Apr 9 Asian Marco Initial Thoughts Expect another mixed day China inflation & PPI on the open


09 Apr

Asia
Australia Pre market Services Index for March @ 58.7 beat F/casts,  due after the open Building Permits and RBA Financial Stability review. Futures were indicating 5pts -0.1% lower earlier, but may trend higher with Gold higher and Energy mixed.  A number of companies go Ex Div today.
Japan Nikkei futures opened +57pts following the moves in the US.  Expect the market to move cautiously higher, covid concerns remain
S Korea Expect markets to open higher following the US and building on recent gains but may see some consolidation going into the close ahead of the weekend.
Taiwan Market to open higher following the US but upside limited as more tech companies become affected by the shortages of chips and other components.
China Market to open due lower with Inflation (F/cast flat) and PPI (F/cast +2%) due on the open.  Also news of more US sanctions likely to hurt sentiment.  Watch to see if Team China come into support the market if there is significant selling.
HK ADR’s indicate -44pts at 28,964 with weakness in Financials and Ecommerce although Tencent’s  ADR closed +0.9% concerns as US blacklists 7 of China’s  supercomputer centres. Also concerns that the US’s global tax initiative could impact Hong Kong negatively, which could be bad for China.
US Futures Opened higher Dow +50pts, S&P +0.2% and NDX +0.2

Finance officials of the world’s major economies on Wednesday agreed on a proposal to boost the resources of the International Monetary Fund by $650 billion as a way to provide more support to vulnerable countries struggling to deal with a global pandemic.
India, South Korea and Thailand faced mounting coronavirus infections on Thursday, undermining cautious hopes that Asia might be emerging from the worst of the pandemic as worries about safety threatened to delay vaccination drives.

DOW +0.17%, NDX +1.03%, S&P +0.42%, Russel 2K +0.88% 
S&P made another high as Tech continues to rally. Many stocks saw initial weakness in reaction to the poor initial claims data but then most stocks worked better believing that there would be continued improvement as the country re-opens as inoculations roll out. Powell confirmed at a virtual IMF event that the recovery was 'uneven and incomplete’, something he believes is a serious issue. But that inflation was not an issue and that if it rose they had the tools to deal with it.
US Senate Foreign Relations Committee introduced major legislation on Thursday to boost the country’s ability to push back against China’s expanding global influence by promoting human rights, providing security aid and investing to combat disinformation.
The Democratic chair of the U.S. Senate Banking Committee has written to several large banks, including Credit Suisse and Japan's Nomura, asking them for information on their relationship with New York-based Archegos Capital Management after the fund imploded last month.
Costco +0.7% off early highs as same-store sales jumped 16% during March. Costco said that online sales rose 57.7% YoY, while net sales for the retail month of March came in at $18.21 billion, up from $15.49 billion in the same period a year ago.
Constellation Brands -4.6% despite beating top and bottom line estimates during the Q4. after announcing a new $500 million strategic investment in convertible preferred stock from KKR, which will mainly be used for a Dutch auction stock repurchase following fiscal first quarter of 2022 earnings.
GameStop -4.3% after the company announced that Chewy co-founder Ryan Cohen would take on the chairman role. Cohen currently serves on the board of directors and has pushed to change GameStop’s focus to e-commerce.
Bilibili +2.3% denied a Reuters report that it’s in talks to buy a 24% stake in Yoozoo Games. Reuters previously reported that Bilibili would buy Yoozoo Games’ stake as well as its headquarters for about $765 million
Banks all saw initial lows; JPMorgan Chase +0.1%, Citigroup -0.5%  Wells Fargo +0.1%, AMEX -0.06%
Work from home names: Facebook flat, Apple +1.9%, Amazon +0.6%, Netflix +1.4%,  Disney -0.1%, Zoom Video +2.5%, Alphabet +0.5% and Microsoft +1.3%,
Tech NXP Semi -1.4%, Nvidia +1.2%, Micron +1.4%, AMD +1.4%, Skyworks +1.3%
Re-opening stocks  Boeing +0.9%, Caterpillar flat, Simon Property -1.2%, Kohl’s flat, Nordstrom +0.7%, Gap +2.3%, United Airlines -0.2%, Carnival -1.5%, Wynn Resorts +0.6%, Chevron -1.1%, Exxon Mobil -1%,  
Lock down names Campbell Soup -1% General Mills +0.1%, JM Smucker +0.2%
DATA
Initial Claims 744k vs 728k prior revised (F/cast was 675k)
Four Week Average Claims 723.75k vs 721.25k prior revised (F/cast was 704.25k)
Continuing Claims 3.734m vs 3.75m prior revised (F/cast 3.61m)
EIA Natural Gas Report 20 Bcf vs 14 Bcf (Consensus was 21 Bcf)
USD was slightly weaker vs Yen & Euro on jobs data. Bitcoin +3.3% @57,699.04 , VIX -1.2% @ 17 a significant low, US T10 @ 1.626%
OIL Brent -0.7%, WTI -0.3% weakness in reaction to the increase in gasoline stocks out Wednesday. Brent moved slightly higher in after hours.
Gold +1.1%, Silver +1.4%, Copper +0.9% Platinum +0.4%, Palladium +0.3%.
AHEAD PPI, Core PPI, Wholesale Inventories, WASDE report, Baker Hughes Oil Rig

