Sept 10 Asian Macro Initial Thoughts Mixed start Japan leadership in focus.


10 Sep

This and previous notes can be found at  Substack ( Asian Market Sense )
Check out ERI-C.com for  interesting research and trading analysis

Asia Summary 
No data due although we could get the China New loans data. China policy still being worked out, I think Dual Circulation represents a radical change from growth and profit to ideology and ‘common prosperity’. Oil weak as China to release reserves.
President Biden announces more pressure on US citizens to get vaccinated by making in mandatory for Govt workers and urges private companies to do the same.

Australia Futures indicate market to open +25pts with +VE sentiment on easing of lockdowns. Gold rises along with Coal and Iron Ore and Aluminium seeing more upgrades but Oil fell overnight.  A number of firms going Ex Div (Cleanaway Waste Management Ltd (ASX: CWY) and logistics solutions platform provider WiseTech Global Ltd (ASX: WTC) and JB Hi-Fi Limited (ASX: JBH))
NSW to ease its lockdown from Saturday, especially for those who are fully vaccinated.
Data Consumer Inflation Expectations
Japan Nikkei local futures -40pts,  Chicago Futures -35pts  BigSq on the open.  Thursday the market managed to close above 30,000 but we could see more downside ahead of the weekend and PPI and BSI Large Manufacturing data pre market Monday. The wild card is pre-leadership vote policy hopes.
S Korea Expect markets to open lower futures indicate -7pts but could see a mild  rebound as some of yesterday’s weakness was related to the quad  witching. Foreigner continue to buy cyclicals with Posco a favourite.   Semi’s may also see a bounce.  
Taiwan Expect market to open higher on news of stimulus vouchers and relief budget but watch T/O which has been dropping all week.
China Expect market to open lower with ADR’s and the Golden Dragon Index weak again overnight in US.  The wild card is Team China supporting the market.
HK ADR’s +43pts at 25,759  Oil weak and some weakness in Chinese Banks.  Expect continued caution after Tencent and NetEase saw a huge increase in volumes yesterday; so whilst there may be some bargain hunting sentiment remains bearish for the sector along with a number of ecommerce plays.
Europe Focus will be on the data.
Ahead Germany Inflation Rate
France Industrial Production
UK  Balance of Trade, Construction Output, Industrial Production, Manufacturing Production, GDP, GDP 3 Month Ave, Goods Trade Balance, NIESR Monthly GDP Tracker.
US Futures 
Opened Dow -8 pts. S&P and Nasdaq futures flat.
Ahead PPI, Core PPI, Wholesale Inventories, WASDE Report, Baker Hughes Rig Count.

DOW -0.43%, NDX -0.25%, S&P -0.46%, Russel 2K -0.03%
Markets opened slightly higher on the good jobs report but the Dow and S&P slipped into the red late morning whilst the NDX traded sideways in the green. But all marekts sold down early afternoon and traded sideways in the red into the close.
Moderna +7.8% after saying it’s developing a single dose vaccine that combines boosters against Covid and the flu.
Lululemon +10.5% and furniture retailer RH +8% on the back of better-than-expected earnings. Lululemon also offered a stronger-than-forecast outlook for Q3 and FY.
Airlines reduced their F/casts because of the resurgence of covid cases but rallied through the morning.
Boston Beer -3.8% off the lows after pulling its earnings guidance amid slowing growth in its hard seltzer brand.
GameStop -10.5% despite the better-than-expected results. The retailer did not provide an outlook or grander turnaround plans.
Banks JPMorgan Chase +0.4%, Citigroup -1% Wells Fargo +1.2%, Amex -0.1%
Work from home names: Facebook +0.1%, Apple -0.7%, Amazon -1.2%, Netflix -1.4%,  Disney +0.4%, Zoom Video +0.8%, Alphabet -0.1% and Microsoft -1%,
Tech NXP Semi +1.1%, Nvidia -0.7%, Micron +0.8%, AMD unch, Skyworks -0.2%
Re-opening stocks  Boeing +1.2%, Caterpillar -0.7%, Simon Property -1.1%, Kohl’s +1.1%, Nordstrom -0.2%, Gap +1.2%, United Airlines +2.3%, Carnival +2.2%, Wynn Resorts -0.7%, Chevron -0.4%, Exxon Mobil +0.1%,  
Lock down names Campbell Soup -0.5% General Mills -1.6%, JM Smucker -0.9%
DATA
Initial Claims 310k vs 345k prior revised (F/cast was 336k)
4 Week Ave 339.5k vs 356.25k prior revised (F/cast was 344.75k)
Continuing Claims 2.783m vs 2.805m prior (F/cast was 2.743m)
EIA Natural Gas Stocks 52 Bcf vs 20Bcf prior (consensus was 40 Bef)
EIA Crude Oil Stocks Change -1.529m vs -7.169m prior (consensus was -4.612m)
EIA Gasoline Stocks Change -7.215m vs +1.29m prior (consensus was -3.39m)
USD was weaker vs Yen & Euro. Bitcoin flat @ 46,438.59, VIX +4.7% @ 18.8, US T10 @ 1.297% as initial claims drop
OIL Brent -1.8%, WTI -1.99% on news China to release oil reserves
Gold +0.16%, Silver +0.12%, Copper +1.09% Platinum -0.48%, Palladium -3.28%.
AHEAD PPI, Core PPI, Wholesale Inventories, WASDE Report, Baker Hughes Rig Count.

