Apr 24 Things to know before trading Asia on Monday


24 Apr

The busiest week for US earnings with 33% of the Dow and S&P 500 reporting with big tech stocks like: Apple, Amazon, Alphabet, Microsoft, Facebook, Tesla, McDonalds, Starbucks, Boeing, Ford, Caterpillar, Visa.  Plus Drug comapnies, Consumer names and oil companies Chevron and Exxon Mobile.  There is also a Fed meeting on Wednesday with investors watching for comments on whether it still sees inflation as being temporary.  Also Disneyland re-opens on Friday to California residents.  Biden is also expected to announce details on spending and tax proposals (“American Families Plan”). Other key US data is Q1 GDP and the Fed favourite Personal consumption expenditures deflator.
A light week for Asian data but Saturday’s meeting of ASEAN will be closely watched to see if it take action over the current Myanmar; traditionally it refrains from interfering in the internal affairs of a member state, and operates by consensus.
Earnings in HK pick up this week; with Cinda Asset in focus on Monday against the Huarong background; but also HSBC on Tuesday and a number of others.

DOW +0.67%, NDX +1.44%, S&P +1.09%, Russel 2K +1.76% 
Dow opened lower but S&P and NDX opened higher and worked higher through the day but saw selling in the last 30 minutes of trading. Financials and Materials rallied. Biden’s capital gains tax being considered more rationally by the market, taking into account haw few would be affected and the probability of it becoming law. UBS noted that U.S. taxable domestic investors own only about 25% of the U.S. stock market, the rest of the market is owned in accounts that aren’t subject to capital gains taxes such as retirement accounts, endowments and foreign investors, so the impact on overall stock prices should be limited even with a higher tax rate. UBS CIO Solita Marcelli said historically there is no relation between capital gains taxes and market returns and they expect the final rate will be lower. That rather implies that the sell off this was nervousness by the market.
US health officials lifted an 11-day pause on COVID-19 vaccinations using Johnson & Johnson’s single-dose shot on Friday, after scientific advisers decided its benefits outweigh a rare risk of blood clot.
Intel -5.3% after Q2 earnings guidance was below analysts’ hopes. American Express -1.9% but opened -4% after it reported quarterly revenue that was slightly short of forecasts.
Snap +7.4% after it said it saw accelerating revenue growth and strong user numbers during the first quarter. Snap broke even on the bottom line while posting revenue of $770 million.
United Airlines Holdings +4.1% announced to add 480 American flights to meet potentially higher travel demand in summer, when more people are expected to get vaccinated.
Earnings have been beating forecasts (86% have beaten so far) but investors seem to be reluctant to chase results; suggesting that they are aware of the strained valuations.
Interesting to note that Playboy(PLBY group) is +83% this month and +173% since Feb on the prospects of being able to tap the NFT market having partnered with Nifty Gateway the online NFT marketplace.
Banks JPMorgan Chase +1.9%, Citigroup +2.3% Wells Fargo +2.7%, Amex -1.9%
Work from home names: 
Facebook +1.6%, Apple +1.8%, Amazon +1%, Netflix -0.6%,  Disney +0.1%, Zoom Video +2.6%, Alphabet +2.1% and Microsoft +1.6%,
Tech 
NXP Semi +2.7%, Nvidia +2.8%, Micron +1.6%, AMD +4.7%, Skyworks +4.1%
Re-opening stocks  B
oeing +1.7%, Caterpillar +1%, Simon Property +1.2%, Kohl’s +1.6%, Nordstrom +2.2%, Gap +2.3%, United Airlines +4.1%, Carnival +1.3%, Wynn Resorts -0.2%, Chevron +0.6%, Exxon Mobil +0.5%,  
Lock down names 
Campbell Soup -1.5% General Mills -1.2%, JM Smucker -1.8%
DATA
PMI Flash
Manufacturing Apr 60.6 vs 59.1 Mar (F/cast was 60)
Services Apr 63.1 vs 60.4 Mar (F/cast was 61)
Composite Apr 62.2 vs 59.7 Mar (F/cast was 60.5)
New Home Sales Mar +20.7% vs -16.2% Feb revised (F/cast was +14.8%)
Baker Hughes Oil Rig Count 343 vs 344 prior
Baker Hughes Total Rig Count 438 vs 439
USD was weaker vs Yen & Euro. Bitcoin -0.8% @ 50,395.30 regained the key 50k level, VIX -7.4% @ 17.33,
US T10 @ 1.56 % as investors consider Biden’s capital gains tax plans
OIL Brent +1.1%, WTI +1.2%
Gold -0.3%, Silver -0.5%, Copper +1.4% Platinum +1.9%, Palladium +0.4% extending it record run.
AHEAD Durable Goods Orders, Dallas Fed Manufacturing Index
Earnings Tesla, Canadian National Railway, Canon, Check Point Software, Otis Worldwide, Vale, Ameriprise, NXP Semiconductor, Albertsons, Royal Phillips

