Apr 7 Asian Marco Initial Thoughts Expect a mixed open; HK re-opens and plays catch-up.


07 Apr

Asia
Australia Market to open flat,  Constuction Index beat F/casts,  PMI’s Services & Composite data improved MoM but missed F/casts, still +VE. New Zealand Prime Minister Jacinda Adern yesterday announced a pandemic milestone: a "travel bubble" allowing quarantine-free travel between New Zealand and Australia from April 19.  +VE Qantas and Air NewZealnd.
Japan Nikkei futures opened +20pts and have trended higher, expect a higher open but limited upside as US markets consolidated overnight.   Rising covid cases still a concern.
S Korea Expect markets to open flat after US markets consolidated overnight.  Current account stronger than expected a slight +VE
Taiwan Market to open slightly higher after good local tech earnings but upside limited as US markets eased slightly.
China Market to open lower with concerns over PBOC tighten policy and continued poor international relations
HK ADR’s indicate +68pts to re open at  29,006 but I would expect an initial spike and then flat trading as recent shorts cover and investors react to the strong US jobs number last Friday and net market moves on Monday and Tuesday.  The ADR’s of Ecommerce names remained weak and expect weakness in Chinese Banks and Property companies as PBOC tightens lending
US Futures Opened slightly higher Dow +27pts  S&P +0.05% NDX +0.04%. FOMC minutes in focus tonight.

IMF/World Bank Spring Meetings
IMF releases new raised growth F/casts; India 12.5%, China 8.4%, US 6.4%, Japan 3.3%, Eurozone 4.4% but warned of ‘daunting’ challenges.
World Bank President David Malpass said he expects China, the United States and other Group of 20 major economies to extend a freeze in bilateral debt service payments through the end of 2021 when they meet this week.

DOW -0.29%, NDX -0.05%, S&P -0.1%, Russel 2K -0.25% markets opened lower having tested new highs on Monday, after the strong US jobs report. Dow ticked higher in early trades and traded sideways around flat for most of the morning but then drifted lower from midday. S&P traded slightly higher and hit a new intraday high but then drifted back to flat and traded sideways.  NDX worked slightly higher in the morning but then sold back down to flat and followed a similar but less pronounced pattern in the PM.
Illumina +7.9% after it pre-announced better than expected results for its first quarter. The company said it expects about $1.085 billion of revenue for the period, above the $924.6 million projected by analysts, according to FactSet. Illumina also raised its full-year revenue guidance.
Southwest Airlines +1.8% after the company recalled 209 pilots from a voluntary extended leave program to support its summer schedule. Southwest said on Monday the pilots will return to active status on June 1 on the back of a return in travel demand amid the vaccine rollout.
Paychex -4.9%, despite beating analysts’ earnings estimates for the fiscal third quarter..
Signet Jewelers -1.7% announced that it was acquiring rental platform Rocksbox. The company said the move is part of its strategy to expand its services business.
Moderna +2.8% announced an expanded partnership with manufacturer Catalent. Through the collaboration, Catalent will dedicate a high-speed filling line to Moderna through June 2023. “This additional fill-finish capacity will be important for not only our COVID-19 vaccine, but also potentially for other programs in our clinical development pipeline,” Moderna said in a statement.
Cara Therapeutics +14% on news it will be added to the S&P SmallCap 600 index. The company will replace MTS Systems flat, and the change will go into effect prior to the opening bell on Thursday.
Consumers across the world spent US$900 billion more at online retailers in 2020 compared with the previous two-year trend, according to a report released Tuesday by the Mastercard Economics Institute. Suggest that online retailing has established itself as part of everyday life.
Banks JPMorgan Chase -0.7%, Citigroup -0.2% Wells Fargo +0.9%, AMEX +0.1%
Work from home names: 
Facebook +0.9%, Apple +0.3% (broker upgrade), Amazon -0.1%, Netflix +0.7%,  Disney +0.7%, Zoom Video +1.8%, Alphabet -0.4% and Microsoft -0.5%,
Tech 
NXP Semi -0.8%, Nvidia -0.9%, Micron -0.3%, AMD flat, Skyworks -1.5%
Re-opening stocks  
Boeing -1.6%, Caterpillar -1.3%, Simon Property +1.3%, Kohl’s +1.6%, Nordstrom +1.1%, Gap +2.5%, United Airlines +0.3%, Carnival +1.7%, Wynn Resorts +4%, Chevron -0.9%, Exxon Mobil -0.3%,  
Lock down names 
Campbell Soup unch, General Mills +0.3%, JM Smucker +0.5%
DATA
Redbook -17.2% MoM vs -17.4% prior. (+10.6% YoY vs 9.8% prior)
JOLTs job openings Feb 7.367m vs 7.099m Jan revised (F/cast was 7m)
IBD/TIPP Economic Optimism Apr 56.4 vs 55.4 Mar (F/cast was 55)
After market
API Crude Oil Stock Change -2.618m vs +3.91m (consensus was -1.325m)
USD was weaker vs Yen & Euro. Bitcoin -2.1% @ 57,693.53, CNBC reports the cryptocurrency market is now in excess of US$2t with bitcoin accounting for about 50% of the market. VIX +1.2% @ 18.12, US T10 eased to 1.654%
OIL Brent +1%, WTI +1.2% after strong Chinese Caixin PMI and US data. API data aftermarket showed a bigger than expected fall; expect more upside.
Gold +0.8%, Silver +1%, Copper -0.7% Platinum +2%, Palladium +0.5%.
AHEAD MBA Mortgage Applications and 30 yr Mortgage Rate, Balance of Trade, Export, Imports, EIA Oil Report, FOMC Minutes, Consumer Credit Change.

