Sept 30 Asian Marco Initial Thoughts: Mixed on quarter end.


30 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 Quarter End so expect some window dressing. Also last day of trading for China’s markets close for Golden Week, HK will also be closed tomorrow.

Australia Expect market to open slightly higher; resources mixed and covid concerns remain. But Iron Ore prices higher.  ExDiv will be a drag on the market.  Australian clocks go forward 1hr this weekend.
Data due Building Permits, Private Sector Credit
Japan futures opened higher but expect muted trading ahead of Quarter end and  Nikkei re-balance on the close.  
S Korea Expect markets to open lower after mixed pre market data and weakness in US tech overnight.
Taiwan Expect market to open lower  with Tech under pressure.
China Expect market to open lower with the Dragon Index -1.4% overnight.  PMI data expected to show slowing.  Market will be closed for Golden Week will also prompt caution
HK ADR’s indicate -205pts at 24,457 with broad weakness.  Gaming stocks weak as Beijing stops approving new licences.
US Futures 
Opened Dow +81pts, S&P +0.24% and NDX +0.24%

DOW +0.26%, NDX -0.24%, S&P -0.16%, Russel 2K -0.2%
Markets opened higher DOW & NDX traded effectively sideways in the green but the NDX dipped into the red late morning, bounced back early afternoon and then dipped into the red again going into the close.
Tech remained weak, defensive stocks +VE with Utilities strong. Semi cons weak after Micron’s poor outlook. Dollar Tree +16.4% on news of more buybacks and price rises in some locations.
Fed Chair Jerome Powell said at a ECB forum it was “frustrating to see the bottlenecks and supply chain problems not getting better, in fact at the margins apparently getting a little bit worse. We see that continuing into next year probably, and holding up inflation longer than we had thought.” -VE
US debt ceiling continues to be a issue.
Banks JPMorgan Chase -0.1%, Citigroup +0.1% Wells Fargo +2.4%, Amex -0.9%
Work from home names: Facebook -0.3%, Apple +0.7%, Amazon -0.5%, Netflix +2.6%,  Disney -1.1%, Zoom Video -1.7%, Alphabet -1.1% and Microsoft +0.2%,
Tech NXP Semi -3.6%, Nvidia -0.9%, Micron -2%, AMD -1.2%, Skyworks -0.2%
Re-opening stocks  Boeing +3.2%, Caterpillar -1.3%, Simon Property +0.1%, Kohl’s -1.1%, Nordstrom -1.4%, Gap +0.3%, United Airlines +0.1%, Carnival -2.5%, Wynn Resorts -0.8%, Chevron -0.1%, Exxon Mobil Flat,  
Lock down names Campbell Soup +1.9% General Mills +2.4%, JM Smucker +1.7%

DATA
MBA Mortgage Applications -1.1% vs +4.9% prior
30 yr Mortgage Rate 3.1% vs 3.03% prior
Pending Home Sales Aug -8.3% YoY vs -8.7% Jul revised (F/cast was -6%)
Pending Home Sales Aug +8.1% MoM vs -2% Jul revised (F/cast was +1.1%)
EIA Gasoline stocks change 0.193m vs 3.475m prior (Consensus was 1.4m)
EIA Crude stocks change 4.578m vs -3.481m prior (Consensus was -1.652m)
Powell’s speech
USD was stronger. Bitcoin -0.9% @ 41,233.10, VIX -2.97% @ 22.56, US T10 @ 1.524% eases as bond sell off eases.
OIL Brent -0.75%, WTI -0.61% falling for a second day
Gold flat, Silver -0.34%, Copper -1% Platinum +0.1%, Palladium +0.1%.
AHEAD GDP Price Index, GDP Growth Rate, Initial Claims, 4 week Ave Claims,  Continuing Claims, PCE Prices, Core PCE Prices, Chicago PMI, EIA Natural Gas Report,  WASDE report.

DAX +0.77%, CAC +0.84%, FTSE +1.14%
Markets opened higher and in traded sideways with a slight rally into the close. Investors watched for comments from the ECB Forum on Central Banking. Auto lead the gains with most sectors closing in the green. Sentiment helped but the +VE sentiment readings in Eurozone.
DATA
Data 
Eurozone 
Economic Sentiment Sept 117.8 vs 117.5 Aug (F/cast was 115.9)
Industrial Sentiment Sept 14.1 vs 13.7 Aug (F/cast was 12.9)
Services Sentiment Sept 15.1 vs 16.8 Aug (F/cast was 15.9)
Consumer Confidence Sept -4 vs -5.3 Aug (F/cast was -4)
Consumer Inflation Expectations Sept 33.1 vs 31.1 Aug (F/cast was 32)
German 
Import Prices Aug +16.5% YoY vs +15% Jul (F/cast was +16.2)
Import Prices Aug +1.4% MoM vs +2.2% Jul (F/cast was +1.1%)
UK 
Consumer Credit Aug £0.4B vs £-0.042B Jul (F/cast was £-0.2B )
Mortgage Approvals Aug 74.5k vs 75.2k Jul (F/cast was 75k)
Mortgage Lending Aug £5.3B vs £-1.4B Jul (F/cast was £3.5B)
Net Lending to Individuals Aug £5.6B vs £-1.4B Jul (F/cast was £2.8B )
AHEAD
EUROZONE Unemployment Rate
GERMANY Unemployment Rate
FRANCE Inflation Rate, Household Consumption, PPI
UK  Nationwide House Prices, Current Account, GDP Growth Rate, Business Investment, Car Production

