Aug 11 Asian Marco Initial Thoughts Cautious trading ahead of US inflation data and Chinese loans.


11 Aug

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

Asia

Australia 
Market has opened higher slightly stronger than the futures thanks to the good results from CBA kicking off the bank’s reporting. Oil and Gold names +VE
Japan Market opened slightly higher another big day for earnings and lots of results from yesterday to digest.
S Korea Markets open  slightly lower new covid cases hitting a new high and off-sets the fall in unemployment.  Samsung opened lower on their ‘unpack’ day having been usurped by Xiaomi’s release last night
Taiwan Market to open higher with the focus on local results.
China Market to open flat with caution over policy and ahead of the New Loans data which could come out at anytime
HK ADR’s -24pts @ 26,581 with Banks and Ecommerce names weak.
US Futures 
Opened Dow slightly higher, S&P 500 futures and Nasdaq 100 futures were flat. Caution ahead of inflation data.

DOW +0.5%, NDX -0.5%, S&P +0.1%, Russel 2K +0.2%
Markets opened flat, Dow rose helped by the passing at the Senate of the infrastructure bill and now goes to the house.  Dow then traded sideways, S&P traded around flat but the NDX dipped lower and drfited lower through the day concerns ahead of the inflation data and the recovery.
Banks 
JPMorgan Chase +1.2%, Citigroup +2% Wells Fargo +2%, Amex -0.8%
Work from home names: Facebook -0.1%, Apple -0.3%, Amazon -0.6%, Netflix -0.8%,  Disney +0.2%, Zoom Video -2.8%, Alphabet -0.1% and Microsoft -0.7%,
Tech NXP Semi +0.1%, Nvidia -1.8%, Micron -5.4%, AMD -1%, Skyworks -0.5%
Re-opening stocks  Boeing +1.5%, Caterpillar +2.5%, Simon Property -0.6%, Kohl’s +2.3%, Nordstrom +2.8%, Gap +4.4%, United Airlines +2.7%, Carnival +4.1%, Wynn Resorts +1.4%, Chevron +1.8%, Exxon Mobil +1.7%,  
Lock down names Campbell Soup -0.2% General Mills +0.2%, JM Smucker +0.8%
DATA
NFIB Business Optimism Jul 99.7 vs 102.5 Jun (F/cast was 101.9)
Unit Labour Costs Prelim Q2 +1% QoQ vs -2.8% Q1 revised (F/cast was +1.4%)
Non Farm Productivity Prelim Q2 +2.3% QoQ vs +4.3% Q1 revised (F/cast was +3.2%)
Redbook +16.2% YoY vs +17.2% prior
After Market 
API Crude Oil Stock Change -0.816m vs -0.879m prior (Consensus was -1.05m)
USD was firming vs Yen & Euro. Bitcoin -0.7% @ 45,860.10
, VIX +0.42% @ 16.79, US T10 @ 1.354% rising ahead of inflation
OIL Brent +2.6%, WTI +2.7%
Gold +0.1%, Silver +0.1%, Copper -1% Platinum unch, Palladium +0.1%.
AHEAD MBA Mortgage Applications and 30 yr Mortgage Rate, Core Inflation Rate, Inflation Rate, EIA Oil Report, Monthly Budget Statement

DAX +0.16%, CAC +0.1%, FTSE +0.4%
Markets opened slightly positive and traded sideways.  Travel and Leisure lead the markets.  Earnings continue to be in focus. But there were concerns as the German ZEW survey missed.
Earnings included Munich Re, ABRDN and InterContinental Hotels Group.
Hellofresh +9% after a strong second-quarter earnings report.
Deliveroo +6.9% after announcing on Monday that Delivery Hero had taken a stake in the company.
German used car broker Auto1 Group -3.1% despite reporting the strongest quarter in its history after the bell on Monday.
M&G -2.9% after the company swung to a loss after tax in the six months to June 30.
DATA
Eurozone
 
