Asian Marco Initial Thoughts. Markets to open lower following the US sell-off


21 Apr

Asia
Australia Market to open lower futures -78pts, Retail Sales and Leading Index data due,Oil weak overnight -VE for Santos and Woodside. BNP releases its Q3 update. Gold names slight +VE. Qantas and Webjet -VE as Trans-Tasman travel bubble in question after a border worker in Auckland has tested positive for COVID-19 and is now quarantining
Japan 
Nikkei futures opened +65pts eased to -10pts but rebounded to +60pts. Expect a flat opening and some bargain hunting following Tuesdays 585pt sell off; Osaka gets State of emergency measures and others may follow but largely priced in.
S Korea 
Expect markets to open lower and see some consolidation following the sell off in US and the Kospi hitting a new high Tuesday. Pre market PPI was stronger than f/cast a further -VE
Taiwan 
Market to open lower after closing at a new high Tuesday following the sell off in the US.
China 
Market to open lower follow the US sell off. Investors watching for sound bites from the Boao forum. Concerns still over international relations, Huarong’s bonds and tighten by the PBOC.
HK 
ADR’s indicate -358pts at 28,777 with broad weakness across all sectors
US Futures 
Opened flat Dow flat, S&P -0.1%, NDX -0.4%

The Religious Freedom in the World Report, covering 2019-2020  issued on Tuesday, said that in some countries, such as Niger, Turkey and Pakistan, prejudices against religious minorities led local residents to blame them for the COVID-19 pandemic and denial of access to medical aid.  Violations of religious freedom are increasing and persecution takes place in more than 25 countries, with China and Myanmar among those that have the worst records, according to a report by a Vatican-backed charity.

DOW -0.75%, NDX -0.92%, S&P -0.68%, Russel 2K -1.96% 
Markets opened flat but sold down through the morning and hitting the day lows late morning before trading sideways in the PM with a slight uptick into the close.
United Airlines -8.5% reported its fifth consecutive quarterly loss and said that business and international travel is still far from a recovery. The State Department said it would increase “do not travel” advisories to 80% of the world’s countries, adding that the pandemic presents an “unprecedented risk to travelers.”
Procter & Gamble +0.8% beat analysts’ estimates for quarterly earnings and revenue as consumers maintained pandemic buying trends like purchasing more cleaning supplies and started buying beauty products again
President Biden said on Tuesday the United States must ramp up production of electric vehicles to catch up with and then surpass China after he virtually toured an electric bus and battery manufacturing plant on Tuesday. “We ought to be the single most significant suppliers of electric buses and vehicles in the world before it’s over. Right now, we’re running way behind China.” He said.
Apple launch event failed to drive the stock -VE for its supply chain. It launched a colorful new iMac and an updated iPad Pro with 5G and the M1 chip that’s also used in the company’s desktop computers. Apple also announced an AirTag lost-device tracking gadget and a refreshed Apple TV 4K with a brand-new remote.
Banks JPMorgan Chase -2.2%, Citigroup -3.2% Wells Fargo -3.1%, AMEX -2.3%
Work from home names: Facebook +0.1%, Apple -1.3%, Amazon -1.1%, Netflix -0.9% ahead of earnings was -8.4% after market. Disney -2.5%, Zoom Video -0.8%, Alphabet -0.5% and Microsoft -0.2%,
Tech NXP Semi -0.5%, Nvidia -1.2%, Micron -1.1%, AMD -2.3%, Skyworks -1.7%
Re-opening stocks  Boeing -4.1%, Caterpillar -2.1%, Simon Property -2%, Kohl’s -4.6%, Nordstrom -2.1%, Gap -1.9%, United Airlines -8.5%, Carnival -4.4%, Wynn Resorts -3.7%, Chevron -1.9%, Exxon Mobil -2.1%,  
Lock down names Campbell Soup +1% General Mills +1.6%, JM Smucker +0.3%
After Hours 
Netflix -8.4% (was -0.9% normal hours) despite earnings being better than f/cast as subscriber numbers missed badly
DATA
Redbook +13.5% YoY vs +13.2% prior
After Market
API Crude Oil Stock Change +0.436m vs -3.608m (Consensus was -2.9m)
USD was flat vs Yen & Euro. Bitcoin +1.2% @ 56,593.33, VIX +8% @ 18.68, US T10 @ 1.566%
OIL Brent -0.72%, WTI -1.48% concerns that the covid surge in India and elsewhere will hurt demand.
Gold -0.01%, Silver +0.1%, Copper -0.02% Platinum -0.53%, Palladium flat.
AHEAD MBA Mortgage Applications and 30 yr Mortgage Rate, EIA Oil Report.
Earnings Verizon, Chipotle, Whirlpool, Nasdaq, Baker Hughes, Anthem, Netgear, Spirit Airlines, Canadian Pacific Railway, Lam Research, Discover Financial, SLM, Halliburton, Knight-Swift Transportation

