Sept 15 Asian Macro Initial Thoughts another mixed day for Asia


16 Sep

This and previous notes can be found at Substack ( Asian Market Sense )
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Asia expect a mixed open again, Oil rallied overnight but Iron Ore remains weak. Japan Trade Data will be watched closely.
China weak with the overhang of Evergrande ahead of the long weekend. HK likely to see inititl margin call selling but then could rally as recent shorts cover ahead of the long weekend.
Tomorrow is quarterly index expiry for ASX/S&P and FTSE rebalance.

Institute of International Finance (IIF) revealed global debt soared to a record $300 trillion in Q2. However, debt-to-GDP declined for the first time since the onset of the Covid-19 pandemic as growth recovered.

Australia Futures indicate market to open +33pts with Oil +VE but Gold and Iron Ore remain weak. Employment data due today will be watched closely.  Ex Div includes Seven Group Holdings Ltd (ASX: SVW), casino operator SKYCITY Entertainment Group Limited (ASX: SKC), and New Zealand telco Spark New Zealand Ltd (ASX: SPK).
Telstra in focus as investor day gets unsderway.
Sentiment +VE as Australia joins US / UK defence pact to counter the rise of China.
Data Employment Data (Part Time, Unemployment, Employment Change, Full Time Employment Change, Participation Rate) RBA Bulletin
Japan Nikkei local futures -10pts Chicago Futures  -30pts ahead of pre market Trade Data which will impact the direction of  trading.
S Korea Futures indicate markets to open slightly higher; key will be the continuation of Foreign buyers.
Taiwan Market to open higher but volumes remain light but expect to see some early bargain hunting in large Tech names.
China Expect market to open lower with Golden Dragaon index-1.17%, expect lighter volumes ahead of long weekend and with southbound connect closing.
HK ADR’s +15pts at 25,048  but some Financials and most Ecommerce names remain weak.  Expect initial margin call selling.  Expect cautious trading ahead of the long weekend in China.  Evergrande and smaller Property Developers underpressure along with Chinese banks with exposure to Evergrande.  Macau was weak in US but may see some bargain hunting.  
US Futures 
Opened Dow +30pts, S&P and NDX +0.1% Initial claims data and Retail Sales will be closely watched

DOW +0.68%, NDX +0.82%, S&P 0.85%, Russel 2K +1.11%
Markets opened +VE and traded sideways through the morning on +VE data before rallying in the PM to close around the day highs.
Energy names strong along with rising Treasury yields +VE for Financials, along with a +VE recovery sense. Casino stocks remained weak; with concerns on Macau regulation and covid in China.
Banks JPMorgan Chase +0.7%, Citigroup -0.84% Wells Fargo +1.3%, Amex +1.2%
Work from home names: Facebook -0.7%, Apple +0.6%, Amazon +0.8%, Netflix +0.9%,  Disney +1.1%, Zoom Video -0.8%, Alphabet +1.3% and Microsoft +1.7% announced a dividend increase and share buyback plan,
Tech NXP Semi +0.4%, Nvidia +0.45%, Micron +0.45%, AMD -0.1%, Skyworks -0.8%
Re-opening stocks  Boeing +1.3%, Caterpillar +1.7%, Simon Property +1.2%, Kohl’s +1.7%, Nordstrom +1.5%, Gap -0.04%, United Airlines -0.02%, Carnival +1.4%, Wynn Resorts -6.3%, Chevron +2.1%, Exxon Mobil +3.4%,  
Lock down names Campbell Soup +1.5% General Mills -0.1%, JM Smucker -0.5%
DATA
MBA Mortgage Applications +3.03% vs 3.03% prior
MBA30 yr rate +0.3% vs -1.9% prior
Export Prices Aug 16.8% YoY vs 17.2% Jul (F/cast was 17.5%)
Export Prices Aug 0.4% MoM vs 1.1% Jul revised (F/cast was 0.9%)
Import Prices Aug 9% YoY vs 10.2% Jul (F/cast was 9.7%)
Import Prices Aug -0.3% vs 0.4% Jul revised (F/cast was 0.3%)
NY Empire State Manufacturing Index Sept 34.2 vs 18.3 Aug (F/cast was 19)
Industrial Production Aug 0.4% MoM vs 0.8% Jul revised (F/cast was 0.5%)
Industrial Production Aug 5.9% YoY vs 6.6% Jul (F/cast was 5%)
Manufacturing Production Aug 0.2% MoM vs 1.6% Jul revised (F/cast was 0.6%)
Manufacturing Production Aug 5.9% YoY vs 7.4% Jul (F/cast was 6.2%)
Capacity Utilisation Aug 76.4% vs 76.2% Jul revised (F/cast was 76.3%)
EIA Crude Oil Stock Change -6.422m vs -1.529m prior (consensus was -3.544m)
EIA Gasoline Stock Change -1.858m vs -7.215m (consensus was -1.957m)
USD dipped vs Yen & Euro. Bitcoin +3.6% @ 48,184.03, VIX -6.6% @ 18.2, US T10 @ 1.304%
OIL Brent +2.6%, WTI +3.1% sharp rally on increased US drawdowns
Gold -0.7%, Silver -0.1%, Copper +1.9% Platinum +0.03%, Palladium +0.7%.
AHEAD Retail Sales, Philadelphia Fed Manufactruing Index, Business Inventories, Initial Claims, 4 week Average Claims, Continuing Claims, EIA Natural Gas Report, Foreign Bond Investment, Overall Net Capital Flows, Net Long Term Tic Flows,  