DAX +0.7%, CAC +0.47%, FTSE +1.28% 
Re-opened higher and traded sideways but the DAX sold down into the close. Credit Suisse -0.4% after announcing a $4.7bn hit from Archegos and several high level departures. Basic resources led, all sectors ended higher.
The European Commission backed on Tuesday a call from US Treasury Secretary Janet Yellen for a global minimum corporate tax, but said its rate should be decided in talks in the Organisation for Economic Cooperation and Development (OECD), Reuters reports.
Avanza +7.2% vs Swisscom -5.1%.
Food delivery services weak as investors questioned whether their pandemic-fueled growth could last as economies begin to reopen. In Britain, Just Eat Takeaway -1.3% and Ocado -0.7%, while in Germany Delivery Hero -1.2% and HelloFresh -1.6%.
BP +3.6% said it’s seeing a healthy start to 2021 thanks to higher energy prices and signs that the industry is set for a rebound after pandemic-induced losses in 2020. The company said Tuesday it was poised to lower its net debt to $35 billion in the first quarter, a level it has said could instigate share buybacks.
FT Reports Goldman bought £75m of Deliveroo shares to lift price on market debut -VE
SAP rallied following a CNBC report stating that Google, the search engine arm of Alphabet, planned to ditch Oracle for its internal financial software and replace it with a platform from the German group
DATA
EUROZONE
Unemployment Rate Feb +8.3% vs +8.3% Jan revised (F/cast was 8.2%)
UK
New Car Sales Mar +11.5% vs -35.5% Feb (F/cast was +75%)
AHEAD
EUROZONE Services and Composite PMI
GERMANY Services and Composite PMI
FRANCE Services and Composite PMI
UK Services and Composite PMI

JAPAN 
Nikkei futures opened +20pts and have trended higher, expect a higher open but limited upside as US markets consolidated overnight.   Rising covid cases still a concern.Yen currently 109.74 slight +VE exporters
Data due pre market
Foreign Exchange Reserves March (Feb was $1379.4b)
Later @ 1pm preliminary
Leading Economic Indicators Fed (Jan was 98.5 F/cast is 99.3)
Coincident Index Feb (Jan was 90.3 F/cast is 91)
Tokyo reported 399 new covid cases Tuesday (+150 DoD) and Osaka 719, surpassing  Tokyo for a seventh day.  The Nationwide total was 2,654
PM Suga will hold a ministerial meeting as early as next week to start discussions on the release of contaminated Fukushima Dai-ichi Nuclear Power Plant water into the ocean, broadcaster FNN said on Tuesday.
Japan decided Tuesday to extend its unilateral sanctions on North Korea, including a ban on all trade, by two years to maintain pressure on the country to give up its nuclear and missile programs, and to make progress on the issue of its past abductions of Japanese nationals.
Renesas Electronics Corp is set to shift some production to a factory in the southwestern prefecture of Ehime after a fire damaged a factory in northeast Japan, public broadcaster NHK said on Tuesday.
FT reports  SoftBank has struck a $2.8bn deal for a 40 per cent stake in Norwegian warehouse automation company AutoStore, in the latest addition to its web of investments in ecommerce and robotics.
Shoei Kisen Kaisha;  The Suez Canal chief said Tuesday that they are negotiating a financial settlement Shoei Kisen Kaisha the owners of the container vessel that blocked the crucial waterway for nearly a week. -VE although likely to covered by insurance
Japan Airlines Co Ltd (JAL) said it had retired its fleet of 13 Boeing Co 777s with Pratt & Whitney engines a year earlier than planned, having suspended operations in February after an engine on a United Airlines plane shed debris.
Water polo test event off as Olympic qualifying cancellations mount. -VE The Japanese government is set to instruct all broadcasters to investigate whether they are complying with foreign ownership rules after major broadcaster Fuji Media Holdings Inc said it may have been in breach in the past, the communications minister said Tuesday.