DAX -1.55%, CAC -2.1%, FTSE -2% 
Opened flat but sold down all day and closed on the day lows. Pre market; German PPI stronger than expected and UK employment data slightly better.  Auto’s firm but other sectors weak especially Travel and Banks.
British American Tobacco -7.6% lead a broad decline for tobacco companies after a report that the Biden administration is considering a requirement for reduced nicotine content in all cigarettes sold in the U.S.; the US’s Imperial Brands -7.3%
Danone -1.8% Q1 sales -3.3% but maintained full year guidance,
Associated British Foods -5.9% as operating profit almost halved YoY.
AMS -12.9% after a media report that it lost some business from U.S. tech giant Apple, Swiss Re -7.5% after entering into a partnership with Veoneer to advance assessment and development of ADAS technology.
Avast +1.3% the Czech antivirus software maker; after a promising first-quarter trading update.
DATA
German
PPI Mar +0.9% MoM vs +0.7% Feb (F/cast was +0.4%)
PPI Mar +3.7% YoY vs +1.9% Feb (F/cast was +3.1%)
UK
Claimant Count Change Mar 10.1k vs 86.8k Feb (F/cast was +150k)
Employment Change Mar -73k vs -147k Feb (F/cast was -120k)
Average Earnings (Inc Bonus) Mar +4.5% vs +4.8% Feb (F/cast was +4.5%)
Average Earnings (Ex Bonus) Mar +4.4% vs +4.3%Feb revised (F/cast was +4%)
Unemployment Rate Mar 4.9% vs 5% Feb (F/cast was 5.1%)
AHEAD
EUROZONE No data due
GERMANY No data due
FRANCE No data due
UK Inflation Rate, Core Inflation, PPI Core, PPI Output, PPI Input, Retail Price Index,

JAPAN 
Nikkei futures opened +65pts eased to -10pts but rebounded to +60pts. Expect a flat opening and some bargain hunting following Tuesdays 585pt sell off; Osaka gets State of emergency measures and others may follow but largely priced in.   Yen currently 108.9
No data due 
Osaka asked the central government to declare a state of emergency and it is reported the PM Suga has decided to declare it for Oaska.  It reported 1,153 new covid cases on Tuesday. Tokyo, Hyogo and Kyoto expected to follow;  -VE but much of that news priced in with yesterdays consolidation.
Tokyo reported 711 new Covid cases (vs 306 on Monday) nationwide the total was 4,335.
Foreign residents reported to be considering flying to other countries to get vaccinated, as the pandemic surges again with no shots in sight for everyday people.
Toshiba Corp. said a potential acquisition offer from CVC Capital Partners has stalled after the firm submitted a new proposal that lacks sufficient information for evaluation.  “It merely stated that CVC would step aside to await our guidance as to whether a privatization of Toshiba would suit management’s and the Board of Directors’ strategic objectives,” the statement said.  Toshiba revealed a preliminary approach from CVC in early April, which sent its share price soaring. Just days later, the company’s board urged caution over the discussions, warning the proposal may not lead to a transaction.
Subaru Corp said on Tuesday that it was suspending production at its plant in Indiana through the end of April due to a global shortage of semiconductors.
China’s military is thought to have instructed a hacker group to conduct cyberattacks on nearly 200 companies and research institutes in Japan, including the Japan Aerospace Exploration Agency, investigative sources said Tuesday. Tokyo police referred a Chinese man, who is a member of the Chinese Communist Party, to prosecutors Tuesday over his alleged involvement in the cyberattacks, they said. It is believed that the series of hacks were conducted by "Tick," a Chinese cyberespionage group, under the direction of China's People's Liberation Army, according to the sources.
A survey on the recruitment environment for new graduates revealed that deteriorated business conditions have led many major companies (22%)  to reduce the number of graduates they aim to hire in spring next year. The “seller’s market” for students that existed before the novel coronavirus pandemic is now a thing of the past. However, some companies aim to maintain the same level of hiring as in the previous year, creating contrasts even within industries.