DAX -0.27%, CAC -0.15%, FTSE flat  
Opened lower despite pre market UK consumer sentiment and retail sales better than F/cast and good PMI data for the UK and Eurozone after the open; Germany’s and France’s was more mixed. Markets traded sideways in the red through the morning, sold down around midday and then worked better into the close.
“This morning’s PMI figures continue to show the impact of the easing of restrictions, with positive sentiment increasingly evident in the UK’s dominant service sector,” “With all sectors showing an improvement relative to March, we believe this points to further strength in the economy in the months ahead.” said Dean Turner, economist at UBS Global Wealth Management.
Initially Oil & Gas weak but Basic Resources gaining. Healthcare was weak.
Earnings from Air Liquide, Schaeffler and LafargeHolcim among the blue chip companies reporting on Friday. Renault and Merck both hold their annual general meetings.
Daimler -0.1% despite having raised its profit forecasts for 2021 but cautioned that the global shortage of semiconductor chips may continue to weigh on second-quarter sales; saw stock sell down from initial highs.
Wartsila 7% rallied further after beating earnings expectations on Thursday,
Moncler -4% after its results.
AHEAD. Germans are facing tougher nationwide COVID-19 measures from Saturday, including night curfews and school closures, after the government passed a disputed new law dubbed the "emergency brake” designed to slow infections.  Passed amid huge protests in Berlin this week, the law prescribes uniform national restrictions and is designed to end a tug of war between the federal government and Germany's 16 states.
DATA
EUROZONE
Flash PMI data
Manufacturing Apr 63.3 vs 62.5 Mar (F/cast was 61.7)
Services Apr 50.3 vs 49.6 Mar (F/cast was 49.1)
Composite Apr 53.7 vs 53.2 Mar (F/cast was 52.7)
GERMANY
Flash PMI dataManufacturing Apr 66.4 vs 66.6 Mar (F/cast was 65.5)
Services Apr 50.1 vs 51.5b Mar (F/cast was 50.9)
Composite Apr 56 vs 57.3 Mar (F/cast was 56.4)
FRANCE
Flash PMI data
Manufacturing Apr 59.2 vs 59.3 Mar (F/cast was 58.5)
Services Apr 50.4 vs 48.2 Mar (F/cast was 45)
Composite Apr 51.7 vs 50 Mar (F/cast was 47)
UK
Consumer Confidence Apr -15 vs -16Mar (F/cast was -12).
Retail Sales Mar +5.4% MoM vs +2.2% Feb revised (F/cast was +1.4%)
Retail Sales Mar +7.2% YoY vs -3.6% Feb revised (F/cast was +4%)
Retail Sales Ex Fuel Mar +4.9% MoM vs +2.5% Feb revised (F/cast was +1.1%)
Retail Sales Ex Fuel Mar +7.9% YoY vs -1% Feb revised (F/cast was +3.8%)
Public Sector Net Borrowing Mar £-28B vs -16b Feb revised (F/cast was -22b)
Flash PMI data
Manufacturing Apr 60.7 vs 58.9 Mar (F/cast was 58.5)
Services Apr 60.1 vs 56.3 Mar (F/cast was 59.1)
Composite Apr 60 vs 56.4 Mar (F/cast was 58)
AHEAD
EUROZONE No data due
GERMANY Ifo Business Climate, Current Conditions, Expectations
FRANCE No data due
UK No data due