JAPAN
Nikkei futures opened higher but expect muted trading ahead of Quarter end and  Nikkei re-balance on the close.  
Yen currently 111.94
Data due Retail Sales, Industrial Production, later Housing Starts and Construction Orders and Nikkei re-balance.
Japan's economy will continue to recover and could reach levels seen before the coronavirus pandemic by the end of this year or early in 2022, Bank of Japan Governor Haruhiko Kuroda said on Thursday.
Japanese Finance Minister Taro Aso on Wednesday hailed the election of former foreign minister Fumio Kishida as the new leader of the ruling Liberal Democratic Party, calling him a "good guy" with experience in domestic and foreign affairs.  The new leader is expected to kick off with more fiscal spending.
Japanese prosecutors asked a Tokyo court on Wednesday to send former Nissan Motor executive Greg Kelly to prison for two years for his alleged part in helping Carlos Ghosn, the carmaker's ousted CEO, hide earnings.
Japan has protested a South Korean court order that assets seized from Mitsubishi Heavy Industries be sold off to pay compensation to two women subjected to forced labour for the company during Japan's occupation of the Korean peninsula.

SOUTH KOREA Expect markets to open lower after mixed pre market data and weakness in US tech overnight.  
Data out
Business Confidence Sept 90 vs 95 Aug (F/cast was 94)
Industrial Production Aug 9.6% YoY vs 7.7% Jul revised (F/cast was 8.5% )
Industrial Production Aug -0.7% MoM vs +0.2% Jul revised (F/cast was +0.3%)
Manufacturing Production Aug vs Jul (F/cast was )
Retail Sales Aug -0.8% MoM vs -0.5% Jul revised (F/cast was -1%)
Retail Sales Aug +3.8% YoY vs 7.9% Jul (F/cast was +6.6%)
Construction Output Aug +0.3% YoY vs -8% Jul revised (F/cast was-1.2% )
Global steelmakers will come together to find ways to decarbonize steelmaking in a forum organized by Posco, the South Korean steel giant said Wednesday.  The Hydrogen Iron & Steel Making Forum 2021, set to take place from Oct. 6-8 on both offline and online channels, is expected to provide a platform for industrywide discussion for major players around the world to join the global movement to reduce carbon emissions. +VE
With Apple set to launch the iPhone 13 in South Korea in early October, Samsung Electronics appears under pressure to safeguard its share not only on its home turf, but also in the increasingly competitive global smartphone market. -VE
GC Pharma is in talks with Janssen  to sign a contract manufacturing deal for Janssen’s COVID-19 vaccine, according to industry sources Wednesday. +VE

TAIWAN
Expect market to open lower  with Tech under pressure.
No data due
Cathay Financial Holding Co yesterday increased its GDP growth forecast for Taiwan this year to 5.6 percent, up from the 5 percent it projected in June, citing robust exports and investment.  However, the company lowered its annual growth forecast for private consumption to 1.09 percent for this year, compared with its previous estimate of 2.39 percent, amid fallout from the local COVID-19 outbreak that began in May.  +VE
Taiwan ranked eighth in the world for digital competitiveness this year, up three places from last year, due to gains in research and development spending, broadband penetration and the market values of tech firms, the International Institute for Management Development (IMD) said yesterday. +VE

CHINA
Expect market to open lower with the Dragon Index -1.4% overnight
Data due Pre Market Manufacturing and Non Manufacturing PMI
Later Caixin Manufacturing PMI.
The United States and European Union agreed on Wednesday to deepen transatlantic cooperation to strengthen semiconductor supply chains, curb China's non-market trade practices and take a more unified approach to regulating big, global technology firms. -VE
At least some of China Evergrande's offshore bondholders had not received a due coupon payment by the close of Asia business on Wednesday, sources said, although the cash-strapped developer reached a $1.5 billion deal to settle debt with a Chinese bank. -VE
Tickets for the Beijing 2022 winter Olympics will be sold to spectators from mainland China only, while unvaccinated athletes must spend 21 days in quarantine ahead of the Games, the International Olympic Committee said on Wednesday. -VE
Chinese automaker GAC (601238.SS) is exporting China-made sport-utility vehicles to Mexico, in its first massive sales in the North America after years of planning to enter the key market. However, the cars are under Dodge marque. +VE
China on Wednesday demanded railway companies and local authorities raise their game in shipping vital coal supplies to utilities, as regions key to the world's no. 2 economy grapple with power cuts that have crippled industrial output.