SOUTH KOREA 
Expect markets to open lower and see some consolidation following the sell off in US and the Kospi hitting a new high Tuesday.  Pre market PPI was stronger than f/cast a further -VE
Data out
PPI Mar +3.9% YoY vs +2.1% Feb revised from 2% (F/cast was +2.6%)
PPI Mar +0.9% MoM vs +0.8% Feb (F/cast was +0.2%)
KDCA  reported 549 new covid cases Tuesday including 321cases of ‘emerging’ variants. The second day above 500 -VE for sentiment.
Biden-Suga summit leaves Moon with few options,  Seoul’s “strategic ambiguity” to be tested amid Washington’s ramped-up efforts to form a unified front on a more assertive China. The US and Japan having reaffirmed their commitments to countering China’s continuing assertiveness over Hong Kong, Taiwan and the South China Sea, while pledging a whopping $4.5 billion to develop ultrafast communications technologies to prevent Huawei, China’s state-backed telecom giant, from dominating the global market. “It’s almost like the US and Japan have announced a set of new global orders,” said Park Won-gon, a professor of North Korean studies at Ewha Womans University. “Now the only option left for South Korea is whether to join the initiative or not.
Hyundai Motor Group, South Korea's largest automotive conglomerate, is mulling the sale of its railway business affiliate, industry sources said Tuesday.  The group is considering selling Hyundai Rotem's loss-making railway business, according to the sources.
Global smartphone sales snapped back in the first quarter of the year to show the strongest growth since 2015, Strategy Analytics said Tuesday with smartphone makers shipping some 340 million units in the first three months of the year, a 24 percent jump from the same period last year. Strong demand in China driven by 5G. "Chip shortages and supply side constraints did not have a significant impact in Q1 among the top five brands but was and will be a concern for smaller vendors over the next few quarters in our view.”  Samsung led the market with a 23 percent market share, following by Apple at 17 percent and three Chinese vendors, Xiaomi (15 percent) and Oppo and Vivo (11 percent each). +VE
S-Oil said Tuesday that the company has signed Kumho Tire as the first partner for its all-in-one car management platform “Eurecar.”  Set for release next year, the mobile app will offer a wide spectrum of services from non-face-to-face charging and payment services at S-Oil gas stations, to dialing designated drivers, valet parking and making car wash reservations.
The Federation of Korean Industries said Tuesday that South Korea needs to consider reviewing related regulations to open up the gates for local practice of telemedicine-medical diagnosis.   FKI Vice Chairman Kwon Tae-shin said now is the time to take deregulatory actions, given the public’s positive perception of telemedicine, formed after experiencing the COVID-19 pandemic.
The bereaved family of Samsung Group Chairman Lee Kun-hee will make public its plans for the late tycoon’s massive personal wealth, estimated to be worth over 30 trillion won ($26.98 billion), industry sources said Tuesday.  The plan will include donations of art from the chairman’s collection and the allocation of his stocks to family members, including Lee Jae-yong, his son and successor in the Samsung empire. It will also detail how the family plans to pay the inheritance taxes.
LG Electronics Inc. said Tuesday it plans to produce home appliances from its smartphone manufacturing line in northern Vietnam, as the company earlier decided to fully withdraw from the mobile business.
Multiple-home owners in one of Seoul’s most expensive districts have been scrambling to give away their apartments to family members or relatives as gifts before toughened tax rules come into force in June, according to data released by the state-run Korea Appraisal Board on Tuesday.