DAX +0.08%, CAC +0.24%, FTSE -1.01%
Opened lower ahead of ECB, CAC and DAX worked higher into the green but the FTSE traded sideways in the red.  ECB left rates unchanged but reduced its bond buying programme. Markets were helped by a good US initial claims number. Industrials were +0.6% but Basic Resources -0.8%.
The European Union removed Japan and five other countries from its list of safe travel destinations, meaning visitors or people returning from those countries are likely to face tighter controls such as COVID-19 tests or quarantine.
easyJet -10.2% after announcing a discounted rights issue, aiming to raise £1.2 billion ($1.65 billion) to fund its pandemic recovery. It also revealed that it had recently rejected a stock takeover offer from Whizz.
Genus -7.5% after missing full-year profit expectations, and saw a broker downgrade.
Polish parcel locker company InPost +5% after reporting a 37% increase in second-quarter earnings Wednesday.
Assa Abloy +4.7% after agreeing to buy the hardware and home improvement division of U.S. company Spectrum Brands.
DATA
Eurozone 
Rate decision unchanged but will reduce its Bond Buying Programme.
Germany 
Balance of Trade Jul €18.1B vs 16.2B Jun revised (F/cast was 21.1B)
Imports sa Jul -3.8% MoM vs +0.7% Jun revised (consensus was +0.2%)
Exports sa Jul +0.5% MoM vs +1.3% Jun (consensus was +0.5%)
Current Account Jul €17.6B vs 22.5B Jun revised (F/cast was 24.4B)
AHEAD
EUROZONE No data due
GERMANY Inflation Rate
FRANCE Industrial Production
UK  Balance of Trade, Construction Output, Industrial Production, Manufacturing Production, GDP, GDP 3 Month Ave, Goods Trade Balance, NIESR Monthly GDP Tracker.

JAPAN
Nikkei local futures -40pts,  Chicago Futures -35pts  BigSq on the open.  Thursday the market managed to close above 30,000 but we could see more downside ahead of the weekend and PPI and BSI Large Manufacturing data pre market Monday. The wild card is pre-leadership vote policy hopes.
Yen currently 109.72
No data due
Tokyo reported 1,675new covid cases (-159 DoD) and the national tally was 10,400
Japan extended emergency COVID-19 restrictions on Thursday in Tokyo and other regions until the end of this month to curb infections and prevent hospitals being overwhelmed.
The government is expected to shorten the period of self-isolation upon arrival for vaccinated people from 14 to 10 days — the first time the nation will have eased quarantine measures since the beginning of the year.
Final arrangements are being made for the leaders of the United States, Australia, Japan and India to meet in person in Washington on Sept. 24, Kyodo News reported on Thursday, citing unnamed U.S. and Japanese sources.
SBI Holdings Inc on Thursday announced an offer to buy a near majority stake in Shinsei Bank Ltd in an unsolicited bid to take effective control of the lender.  SBI aims to become Japan’s fourth largest banking group and already owns the country’s largest online brokerage, an online bank and an asset manager. It has been taking stakes in smaller lenders to create a nationwide network.
U.S. investment bank Houlihan Lokey Inc has raised its offer price to buy Japanese mergers and acquisitions (M&A) advisory firm GCA Corporation for about $599.1 million (65.9 billion yen) in cash, the company said on Thursday.
Japanese vaccine minister Taro Kono will formally announce on Friday that he is joining the race to lead the ruling party, Kyodo news agency said.
Stores in Japan ask customers to prove they’re real Pokemon fans when buying cards to stop scalpers  - only in Japan.