DAX -0.68%, CAC -1.04%, FTSE -0.25%
Markets opened flat FTSE and DAX trading flat for most of the day but dipped into the close. CAC trended lower throughout; weakness in Asia and the China data which could hurt the global growth outlook. UK data showed inflation soaring to a 9yr high. Much was due to restaurants & hotels an area which was the subject of heavy discounts under the UK ‘Eat out, Help out’ scheme. Utilities lead the declines only Oil/Gas +VE.
Earnings came before the bell from H&M Group and Zara owner Inditex.
Just Eat Takeaway -4.6% after competitor Deliveroo announced a partnership with Amazon.
Swedish Match +4.3% after announcing plans to spin off its cigar business.
Ahead

Eurozone
Industrial Production Jul 7.7% YoY vs 10.1% Jun revised (F/cast was 6.2%)
Industrial Production Jul 1.5% MoM vs -0.1% Jun revised (F/cast was 0.5%)
Labour Cost Index Q2 -0.1% YoY vs 1.3% Q1 revised (F/cast was 3.8%)
Wage Growth Q2 -0.4% YoY vs 2.1% Q1 revised (F/cast was 3.6%)
France
Inflation Rate Aug 1.9% YoY vs 1.2% Jul (F/cast was 1.9%)
Inflation Rate Aug +0.6% MoM vs 0.1% Jul (F/cast was +0.6%)
UK
Inflation Rate Aug 3.2% YoY vs 2% Jul (F/cast was 2.9%)
Inflation Rate Aug +0.7% MoM vs 0.0% Jul (F/cast was +0.4%)
Core Inflation Aug 3.1% YoY vs 1.8% Jul revised (F/cast was 2.8%)
Core Inflation Aug 0.7% MoM vs 0.0% Jul (F/cast was 0.3%)
PPI Core Output Aug 1% MoM vs 1% Jul revised (F/cast was 0.3%)
PPI Core Output Aug 5.3% YoY vs 4.1% Jul revised (F/cast was 4.3%)
PPI Input Aug 11% YoY vs 10.4% Jul revised (consensus was 10.3%)
PPI Input Aug 0.4% MoM vs 1.3% Jul revised (consensus was 0.2%)
PPI Output Aug 0.7% MoM vs 0.8% Jul revised (F/cast was 0.4%)
PPI Output Aug 5.9% YoY vs 5.1% Jul revised (F/cast was 5.4%)
Retail Price Index Aug 4.8% YoY vs 3.8% Jul (F/cast was 4.5%)
Retail Price Index Aug 0.6% MoM vs 0.5% Jul (F/cast was 0.3%)
AHEAD
EUROZONE No data due
GERMANY No data due
FRANCE No data due  
UK  No data due

JAPAN Nikkei local futures -10pts Chicago Futures indicate a higher open +0.3%.  Pre market Trade Data will impact the direction of  trading.
Yen currently 109.34
Data due pre market 
Balance of Trade Aug (Jul ¥441B F/cast is ¥-60B
Exports Aug (Jul was 37% Consensus 34%)
Imports Aug (Jul was 28.5% Consensus 40%)
Foreign Stock & Bond Investment.
Tokyo announced Wednesday 1,052 new cases of covid.
Bank of Japan Governor Haruhiko Kuroda said on Wednesday robust profits will help companies ramp up capital expenditure despite the hit to output from supply chain disruptions caused by factory shutdowns in Southeast Asia.
Shigeru Ishiba, a heavyweight politician of Japan's ruling party, formally announced on Wednesday that he would not run for the party's leadership race, throwing his support instead behind Taro Kono, a top contender to become the next prime minister.
Takeda Pharmaceutical Co said on Wednesday the U.S. Food and Drug Administration approved its drug, Exkivity, to treat a type of lung cancer. +VE
The Japan Securities Dealers Association said on Wednesday it would review the process for setting the price of initial public offerings (IPO), responding to criticism from startups that IPO prices have often been too low and surged on market debuts. +VE
SoftBank Group Corp Chief Executive Masayoshi Son on Wednesday said so-called smart robots can revitalise Japan’s economy and competitiveness, doubling down on robotics just as the company’s much-hyped “Pepper” robot prepares to bow out +VE.
Streetwear pioneer Nigo was named Wednesday as the new artistic director of Kenzo, luxury group LVMH announced. Known for his celebrity collaborations, Nigo takes over from Portuguese designer Felipe Oliveira Baptista, who quit the post in June after just two years +VE.

