today will add some volume.
US Futures 
Opened slightly higher Dow +50pts, S&P and NDX +0.1%

DOW -0.74%, NDX flat, S&P -0.51%, Russel 2K -1.9%
Markets opened higher; DOW dipped and drifted lower. S&P traded sideways around flat but sold off into the close. NDX worked better for most of the day but sold down into the close.  Good earnings from Mircosoft and Alphabet but VISA’s outlook was viewed as conservative.  GM beat but Boeing’s loss was bigger than forecast. Robinhood -10% as it missed.  Twitter -11% post earnings.  Texas -5% missed, Enphase Energy +24.6% after reporting record revenue in the face of supply chain headwinds.  Coca-Cola +1.9% beat with +VE outlook.
Banks JPMorgan Chase -2.1%, Citigroup -4.4% Wells Fargo -1.2%, Amex -1.6%
Work from home names: Facebook -1.1%, Apple -0.3%, Amazon +0.5%, Netflix -0.8%,  Disney -1.5%, Zoom Video -2.1%, Alphabet +5% and Microsoft +4.2%,
Tech NXP Semi -1.9%, Nvidia -1.1%, Micron -1%, AMD -0.5%, Skyworks +1%
Re-opening stocks  Boeing -1.5%, Caterpillar -1.8%, Simon Property -1.7%, Kohl’s -2.1%, Nordstrom -0.9%, Gap -4.2%, United Airlines -2.1%, Carnival -0.8%, Wynn Resorts -0.4%, Chevron -1.8%, Exxon Mobil -2.6%,  
Lock down names Campbell Soup -2.1% General Mills -1.3%, JM Smucker -1.4%
DATA
MBA Mortgage Applications +0.3% vs -6.3% prior
MBA 30 yrs Mortgage rate 3.3% vs 3.23% prior
MBA Purchase Index 275.6 vs 266.2 prior
MBA Mortgage Refinance Index 2763.8 vs2807.9 prior
MBA Mortgage Market Index 645.1 vs 643 prior
Durable Goods Orders Sept -0.4% vs +1.3% Aug revised (F/cast was -0.8%)
Durable Goods Orders ExTrans Sept +0.4% vs +0.3% Aug revised (F/cast was +0.3%)
Durable Goods Orders ExDefence Sept +0.4% vs +0.3% Aug revised (F/cast was +0.3%)
Goods Trade Balance Adv Sept $-96.25b vs -88.16b Aug (F/cast was -87b)
Non Defence Goods Orders ExAir Sept +0.8% vs +0.5% Aug revised (Consensus +0.5%)
Wholesale Inventories Adv Sept +1.1% MoM vs +1.2% Aug (F/cast was +0.5%)
Retail Inventories Adv Sept +0.6% MoM vs +0.6% Aug
EIA Crude stock Change 4.267m vs -0.431m prior (Consensus 1.914)
EIA Gasoline stock Change -1.994m vs -5.368m prior (Consensus -1.862
USD index fell. Bitcoin -5.4% @ 58,755.93, VIX +6.3% @ 17, US T10 @ 1.55% falling below 1.6%
OIL Brent -2.5%, WTI -2.35%
Gold +0.1%, Silver flat, Copper -0.8% Platinum -0.2%, Palladium +0.1%.
AHEAD GDP Growth Rate, Initial, Average and Continuing Claims, Core PCE and PCE Prices, Pending Home Sales, EIA Natural Gas Report, Kansas Fed Manufacturing Index.
Earnings: Apple, Amazon, Caterpillar, Comcast, Merck, Northrop Grumman, Altria, Intercontinental Exchange, Sirius XM, Yum Brands, American Tower, Gilead Sciences, Starbucks, Molson Coors, T. Rowe Price, Airbus, Anheuser-Busch InBev, Sanofi, STMicroelectronics, Volkswagen, Royal Dutch Shell, Stanley Black & Decker, AllianceBernstein, Check Point Software, Brunswick, Oshkosh