SOUTH KOREA 
Expect markets to open flat after US markets consolidated overnight.  Current account stronger than expected a slight +VE
Data out 
Current Account Feb $8.03b vs 7.06b Jan (F/cast was 6.9b)
IMF maintains S. Korea’s 2021 economic growth outlook at 3.6% but it will grow 2.8 percent in 2022 as the world economy recovers,
South Korea has seen the largest and fastest increase in total national liabilities last year, as it neared the 2,000 trillion won ($1.78 trillion) mark and exceeded the country’s gross domestic product for the first time, the Finance Ministry said Tuesday.  It is likely to raise concerns about household debt levels too. -VE for sentiment.
North Korea said on Tuesday it would not take part in the Tokyo Olympics due to coronavirus concerns.  Slight -VE for sentiment on restarting peace talks.
LG Electronics is mulling over what to do with its overseas phone plants (Vietnam, Brazil and China) as it withdraws from the smartphone business; with outright closure being considered as one possible option, people familiar with the matter said Tuesday.  +VE LG Electronics but -VE for the local economies.
Netmarble hired composer Joe Hisaishi as a spokesperson for the company’s new game Second Country: Cross Worlds, set for release on April 14. +VE
National Institute of Science and Technology revealed a perovskite solar cell, which it says boasts the world’s highest efficiency rate, Tuesday. It can convert solar energy into usable energy at a rate of 25.6%  Slight +VE for the sector

TAIWAN 
Expect market to open slightly higher after good local tech earnings but upside limited as US markets eased slightly.
Data due after market  
Foreign Exchange Reserves Mar (Feb was $543.33b, F/cast is 548b)
The New Taiwan dollar yesterday rose past NT$28.5 against the US dollar for the first time in two weeks, after foreign portfolio managers increased stakes in local shares, dealers said.  Slight -VE for exporters. Publicly traded firms’ pretax profit increases 21.04% for the 1,736 publicly traded companies +VE for sentiment.
Nanya Technology Corp yesterday reported its best monthly revenue in 29 months as prices jumped amid a remote-working and schooling trend, which has exacerbated a chip shortage. Revenue last month was NT$6.4 billion (US$224.67 million) amid the COVID-19 pandemic-driven trend, Nanya said. Revenue expanded 10.65 percent from NT$5.79 billion in February, mainly due to price increases, it said. +VE
Hon Hai Precision Industry Q1 revenue +44.5% on robust demand for Apple Inc’s new 5G devices and other gadgets that help consumers stay connected at home during the COVID-19 pandemic.  Revenue in the three months through last month rose to NT$1.34 trillion (US$47.04 billion), from NT$929.68 million a year earlier, but -33% QoQ, the firm reported yesterday.  In line with expectations but still slight +VE
Taiwan’s flat-panel industry has emerged from the doldrums thanks to a COVID-19-related surge in demand, the Ministry of Economic Affairs said yesterday. Production value in the industry last year grew 0.3 percent from 2019, ending two years of declines, the ministry said in a statement. Slight +VE
Taiwan Land Development Corp yesterday asked the government to remove obstacles so that it could sell land to end its cash problems, causing its shares to plunge by the daily limit, with margin trading to be suspended, starting today.  “All the company needs is a cash injection of NT$1 billion [US$35.1 million] for its shares to qualify for credit trading again,” TLDC chairman Chiu Fu-sheng told a news conference in Taipei, protesting the labeling of the company’s stock as full delivery shares.  -VE