ZEW Economic Sentiment Index Aug 42.7 vs 61.1 Jul (F/cast was 45.6)
Germany
ZEW Economic Sentiment Index Aug 40.4 vs 63.3 Jul (F/cast was 55.1)
ZEW Economic Sentiment Index Aug 29.3 vs 21.9 Jul (F/cast was 29.1)
AHEAD
EUROZONE No data due
GERMANY Inflation Rate
FRANCE No data due  
UK  No data due

JAPAN
Market opened slightly higher another big day for earnings and lots of results from yesterday to digest.
Data due later Machine Tool Orders
Tokyo reported 2,612 new covid cases
Softbank earnings disappoint Q1 Net profit -39%, following big gains in  the same period last year.  The size of buyback less that expected and news that Son will make personal investments alongside the fund. Noted the impact of the crackdown in China.
Kirin Holdings is not planning to exit Myanmar, despite being forced to scrap its beer partnership with a joint venture linked to Myanmar’s military after a coup earlier this year, an executive said on Tuesday.
Nissan says its huge factory in Smyrna, Tennessee, will close for two weeks starting Monday due to computer chip shortages brought on by a coronavirus outbreak in Malaysia. -VE
The number of corporate bankruptcies in Japan fell at the fastest rate this year to hit the lowest in 50 years for a July, thanks to funding support from the government and banks. There were 476 company bankruptcies in July, down 40% from the same month a year ago, Tokyo Shoko Research showed, pointing to government help for corporate financing amid a resurgence of the COVID-19 pandemic. +VE  

SOUTH KOREA
Markets open  slightly lower new covid cases hitting a new high and off-sets the fall in unemployment.  Samsung opened lower on their ‘unpack’ day having been usurped by Xiaomi’s release last night  
Data out
Unemployment Rate Jul 3.3% vs 3.7% Jun (F/cast was 3.7%)
KDCA logged 2,021 new coronavirus cases Tuesday ( -637 DoD)
Krafton Inc, the Tencent Holdings-backed company behind blockbuster video game “PlayerUnknown’s Battlegrounds” (PUBG), fell as much as 20% on their trading debut on Tuesday. Stock will be watched closely again today. -VE
SK Bioscience has been given the green light to proceed with a late stage clinical trial of its COVID-19 vaccine candidate, heightening expectations for a homegrown vaccine becoming available next year.+VE
Korea Aerospace Industries said Tuesday it has signed a 49.7 billion-won ($43.2 million) deal with the Public Procurement Service to supply two Surion helicopters to the Korea Coast Guard +VE.
Samsung annual unpack day today but event usurped by Xiaomi which unveil its  new flagship smartphone Mi Mix 4 last night.
Samsung logged a share of 73 percent in the South Korean smartphone market in the April-June period, up 6 percentage points from a year earlier, according to data from market researcher Counterpoint Research.

TAIWAN
Expect market to open higher with the focus on local results.
No data due.
The number of employees in the industrial and service sectors shrank by 93,000 in June, a record 1.14 percent decrease from May, as the job market took a hit from the domestic COVID-19 outbreak and tougher disease prevention measures, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday.  Slight -VE
Taiwan is hoping to collaborate with nations such as Japan and the US where Taiwanese semiconductor companies have a presence to set up a joint semiconductor talent pool, President Tsai Ing-wen told Japanese media yesterday.   In an interview with Tokyo-based Bungei Shunju magazine via videoconference, Tsai covered several topics, including the development of Taiwan’s semiconductor sector, COVID-19 prevention measures, Taiwan-US-Japan relations and cross-Taiwan Strait relations. +VE
Fubon Financial Holding  yesterday posted record-high net income of NT$18.59 billion (US$667.96 million) for last month, thanks to investment gains and dividend income that allowed it to remain the most profitable among its domestic peers.  Cumulative profit more than doubled to NT$106.19 billion in the first seven months, surpassing the sum for the whole of last year, or earnings per share of NT$10.1, the company said in a statement. +VE
ChipMOS Technologies a display driver IC and memorychip tester and packager, yesterday said that it is raising the prices of most packaging and testing services this quarter as robust demand continues to drive its factory utilization to a high level, compared with an average of 87 percent last quarter.  The Hsinchu-based firm started to raise prices of packaging and testing services last month to reflect higher raw material costs and worsening capacity constraints amid constant delays in the delivery of new manufacturing equipment, it said. Higher utilization rates and price increases are to give a further lift to the company’s net profit this quarter, ChipMOS chairman Cheng Chih-chieh told a videoconference.
Taiwan Semiconductor Manufacturing Co  yesterday said that its board of directors has approved the issuance of US$1 billion of unsecured bonds in Taiwan and up to US$8 billion of bonds in the US to fund its capacity expansion.  The chipmaker told investors last month that it plans to invest US$8 billion in a 12-inch fab in Arizona over the next three years, a part of its US$12 billion investment in the US from this year to 2029. The Arizona fab is under construction and is to start producing 5-nanometer chips in the first quarter of 2024, it said.