JAPAN 
Expect at this stage for the Nikkei to open higher; with the new state of emergency largely priced in and the rebound in the US Friday.  Some caution ahead of the BoJ meeting Tuesday with the quarterly outlook report.  Then a light week for data until Friday when we get Tokyo CPI, Industrial Production & PMI  and unemployment.  
Yen closed  107.91
Data due midday
Leading Economic Index Feb Jan was 98.5 (F/cast is 99.7)
Coincident Index Feb, Jan was 90.3 (F/casts is 89.0)
Tokyo reported 759 new covid cases Friday, Osaka 1,162Japan declared "short and powerful" states of emergency for Tokyo, Osaka and two other prefectures on Friday as the country struggles to contain a resurgent coronavirus pandemic three months before the Olympics.  The government will require restaurants, bars and karaoke parlours serving alcohol to close, and big sporting events to be held without spectators from April 25 to May 11, Economy Minister Yasutoshi Nishimura said.
It is singling out alcohol consumption a response that highlights experts’ belief that alcohol can help accelerate transmission of COVID-19. -VE for Brewers but also Department stores, malls, theme parks, bars and restaurants serving alcohol, as well as theaters and museums, will close. Restaurants that do not serve alcohol and public transportation services are asked to finish early. Groceries and schools will stay open
Economist are saying that the latest virus emergency could push the economy into recession; Q1 GDP data will be published in May.
Health ministry approved on Friday the use of rheumatoid arthritis drug Baricitinib for COVID-19 patients, the third such approval following the drugs remdesivir and dexamethasone.
Mitsubishi UFJ Financial Group (8306.T) has cut six members of its U.S. team, four in sell-side markets research, sales and trading, and two investment-banking advisors, according to a source familiar with the matter. The job reductions were made in the last week, the source said, as the bank expands its fixed-income trading and debt capital markets businesses, for which has been hiring since mid-2020.  Slight -VE
Honda said Friday it would aim to have electric and fuel cell vehicles account for 100 percent of all sales by 2040 to promote climate goals. The automaker's newly appointed CEO Toshihiro Mibe described the target as "challenging" but said the firm wanted to "set high goals” +VE
Panasonic Corp is nearing a deal to acquire US artificial-intelligence (AI) software developer Blue Yonder, people familiar with the matter said. Talks are at an advanced stage and an announcement could come as soon as the next few days, said the people, who asked not to be identified as the information is private. A deal for the AI firm, in which Panasonic is a minority shareholder, could be valued at about US$6.5 billion, one of the people said. Blue Yonder, which confidentially filed for a US initial public offering this month, would not proceed with its listing plans as a result, another person said. A deal would come less than a year after Panasonic acquired a 20 percent stake in Blue Yonder for US$800 million, giving the AI firm an enterprise value of US$5.5 billion. Blue Yonder makes supply-chain management software and uses AI to predict product demand. +VE
ANA Holdings Inc said Friday it now forecasts its net loss in the business year ended March to be 405 billion yen ($3.75 billion), less than the previous estimate of 510 billion yen thanks to cost-cutting efforts and an eased tax burden.  ANA said its operating loss is expected to stand at 465 billion yen, smaller than the initial forecast of 505 billion yen, on sales of 725 billion yen, down from the previous outlook of 740 billion yen, amid weak air travel demand due to the continued impact of the novel coronavirus pandemic. +VE

SOUTH KOREA 
Expect markets to open higher following the US rebound.
No data due Monday but Tuesday we get GDP Growth, Wednesday Consumer Confidence, Thursday Business Confidence, and Friday Industrial Production, Retail Sales, Manufacturing and Construction Output
KDCA reported 785 new covid cases (760 local infections with with untraceable cases being 29%).
SD Biosensor Inc and Humasis Co Ltd (205470.KQ) +VE as Government granted conditional approval for the public to use two coronavirus self-test kits for the first time. The approval is conditional on them providing further clinical trial data on self-testing within three months, the drug safety ministry said in a statement.
Sales of biosimilars developed by Samsung Bioepis in Europe reached $205.1 million in the first quarter this year, the South Korean drugmaker said Friday. Sales of Samsung Bioepis’ three major autoimmune biosimilars -- Benepali, Flixabi and Imraldi -- increased 3.9 percent on-quarter but decreased 6.3 percent on-year, the company said, citing an earnings report of its US partner Biogen released Thursday, local time. +VE
South Korean firms that are heavily reliant on exports should come up with diverse ways to cut down on their logistics costs amid a prolonged surge in ocean freight charges, a report suggested Friday. Ocean freight rates are rising and could continue for a long time against the backdrop of unstable supply and demand for empty containers and a rise in demand due to revenge consumption, the Institute for International Trade warned in its report.   +VE Shippers and Logistic companies. Baltic Dry Index +1.4% Friday; to a year high and approaching the highs seen at the end of 2019.
Hanwha Corp. said Friday  tissue green bonds; it will file a securities declaration with the Financial Supervisory Service on Monday and conduct a book-building session Thursday, seeking to issue green bonds worth up to 150 billion won ($13.4 million) on May 7.
KB Financial Group outperformed the three other major banking groups here in terms of first-quarter net profit, buoyed by its strong brokerage and other nonbanking businesses, data released Friday showed.   KB’s net profit in the first three months gained 74.1 percent on-year to 1.2 trillion won ($1.1 billion) -- a record-high quarterly net profit since it became the holding entity of KB-branded financial and banking firms in September 2009.
South Korean securities firms, which are infamous for their rigid company culture, are competitively setting up their own digital platforms and seeking partnerships with rising fintech startups. Conventional stockbrokers are doing this for one reason -- they hope to do business in the MyData segment.  MyData is one of the government’s marquee projects to reshape the outdated financial sector in response to the “fourth industrial revolution,” centered on digitalization. +VE
Oriental Brewery, has tapped veteran actress Youn Yuh-jung as the new brand ambassador for its flagship beer brand Cass, the company said Friday. +VE

