Sept 15 Asian Macro Initial Thoughts Weak start China data in focus.

15 Sep

This and previous notes can be found at Substack (Asian Market Sense)
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Asia Expect a weaker open, Apple failed to inspire at its new product launch -VE for its supply chain names. Holidays approaching Chusok for S Korea and Mid Autumn Festival for China, Hong Kong and Taiwan may prompt some to take cash and sit on the sidelines.

Australia Futures indicate market to open -34pts following the US, Iron Ore still weak but Oil rising after market should give some support along with rising Gold prices.  Ex Div today includes CGC 4c, CIM 43c, DTL 9.5c, LOV 18c, PGF 5c, REG 4.6c.
Data Home Sales, Consumer Confidence & Inflation data
Japan Nikkei Local futures +18pts  Chicago Futures -255pts  Expect a weak open following weakness in the US as inflation missed and the weak Tankan Index.  But watch for bargain hunting on Election related buying.
S Korea Expect markets to open slightly higher Futures +2.9pts helped by good unemployment data but may dip in early trades after weak US markets and with covid cases expected to hit a new record high.
Taiwan Expect market to open lower and volumes to remain light.  Apple supply chain names weak.  Expect some rotation into old economy names.
China Expect market to open lower Golden Dragon Index -2.2% overnight continued concerns over the new government polices and new covid outbreak.  Data due on the open will also be closely watched.
HK ADR’s -193pts at 25,308 with broad weakness and expect initial margin call selling too.  The China data will also influence trading
US Futures 
Opened Dow +20pts, S&P +0.08% and NDX +0.11%.

DOW -0.84%, NDX -0.45%, S&P -0.57%, Russel 2K -1.37%
Markets opened slightly higher as inflation (used cars, air travel etc cheaper) came in lower than expected but markets trended lower through the day
Banks JPMorgan Chase -1.8%, Citigroup -2.4% Wells Fargo +0.6%, Amex -1.2%
Work from home names: Facebook flat, Apple -1% despite new product launch, Amazon -0.21%, Netflix -2%,  Disney -1.4%, Zoom Video -3%, Alphabet +0.2% and Microsoft +0.9%,
Tech NXP Semi -1.3%, Nvidia +0.4%, Micron -1.2%, AMD +0.9%, Skyworks -1.7%
Re-opening stocks  Boeing -1.4%, Caterpillar -1.9%, Simon Property -1.2%, Kohl’s -1.1%, Nordstrom -1.6%, Gap -2.1%, United Airlines -2.2%, Carnival -1.9%, Wynn Resorts -10.9%, Chevron -1.8%, Exxon Mobil -1.4%,  
Lock down names Campbell Soup -1.1% General Mills +0.2%, JM Smucker -0.2%
NFIB Business Optimism Index Aug 100.1 vs 99.7 Jul (F/cast was 99.5)
Inflation Rate Aug +5.3% YoY vs +5.4% Jul (F/cast was +5.3%)
Inflation Rate Aug +0.3% MoM vs +0.5% Jul (F/cast was +0.4%)
Core Inflation Rate Aug +4% YoY vs +4.3% Jul (F/cast was 4.3%)
Core Inflation Rate Aug +0.1% MoM vs +0.3% Jul (F/cast was +0.3%)
Redbook +15.3% YoY vs 16.5% prior
API Crude Oil Stock Change -5.437m vs -2.882m prior (Consensus -3.903m)
USD was flat vs Yen & Euro. Bitcoin +4.3% @ 46,697.81, VIX +0.46% @ 19.46, US T10 @ 1.277%
OIL Brent +0.2%, WTI unch but rising after market on API data
Gold -0.02%, Silver -0.06%, Copper -1.4% Platinum -0.1%, Palladium +0.4%.
MBA Mortgage Applications & 30 yr rate, Export/Import Prices, NY Empire State Manufacturing Index Industrial & Manufacturing Production, Capacity Utilisation, EIA Oil Stock Change Report

DAX +0.14%, CAC -0.36%, FTSE -0.49%
Markets opened lower but DAX rebounded to traded in the green around flat. FTSE and CAC working back to flat. FTSE then traded sideways around flat but CAC failed to regain the green. UK employment data was mixed. Mining stocks weak but Tech +VE
JD Sports +9.7% in early trades after reporting a sevenfold surge in 1H earnings.
Allfunds Group weak after a share placement.
Spanish utility company Endesa fell 5.2%.
Claimant Count Aug -58.6k vs -7.8k Jul (F/cast was -26k)
Ave Earnings Ex Bonus Jul +6.8% vs +7.4% Jun (F/cast was +6.7%)
Unemployment Rate Jul 4.6% vs 4.7% Jun (F/cast was 4.7%)
But still have 1.6m people on furlough
Employment Change Jun 183k vs 95k May (F/cast was 150k)
EUROZONE Industrial Production, Labour Cost Index,  Wage Growth.
GERMANY No data due
FRANCE Inflation Rate
UK  Inflation Rate, Core Inflation, PPI Core Output, PPI Input/Output  Retail Price Index,  