SOUTH KOREA
Expect markets to open lower futures indicate -7pts but could see a mild rebound as some of yesterday’s weakness was related to the quad witching. Foreigner continue to buy cyclicals with Posco a favourite.  Semi’s may also see a bounce.    
No data due
With politicians and regulators joining forces to strengthen monitoring of fast-growing IT platforms, shares of South Korea’s two tech giants plummeted Thursday, losing a combined 19 trillion won ($16.2 billion) in just two days. The Financial Services Commission and Financial Supervisory Service on  Tuesday said selling financial products on internet platforms without an  intermediary license goes against the Financial Consumer Protection  Act. The authorities said sales of financial products on their platform  are considered an act of intermediation, not mere advertisement as  fintech companies claim. The FCPA was enacted in March and its grace  period ends Sept. 24, by which affected companies should halt or alter  their services.  -VE
SK ecoplant has won a bid to build a $2.2 billion expressway in Norway, making them the first South Korean construction company to enter the infrastructure business in the north European country.  +VE
LG Chem has joined hands with the nation’s e-commerce giant Coupang to recycle 3,000 metric tons of plastic packaging waste and to offer a door-to-door plastic-waste retrieval system +VE
Hyundai Motor’s plans to develop a remote charging system for battery-powered electric vehicles has been given a go-ahead from the Korean government, it was announced Thursday. +VE.
The total loan extended to Koreans in their 20s and 30s to pay their “jeonse” rents more than doubled since President Moon Jae-in took office in 2017, data showed Thursday, reflecting the reality of young people ditching hopes to buy homes, and rent instead.

TAIWAN
Expect market to open higher on news of stimulus vouchers and relief budget but watch T/O which has been dropping all week.
No data due
Typhoon Chanthu expected to make landfall Saturday.
After market Thursday Govt announced distributing stimulus vouchers from Oct 8 
and Cabinet approved NT$160bn covid relief  budget +VE.
The national treasury last month received NT$132.4 billion (US$4.77 billion) in tax revenue, up 3.8 percent year-on-year, led by a tax revenue increase for securities transaction taxes, although the market has noticeably lost steam, the Ministry of Finance said yesterday.
Securities transaction tax revenue soared 67.5 percent year-on-year to NT$24.5 billion, as average daily turnover gained 61.22 percent from NT$271.8 billion to NT$438.2 billion, the ministry said in a report. +VE
Nearly 90 percent of Taiwanese oppose Beijing’s “one China, two systems” and its diplomatic oppression of Taiwan, including its moves against Lithuania, a poll released yesterday by the Mainland Affairs Council (MAC) showed.  It also showed that 70.4 percent of respondents disagree with Beijing’s attempts to show that the US’ pledge of protection is “shaky” following its withdrawal from Afghanstan, while 88.6 percent support the government collaborating with the US and like-minded countries to ensure peace and stability in the Taiwan Strait.  Should give reason to more countries giving diplomatic support to Taiwan and reduce the cross strait tension +VE.
Taiwan Power Co  yesterday broke ground for a cloud data center in Changhua County, as the firm is seeking to build a smart grid to handle rising electricity consumption amid increasing demand for energy from renewable sources. +VE
Quanta Computer Inc and Compal Electronics Inc last month reported noticeably muted sales, attributing the trend to unresolved component shortages and logistics woes. Quanta, the world’s biggest contract notebook computer maker, yesterday posted consolidated revenue of NT$84.72 billion (US$3.05 billion) for last month, down 10 percent month-on-month and 20.1 percent year-on-year.  Compal yesterday said that consolidated revenue fell 5.2 percent  month-on-month to NT$102.39 billion last month, up 22 percent from  August last year.  Slight -VE