DAX +0.17%, CAC +0.57%, FTSE +0.83% 
Markets opened higher PMI data was mixed FTSE initally dipped but then worked slowly higher, Dax trended lower and then traded around flat. CAC opened higher and traded sideways. Encouraged by US markets trading at highs.
F&B lead the gains ahead of UK lockdown ending Monday, Healthcare was initially leading but Insurance sector weak but most sectors closed in the green
FT Lex’s UK stocks: happy domesticity; suggests that stocks are favourable on a relative basis but concludes 'Even liquidity is not assured at a time when financial collapses such as Archegos and Greensill are delivering small shocks to the system. Prudent investors should heed the old advice of “sell in May and go away”, even if that means a holiday cottage in Cornwall rather than a prohibited trip abroad.’
BMW AG -1% despite reporting record first-quarter vehicle deliveries, driven largely by explosive demand in China. It and Mercedes Benz are also receiving big boosts from newly introduced plug-in hybrid and fully electric vehicles.
The London Stock Exchange Group said on Thursday it was investigating a lengthy outage at its newly-acquired Refinitiv market data unit, Reuters reports.
DATA
EUROZONE
Construction PMI Mar 50.1 vs 45 Feb (F/cast was 52)
PPI Feb +0.5% MoM vs +1.7% Jan revised (F/cast was +0.4%)
PPI Feb +1.5% YoY vs +0.4% Jan revised (F/cast was +1.1%)
GERMANY
Factory Orders Feb +1.2% MoM vs +0.8% Jan revised (F/cast was+0.9%)
Construction PMI Mar 47.5 vs 41 Feb (F/cast was 48)
FRANCE
Balance of Trade Feb Euro -5.25b vs -4.19b Jan (F/cast was-3.2b )
Current Account Feb Euro -2.6b vs -2b Jan revised (F/cast was -1.8b)
Construction PMI Mar 49.7 vs 44 Feb (F/cast was 51)
UK
Construction PMI Mar 61.7 vs 53.3 Feb (F/cast was 54.1)
AHEAD
EUROZONE No data due
GERMANY Balance of Trade, Exports & Imports, Industrial Production, Current Account
FRANCE Industrial Production
UK Halifax House Price Index

