Sept 28 Asian Marco Initial Thoughts Expect cautious trading ahead of China data and tomorrows big ExDiv & LDP vote in Japan tomorrow


28 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 expect caution as power shortages in China impacting global supply chains.

Australia Futures indicate market to open -43pts with weakness in Tech.  Miners and Oil names  +VE but Gold slightly weaker overnight.
Dividends from Altium Limited (ASX: ALU), Amcor CDI (ASX: AMC), Coles Group Ltd (ASX: COL), and Evolution Mining.
Data due; Retail Sales
Japan Nikkei local futures opened -17pts  expect a cautious day’s trading ahead of a big Ex Div day tomorrow and the LDP leadership vote.  Crude rising should also help the Miners and Re-opening stocks likely to see interest too.
S Korea Expect markets to open flat Consumer Confidence rose +VE for Retail and Re-Opening stocks but China’s power cuts -VE for Apple plays and POSCO’s Jiangsu plant.
Taiwan Expect market to open lower following the US markets and mixed data after market Monday.  TSMC in focus rallied in the auction on bargain hunting.  Power Shortages in China a concern.  Shippers still seeing bottlenecks but over all +VE   Re-opening names +VE on news that covid restrictions will be eased.
China Expect a cautious open with industrial production data due in addition to the recent power shortages which will also influence future production.  Their are also concerns about knock on effect from Evergrande after another developer sought assistance along with the on-going covid outbreak .
HK ADR’s +113pts at 24,320  expect some initial short covering to offset the caution ahead of the China Industrial Production data. Weaknessin CLP, CCB, Unicom, BoC HK and CK Hutch.  Evergrande reports insiders further selling down of stakes.
US Futures 
Opened Dow -4pts, S&P were flat and NDX-0.1%
Data ahead Goods Trade Balance,Wholesale Inventories, Redbook, Case/Shiller Home Price, Consumer Confidence, Richmond Fed Manufacturing Index, Powell’s Testimony to Congress, Fed Speakers; Bowman and Bostic. After Market API Crude Oil Stock Change

DOW +0.21%, NDX -0.52%, S&P -0.28%, Russel 2K +1.46%
Dow opened higher and rallied but pulled back after the first hour and traded effectively sideways. NDX opened lower but worked back towards flat.  S&P opened lower and traded around flat but in the red.
Lawmakers continue to debate the US debt ceiling and Biden’s infrastructure bills. Treasury yields rose (briefly topping 1.5% intraday) pushing banks shares higher. Energy was also +VE but tech stocks were weak.
Banks JPMorgan Chase +1.2%, Citigroup +0.2% Wells Fargo +0.3%, Amex +1.4%
Work from home names: Facebook +2%, Apple +0.1%, Amazon +0.3%, Netflix -0.2%,  Disney -0.1%, Zoom Video -1.4%, Alphabet +0.7% and Microsoft -0.1%,
Tech NXP Semi +0.2%, Nvidia -1.8%, Micron flat, AMD -0.3%, Skyworks -0.4%
Re-opening stocks  Boeing +0.1%, Caterpillar +0.1%, Simon Property -0.9%, Kohl’s -0.5%, Nordstrom -0.2%, Gap -1.2%, United Airlines +2.8%, Carnival +3%, Wynn Resorts -1.1%, Chevron +0.5%, Exxon Mobil +0.9%,  
Lock down names Campbell Soup +0.4% General Mills +0.4%, JM Smucker -0.6%
DATA
Durable Goods Orders Aug +1.8% MoM vs +0.5% Jul revised(F/cast was +0.4%)
Durable Goods Orders Ex Trans Aug +0.2% MoM vs +0.8% Jul revised (F/cast was +0.4%)
Durable Goods Orders Ex Defence Aug +2.4% MoM vs -0.5% Jul (F/cast was +0.3%)
USD stronger as T10 roses. Bitcoin -0.21% @ 43,194.00, VIX +5.7% @ 18.76, US T10 1.491% on news that Kaplan and Rosengren retire over trading revelations leaving the Fed potentially open to more dovish views
OIL Brent +1.8%, WTI +2%
Gold -0.08%, Silver -0.22%, Copper -0.27% Platinum -0.06%, Palladium +0.2%.
AHEAD Goods Trade Balance,Wholesale Inventories, Redbook, Case/Shiller Home Price, Consumer Confidence, Richmond Fed Manufacturing Index,  Powell’s Testimony to Congress, Fed Speakers; Bowman and Bostic. After Market API Crude Oil Stock Change