Nikkei Local futures +18pts  Chicago Futures -255pts  Expect a weak open following weakness in the US as inflation missed and the weak Tankan Index.  But watch for bargain hunting on Election related buying and re-opening names.
Yen currently 109.72
Data out
Tankan Index Sept 18 vs 33 Aug (F/cast was 39)
Pre Market
Machinery Orders Jul (Aug was 18.6% YoY F/cast is 16%)
Machinery Orders Jul (Aug was -1.5% MoM F/cast is +2.9%)
Tertiary Industry Index
Japan saw a sharp increase in the deaths of people aged 59 or younger due to COVID-19 amid the latest round of the coronavirus pandemic with the spread of the highly contagious Delta variant, the health ministry said Tuesday.  Comes as Japan looks to ease some covid restrictions.
Shinsei Bank is considering measures to fend off an unsolicited $1.1 billion tender bid by SBI Holdings, the Nikkei financial daily reported on Tuesday. Shinsei Bank’s board could meet this week to discuss a possible issuance of stock warrants to existing shareholders to dilute the holdings of SBI, which already owns 20% of the Tokyo-based lender -VE
SoftBank Group Corp (9984.T) on Tuesday launched a $3 billion fund to invest in technology companies in Latin America in a bid to build on the success of its initial fund for the region, which has spent most of its capital.
Travel agency JTB Corp. said Tuesday that it sold its Tokyo headquarters as well as another building in Osaka as it progresses through a restructuring effort aimed at shoring up its finances after the COVID-19 pandemic killed demand for its services.
JTB sold the buildings for several tens of billions of yen to bolster its cash reserves, a company source said. A JTB spokesperson declined to comment on specifics regarding the sale value or name of the buyer.
Earnings include
Comforia Residential REIT Inc. (3282 JP)
Cosel Co. (6905 JP)
Escon Japan REIT Investment Co. (2971 JP)
Industrial & Infrastructure Fu (3249 JP)
Itochu Advance Logistics Inves (3493 JP)

Expect markets to open slightly higher Futures +2.9pts helped by good unemployment data but may dip in early trades after weak US markets and with covid cases expected to hit a new record high.
Data out
Unemployment Aug 2.8% vs 3.3% Jul (F/cast was +3.7%)
Biotech firm GL Rapha expects to win regulatory approval from Russia to export Sputnik Light coronavirus vaccines this month, its chairman said, paving the way for the first overseas production of the shot to ease a supply shortage. +VE
SK Materials and Group14 Technologies will jointly establish an 850 billion won ($725.7 million) silicon anode plant in Sangju, North Gyeongsang Province, to gain foothold in the next-generation electric vehicle battery market, SK Materials said Tuesday. +VE
Volvo Korea unveiled the latest face-lifted version of its flagship sport utility vehicle XC60, equipped with a new smart car system developed in partnership with South Korean mobile carrier, SKT +VE.
Kakao Group, the largest mobile technology business in South Korea, pledged on Tuesday to spend 300 billion won ($255.4 million) to support small businesses and the self-employed, looking to soothe growing public criticism over its rapid business expansion. Slight -VE
GS Caltex said Tuesday that it has deployed robots to maintenance tasks that entail risks of nitrogen asphyxiation, accelerating its digital transformation drive. +VE
Foreign investors put more value on high growth potential rather than stability when choosing which domestic stocks to purchase, a report showed Tuesday.

Expect market to open lower and volumes to remain light.  Apple supply chain names weak.  Expect some rotation into old economy names.
No data due
Wind turbine manufacturer Siemens Gamesa Renewable Energy SA yesterday inaugurated Taiwan’s first nacelle assembly plant at the Port of Taichung, its first assembly facility for offshore nacelles outside Europe. +VE
The exposure of Taiwanese financial institutions to troubled Chinese property giant Evergrande Group totaled NT$2.21 billion (US$79.75 million) as of the end of July, the Financial Supervisory Commission (FSC) said yesterday.  The amount constituted banks’ loan exposure of NT$500 million and NT$1.71 billion in Evergrande shares invested through domestic or offshore funds, the commission said.  While two local banks had exposure to Evergrande, they had set aside provisions for bad debts, Banking Bureau Chief Secretary Phil Tong  told a news conference in New Taipei City. -VE