CHINA 
Expect market to open lower with concerns over PBOC tighten policy and continued poor international relations
Data due after market 
Foreign Exchange Reserves Mar (Feb was $3.205tn, F/cast is 3.2tn)
IMF urges China to reduce corporate debt risk made worse by heavy pandemic lending. Chinese financial authorities should stop providing such easy access to capital, especially to ‘riskier borrowers’, International Monetary Fund says. It follows China making it easier for businesses to borrow during the pandemic to keep them and the economy afloat, and loans went to many struggling firms.  Recent PBOC action would suggest that China is already doing this.
Turkey called in China’s ambassador on Tuesday after his embassy said it had “the right to respond” to opposition leaders who criticised China’s treatment of Uighur Muslims three decades ago.
China is said to be testing Biden with its South China Sea tactic that misled Obama but mooring militia boats off a disputed Philippines reef to see what action he will take.  China says the vessels are 'taking shelter from the wind’.   Could be a key test.  President Duterte is committed to peacefully resolving a diplomatic row with China over the disputed South China Sea, his spokesman said on Tuesday, in a measured response after days of strong rebukes by his ministers and generals.  Beijing accuses Philippines of ‘hype’ over the Chinese fleet at Whitsun Reef; the  foreign ministry spokesman says his countrymen have sheltered in and fished the contested waters ‘for thousands of years’
A Chinese carrier group is exercising near Taiwan and such drills will become regular, the country's navy said, in a further escalation of tensions near the island Beijing claims as its sovereign territory.  The announcement of the naval exercise comes two days after the US Navy's Theodore Roosevelt Carrier Strike Group entered the South China Sea on April 4 for routine operations, its second such visit this year, amid stepped up US-China tensions. -VE
China's domestic tourism revenues over the Ching Ming Festival were way below pre-pandemic levels although a services sector recovery accelerated last month to a four-month high.   As many 102 million domestic trips were made during the festival, or 94 percent of pre-pandemic levels, according to the Ministry of Culture and Tourism. Domestic tourism revenues, however, were only 56.7 percent of pre-pandemic levels at 27.16 billion yuan.  Slight -VE Airlines and Rail companies.
Bytedance An Indian court on Tuesday said it must deposit around $11 million that authorities believe the company owes in an alleged case of tax evasion, a decision the government said bars the firm from using existing bank funds for other purposes.
China says it lifted millions of ethnic minorities out of poverty in the past five years. The  White paper hailing Beijing’s successes said 15.6 million people in the eight poorest provinces and regions had benefited from the anti-poverty drive.  Report does not directly address growing outcry over its actions in Xinjiang, but stresses benefits of economic development for ethnic minorities.   Need to remember that it was previous Chinese policies that also put these people into poverty.
US considers joint boycott of 2022 Beijing Winter Olympics as calls grow for the US to back out of the Games because of alleged human rights violations in China. -VE
FT reports Chinese private equity groups seek record fundraisings as international investors pile in

HONG KONG  
ADR’s +68pts to re open at  29,006 but I would expect an initial spike and then flat trading as recent shorts cover and investors react to the strong US jobs number last Friday and net market moves on Monday and Tuesday.  The ADR’s of Ecommerce names remained weak and expect weakness in Chinese Banks and Property companies as PBOC tightens lending
No data due
Tuesday HK reported 7 new covid cases (vs 16 Monday) which included a 12 day old baby. 3 linked to existing cases and 4 imported. Press reports 40% of Hong Kong children infected with Covid-19 have no symptoms and so could be spreading the virus silently.
Short Selling Thursday 18.7%  vs14.5% Wednesday
Top Shorts  Sands China (1928) 45%, ICBC (1398) 38%, BankComm (3328) 37%, Ping An (2318) 35%, Hang Seng Bank (11) 33%, AAC Tech (2018) 32%, Hengan (1044) 31%, Ali Health (241) 29%, Henderson Land (12) 28%, HSBC (5) 28%, Galaxy Ent (27) 28%, Tencent (700) 26%, 
Bud Apac (1876) 26%.  
Government 

Seeing further resistance to its proposal to limit public access to the data at the companies registry.  Carrie Lam proposed the move to prevent ‘doxing’ although there is existing legislation covering such acts. This time from the Hong Kong Confederation of Trade Unions.
WATCH
Restaurants saw business surge up to 30% at the long weekend compared to last year's holiday as many Hongkongers ate well over the five-day period.
China Evergrande (3333)  March contracted sales +4.4% YoY to 64.8 billion yuan (HK$76.92 billion).The contracted sales area last month was 7.850 million square meters, representing an increase of 13 percent. The developer pocketed about 65.16 billion yuan in March.During the first quarter, Evergrande reached contracted sales of properties of 153.15 billion yuan, rising 3.9 percent year-on-year. The contracted sales area climbed 7.8 percent to 17.88 million sq m.  Total cash collection from January to March amounted to 134.28 billion yuan, rising 18.3 percent.
China Vanke (2202) said its contracted sales +14.38% to 62.84 billion yuan in March, with a contract sales area of about 4.3 million sq m, rising 13.59 percent. In the first quarter, the developer achieved an accumulated contract sales area of 11.04 million sq m, rising 24.82 percent. The corresponding contract sales increased by 30.16 percent to 179.47 billion yuan.  Vanke also plans to increase its registered capital in its logistic arm to 24.42 billion yuan from 18.1 billion yuan.
COUNTRY GARDEN (02007.HK) announced that it had achieved contracted sales attributable to the shareholders of approximately RMB52.69 billion, up 12% yearly, in March 2021.
R&F PROPERTIES (02777.HK) announced total contracted sales at the end of March 2021 were approximately RMB30.55 billion, representing a year-on-year increase of 68%.

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