TAIWAN 
Expect market to open higher on strong Industrial Production and Retail Sales Data Friday.  Buoyed also by the rebound in the US.
No data due this week until Friday when GDP Growth rate is released
After market Friday 
Industrial Production Mar +16.78% YoY vs 2.52% Feb (F/cast was 5.5%)
Retail Sales Mar +12.05% YoY vs 12.81% Feb (F/cast was +9.5%)
M2 Money Supply Mar +8.9% YoY vs 9.12% Feb (F/cast was +8.8%)
Industrial Production up for a 14th month on robust demand for technology products and vehicles, while retail sales rose to surpass pre-COVID-19 pandemic levels, the Ministry of Economic Affairs said yesterday.  Despite a high comparison base last year, chip production +35% YoY backed by strong demand for 5G-related devices, high-performance computing, vehicles and consumer electronics. The ministry gave a rosy outlook for industrial production this month, despite some manufacturers in Taichung facing water restrictions due to a drought.
The Taiwan Institute of Economic Research (TIER) Friday raised its economic growth forecast for the nation to 5.03 percent, citing a global economic recovery, which it said would boost the nation’s exports and domestic demand. That represented an increase of 0.73 percentage points from its forecast in January and is the first to forecast growth of more than 5 percent. The upgraded economic growth forecast was based on rising domestic demand and exports in Taiwan, TIER president Chang Chien-yi told reporters. If the global economy continues to recover, TIER might consider raising its forecast for Taiwan again, he said.
TSMC gave greenlight to almost US$2.9 billion in capital budget to ramp up auto chip manufacturing capability. The Taiwanese firm approved the budget to meet higher structural demand and address chip shortage spread challenges across the globe. The funds will be used for the 28nm advanced node capacity at the Nanjing fab, with mass production plans slated for 2H22.  +VE
Line Bank crash draws commission’s ire.   Banks have been instructed to conduct stress tests to avoid a system failure when they start operations, the Financial Supervisory Commission said after Line Bank Taiwan Ltd launched on Thursday, but its system crashed. -VE

 CHINA 
Expect market to open lower with continuing concerns about International relations and credit tightening.  The presence on Team China remains the wild card.
No data due Monday, Tuesday Industrial Profits and Friday Non & Manufacturing PMIs
China confirmed 9 additional COVID-19 cases, all being imported, reported by National Health Commission.  I still find the official data surprising; especially as Hong Kong reported a returnee from China as being infected. The United States will urge its Group of Seven allies to increase pressure on China over the use of forced labor in its northwestern Xinjiang province, home to the Muslim Uighur minority, a top White House official said on Friday.
Chinese Foreign Minister Wang Yi, on a conference call with the U.S. Council on Foreign Relations, said the new American government has yet to find the right way to deal with China, reported Chinese media.
The Philippines has sent two new diplomatic protests to China over its failure to withdraw what it called on Friday “threatening” vessels that were massing in contested areas of the South China Sea; 160 Chinese fishing and militia vessels around the disputed Spratly islands and Scarborough shoal, as of April 20.  Five Chinese coastguard vessels were also spotted around the areas.  “The continued swarming and threatening presence of the Chinese vessels creates an atmosphere of instability and is a blatant disregard of the commitments by China to promote peace and stability in the region,” the foreign ministry said.  The citing of Chinese commitments to peace and stability will put additional pressure on China and the validity of its statements.
China is set to resume cargo train service with North Korea, people familiar with the matter said, following a 15-month border closure due to COVID-19, as trade with the impoverished and isolated country begins to rebound.
China checks if Seoul still cool on joining US-led Quad alliance  In a sign of Beijing’s concern about ‘Indo-Pacific Nato’, sources say officials have been asking South Korea about its intentions.  So far Seoul has maintained a strategic ambiguity towards the grouping as it strives to avoid taking sides with either Beijing or Washington
Ant told to hand over data. The Chinese government wants Ant Group to hand over its data to a state-controlled company to be run by former central bank officials, the Financial Times (FT) reported, citing people close to the negotiations. The newly created credit-scoring entity would serve rival financial institutions, including state lenders, it reported. Ant has said it wanted to lead the new company to minimize government intervention, the FT said, citing one banker who has worked with the fintech company. The government has proposed establishing a joint venture with local technology giants that would oversee the lucrative data they collect from hundreds of millions of consumers, Bloomberg News reported last month.  As I have always said one of the reasons for the crackdown was the Govt/PBOC wanting the data, which both Ant and Tencent have been resisting.  This now increases the pressure on Tencent to hand over its data too.  The PBOC sought to set up its own but couldn’t get the type of data that Ant and Tencent have.  I think this could severely undermine the Fintech in China.  Citizens are resonably happy handing their data over to Ant and Tencent because they get the benefits of deals and services but not to the government. The key I think is the government wants the data in order to tax people and the shadow ‘cash’ economy.  This data will enable the government to see how much people are spending and if that is inline with declared incomes.
Jidu Auto, an electric vehicle venture between China’s tech giant Baidu and Chinese automaker Geely, aims to plough 50 billion yuan ($7.7 billion) into producing smart cars over the next five years, its chief executive told Reuters.