TAIWAN 
Expect market to open lower after closing at a new high Tuesday following the sell off in the US.
No data due 
But after Market Tuesday 
Export Orders Mar +33.3% YoY vs +48.5%Feb (F/cast was +37%)
Increased for a fifth straight month of double-digit percentage growth to set a record for the month of March. The “red hot” information communications and technology (ICT) sector has not slowed down, with orders totaling US$14.02 billion, up 21 percent year-on-year and a new high for the month of March, while orders in the optical equipment sector reached US$2.64 billion, up 45.2 percent year-on-year — the 10th consecutive month of growth, the ministry said. The growth is expected to continue this month, with orders forecast to increase by 29.8 to 33.7 percent annually, it added. One headwind for exporters could come in the form of a stronger local currency.
The military is to form a new reserve mobilization agency while expanding the scope of civilian forces that can be mobilized as part of its efforts to bolster the nation’s reserve forces amid increasing threats from China, the Ministry of National Defense said yesterday.
Taiwan plays a key part in global supply chains, but it has many things to offer in addition to Taiwan Semiconductor Manufacturing Co (TSMC), European Economic and Trade Office in Taiwan Head of Office Filip Grzegorzewski told a news briefing yesterday.  Grzegorzewski made the remarks after the European Council on Monday released the EU’s Strategy for Cooperation in the Indo-Pacific.  The EU “has a big stake in the Indo-Pacific region, and has every interest that the regional architecture remains open and rules-based,” the EU said in a news release.  The EU looks forward to working with like-minded partners in the region, including Taiwan, which shares values with the EU on democracy, human rights and the rule of law, he said when asked about Taiwan’s role in the strategy.
The Financial Supervisory Commission is to set up new money laundering regulations for the nation’s cryptocurrency exchanges from July 1, requiring them to report transactions valued at more than NT$500,000 (US$17,770), the commission said yesterday.
Capacity at the Zengwen Reservoir, Taiwan’s largest reservoir, had as of yesterday fallen to 10.71 percent, its lowest level of the current shortage.  There was some rain in the reservoir’s catchment area on Sunday and Monday, but water levels only increased 10mm, despite artificial cloud-seeding operations, Southern Region Water Resources Office deputy head Tsou Han-kuei said. Later on Monday, capacity fell to about 11 percent after water was released to the Wushantou Reservoir Tsou said.  -VE
Foxconn Technology Group  has reached a new deal with reduced tax breaks for its scaled-back manufacturing facility in southeast Wisconsin, Governor Tony Evers and the company announced on Monday.  Details of the new deal were not immediately released.  The new deal would reduce the potential tax breaks by billions of dollars, but still offer potential tax breaks of more than US$10 million to the company, a person with knowledge of the new contract who was not authorized to speak publicly about the deal said on Monday. +VE

CHINA 
Expect market to open lower follow the US sell off.  Investors watching for sound bites from the Boao forum.  Concerns still over international relations, Huarong’s bonds and tighten by the PBOC. 
 No data due
Boao Forum continues
President Xi Jinping called for greater global economic integration and warned against decoupling while calling on the United States and its allies to avoid "bossing others around.” Xi, in a speech at the Boao Forum on Asia, did not name the United States specifically, but said: "International affairs should be conducted by way of negotiations and discussions, and the future destiny of the world should be decided by all countries. "One or a few countries shouldn't impose their rules on others and the world shouldn't be led on by the unilateralism of a few countries.” In a veiled critique of US efforts to reduce dependence on Chinese supply chains and withhold exports of goods like advanced computer chips, Xi said "any effort to build barriers and decouple works against economic and market principles and would only harm others without benefiting oneself."
China will keep widening the business scope for foreign financial institutions, on top of the foundation of pre-national treatment and negative list management, PBOC Governor Yi Gang was quoted as saying by Securities Times.
China Securities Regulatory Commission announced that Guangzhou Futures
Exchange had officially opened Monday, 
celebrating the fifth futures exchange in the second largest economy.  HKEX (00388.HK) had in early-February announced acquisition of 7% stakes in Guangzhou Futures Exchange.
During the first quarter of 2021, China's production volume of new energy vehicles and integrated circuits rose 3.1 times and 62.1%, according to Minister of Industry and Information Technology. It is global industrial chain's smooth cooperation that could ease tight situations faced by the semiconductor sector worldwide, opined Huang Libin, MIIT's spokesperson and director general of MIIT's Performance Inspection and Coordination Bureau. Regarding recent auto chip shortages, MIIT has organized carmakers and chipmakers to prepare a manual for matching semiconductor supply with demand in auto sector, which will further unclog information channels and build a platform for bilateral exchange and collaboration.
US Department of Homeland Security said at least two groups of China-linked hackers have spent months using a previously undisclosed vulnerability in American virtual private networking devices to spy on the U.S. defense industry, researchers and the devices' manufacturer said Tuesday.  Utah-based IT company Ivanti said in a statement the hackers took advantage of the flaw in its Pulse  Connect Secure suite to break into the systems of "a very limited number of customers."
China starts large-scale testing of its internet of the future.   Experimental network connects 40 leading universities to prepare for an AI-driven society five to 10 years down the track.   The facility will become a prototype ‘future internet’ with huge bandwidth to connect the many devices expected to be commonplace. Headquartered at Tsinghua University, the “future internet technology infrastructure” connects 40 of the country’s leading research universities with huge bandwidth and far lower latency than the existing internet, according to state news agency Xinhua.  It will serve as a backbone network for the China Environment for Network Innovations (CENI), a national research facility connecting the largest cities in China, to verify its performance and the security of future network communications technology before commercial use.
DBS Group said on Tuesday it plans to buy a 13 percent stake in privately-held commercial lender Shenzhen Rural Commercial Bank Corp (SZRCB) for 5.29 billion yuan (US$814.26 million), Reuters reports.
Chinese internet companies blocked users from sharing a lengthy article written by former premier Wen Jiabao in tribute to his late mother, censoring a senior member of the ruling Communist Party, possibly because he spoke out of line, Reuters reports. The obituary-style article written by Wen about his mother, who died recently, appeared in a small weekly newspaper called the Macau Herald on Friday and was posted on a public account on Chinese chat app WeChat on Saturday, but was swiftly restricted.  The heartfelt tribute includes details of Wen's mother's struggle during periods of upheaval in China, including the second Sino-Japanese War and the political purges of the Cultural Revolution. "In my mind, China should be a country full of fairness and justice, always with a respect for the will of the people, humanity, and human nature," said Wen's article, which did not directly discuss China's current political environment.