DAX -0.33%, CAC -0.19%, FTSE -0.33%
Markets opened flat and drifted lower and then traded sideways. Focus on the UK budget which came out in the afternoon; included multi-billion pound spending on health care and transport, as well as a rise in the national living wage. Also in focus were earnings with Schneider Electric, Deutsche Bank (profits fell but beat F/casts stock closed -6.9%), Heineken and Banco Santander (net profit surged but stock closed -2.8%) amongst others reporting. Mining stocks weak after weak Industrial Profits data out of China.
Eurozone
Loans to Households Sept 4.1% YoY vs 4.2% Aug (F/cast was 4.3%)
Loans to Companies Sept 2.1% YoY vs 1.5% Aug (F/cast was 1.2%)
M3 Money Supply Sept 7.4% YoY vs 7.9% Aug (F/cast was 7.8%)
German
Gfk Consumer Confidence Nov 0.9 vs 0.4 Oct revised (F/cast was -1)
Import Prices Sept 17.7% YoY vs 16.5% Aug (F/cast was 17.5%)
Import Prices Sept 1.3% vs 1.4% Aug (F/cast was 1.2%)
France
Consumer Confidence Oct 99 vs 101 Sept (revised) (F/cast was 101)
PPI Sept 1.7% MoM vs 1% Aug (F/cast was 0.6%)
PPI Sept 11.6% vs 10% Aug (F/cast was 10.3%)
Unemployment Benefit claims Sept -55k vs -51.1k Aug (F/cast was -36k)
Jobseekers Total Sept 3.2537m vs 3.3087m Aug (F/cast was 3.2727m)
AHEAD
EUROZONE  Sentiment Data (Economic, Industrial & Services) and Consumer Confidence along with the ECB interest rate decision.
GERMANY Unemployment
FRANCE No data due  
UK  Car Production

JAPAN
Nikkei futureNikkei futures opened +40pts  Earnings in focus today with a large number due including Sony, Keyence, Advantest and Takeda; and analysts changes in reaction to yesterday’. BoJ no change expected.  Topix rebalance on closes opened +40pts  Earnings in focus today with a large number due including Sony, Keyence, Advantest and Takeda; and analysts changes in reaction to yesterday’. BoJ no change expected.  Topix rebalance on close
Yen currently 113.83 slightly weaker overnight
Data due pre market
Retail Sales Sept (Aug was -3.2% YoY and F/cast was -2%)
Retail Sales Sept (Aug was -4.1% MoM and F/cast was 1%)
Later BoJ Interest Rate Decision  expected to keep monetary policy settings steady  and project inflation to stay below its 2% target for at least two more years, reinforcing market bets it will lag other central banks in dialling back crisis-mode policies.
PM Kishida's push to restart Japanese nuclear power plants faces stiff opposition ahead of a general election on Sunday, where his future as leader hangs in the balance if the vote is tight.
SoftBank Corp. will stop collecting penalties at the end of January 2022 from users who cancel their subscription contracts before expiration.  NTT Docomo Inc. abolished such cancellation fees this month, while KDDI Corp. is planning to follow suit by the March end of the current fiscal year.  The moves are expected to enable subscribers to switch carriers more easily.  Slight -VE
Tokyo Stock Exchange Inc said Wednesday it will extend its regular trading hours by 30 minutes, possibly starting in the second half of fiscal 2024, to make the bourse more competitive internationally and attractive to local investors.

SOUTH KOREA
Expect markets to open lower following the US but earnings remains in focus with Samsung in focus today with numbers due pre open.
No data due
Earnings  include  
LG Electronics, Hanwha Life, Hyundai Steel, S-Oil, Lotte Fine Chemical, Daewoo E&C, Korea Aerospace, Doosan Fuel Cell, Cheil Worldwide, Hyundai Glovis, DGB Financial, HDC Hyundai Development, Hyundai Mobis, LG Innotek, Hanwha Solutions
LG Display Co said Wednesday that its Q3 net income surged 4,067.5 percent from a year earlier to 463.5 billion won ($396.1 million), largely driven by strong demand and profitability of its OLED business.
Operating income jumped 221.8 percent to 528.9 billion won in the three months ending in September, 17.3 percent lower than previously expected. Sales rose 7.2 percent on-year to 7.22 trillion won. +VE
Hyundai Motor Co slightly missed analysts' profit estimates as the global chip crisis drove down vehicle shipments and it said it expects it will take a long time to get back to normal chip supplies.  Slight -VE
Hyundai Mobis, the auto parts making affiliate of Hyundai Motor Group, has adopted a “Green Acceleration” strategy to promote environmentally friendly business management for future generations and the Earth, the company said Wednesday. Slight +VE
LG Chem Ltd. said Wednesday it will build a battery separator production plant in Hungary with Japanese chemical giant Toray Industries Inc. as part of efforts to expand its presence in the European market.  Under the 50:50 joint venture deal, the two companies will invest over a combined 1 trillion won ($854.7 million), aiming for annual production of 800 million square meters of separators, the key component used in rechargeable batteries, by 2028, LG Chem said in a press release.  +VE
Kolmar Korea, a cosmetics and health care company based in Seoul, has made a strategic investment in a beauty platform operator in a bid to target Millennial and Generation Z consumers in the local beauty market.  According to its announcement on Wednesday, the company purchased an 11 percent stake in Pawcompany.