HONG KONG  ADR’s +90pts at  29,168 most ADR’s in the green but Chinese Banks weak.  I would expect to see Tencent see weakness on the news being forced to had over data to an SOE run by PBoC officials.  Shippers +VE as BDI approaches highs.
Expect cautious trading ahead of a busy week for earnings including HSBC, Chalco, WH Group, Jiangxi Copper and others.  
No data due
HK reported 3 new covid cases vs 9 Friday.
EARNINGs include China Cinda Asset (1359), China New Higher Education (2001), Shanghai Fosun Pharma (2196), Xinjiang Goldwind Science (2208)
Short Selling Friday 14.2%  vs 13.8% Thursday
Top Shorts
 
Wharf REIC (1997) 43%, Country Garden (2007) 38%, BankComm (3328) 35%, Bank Of China (3988) 34%, Sino BioPharm (1177) 34%, CCB (939) 32%,  Sunny Optical (2382) 30%, Bud Apac (1876) 29%, Hang Lung Ppty (101) 29%,Wuxi Bio (2269) 27%, HK & China Gas (3) 25%, Petrochina (857) 25%
WATCH
HSBC and HangSeng Bank ahead of Q1 results due Tuesday together with a number of other companies 
CSI PROPERTIES (00497.HK)  Profit Warning; The Group is expected to record a significant decrease by approximately 70% in its profit attributable to owners of the Company for the fiscal year ended 31 March 2021.
XIAMEN PORT (03378.HK) announced the result for the first quarter ended March 2021. Based on Chinese accounting standards, net profit burgeoned 125.9% yearly to RMB78.2 million.
FEIYU (01022.HK) announced that the Company would issue 171.8 million new shares to the independent third party THL H Limited, a wholly-owned subsidiary of TENCENT (00700.HK), at a total consideration of HK$119 million.  The Subscription Price of HK$0.6941 per share represented a premium of 8.45% to the Company's closing price on 23 April.  Upon completion, the Subscriber will become a substantial shareholder of the Company with a 10% stake.
CHINA SHENHUA (01088.HK) announced the result for the first quarter ended 31 March 2021. Net profit +18.9% yearly to RMB11.864 billion. EPS equaled 59.7 fen.
CBHB (09668.HK) announced that the operating income for the three months ended March 31, 2021 was RMB7.992 billion and net profit RMB3.515 billion.
CM BANK (03968.HK) unveiled the first quarterly report of 2021. Net profit gained 15.2% yearly to RMB32.015 billion. EPS was RMB1.27. Net operating income added 11.1% yearly to RMB84.844 billion.
CHINARES CEMENT (01313.HK) announced first-quarter results ended March 2021. The net profit amounted to HK$1.29 billion, up 15.8% year-on-year  EPS was HK$0.185.
The Government announced that a government site comprising two portions on Hoi Fan Road in Tai Kok Tsui will be granted to the Office for Safeguarding National Security of the Central People's Government in the Hong Kong Special Administrative Region (OSNS) for its permanent office premises and ancillary facilities
Centa-City Leading Index (CCL) last tracked at 180.19, up 0.13% weekly. 
CCL Mass last printed at 182.98 +0.48% weekly.
CCL (small-to-medium units) last printed at 180.60, +0.26% weekly.
Centaline Property research pointed out that the three major indices have been ascending and descending altogether in the recent seven weeks, indicating the housing prices are zigzagging to trend up.

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