HONG KONG  
ADR’s -358pts at  28,777 with broad weakness across all sectors
No data due
Short Selling Tuesday 8.6% vs 16.4% Monday
Top Shorts  Sino BioPharm (1177) 54%, Bud Apac (1876) 36%, BankComm (3328) 33%, Bank Of China (3988) 29%,  Ping An (2318) 27%, Wuxi Bio (2269) 24%
WATCH
SUNLIGHT REIT (00435.HK) released the operational statistics of Sunlight REIT for the third quarter of the financial year 2020/21. At 31 March 2021, the occupancy rate of Sunlight REIT’s portfolio was 92.7% as compared to 91.5% at 31 December 2020.
BABA-SW (09988.HK)'s Fliggy announced the launch of domestic flight ticket blind boxes at RMB66 each during 20-22 April. After picking the departure location, each user can draw a blind box for a flight ticket with random destination and date of departure (slated for the coming three to 30 days).   On another note, Fliggy mentioned the tour and hotel bookings for the May Day holiday had burgeoned by over 11 times YoY on the platform.
DBS Group, Mitsubishi UFJ (MUFG), OCBC and STANCHART (02888.HK) are among suitors for parts of Citigroup's consumer business in Asia, Reuters citing people with direct knowledge of the matter.
EDVANTAGE GROUP (00382.HK) generated RMB554 million in interim revenue ended February 2021, up 32.5% yearly and representing roughly 44% of RMB1.25 billion in full-year target.  The group started consolidated Urban Vocational College of Sichuan and Urban Technician College of Sichuan, which had been acquired last year, into its statements from January 2021, disclosed CEO Liu Yi Man, adding that she is confident of meeting the full-year target.
TENCENT (00700.HK)  will shower RMB1-billion "WeChat Pay City Vouchers" during the 2nd Session of May 5th Shopping Festival in Shanghai, revealed Xin Jianhua, the General Manager of Government Cooperation Center for WeChat Pay of TENCENT. WeChat Pay will mobilize more than a hundred of brands and almost tens of thousands of outlets online and offline in Shanghai, whereas citizens can obtain vouchers through the Mini Program "WeChat Pay City Vouchers" from merchants like JD, Carrefour and Starbucks. +VE
China Evergrande New Energy Vehicle (0708) exhibited nine electric car models in a car show for the first time as its president pledged mass deliveries by next year.
Although the car subsidiary of developer China Evergrande (3333) has a huge presence at the Shanghai Auto Show which opened Monday, media could not get up close and personal with its Hengchi models on display as the cars were contained within glass fences and only security and company personnel were allowed in. That set social media abuzz with some netizens questioning whether the models are available to drive, as their chassis design is much flatter than traditional cars. But others said Tesla's models have similar designs. Slight -VE

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