DAX +0.27%, CAC +0.19%, FTSE +0.17%
Markets opened higher. FTSE dipped as the petrol shortage hits and traded flat before a small rally into the close. German election provides no clear winner so the inter-party negotiations likely to take weeks to provide a new government; key being the far left’s failure to gain traction.  DAX opened higher but trended to flat through the day. The CAC followed a similar pattern.  Lagarde commented that Euro zone inflation could exceed the ECB’s current projections but be temporary.  Oil & Gas strong as shortages hit. Tech shares were weak.   UK Labour party conference underway.
DATA
Eurozone
Loans to Household Aug +4.2% YoY vs +4.2% Jul (F/cast was +4.3%)
Loans to Companies Aug +1.5% YoY vs +1.7% Jul (F/cast was +1.7%)
M3 Money Supply Aug +7.9% YoY vs +7.6% Jul (F/cast was +7.7%)
France
Unemployment Benefits Claims Aug -51.1k vs -57.8k Jul (F/cast was -44k)
Jobseekers Total  Aug 3.3087m vs 3.3598m Jul (F/cast is 3.3158m)
AHEAD
EUROZONE ECB’s Lagarde Speech
GERMANY Consumer Confidence
FRANCE Consumer Confidence
UK  No data due

JAPAN
Nikkei local futures opened -17pts  expect a cautious day’s trading ahead of a big Ex Div day tomorrow and the LDP leadership vote.
Crude rising should also help the Miners and Re-opening stocks likely to see interest too.
Yen currently 110.99
Data due BoJ Monetary Policy Meeting Notes.
Tokyo reports 154 new covid cases (-145 DoD) and the national total was 1,147. Expectation are that the State of Emergency will be lifted shortly.
Japan has approved GlaxoSmithKline (GSK.L) and Vir Biotechnology's (VIR.O) Sotrovimab as an antibody treatment for coronavirus, Health Minister Norihisa Tamura said on Monday. +VE
Japan’s biggest power generator JERA (a joint venture between Tokyo Electric Power and Chubu Electric Power) said on Monday it will invest $1.58 billion to take 27% stake in Aboitiz Power Corp in the Philippines from Aboitiz’s parent company to boost its presence in the country where power demand is growing. +VE
A group of junior lawmakers has emerged as a force to be reckoned with in Japan’s ruling party leadership contest, facing off with party barons in the wide-open race for votes on Wednesday, which will also determine the premiership.  The old party factions have lost influence since reforms in the 1990s when they were banned from funding candidates, leaving that solely to party headquarters. Many are dissatisfied  with the back room deals that saw Suga win last time. Voting will take place on Wednesday and could result in a run-off contest too.
Shinsei said its proposed extension to Dec. 8 will give shareholders sufficient time to assess provided information so they can decide on whether to tender their shares.
Softbank’s Deep Nishar reported to leave the firm by the end of the year -VE