CHINA
Expect Market to open flat with caution over policy and ahead of the New Loans data which could come out at anytime. PBoC policy remains unclear but likely to remain supportive.  Covid still an overhang.
No data due.
A U.S. appeals court on Tuesday threw out a price-fixing lawsuit against two Chinese companies that make vitamin C, a case that spotlighted trade tensions between the United States and China.
Chinese authorities have arrested a top public relations executive at Chinese social media giant Weibo Corp (WB.O), local Chinese media reported widely on Tuesday and confirmed to Reuters by a company source.  According to an internal memo sent to staff and seen by Reuters, Mao Taotao, director of public relations at Weibo - which is partly owned by e-commerce giant Alibaba Group Holding Ltd. - is suspected of bribery and had "seriously harmed the interests of the company."
Cathie Wood said valuations of Chinese stocks will likely remain depressed for a while, but she isn’t shutting the door on them, Bloomberg reports. “So is China now uninvestable?” the head of Ark Investment Management said on a webinar hosted by the firm Tuesday. “Well, I would say in any of the areas that we’re looking at right now, the multiple structure, the valuation structure of those companies is down and probably not going to come back very quickly, may even go down more.” “But,” she said later in the webinar, “I’m sure we’re going to find some very interesting companies in the innovation space, and so we’re going to keep an open mind there.” Slight +VE
Russia and China are holding a large-scale joint military exercise in north-central China involving more than 10,000 troops, Russia's defence ministry said on Tuesday.  The Sibu/Cooperation-2021 drills in China's Ningxia region are being watched for signs that China and Russia are expanding military cooperation as they spar with the West.

HONG KONG 
ADR’s -24pts @ 26,581 with Banks and Ecommerce names weak.
No data due

Earnings in focus today include Cathay Pac (293 HK), HK Ex (388 HK),  Techtronics (669 HK),  Lenovo (992 HK) and others

SHORT SELLING Tuesday 15.7% vs 13.2% Monday
Top shorts  
CKAsset (1113) 56%, Bud Apac (1876) 51%, Country Garden (2007) 48%, Wharf REIC (1997) 46%, MTRC (66) 44%, CLP (2) 40%, HSBC (5) 38%, Baba (9988) 37%, AIA (1299) 37%, CCB (939) 34%, Haidilao (6862) 34%

NATIONAL SECURITY
Local legislation should be used to introduce the anti-sanctions law in Hong Kong, says Chief Executive Carrie Lam Cheng Yuet-ngor.

Lam has thrown her weight behind the introduction of the law through the Legislative Council - similar to the national anthem law's process - instead of through promulgation such as when the national security law took effect on June 30, 2020 after Beijing imposed it on Hong Kong.