JAPAN 
Nikkei futures opened  +57pts following the moves in the US. Expect the market to move cautiously higher, covid concerns remain.  Yen currently 109.28
No data due but on Monday we get Bank Lending and PPI pre market.
Tokyo reported 545 new cases (vs 555 Wednesday) and Osaka reported 905 The national total was 3,406The government will decide Friday whether to put Tokyo plus Kyoto and Okinawa prefectures under the novel coronavirus quasi-emergency stage following a resurgence in infection cases there.
Japan is looking to raise its 2030 greenhouse gas emissions-reduction target to a 45% cut on fiscal 2013 levels from 26% now, Kyodo news agency said on Thursday, citing government sources.+VE
Nomura has set up an internal team to investigate a possible $2 billion loss relating to Archegos Capital Management, two people familiar with the matter said. It plans to disclose details related to the loss, which it disclosed in March, later this month, possibly on April 27, one of the sources told Reuters.
Toshiba to consider CVC offer carefully many see it as an opportunity to avoid activist but it is likely to be subject to govt approval.  CVC is expected to look at reaching up the company.
Fast Retailing, the owner of clothing brand Uniqlo, on Thursday reported a 23% jump in half-yearly operating profit and raised its full-year profit estimate.  Uniqlo’s focus on China and Japan helped it escape the worst of the downturn that hit the United States and Europe. +VE
Toyota Motor Corp unveiled on Thursday new models of Lexus and Mirai in Japan, equipped with advanced driver assistance, as competition heats up to develop more self-driving and connected cars. Toyota’s latest launch comes as automakers, electric car startups and tech giants invest heavily in so-called active safety features.  +VE
Corporate bankruptcies in Japan dropped to a 30-year low in fiscal 2020, which ended March 31, thanks to government relief measures for businesses hit by the coronavirus fallout, Tokyo Shoko Research Ltd. said Thursday.  The number of companies that failed with debts of ¥10 million or over fell 17.0% from the previous year to 7,163, falling short of 8,000 for the first time since fiscal 1990, the credit research firm said.
Privately run coronavirus testing centers at Tokyo's Haneda airport for boarding passengers will open on Saturday.  The rapid testing facilities will conduct antigen tests, which provide results in roughly 15 minutes, for 1,800 yen, while also offering polymerase chain reaction tests, which take longer than antigen tests, for 1,900 yen but only for those not departing the same day.

SOUTH KOREA 
Expect markets to open higher following the US and building on recent gains but may see some consolidation going into the close ahead of the weekend.
No data due
KDCA reported 700 new coronavirus cases on Thursday, its highest daily tally since early January, and the prime minister reiterated warnings that new social distancing rules would likely be needed.
Exports are expected to expand 18.1 percent on-year in 2021 to set a fresh record high on the back of global economic recovery from the COVID-19 pandemic, a think tank said Thursday. +VE
Expectations for Seoul’s grand-scale redevelopment grew Thursday after the opposition candidate won the Seoul mayoral race, partly on a pledge to lift regulations affecting high-rise apartments along the Han River and in other parts of the city.  +VE Construction names but policies likely to conflict with Central Govt policies.
SK Telecom is utilizing its artificial intelligence technology to support the country’s health authority in monitoring recipients after COVID-19 vaccination, it said Thursday.  Dubbed NUGU Vaccine Carecall, SKT’s NUGU AI platform will provide guidance to those subject to vaccination through calls, and monitor any abnormal signs after shots are administered.  The telecom company signed a Memorandum of Understanding with the Korea Disease Control and Prevention Agency on Thursday. +VE
Samsung Electronics Co. introduced its new Galaxy A series smartphone portfolio in the United States on Thursday, hoping it can take over market share of its South Korean rival LG Electronics Inc. that recently announced its departure from the mobile business. +VE
Daewoo Shipbuilding & Marine Engineering Co. said Thursday that it has opened a center to control the shipbuilding process at its shipyards.  The center at its Okpo shipyard on Geoje Island, 398 kilometers south of Seoul, is made up of two parts -- the smart production management center and smart sea trial center -- Daewoo Shipbuilding said. Slight +VE
Samsung Heavy Industries Co. said Thursday that it has obtained approvals for its conceptual design for a wind turbine installation vessel (WTIV) from three global ship quality assurance and risk management companies. +VE
GS Group kicked off a mentoring camp with biotech startups on Thursday as part of environmental, social and governance efforts, with plans to pursue eco-friendly business projects together.
Renault Samsung, has successfully brought back its popular XM3 model to the market after dealing with technical issues, officials said Thursday. +VEKT Sat Co. said Thursday it has won an order to establish a high-speed satellite telecommunications network in Indonesia's Papua province +VE