TAIWAN
Expect market to open flat following the US markets but local results +VE so limited downside.
No data due
The government’s business climate monitor last month stayed “red” for the eighth consecutive month, as exports remained strong and service-focused sectors increasingly emerged from the pinch of a local COVID-19 outbreak, the National Development Council (NDC) said yesterday.   The gauge slid 1 point to 38 last month, and is likely to stay “red” this month, reflecting a continuing economic boom, NDC Research Director Wu Ming-huei said. +VE
Taiwan and the Czech Republic share the determination to defend democracy and freedom, Minister of Foreign Affairs Joseph Wu told a forum in Prague yesterday, calling on democratic countries to unite against authoritarianism.  Wu made the remarks at a forum cohosted by the Czech Academy of Sciences and Czech think tank Sinopsis titled “Towards a productive relationship: Engaging with Taiwan in multiple domains.”  
He also said Taiwan needs to strengthen its defences and, with just 15 diplomatic allies in the world, seek more friends on the international stage as it faces pressure from China. The move has annoyed China but shows growing support for Taiwan being recognised.
Yageo Corp yesterday reported its best quarterly net profit in nearly three years, but said that its growth momentum could be disrupted this quarter by a global chip shortage.  On top of that, market demand for consumer electronics and mobile devices has shown some softness in the Greater China region, Yageo told an online investors’ conference. +VE
United Microelectronics Corp (UMC),  yesterday forecast another thriving period next year, with revenue growth forecast to outpace the 12 percent estimated for its global peers.  To satisfy clients’ strong demand for 28-nanometer chips, the Hsinchu-based chipmaker is to expand capacity by 6 percent next year by squeezing extra capacity from a 12-inch fab in Tainan as its factories are forecast to run at full capacity until the end of this year. +VE
The production value of Taiwan’s semiconductor industry is expected to increase 24.7 percent this year and surpass NT$4 trillion (US$143.8 billion) after growing 20.9 percent last year, Taiwan Semiconductor Manufacturing Co (TSMC) chairman Mark Liu said yesterday.  Speaking at the online annual meeting of the Taiwan Semiconductor Industry Association, Liu said that Taiwan remained competitive in the global semiconductor industry, despite the impact from the COVID-19 pandemic over the past two years. +VE

CHINA
Expect market to open lower with continued caution over the impact of the energy crunch and concerns over the property sector.  Covid cases also a worry.
No data due
Earnings 
Inner Mongolia Yili (600887 CH) 3Q results
India's foreign ministry said on Wednesday that it was concerned about a new law passed by China last week to strengthen border protection amid a protracted military standoff between the two Asian giants along a contested Himalayan frontier.
China says will take action against Czech Republic for recognising Taiwan.

HONG KONG 
ADR’s -159pts at 25,469 broad weakness, expect some more initial downside due to some margin call selling. Another day of earning likely to keep investors sidelined and T/O light although Futures Expiry today will add some volume.
Data due
(Macau) Sept. Hotel Occupancy Rate, prior 38.4

HK Earnings due 28 Oct include Sichuan Exp (107), Tsingtao Brewery (168), BYD Electronic (285), Jiangxi Copper (358), Sinopec (386), Guangshen Rail (525), Nanjing Panda (553), Shangdong Molong Pet (568), Beijing North Star (588), Petrochina (857), Anhui Conch (914), Hisense Home Applicances (921), Datang Int (991), Anhui Exp (995), China Citic Bank (998), Guangdong Tannery (1058), Zoomlion (1157), BYD (1211), Agri Bank of China (1288), HKBN (1310), New China Life (1336), Peoples Insurance (1339), Postal Savings Bank of China (1658), GF Securities (1776), BAIC Motor (1958), BBMG (2009), China Vanke (2202), Yantai North Andre Juice (2218), PICC Property & Casualty (2328), China Life Ins (2628), China Oilfield Services (2883), Qinhuangdao Port (3369), Fuyao Glass (3606), Chongqing Rural Bank (3618), CICC (3908), CanSion Bio (6185), Haitong Sec (6837).