SOUTH KOREA
Expect markets to open flat Consumer Confidence rose +VE for Retail and Re-Opening stocks but China’s power cuts -VE for Apple plays and POSCO’s Jiangsu plant.
Data out Consumer Confidence Sept 103.8 vs 102.5 Aug (F/cast was 101.5)
South Korea’s 5G users increased by millions this year, but 5G network base stations are still being rolled out slowly, a local agency said Monday.  +VE for base station manufacturers
Samsung Electronics and Hyundai Steel announced Monday that they had developed a new wastewater recycling technology that would allow sludge from the chip manufacturing process to be reused for steelmaking.  Slight  +VE
Samsung Electronics Co. is expected to report strong third-quarter earnings on the back of its semiconductor business and a weak won, analysts said Monday. It was projected to log 16.3 trillion-won ($13.8 billion) in operating profit for the July-September period, up 31.9 percent from a year earlier, while its sales were forecast to increase 12.2 percent on-year to 75.1 trillion won over the period, according to the data from nine local brokerage houses compiled by Yonhap Infomax, the financial news arm of Yonhap News Agency. +VE
Doosan Fuel Cell on Monday shipped four hydrogen fuel cells worth $13.2 million to China in what was marked as South Korea’s first export of the product. According to the Ministry of Trade, Industry and Trade Monday, the fuel cells with a combined capacity of 1.8 megawatts will be installed at seven apartment buildings of 400 households and one commercial building in Foshan, Guangdong province. The fuel cells will generate heat and electricity. +VE
Hyundai Motor Co. said Monday it has restarted production at a local plant on the resumed supply of electronic components.  It halted the Asan plant from Sept. 15-17 due to a lack of chip parts, resulting in production losses of 3,000 vehicles, the company said in a regulatory filing. +VE

TAIWAN
Expect market to open lower following the US markets and mixed data after market Monday.  TSMC in focus rallied in the auction on bargain hunting.  Power Shortages in China a concern.  Shippers still seeing bottlenecks but over all +VE
No data due but after market Monday
Industrial Production Aug 13.69% vs 13.93% Jul (F/cast was 13%) due to steady and strong demand for new technology along with a general global recovery, the Ministry of Economic Affairs reported yesterday.
Retail Sales Aug -4.3% vs -9.6% Jul revised (F/cast was 0.5%)
The government’s business climate monitor last month turned “red” for the seventh straight month, indicating an economic boom as the effects of a COVID-19 outbreak tapered off amid robust exports, the National Development Council (NDC) said yesterday.  The climate gauge gained 1 point to 39 on the back of an improvement in retail, wholesale and restaurant revenue after authorities eased social distancing requirements, NDC research director Wu Ming-huei said.
Germany welcomes Taiwan Semiconductor Manufacturing Co (TSMC) to establish a new fab in Saxony, German Institute Taipei Director-General Jorg Polster said yesterday at a news briefing on the country’s election. It is the first time the German Institute Taipei has held a briefing on Germany’s parliamentary election, which is “very important,” said Polster, who spoke in German with a Chinese interpreter. Polster said, adding that he is interested in visiting Taiwan’s science parks.   Other areas for ongoing cooperation include energy, culture, aviation and judicial exchanges, he said.  Taiwan and Germany regularly hold energy forums, with offshore wind energy being a sector of common interest, he said.  Considering there are many similarities between Taiwan’s judiciary system and Germany’s, he would also like to have more bilateral exchanges on legal institutions and judges, he said. +VE
British lawmaker and former Conservative Party leader Iain Duncan Smith has called on the free world to “categorically” support Taiwan and Lithuania in response to China’s bullying.  “Should the free world support them? Yes, categorically,” he said. “We need to be able to make it clear to China one way or the other that China cannot act unilaterally over Taiwan, and that the overflying of their military jets and the threats, the posturing, the undiplomatic language, is appalling.”
Many governments have chosen to ignore Beijing’s aggressive behavior toward Taiwan and those who support Taiwan on the world stage, he said, adding that such problems need to be dealt with. He implored the Chinese government to “take a step back from its appalling behavior,” to cooperate and obey the rules that exist in the international order, as well as to value other important things such as human rights and freedom of expression, Smith said. +VE
Pegatron Corp  a key partner for Apple Inc and one of the assemblers of its iPhone, said yesterday that it’s taking energy-saving measures to comply with local government policies. Regardless, the firms responsible for producing the Apple handset have avoided drastic cutbacks in production so far and appear to be getting preferential access to energy in order to keep operations going, people familiar with the situation said.