TAIWAN 
Expect market to open higher following the US but upside limited as more tech companies become affected by the shortages of chips and other components.
Data due after market Balance of Trade, Imports, Exports
The Ministry of Health and Welfare yesterday recommended that the rollout of AstraZeneca’s COVID-19 vaccine should continue, adding that people would be informed of all known risks.
The consumer price index (CPI) last month rose 1.26 percent, as costs in all categories gained traction, with airfares and fuel prices increasing by double-digit percentage points, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The index remains stable and price hikes are limited to some items alone, the agency said.  Price increases in fuel and raw materials underpinned the increase in the inflationary gauge, which contracted 0.59 percent, compared with one month earlier, DGBAS official Tsao Chih-hung told a news conference in Taipei.
Minister of Foreign Affairs Joseph Wu yesterday said that following reports that Washington is to retain the previous US administration’s directives on dealings with Taiwan, existing US contact guidelines are still in place, as it is unclear how to proceed without them, but many had already been broken and future changes would be “very significant.”
The US Department of State on Wednesday reaffirmed its “rock-solid” commitment to Taiwan and said that Washington maintains the ability to resist any actions that would threaten Taiwan’s security, as China steps up its military pressure.  The remarks by State Department spokesman Ned Price came as a Chinese aircraft carrier group conducted drills in waters off Taiwan and as 15 Chinese planes entered Taiwan’s air defense identification zone that day, in the fifth straight day of such incursions.  Asked at a press briefing about Beijing’s apparent ratcheting up of pressure on Taipei, Price reaffirmed that the US’ commitment to Taiwan remains “rock solid.”
Largan profit falls, warns of months ahead shortages of high-end components would likely continue, while some manufacturing lines would take a season to rebuild, Largan’s CEO said.  Yesterday it reported its weakest quarterly net profit in three quarters;  Net profit fell 21 percent to NT$5.32 billion (US$187.13 million) in the first three months of this year, compared with NT$6.72 billion in the same period last year, it said. On a quarterly basis, net profit fell 32.6 percent from NT$8.57 billion. That translated into earnings per share of NT$39.62, down from NT$50.1 a year earlier and NT$5.87 in the fourth quarter last year. -VE with -VE cross read to Sunny Optical in HK
Broadband providers are seeing delays of more than a year when ordering Internet routers, becoming yet another victim of chip shortages choking global supply chains and adding challenges for millions still working from home. -VE
Wisdom Marine Lines reported pretax profit of NT$895.92 million (US$31.51 million) for Q1 vs a net loss of NT$123 million a year earlier, thanks to rising charter rates, the company said on Tuesday.  Wisdom’s first-quarter pretax profit surpassed its net profit of NT$111.41 million for the whole of last year, while its pretax earnings per share were NT$1.2 in the first quarter, higher than earnings per share of NT$0.15 last year, it said in a statement.  Wisdom, the nation’s largest bulk shipper in terms of fleet size, reported NT$1.37 billion in revenue for last month, up 45.9 percent year-on-year and the highest in a single month, it said.  +VE for Shippers

CHINA 
Expect market to open lower due lower with Inflation (F/cast flat) and PPI (F/cast +2%) due on the open.  Also news of more US sanctions likely to hurt sentiment.  Watch to see if Team China come into support the market if there is significant selling.
Data due
Inflation Rate Mar (Feb was -0.2% YoY (+0.6% MoM). F/cast is +0.2% YoY and -0.3% MoM)
PPI Mar (Feb was +1.7% (F/cast was +2%)
At the weekend Vehicle Sales and on Monday we could get New Loans data.
Another 11 people have been diagnosed with coronavirus disease in China’s only active outbreak, AP reports. Infections in the Yunnan province city of Ruili have topped 100, including those not showing symptoms, but a vaccination campaign and stay-home orders appear to have curbed large-scale transmission.
US Senate Foreign Relations Committee introduced major legislation on Thursday; a draft measure, titled the “Strategic Competition Act of 2021,” to boost the US’s ability to push back against China’s expanding global influence by promoting human rights, providing security aid and investing to combat disinformation. -VE
US blacklists seven Chinese supercomputer centres over weapons concerns. The Commerce Department says Beijing’s growing efforts in the field could have military uses that pose dangers.   Those put on the entity list include Wuxi’s National Supercomputing Centre, home to the Sunway TaihuLight, considered the world’s fastest when it was launched in 2016 -VE
China quiet on global minimum corporate tax rate backed by G20 as questions over Hong Kong’s tax-haven status arise.  Hong Kong is the world’s seventh-largest tax haven, and the largest in Asia.  The minimum corporate tax concept has potential risks for Hong Kong, through which some 70 per cent of foreign investment from the Chinese mainland is now channelled. One of the key advantages for a business to establish itself in Hong Kong and source its mainland-generated revenue is its low tax burden, so forcing Hong Kong to raise its corporate taxes could reduce its appeal as a business location. -VEUS bolsters presence with amphibious assault ship USS Makin Island.  The ship’s visit highlights Washington’s obligation towards the Philippines, analyst says, with Manila in dispute with China over Whitsun Reef.  The transit follows both China and the US sailing aircraft carriers into the contested waters. Slight -VE
BMW AG yesterday joined rival Mercedes-Benz in reporting record first-quarter vehicle deliveries, driven largely by explosive demand in China. Both are also receiving big boosts from newly introduced plug-in hybrid and fully electric vehicles.  Slight -VE for domestic brands.
Twitter has thrown its support behind the “Milk Tea Alliance” of democracy movements in Taiwan, Hong Kong and elsewhere in Asia, defying China at a time when Beijing is punishing Western companies for commenting on what it considers internal matters.  The social media company yesterday prominently displayed flags of Taiwan, Hong Kong, Myanmar and Thailand while unveiling an emoji to support democracy advocates in places that have in the past few years seen historic protests and share a love for the beverage.