SOUTH KOREA Futures indicate markets to open slightly higher; key will be the continuation of Foreign buyers.
No data due
The foreign ministers of South Korea and China held talks in Seoul on Wednesday amid concerns over North Korea's recent missile test and stalled denuclearisation negotiations between Pyongyang and Washington. +VE
The sister of North Korean leader Kim Jong-un on Wednesday accused South Korean President Moon Jae-in of being "foolish" and warned of "complete destruction" of inter-Korean relations for branding Pyongyang's weapons tests a "provocation." -VE
The launch of Disney+  signals a fresh round of competition in the streaming video and content production markets in Korea, one of the key beachheads for expansion in Asia and beyond. +VE for consumer  -VE for existing players.
Hyundai Motor Group said Wednesday it has joined hands with two local partners in Texas to test whether spent-up electric vehicle batteries could be reused as energy storage systems. +VE
Hyundai Motor Group on Wednesday broke ground on a 10 gigawatt-hour battery cell production plant in Indonesia in cooperation with LG Energy Solution, joining the global race to secure battery cells for the future +VE

TAIWAN Market to open higher but volumes remain light but expect to see some early bargain hunting in large Tech names.
No data due 
CECC reported 1 local and 4 imported covid cases +VE
More than 10 local banks have launched reward programs for credit card holders who link their Quintuple Stimulus Vouchers to their cards, 
aiming to boost credit card business affected by a domestic COVID-19 outbreak that started in May. The government-issued NT$5,000 (US$180.5) vouchers are slated to be distributed free of charge from Oct. 8. +VE
China Steel Corp  yesterday said it would raise prices for domestic deliveries by 1.32 percent next month and for next quarter to reflect higher manufacturing costs and rising steel demand  +VE.
Yuan deposits held by local banks last month shed 1.72 percent to the lowest level this year at 237.84 billion yuan (US$36.97 billion), ending two months of gains, as corporate accounts trimmed holdings in favor of other investment tools, the central bank said yesterday. Slight +VE
Hon Hai Precision Industry Co’s electric vehicle (EV) project with Byton Ltd has been put on hold due to the Chinese start-up’s worsening financial situation, the Nikkei Asia reported yesterday, citing unidentified sources with knowledge of the matter.  “The project is not officially terminated yet, but it is very challenging to proceed at this moment,” one of the sources told the newspaper. +VE for Hon Hai

CHINA
Expect market to open lower with Golden Dragaon index-1.17%, expect lighter volumes ahead of long weekend and with southbound connect closing.
No data due
China’s Geely Holding is in advanced discussions with banks to list its Volvo Cars unit in the coming weeks, three sources told Reuters, in what is expected to be one of Europe’s biggest initial public offerings (IPOs) this year. +VE
Taiwan is a "sea fortress" blocking China's expansion into the Pacific and is willing to share with other democracies its knowledge of countering Beijing's efforts to undermine it, Foreign Minister Joseph Wu told a U.S. audience on Wednesday.  -VE
China will make it easier for its investors to trade offshore debt from next week with the opening of a "Southbound" leg of its Bond Connect channel, in the country's latest move to encourage more outbound investment. In a joint statement on Wednesday, China's central bank and the Hong Kong Monetary Authority said the Southbound Bond Connect channel would launch on September 24, more than four years after the Northbound leg expanded foreign investors' access to China's bond market, the world's second-largest.  +VE
Home sales by value slumped 20 percent last month from a year ago, the biggest drop since the onset of the coronavirus shut swaths of the economy at the start of last year, according to calculations based on National Bureau of Statistics data released yesterday.  New-home prices in 70 cities, excluding state-subsidized housing, rose 0.16 percent from July, the slowest pace this year, the data showed.  Of the 70 cities, 46 saw their new-home prices rise, down from 51 in July  -VE.