Expect market to open lower Golden Dragon Index -2.2% overnight continued concerns over the new government polices and new covid outbreak.  Data due on the open will also be closely watched.
Data due
Home Price Index, NBS Press Conference, Fixed Asset Investment, Industrial Production, Retail Sales and Unemployment Rate
General Office of the Chinese Communist Party and General Office of the State Council published the Opinions on Strengthening the Construction of Network Civilization, Xinhua News Agency reported. A notice was also issued to urge all regional departments to enforce the Opinions meticulously.
The Opinions pointed out that the moral build-out in cyberspace should be strengthened, and charity business should be promoted.
The document also proposed to further regulate the cyberspace behavior, for example raising teenagers' awareness in using internet properly and creating comprehensive anti-addiction mechanism for them. The implementation of the personal information protection law and data security law should be enhanced too.
China will step up efforts to promote a “civilised” internet by strengthening oversight over the likes of news sites and online platforms and encouraging them to promote core socialist values, the state-run Xinhua news agency reported on Tuesday.
After years of runaway growth and rapid change, China’s regulators have been to trying to strengthen control over society with more stringent supervision of a range of sectors from technology to education and entertainment. Cyberspace should be used to promote education about the ruling Communist Party and its achievements, according to guidelines published by the State Council, the news agency reported.
Shanghai's Propaganda Department, Cyber Administration, Bureau of Culture and Tourism and Communications Administration held a meeting with around 20 major gaming corporates, operating platforms and publishing units in the city, reported The Paper. During the meeting, the Shanghai authorities outlined regulations which forbid the city's gaming corporates to publish non-licensed games and games with incomplete anti-addiction system. The city government also highlighted that all platforms and companies are strictly prohibited from supplying gaming accounts to minors by way of sale or lease and that the authorities will actively cooperate to strengthen the oversight on relevant malpractice within the sector.
China's People's Daily newspaper said it was "imperative and urgent" to regulate advertisements bombarding people with recommendations for cosmetic surgery, procedures and treatments, as they had become excessive, and some made false claims. -VE

ADR’s -193pts at 25,308 with broad weakness and expect initial margin call selling too. The China data will also influence trading
No data due

SHORT SELLING HSI Tuesday 20.4% vs 17.2% Monday
Top shorts  
Country Garden (2007) 43%, Wharf REIC (1997) 42%, Haidilao (6862) 42%, MTR (66) 37%, CK Asset (1113) 37%, SHKP (16) 37%, Ali Health (241) 37%, Li Ning (2331) 36%, Bank of China (3988) 36%, AIA (1299) 35%, Techtronic (669) 34%, CM Bank (3968) 32%, ICBC (1398) 32%, Sunny Optical (2382) 31%, CKH (1) 31%, China Overseas (688) 30%, CCB (939) 29%, Xiaomi (1810) 28%, Henderson Land (12) 27%, HKEX (388) 27%, Citic (267) 27%, China Res Holdings (1109) 26%, CLP(2) 26%, Anta (2020) 25%. (2313) 27%, BYD (1211) 26%, Anta Sports (2020)25%, PowerAssets (6) 25%.
Hong Kong is again ranked as the world's freest economy, but Fraser Institute said interventions by Beijing will likely have a negative impact in future reports.  The institute ranked Hong Kong as the world's freest economy in the Economic Freedom of the World 2021 Annual Report based on 2019 data.

PING AN (02318.HK) announced that the accumulated gross premium incomes of the four  subsidiaries of the company for the period from January 1, 2021 to  August 31, 2021
sank 5.33% YoY to RMB531.785 billion -VE

CHINA AOYUAN (03883.HK) announced that its chairman Guo Zi Wen has purchased 3.55 million  shares of the company today (14th), at an average price of approximately  $4.26 per share, involving $15.1 million.

Standard Chartered Bank has lodged an application at regulator for commencing Wealth Management Connect services, hoping the business income from GBA wealth management to surge by three times in the coming four years, said Anthony Lin, Chief Executive Officer, Greater Bay Area at the Bank. Together with other services, the GBA unit will hire additional 1,500 employees in future.

Macau is set to begin the public consultation for the revision of the gaming law from 15 September, which will last for 45 days, expressed Lei Wai Nong, Macau's Secretariat for Economy and Finance.  Lei added that the Macau government is hoping to perfect the legal regulatory system of gaming industry and to foster sustainable and benign development of the sector through the revision, while boosting the integrated competitiveness of the city.

Jiangsu Consumer Council arranged a meeting with 14 internet corporates today (14th), including TENCENT (00700.HK) and Sogou Inc. (SOGO.US), to follow up on the issue of pop-windows on respective websites, reported Xinhua News Agency. The council urged the companies to ensure that the pop-up windows could be removed smoothly with one click and reminded the corporates of their responsibility in safeguarding the legitimate rights of the consumers.

EVERGRANDE (03333.HK)'s  financial crisis intensified. The stock plummeted 11.9%  Tuesday (14th),  to close at $2.97. The Chinese government is now considering to arrange a  joint task force, which consists of accountants and lawyers, to station  at EVERGRANDE, in order to gain a comprehensive understanding of the  company's financial situation, which may ultimately lead to the  restructuring of the group, reported Bloomberg News.

Bank of China (3988), a top global investor in coal-power plants, must end the financing of such projects outside the mainland and support clean and renewable energy instead, an alliance of 35 non-governmental organizations said yesterday.  The comments, made in an open letter to state-controlled BOC's chairman, Liu Liange, and signed by groups from 13 countries in Asia, Africa and Europe, add to growing criticism of China for financing coal-fired power stations overseas, especially as part of its Belt and Road Initiative.

Exporters in Hong Kong are worried that rising transportation costs may dim overseas Christmas orders, according to a Trade Development Council survey.  Only 20.2 percent of Hong Kong businesses polled in the third-quarter survey anticipated an increase in Christmas sales this year, compared with 38.7 percent who foresaw no change and 41.1 percent who predicted a decline.
The council also announced yesterday that its export index for the third quarter fell 9.7 points to 39, after rising for five consecutive quarters.

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