HONG KONG  
ADR’s -44pts at 28,964 with weakness in Financials and Ecommerce although Tencent’s  ADR closed +0.9% concerns as US blacklists 7 of China’s  supercomputer centres. Also concerns that the US’s global tax initiative could impact Hong Kong negatively, which could be bad for China.
Data due Foreign Exchange Reserves

IPO LINKLOGIS–W (09959.HK), debut’s today;  closed at $18.28 in gray market, up 4% or $0.7 against the listing price of $17.58, on volume of 17.2 million shares andturnover of $314 million, PhillipMart data showed.  Excluding the handling fees, a book gain of $350 was reported per board lot of 500 shares.

Short Selling Thursday 4.6% vs 18.1% Wednesday 
Top Shorts  Haidilao (6862) 49%, Country Garden (2007) 47%, Bud Pac (1876) 44%, Mengniu Dairy (2319) 35%, Bankcomm (3328) 31%,  Ping An (2318) 31%,  Sino BioPharm (1177) 29%,  Galaxy Ent (27) 28%,  Bank of China (3988) 28%, Sands China (1928) 27%.
TRAVEL 
Hongkongers stranded in United Kingdom vented their frustrations as all tickets of two designated flights to Hong Kong were snapped up within two hours after sales started at 4 pm today.   The government earlier announced that they have arranged two designated flights from the UK to Hong Kong, with the CX2252 flights departing Heathrow Airport, London on April 21 and 28.
Some of the 700 Hong Kong residents stranded in Britain have canceled their trips home on special flights, saying they are unhappy about the quarantine arrangements.  All returnees from Britain are being quarantined at the Rambler Garden Hotel in Tsing Yi.   And some about to fly back expressed concerns regarding the hotel due to bad online reviews - including paying HK$400 to HK$500 a night for a "tiny room."