WATCH
WHARF HOLDINGS (00004.HK) Short selling $10.68M; Ratio 35.767% Chairman Stephen Ng opined that the continuously tight land supply and loosened capital should underpin housing prices fundamentally; even if prices fall, the magnitude should be limited. Contented with the current asset portfolio of the group, WHARF is not in rush to increase the assets in hand, viewing the existing assets are sufficient for development. In medium term, the group will magnify investment in Hong Kong. Key here is that HK developers don’t have to hold a land bank because of the Government reserve list. Call me if you want more details

The Securities and Futures Commission (SFC) will introduce investor identification for the securities market in Hong Kong and require reporting of over-the-counter (OTC) securities transactions. The investor identification regime is expected to be launched in the second half of 2022 and the OTC securities transactions reporting regime in the first half of 2023, subject to the completion of system testing and market rehearsals. To provide more time for the industry to prepare, the implementation timelines were extended after taking consultation feedback into account.

The government announced that the registration for the Consumption Voucher Scheme will close this Saturday (August 14). The government remarked that people choosing to upload their Hong Kong identity card copy for authentication in respect of their electronic registration should upload their HKID card copy via the scheme website by August 16 to complete the registration procedure, otherwise the electronic registration submitted will be regarded as incomplete and will not be processed. Slight -VE But may indicate a good take up so far.

SUNWAH KINGSWAY (00188.HK) announced that between 25 May 2021 and 10 August 2021, the Company, through its wholly-owned subsidiaries, conducted on the Stock Exchange a series of on-market transactions to further dispose of an aggregate of 54,500 MEITUAN-W (03690.HK) Short selling $1.03B; Ratio 10.457% Shares at an average daily price between HK$193.6 and HK$307.6 per Meituan Share for an aggregate consideration of approximately HK$13.986 million. The Further Disposals realised a loss of approximately HK$100,000.

LONGFOR GROUP (00960.HK) Short selling $34.64M; Ratio 9.442% announced that in July, the Group recorded contracted sales of RMB19.02 billion, down 9.34% year-on-year. -VE

U-PRESID CHINA (00220.HK) announced interim result ended June 2021. The net profit amounted to RMB847 million, down 20.5% year-on-year. EPS was 19.62 fen. No interim dividend was declared. -VE

YUEXIU TRANSPORT (01052.HK) announced interim result ended June 2021. The company swung into net profit of RMB468 million from loss of RMB288 million in the same period of 2020. EPS was RMB0.2795. An interim dividend of HK$0.2 per share was declared. +VE

China's Central Commission for Discipline Inspection (CCDI) issued an article on the sexual assault on the Alibaba's female staff, urging the company to eradicate the soil that brews any hidden rules in the job market. While the company announced to conduct phased investigation and follow-ups, the police is probing the case and collecting evidence.
The article accentuated that anyone who is found violating laws and committing any crimes must be solemnly punished by the law. Apart from citing the legal issues, the article also pointed out the hidden rules involved in the incident should trigger deep reflection of the public.

GIORDANO INT'L (00709.HK) expressed that, in light of the development of the COVID-19 pandemic, it is difficult to forecast the overall sales performance in 2H21 and that the company will concentrate on controlling relevant costs and account receivable, said Gary Chan, executive director of the company. Mark Loynd, another executive director of the company, remarked that the company remains optimistic on the outlook of its businesses in China, Hong Kong and Taiwan at the moment and that it has begun expanding the Central Asia market which harbors immense potential.  Slight -VE

SHK PPT (00016.HK) Short selling $47.71M; Ratio 14.788% released the first price list for the phase one of "Wetland Seasons Bay" -- a residential project at No. 1 Wetland Park Road, Tin Shui Wai. The developer launched 245 units, with saleable area of 300-795 square feet. The discounted selling prices of the first batch range from $4.551 million to $11.247 million +VE.

In July 2021, the number of residential property transactions involved Buyer's Stamp Duty (BSD) amounted to 49, down 55 deals or 52.9% monthly, according to the Stamp Office of Inland Revenue Department. The amount of BSD collected was $120 million, down 34.3% month-over-month to a 5-month low. Slight -VE

Comments
* The email will not be published on the website.