Aug 24 Asian Macro Initial Thoughts, rebound continues but upside limited


24 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 after a strong rebound Monday prompting a lot of short covering I think there is limited upside today. Investors remain cautious ahead of Jackson Hole and watching for clarity on China policy. Japan earnings over focus now turns to whether PM Suga is re-electable or not. HK earnings in focus.

Australia Futures indicate market to open +25pts,  earnings remain in focus along with potential M&A prospects.  Oil, Gold and Miners +VE overnight.
Japan Nikkei futures opened  Chicago +30pts, Yamaha to sell part of Yamaha Motor stake to fund buyback +VE, Shipping and Robotic firms +VE  
S Korea Expect markets to open higher the drop in Consumer  Confidence co-incided with the surge in covid cases.   DR’s indicate a higher open.  Game sector +VE as Govt looks to abolish the shutdown rule. Steel +VE as agreed price hike less than expected
Taiwan Market to open higher following US sentiment +VE on falling unemployment.
China Market to open higher but with caution.  Southbound  traders were neutral yesterday as they watch for more insight into the slowing economy and what stimulus the government or PBoC  intends to impliment.  The crackdown in Hangzhou underlines the pressure on Alibaba.
HK ADR’s +163pts at 25,273 Financials closed in the red but the wider market +VE.   Upside limited following yesterday’s short covering rally with many remaining cautious as earnings continue and ahead of Jackson Hole and with uncertainty over China policy.  Macau names +VE as China reports zero new covid cases and will ease entry requirements.  Good results from JD.Com +VE but Didi pulling its European expansion plans reflects the policy concerns.  
US Futures 
Opened Dow +60pts, S&P and NDX +0.2%

JAPAN Nikkei futures opened  Chicago +30pts, Yamaha to sell part of Yamaha Motor stake to fund buyback +VE, Shipping and Robotic firms +VE  
Yen currently 109.65
No data due
Tokyo reported 2,447 new cases on Monday (-515 DoD)
7-Eleven convenience stores chain plans to launch a super-fast delivery service in five years, stepping up competition with Amazon.com (AMZN.O), the Nikkei financial daily reported on Monday.
Japan will oblige business operators to reduce the provision of 12 disposable plastic items such as spoons and straws from next April to promote recycling and tackle marine pollution, the government said Monday.

SOUTH KOREA Expect markets to open higher the drop in Consumer  Confidence co-incided with the surge in covid cases.   DR’s indicate a higher open.  Game sector +VE as Govt looks to abolish the shutdown rule. Steel +VE as agreed price hike less than expected
Data out
Consumer Confidence Aug 102.5 vs 103.2 Jul (F/cast was 105)
KDCA reported 1,418 cases for Sunday; Govt aims to have 70% of population vaccinated by Chuseok Holioday (Sept 18 -22) +VE.
The United States has no hostile intent toward Pyongyang and is open to meeting any time and any place, Washington’s special envoy for North Korea said on Monday during a visit to South Korea. Slight +VE
The ASEAN+3 Macroeconomic Research Office said Asia’s fourth-largest economy continues its strong rebound in 2021 buoyed by a sustained global recovery and robust demand for electronics and autos. But it warned that the country’s growing household debt could undermine its growth momentum. -VE
Government said Monday that it was taking measures to cope with any potential disruptions in maritime shipping as a labor strike loomed at the country’s largest shipper, HMM. After nearly 88% of the 453 unionized longshore workers at HMM voted in favor of the collective action, as their wage negotiations with the company management remained deadlocked. -VE
Samsung, SK hynix face mixed outlooks for DRAM chips, foreigners selling on concerns about a drop in DRAMchips in the coming months. -VE
Celltrion’s COVID-19 antibody treatment, the world’s third therapy to be developed for the coronavirus, is likely to enter the US and European markets later this year, a local brokerage said in a report Monday.  +VE
Samsung Bioepis Co. said Monday it has won approval from European authorities for the sale of its ophthalmology biosimilar, Byooviz.  +VE