CHINA
Expect a cautious open with industrial production data due in addition to the recent power shortages which will also influence future production.  Their are also concerns about knock on effect from Evergrande after another developer sought assistance along with the on-going covid outbreak .
Data due 
Industrial Profits (YTD) Aug. Jul was 57.3% YoY (F/cast is +45%)
GS downgrades GDP growth target for China to 7.8% from 8.2%
Multiple Shanghai government departments arranged admonition talks jointly with ride-hailing platforms in the city today (27th), reporting the law enforcement of the year and mapping out works to be done in the next phase, Chinese media reported. The meeting passed on the requirements as stipulated by the Ministry of Transport, reporting the main focuses of the previous MoT joint talks with 11 rider-hailers, including Meituan Chuxing and Didi Chuxing. Looking ahead, Shanghai’s traffic supervisors, law enforcement bodies and public security agencies will conduct joint law enforcement actions from time to time, mount thorough inspections on online car-hailing platforms, and keep random data in check; if breaches are investigated, stringent penalties will be imposed.

HONG KONG 
ADR’s +113pts at 24,320 expect some initial short covering to offset the caution ahead of the China Industrial Production data. Weaknessin CLP, CCB, Unicom, BoC HK and CK Hutch. Evergrande reports insiders further selling down of stakes.
Data due after market  Trade Balance, Exports and Imports

SHORT SELLING HSI Monday 16.7% vs 20% Friday
Top shorts 
Country Garden (2007) 52%, Bud Apac (1876) 51%, Henderson Land (12) 43%, CM Bank (3968) 38%, Petrochina (857) 35%, Mengniu Dairy (2319) 35%, China Res Land (1109) 35%, Bank of China (3988) 31%, Hengan (1044) 31%, MTR (66) 30%, Power Assets (6) 30%, China Overseas (688) 29%, Haidilao (6862) 28%, CK Asset (1113) 28%, Ali Health (241) 27%, Wharf REIC (1997) 27%, Meituan (3690) 27%, HKEX (388) 26%.

WATCH
The Hong Kong government released a report on Hong Kong's business environment.
The Financial Secretary Paul Chan expressed that, after the civil unrest in 2019 and subsequent suppression from the U.S. in terms of spreading misleading information and smearing about the business environment in Hong Kong, the Hong Kong government views it appropriate to retaliate the misleading messages with concrete data and illustrate the actual business environment in Hong Kong to the international community. Also, Chan added that the report serves another purpose of compiling and introducing the series of new policies rolled out by the Chinese government. The Financial Secretary remarked that the development of Hong Kong is tightly connected to that of China.

ND PAPER(02689.HK) -0.360 (-3.209%) Short selling $21.40M; Ratio 26.723% announced annual result ended June 2021. The revenue rose 19.9% year on year to RMB61.574 billion. The net profit amounted to RMB7.101 billion, up 70.4% year on year. EPS was RMB1.51. A final dividend of RMB33 fen was declared, against a dividend of RMB22 fen in the year-ago period. The total dividend for the fiscal year amounted to RMB43 fen, compared to a total dividend of RMB32 fen in the previous fiscal year.

CHINA GAS HOLD (00384.HK) announced that it repurchased 3.3414 million shares of the company on the Stock Exchange today (27th) at a repurchase price of $20.7-21.4 per share, involving approximately $70.4055 million.

CHINESE EST H (00127.HK)  offloaded about 131 million EVERGRANDE (03333.HK) shares in the market at an average price of $2.6845 each today (27 September), likely pocketing $351 million (excluding handling fees).  Upon completion, CHINESE EST H's shareholding in EVERGRANDE declined from 5.66% to 4.68%.

Fitch Ratings downgraded RONSHINECHINA (03301.HK)'s Long-Term Foreign-Currency Issuer Default Rating (IDR) to "B+" from "BB-", with a negative outlook. RONSHINECHINA's senior unsecured rating and the ratings on its outstanding USD senior notes have likewise been downgraded from "BB-" to "B+", with a Recovery Rating of "RR4".  The downgrading was primarily due to the higher land acquisition costs for RONSHINECHINA over the past few years, combined with the property price cap policy rolled out by the local governments, which affected the average selling prices and ultimately resulted in weaker profitability, remarked Fitch Ratings.

Ascend Money, a startup backed by Ant Group and Charoen Pokphand Group, is valued at US$1.5 billion after the latest US$150-million funding round, making it the first fintech unicorn in Thailand.
The startup will improve its mobile payment app TrueMoney Wallet and expand its Southeast Asia digital financial services using the fresh funds

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