SHORT SELLING HSI Wednesday 19.4% vs 20.2% Tuesday
Top shorts 
Country Garden (2007) 46%, Hang Seng Bank (11) 39%, Wharf REIC (1997) 39%, BoC HK (2388) 33%, HKEX (388) 32%, Longfor (960) 30%, CM Bank (3968) 30%, Haidilao (6862) 30%, AAC Tech (2018) 29%, Ping An (2318) 29%, Hengan (1044) 29%, Henderson Land (12) 29%,  Baba (9988) 28%, Li Ning (2331) 28%, China Overseas (688) 27%, Hang Lung Ppty (101) 26%, New World Dev (17) 25%, Ali Health (241) 25%.

COVID
Expert panel advises third shot for Hongkongers who took Sinovac Covid-19 vaccine.
But priority should be given to elderly, people with weak immunity and workers with high exposure to virus, joint scientific committee says.  It also recommends that only people in high-risk groups who had taken German-made BioNTech vaccine receive booster shot for now.
A leading Hong Kong health expert has labelled a new 14-day quarantine requirement for recovered Covid-19 patients as “unethical”, while a major patients’ rights group has suggested the government should offer cash payments for low-income residents forced to undergo it.
Professor Benjamin Cowling of the University of Hong Kong, a top epidemiologist in the city, on Wednesday launched a scathing attack on the policy change – aimed at easing Beijing concerns and reopening the border – branding it “ridiculous” and “unethical”. Speaking out on Twitter, Cowling said the policy was a “waste of resources and actively harming the patient with no community benefit to offset against”. The HK Govt is coming under increasing pressure to change its policy but it is unlikely to do so whilst Beijing maintains it’s zero covid policy.

WATCH
CHINA POWER (02380.HK) announced that the combined total electricity sold by the Group for the nine months ended 30 September 2021 
amounted to 75,747,452MWh, representing an increase of 17.33% compared to the same period last year. +VE

HKEX (00388.HK) CEO Nicolas Aguzin pointed out the rather sturdy Hong Kong IPO conditions than a quarter ago. With 73 IPOs year-to-date, the fundraising size has reached $285.9 billion, with nearly 90% stemming from new economy and biotech stocks. The Stock Exchange has welcomed the dual primary listing of two Weighted Voting Rights (WVR) companies during the period, he added. He also commented his concern about the reversal of quarantine examptions.

SINOTRANS (00598.HK) announced the result for the first three quarters ended 30 September 2021. 
The net profit prepared in accordance with China Accounting Standards amounted to RMB3.079 billion, up 47.9% yearly. EPS was RMB0.4161.

PING AN (02318.HK) announced the results for the first three quarters. 
Net profit decreased 20.8% year on year to RMB81.638 billion, with EPS of RMB4.63. Operating profit rose 9.2% year on year to RMB118.737 billion, which is equivalent to a 20.3% annualized operating ROE. -VE

HAITONG INT'L (00665.HK) announced the result for the first three quarters ended 30 September 2021. 
The net profit amounted to HK$1.15 billion, down 4.2% yearly. EPS was HK19.53 cents. No dividend was declared.

China to cap key coal price to help ease energy prices -VE for miners.

National Development and Reform Commission (NDRC), State Administration of Foreign Exchange (SAFE), and other Chinese regulators 
are urging property companies to repay debt on time, Bloomberg citing sources. The watchdog also plans to facilitate foreign debt repayment within a permissible scope of policy to avert more events of default.

To extend the offline-to-online convergence strategy of the new retail model, HK TECH VENTURE (01137.HK) announced that its 24-hour online shopping mall “HKTVmall” further strengthens the service of O2O shops with the grand opening of the first HKTVmall Supermarket in Tseung Kwan O District.  
The HKTVmall Supermarket is by far the largest HKTVmall O2O shop with an area of over 4,400 sq. ft., providing over 3,000 product choices to customers, the announcement added. +VE

The detached house at Black's Link, The Peak, which was once lived by EVERGRANDE (03333.HK) Chairman Hui Ka Yan and his wife, was in this month pledged to CCB (Asia) for $300 million loan potentially, HK01 reported.  Through Giant Hill Limited, Hui Ka Yan held the luxury property at Block C, No.10 Black's Link with $800 million market cap, and acted as the controlling shareholder of Giant Hill. Earlier on, the director name of Giant Hill was changed to Tan Haijun, the "housekeeper" of Hui.

The Centa-Salesman Index (CSI) for commercial shop selling price last posted at 57.14, up 0.55 pts weekly. 
The CSI for shop rent rose 3.46 pts weekly to 59.06. The indices were nearing 60 amid a two-week uptick, putting an end to their stroll around 55 three weeks before. The shop selling price and rent will stay firmly at peak should the indices zoom past 60 with signs of rally.

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