CHINA
Expect market to open lower with ADR’s and the Golden Dragon Index weak again overnight in US.  The wild card is Team China supporting the market.
No data due but we could get New Yuan Loans, Total Social Financing etc.
China has announced it will sell oil from its state petroleum reserves  for the first time, as Beijing steps up efforts to rein in inflationary  pressures stemming from commodity markets.
FT reports Cathie Wood, the chief executive of Ark Invest and one of the world’s most closely watched investors, said her fund had significantly reduced its exposure to China, leaving only a portfolio of companies that were identifiably “currying favour” with Beijing.
Reuters article notes When Xi Jinping took command of the Communist Party in late 2012 and  proclaimed “only socialism can save China”, it was largely ignored as  the perfunctory mention of an antiquated slogan - not to be taken  literally in a modern-day, market-powered economy. But sweeping new policy moves - from crackdowns on internet companies, for-profit education, online gaming  and property market excesses, to the promulgation of "Common  Prosperity" - show Xi's seriousness in steering China back towards its  socialist roots.  I think ideology over profit in now the aim -VE for previously highly profitable companies in the Ecommerce field.
Global investors sold China-focused equity funds for the second straight month in August on concerns over a regulatory crackdown on local firms and the economic impact of the Delta coronavirus variant.
China Development Bank vice-president detained in corruption probe  He Xingxiang is the third senior CDB executive to face a corruption probe during President Xi Jinping’s anti-corruption drive. It comes eight months after former CDB chairman Hu Huaibang was sentenced to life for taking US$13.2 million in bribes -VE
Shanghai Stock Exchange and Shenzhen Stock Exchange announced the arrangements for the 2021 Mid-Autumn Festival holiday. Both markets will be closed on 19-21 September, and will be reopened from 22 September.  During the holiday, the Southbound Trading under Shanghai- and Shenzhen-Hong Kong Stock Connects will be suspended during 16-22 September, and will be reopened from 23 September.

HONG KONG 
ADR’s +43pts at 25,759 Oil weak and some weakness in Chinese Banks. Expect continued caution after Tencent and NetEase saw a huge increase in volumes yesterday; so whilst there may be some bargain hunting sentiment remains bearish for the sector along with a number of ecommerce plays.
No data due

IPO Chinese pub chain HELENS (09869.HK), which is scheduled to debut on the Stock Exchange tomorrow (10th), opened low at $15.8 in the
gray market 
and has garnered support afterwards. The stock last stood at $21.65, up 9.5% against its listing price of $19.77, on a volume
of 6.5 million shares, according to data from PhillipMart.

SHORT SELLING HSI Thursdays 17.6% vs 21.7% Wednesday
Top shorts 
Country Garden (2007) 59%, Haidilao (6862) 46%, Bank of China (3988) 43%, BYD Co (1211) 41%, CM Bank (3968) 39%, Xiaomi (1810) 37%, Sands China (1928) 36%, Wharf REIC (1997) 36%, CCB (939) 33%, ICBC (1398) 32%, Hang Seng Bank (11) 32%, Ali Health (241) 29%, SinoBioPharm (1177) 28%, MTRC (66) 27%, CK Assets (1113) 27%, Power Assets (6) 27%, Sunny Optical (2382) 25%, Techtronics (669) 25%

National Securtity Law
Further to the arrests of the key members of the Hong Kong Alliance in Support of Patriotic Democratic Movements in China  they have been charged with subversion of State Powers and the June 4 museum raided and its contents seized.
District Councilors required to take an oath pledging allegiance to the SAR government Friday

WATCH
The Urban Renewal Authority (URA) announced today (9th) that the contract for the development of Bailey Street / Wing Kwong Street Development Project (the Project) in To Kwa Wan has been awarded to Nation Star Development Limited, a wholly-owned subsidiary of HENDERSON LAND (00012.HK)
+0.200 (+0.589%) Short selling $18.45M; Ratio 22.834% , with a tender amount at HK$8.189 billion.
The tender amount this time is close to the lower end of the market valuation of nearly $8 billion to over $10 billion. Based on the buildable floor area of about 717,400 sq.ft., the land price per sq.ft. is about $11,414.
HENDERSON LAND (00012.HK)'s spokesman said after the company has won the URA's Bailey Street / Wing Kwong Street Development Project that the company was grateful of seizing the contract, of which the project is located in the core district of the area. Familiar with the area, the company voiced confidence in the development potential there +VE.

PING AN (02318.HK) -1.450 (-2.375%) Short selling $249.04M; Ratio 15.110% announced today (9th) that it repurchased 808,600 A shares through the Shanghai Stock Exchange at a price ranging from RMB51.02 to RMB51.43 per share, involving approximately RMB41.3977 million +VE.