HONG KONG 
ADR’s -205pts at 24,457 with broad weakness. Gaming stocks weak as Beijing stops approving new licences.
No data due

SHORT SELLING HSI Wednesday 21.9% vs 20.8% Tuesday
Top shorts 
Country Garden (2007) 53%, Bud Apac (1876) 49%, China Res Land (1109) 39%, BDY (1211) 36%, CM Bank (3968) 35%, Meituan (3690) 34%, HK & China Gas (3) 33%, Baba (9988) 33%,Wuxi Bio (2269) 33%, Mengniu Dairy (2319) 33%, HKEX (388) 31%, HSBC (5) 31%, CSPC Pharma (1093) 30%, Bank of China (3988) 27%, Shenzhou (2313) 26%, Power Assets (6) 26%, Sino BioPharm (1177) 26%, CK Asset (1113) 25%, Anta Sports (2020) 25%, AIA (1299) 25%,

WATCH
BABA-SW (09988.HK)'s content center is officially rooted in Changzhou, Jiangsu, rendering content services to short videos and live broadcasts on Taobao and Tmall, Chinese media reported. 
The content center purportedly has an office area of almost 30,000 sq.m.., and has been in operation for 8 months with nearly 1,000 employees in the office area.

The government announced that, pursuant to the power conferred on  him by "the Companies Ordinance", the Financial Secretary, Paul Chan,  has presented a petition to the Court of First Instance to wind up NEXT  DIGITAL (00282.HK). 
The Securities and Futures  Commission (SFC) also believes that it is desirable in the public  interest for NEXT DIGITAL to be wound up, based on the information and  evidence it has obtained.WEIMOB INC (02013.HK) announced the repurchase of 1.344 million shares on the Stock Exchange Wednesday (29th) at a price between $10.82-11.18 each, involving $14.8343 million.

SWIREPROPERTIES (01972.HK) announced that the Project Company, which is a subsidiary of Swire Properties, accepted the Land Exchange Offer under the Offer Letter, pursuant to which the Project Company will surrender the Lot located at No.391 Chai Wan Road, Chai Wan, 
Hong Kong to the Government and the Government will grant Chai Wan Inland Lot No. 178 to the Project Company for a premium of HK$4.54 billion. The Regranted Lot has a total site area of about 9,000 square metres and a lease term of 50 years.Fitch Ratings has further downgraded the Long-Term Foreign-Currency Issuer Default Ratings (IDRs) of EVERGRANDE (03333.HK), and its subsidiaries, Hengda Real Estate Group Co., Ltd and Tianji Holding Limited, from "CC" to "C".  Fitch Ratings maintained a Stable outlook for Hong Kong domestic banks with no plan for downgrading them due to the EVERGRANDE crisis, remarked Grace Wu, Senior Director and Head of Greater China Bank Ratings at Fitch. However, banks with a larger risk exposure to Mainland business, such as MINSHENG BANK (01988.HK) and other mid-small scaled banks, would be relatively more vulnerable to the impact wrought by the debt woes of EVERGRANDE, Wu added.

Macau Chief Executive Ho Iat Seng acknowledged the report that Guangdong and Hong Kong are negotiating on the border resumption arrangement, 
assuming Macau to unwind border curbs with Hong Kong concurrently when Guangdong and Hong Kong enforce the related arrangement, Radio Macau (TMD) reported. The CE foretold that announcement will be made very soon.

Former IMF chief economist and economics professor at Harvard University, Kenneth Rogoff, believes that EVERGRANDE (03333.HK)'s debt crisis may not evolve into a Chinese version of Lehman Brothers incident, 
but instead the collapse of the entire property-driven growth model of the Chinese economy, reported Barron's.  Real estate-related products and services currently account for 29% of China's GDP, which is an alarmingly high level, the economist added. Rogoff estimated that, in the case of EVERGRANDE's collapse, China's annual economic growth rate may plunge to only 2%, as the entire Chinese property sector would be crushed.

Michael Wong: Govt To Sell 2 Residential Sites in Tai Po, Repulse Bay 
in 3FQ, Offering 210 Flats.   Private housing supply from various sources would total 14,430 units during 1-3Q21 considering 1H21 supply of 7,320 flats, exceeding the annual goal of 12,900 units. Wong estimated the full-year private home supply at 17,000 units, being 30% above the target.

JD-SW (09618.HK) announced the opening of its first JD MALL in Xi'an on 30 September.
The five-storey mall has an operating floor area of 42,000 sq.m., offering more than 200,000 commodities from some 150 electric appliance and 3C brands at home and abroad, including Apple, Huawei, Intel, Midea, Haier, Gree, Aux Group and Philips.

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