HONG KONG  ADR’s +15pts at 25,048  but some Financials and most Ecommerce names remain weak.  Expect initial margin call selling.  Expect cautious trading ahead of the long weekend in China.  Evergrande and smaller Property Developers underpressure along with Chinese banks with exposure to Evergrande.  Macau was weak in US but may see some bargain hunting.  
Data due  Unemployment after market

SHORT SELLING HSI Wednesday 15% vs 20.4% Tuesday
Top shorts  
China Overseas (688) 30%, CCB (939) 47%, Country Garden (2007) 45%, Bank of China (3988) 43%, Henderson Land (12) 41%, Haidilao (6862) 40%, CK Asset (1113) 40%, Wharf REIC (1997) 38%, Ali Health (241) 37%, SHKP (16) 36%, MTR (66) 34%, BYD (1211) 31%, CM Bank (3968) 31%, HKEX (388) 30%, Mengniu Dairy (2319) 29%, Sino Biopharm (1177) 27%, Geely (175) 25%

NATIONAL SECURITY
Nine Hong Kong pro-democracy activists were sentenced to between six and 10 months in prison on Wednesday
for taking part in an unauthorised assembly at last year’s vigil for the victims of China’s 1989 Tiananmen Square crackdown on protesters.

WATCH
HENDERSON LAND (00012.HK)'s THE HOLBORN, a residential project in Hong Kong East, has its first sales arrangement uploaded today (15th), rolling out 128 flats for sales this Sunday (19th), said Mark Hahn, General Manager of Sales (2) Department. With saleable area of 220-260 sq.ft., the related flats are discounted at $5.8083-8.0342 million. +VE

CHINA RES POWER (00836.HK) announced that total net generation of subsidiary power plants for the first eight months of 2021 increased by 19.1% year on year to 118 million MWh, among which, subsidiary wind farms increased by 51.9% year on year to 20.4661 million MWh, subsidiary photovoltaic plants increased by 61.7% year on year to 796,100 MWh. +VECK ASSET (01113.HK) announced that Li Ka Shing Foundation Limited acquired a total of 1.5245 million shares in CK Asset at the average price of HK$47.6714, HK$48.4489, HK$48.5642 and HK$49.2970 per share on 9 September, 10 September, 13 September and 14 September 2021 respectively. As a result, the deemed interests of Li Ka-shing, Victor T K Li and Li Ka Shing Foundation Limited in CK Asset increased from 45.98% to 46.02%; increased from 46.05% to 46.09%; and increased from 11.27% to 11.31%. +VE

S&P Global Ratings lowered the long-term issue rating on EVERGRANDE (03333.HK) and its subsidiaries Hengda Real Estate Group and Tianji Holding from "CCC" to "CC".
Equally, the long-term issue rating on USD notes issued by EVERGRANDE and guaranteed by Tianji Holding was lowered from "CCC-" to "C". EVERGRANDE's negative outlook reflected a higher default risk and a higher chance of debt restructuring as its liquidity seems to have depleted. -VE

CHINA TAIPING (00966.HK) announced that the gross premium income of Taiping Life Insurance (TPL), Taiping General Insurance, and Taiping Pension, being subsidiaries of the Company, for the first eight months of 2021 were RMB109.265 billion (up 3.3% YoY), RMB18.527 billion (down 1.7% YoY), and RMB4.597 billion (up 18.4% YoY).  Overall +VE

The Centa-Salesman Index (CSI) (for residential selling prices) last posted at 67, down 0.15 pts from last week. The index softened on thinner second-hand deals, said the research department of Centaline Property. However, the fall was too mild to be a sign of home price downturn. They believed CSI will continue to hover between 60 and 70, foretelling a prolonged tread at the historical high.
The CSI (for residential rent) dipped 0.63 pts weekly to 64.84. With the rent zooming past the 2020 peak, the index was struggling amid higher market resistance. This forecast an unchanged rent uptick although the growth may decelerate Slight -VE.

MCC (01618.HK) -0.060 (-2.034%) Short selling $4.01M; Ratio 4.208% announced that the value of newly signed contracts of the company amounted to RMB785.72 billion from January to August in 2021, representing an increase of 30.9% from the same period of last year. +VE

Hong Kong's private consumption, which grew by 6.5 percent year on year in the second quarter, was a major contributor to the credit market's recovery, a report from TransUnion showed.
In the latest quarter, originations - a measure of new accounts opened that is a function of both credit demand and supply - increased year on year across all major unsecured lending credit categories and were particularly strong for credit cards - up 26 percent, the report said. Credit cards also recorded growth in outstanding balances by increasing 1 percent year on year in the second quarter, the first yearly increase since the fourth quarter of 2019. +VE

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