Chinese financial watchdog has allowed EVERGRANDE (03333.HK) -0.160 (-4.313%) Short selling $62.98M; Ratio 10.954% to re-negotiate the deadline for existing loan repayment with financial institutional creditors, Bloomberg citing insiders +VE but unlikely to make a significant difference.CHINA AOYUAN (03883.HK) -0.390 (-8.497%) Short selling $50.27M; Ratio 27.027% announced that its chairman Guo Ziwen has purchased 4.85 million shares of the company today (9th), at an average price of approximately $4.16 per share, involving $20.17 million +VE.

Macau's Novel Coronavirus Response and Coordination Centre expressed that, with the COVID-19 outbreak in Hong Kong becoming under control in recent days, the Macau government has deemed it appropriate to ease up the entry restrictions for "non-resident foreigners" who have stayed substantially in Hong Kong.
The Macau government thus announced to allow "non-resident foreigners" who meet the specific requirements and who have not been to places other than Mainland China, Macau or Hong Kong in the past 21 days, to apply for entry into Macau +VE.

CK ASSET (01113.HK) -0.050 (-0.104%) Short selling $95.17M; Ratio 27.169% said Li Ka Shing Foundation acquired a total of 1.2855 million shares in CK Asset at the average price of HK$49.8174, HK$47.7935 and HK$48.0308 per share on 3 September, 7 September and 8 September 2021 respectively. As a result, the deemed interests of Li Ka-shing, Victor T K Li and Li Ka Shing Foundation in CK Asset increased from 45.95% to 45.98%; increased from 46.02% to 46.05%; and increased from 11.23% to 11.27%, respectively +VE.

SUNNY OPTICAL (02382.HK) -0.200 (-0.086%) Short selling $113.16M; Ratio 25.384% announced that, over August, shipment of spherical glass lenses amounted to 3.397 million units, up 86.1% YoY. Handset lens sets (HLS) shipment plunged 22.8% YoY to 125 million units, mainly due to the overall moderated demand in the smartphone market, compared to the corresponding period of the previous year.  Shipment of vehicle lens sets and other lens sets for August amounted to 5.461 million units and 10.913 million units, up 0.9% YoY and 83.5% YoY respectively, the company added +VE.

The Intermediate People's Court of Hefei announced to ink a strategic cooperation agreement with BABA-SW (09988.HK)'s Taobao (Alibaba Auction) to start working together on online auction services and online counselor management. In addition, both sides aim to explore the localized innovative mode of "Internet + Legal Counselling". +VE

SHK PPT (00016.HK) +0.800 (+0.735%) Short selling $38.69M; Ratio 11.884% announced the results for the year ended 30 June 2021. 
Revenue burgeoned 3.2% year-on-year to HK$85.262 billion. Net profit was HK$26.686 billion, up 13.5% annually. EPS hit HK$9.21. A final dividend of HK$3.7 per share was declared, flattish from the same period last year. Underlying profit amounted to HK$29.873 billion, up 1.7% annually Slight +VE.

Renault is in advanced talks to terminate its joint venture to build vans with BRILLIANCE CHI (01114.HK), Reuters citing insiders. 
The French company has teamed up with BRILLIANCE CHI since 2017, when both sides set up manufacturing arms in Shenyang and planned to make inroads to the electric commercial van market. +VE

TENCENT (00700.HK) -44.500 (-8.484%) Short selling $2.75B; Ratio 10.296% 's Tencent Cloud declared the partnership with the big conglomerate Nomin to provide solutions for its digital transformation. 
This marked the first time for Tencent Cloud to enter the Mongolian market. In addition, Tencent Cloud has joined hands with S Cloud to help with local digital economic development. +VE

The Cross-boundary Wealth Management Connect and the Southbound Bond Connect (i.e. southbound leg of the Bond Connect) projects will officially be put into operation soon,
meaning the Mainland capital and bond market scope for Hong Kong and Macao investors are expanding continuously, revealed Pan Gongsheng, deputy governor of the People's Bank of China  +VE.

One-third of Qianhai will be reserved for Hong Kong enterprises, according to Shenzhen's mayor.   The State Council announced earlier this week that the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone will increase its size sevenfold from 14.9 square kilometers to 120.5 sq km. Slight +VE

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