WATCH
Codelco, the world’s biggest copper producer, said concerning the COVID-19 resurgence in Chile, that it would not disrupt supply of the metal. “Definitely not,” company chairman Juan Benavides said when asked if a tightening of restrictions this week would interrupt the company’s operations or shipments.  Codelco lifted first quarter output despite a surge of infections in Chile, he said in an interview.  -VE for Jiangxi Copper and others like Chalco, that rallied yesterday on the rumour the covid surge would impact supplies
Sun Hung Kai Properties (0016),will offer 40 units at St Michel in Sha Tin for sale by tender from April 16.  The 40 units measure between 942 sq ft and 1,521 sq ft.
Mainland developer Kaisa (1638) bought a floor of The Center in Central for around HK$870 million, or HK$34,236 per sq ft, according to local media reports.
Krafton, the developer for the game "PUBG" backed by TENCENT (00700.HK), lodged a listing application at Korea Stock Exchange.   Preliminary documents showed that TENCENT holds approximately 15.5% stake of Krafton through an investment company.
CHINA LONGYUAN POWER (916 HK) announced that power generation of the company on a consolidated basis is higher 9.09% YoY
* Wind power was flat yoy, coal was +71.62% yoy, other renewable was +125.67% yoy.
* On a YTD basis, wind is up +23.5% yoy, coal is up +42.1% yoy, and other renewable is up +149.6% yoy. +VE
NTES-S (09999.HK)'s Yanxuan disclosed that the group at this moment has no vehicle manufacturing plan, underscoring that they tend to work with dealers for now on vehicle sale business.  NTES-S hopes to subsidize its clients with the cash and money it earns, according to Yanxuan.  +VE
CHINA HUARONG (02799.HK) is preparing to strip out non-core and loss-making assets as part of its broader plan to boost profitability and avoid debt restructuring or government recapitalization, Bloomberg citing sources.  The Chinese company has received positive initial feedback from the watchdog after submitting the plan, sources said. +VE
CHINA SCE GROUP (01966.HK) announced that the Group achieved an accumulated contracted sales amount of approximately RMB26.032 billion and an accumulated contracted sales area of 1.4933 million square metres for the first three months of 2021, representing a year-on-year increase of 101% and 66%, respectively.  The average selling price for the period was RMB17,432 per square metre.
HKEX (00388.HK) announced addition of BILIBILI-SW (09626.HK) into the list of Volatility Control Mechanism (VCM) securities, with effect from 15 April 2021.
Hutchison China MediTech Limited (HCM.US)  announced that it has entered into a definitive agreement for the issuance of US$100 million of shares at a price equivalent to US$30.5 per American Depositary Share (ADS) via a private placement to funds affiliated with Baring Private Equity Asia (BPEA).  Christian Hogg, Chief Executive Officer of HUTCHMED, said the group expects significant growth of business this year as it looks to accelerate oncology revenues from ELUNATE and SULANDA.
TRIP.COM-S (09961.HK), on debut for its secondary IPO in Hong Kong, had its international placing reported over-subscription, according to market sources. It has started its secondary IPO in Hong Kong from today through 13 April. The maximum offer price is HK$333 per share. Entry fee. is around HK$16,817.78 per board lot of 50 shares.
TENCENT (00700.HK) and SAIC MOTOR (600104.SH) established a joint cybersecurity lab for profound cooperation on cybersecurity standards related to intelligent connected vehicles (ICVs), attack and defense technologies, as well as R&D and operation of cybersecurity technologies.  This could raise US suspicions about links to the military that could result in sanctions.
PCCW (00008.HK) is working with its financial advisers on its proposed sale of PCCW Solutions, which may be valued over US$1.0 billion, Bloomberg learnt from insiders. Several telecom carriers and private equity funds have shown interest in partial acquisition, according to the report. +VE
China Association for Vaccines President Feng Duojia revealed at the Peking University seminar that China's COVID-19 vaccine production capacity can reach around 5 billion doses a year in 2022, reported Beijing Daily.  He anticipated almost 70% of the Chinese people to gradually be vaccinated by the end of 2021.
FAST RETAIL-DRS (06288.HK) announced interim results ended February 2021. Profit attributable to owners of the Parent amounted to JPY105.868 billion, up 5.4% yearly.  EPS. equaled JPY1,036.76. Interim DPS. was JPY240.  An application has been made by the Company for resumption of trading in its Hong Kong depositary receipts with effect from Friday
Cenovus Energy Director Frank Sixt told reporters that the company does not intend to sell its Asian assets and that they are satisfied with relevant performances and their relationship with CNOOC (00883.HK), after the street had rumored earlier that the energy firm was pondering over disposal of Husky Energy's Asia-Pacific business.
Centa Valuation Index (Major Banks) (CVI) last stood at 81.25 this week, down 0.98 pts weekly. CVI softened for two weeks following a weekly surge of 9.38 pts, standing firmly around 80, said the research department of Centaline Property. This reflected bankers' rational stance on mortgage and a persistently upbeat view on the property market. They anticipated the index to hold steady at 80 in short run, foretelling a home price uptrend.  Interesting to see that there has not been a re-rating after CY Leung said the HK administration was to focus on the housing situation in Hong Kong.

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