TAIWAN Expect market to open higher following the rebound in the US
No data due but the unemployment rate last month declined to 4.53%, from 4.8% a month earlier, as fewer people lost jobs to business downsizing and closures, despite an increase in the number of first-time jobseekers, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday +VE.
Taishin Life Insurance Co Ltd, a new life insurance unit of Taishin Financial Holding Co, aims to generate first-year premiums (FYPs) of NT$4 billion (US$142.93 million) during the second half of this year, the insurer’s chairman Barry Tsai said at its opening ceremony in Taipei yesterday. +VE
The average selling price of DRAM chips is expected to rise at a much slower pace of 3 to 8 percent quarter-on-quarter this quarter, as demand from PC makers has begun teetering due to uneven supply of key components, market researcher TrendForce Corp said yesterday.
The Formosa Plastics Group is to raise wages by 3.83 percent, effective retroactively to July 1. The company’s union said that FPG chairman William Wong agreed in a meeting with union representatives on Tuesday last week to raise the wages of all group employees. Along with the across-the-board wage hike, Wong agreed to a one-time bonus of NT$10,000 for all employees. Based on a wage hike of 3.83 percent, the average employee salary would rise by about NT$2,100 to NT$56,900 per month, the union said.

CHINA
Market to open higher but with caution.  Southbound  traders were neutral yesterday as they watch for more insight into the slowing economy and what stimulus the government or PBoC  intends to impliment.
No data due
China reported no new locally transmitted cases of COVID-19 on Monday for the first time since July, a sign the current outbreak may be waning amid Beijing’s ‘zero-tolerance’ stance and tough anti-virus measures across the country.
SEC issues new rules for overseas listings and the requirement to disclose off shore structures and associated cash flows. Slight +VE
China said on Monday it will tighten scrutiny over accounting firms in a  fight against financial forgery, vowing "zero tolerance" toward  misconduct.  The  guidelines, published by China's State Council, or cabinet, come as  Beijing launches a flurry of regulatory crackdowns against sectors  ranging from Internet to tutoring. +VE
Members of China’s ruling Communist Party in the technology hub city of Hangzhou have been ordered to resolve any potential business-related conflicts of interest involving themselves or relatives, the country’s graft watchdog said on Monday.  The statement from the local arm of China’s powerful Central Commission for Discipline Inspection (CDDI) came two days after it announced a probe into the most senior party official in Hangzhou, city party secretary Zhou Jiangyong

HONG KONG 
ADR’s +163pts at 25,273 Financials closed in the red but the wider market +VE. Upside limited following yesterday’s short covering rally with many remaining cautious as earnings continue and ahead of Jackson Hole and with uncertainty over China policy. Macau names +VE as China reports zero new covid cases and will ease entry requirements. Good results from JD.Com +VE but Didi pulling its European expansion plans reflects the policy concerns.
No data due

EARNINGS HK due Tuesday includes: Regal Hotels (78)  Kunlun Energy (135), K Wah (173), Shui On Land (272), Sinofert (297), Esprit (330), Glorious Sun (393), China Foods (506), Sinotrans (598), Paliburg (617), Fosun (656), Kaisa Health (876), Emperor Watch (887), China Taiping Ins (966), Mainland Headwear (1100), China Outfitters (1146), China Datang Renewable Power (1798), CGN New Energy (1811), Ping An Healthcare (1833), China Aircraft Leasing (1848), Country Garden (2007), BBMG (2009), Anta (2020), Coolpad (2369), Chalco (2600), Guiotai Junan Sec (2611), Guangzhou R&F Property (2777), Kingsoft (3888), Greentown (3900), Inner Mongolia Yitai Coal (3948), Haidilao Int (6862)

SHORT SELLING Monday 14.9% vs 14.3% Friday
Top shorts 
Country Garden (2007) 54%, CK Asset (1113) 50%, Bank Comm (3328) 49%, Ali Health (241) 45%, Bank of China (3988) 45%, Hengan (1044) 37%, China Life (2628) 37%, Hang Lung Ppty (101) 34%, Shenzhou (2313) 32%, New World Development (17) 30%, Sunny Optical (2382) 30%, MTRC (66) 29%, Bud Apac (1876) 28%Henderson Land (12) 26%, HSBC (5) 26%, Xinyi Solar (968) 26%, Hang Seng Bank (11) 25%, Wharf REIC (1997) 25%.

RESULTS after market Monday
HENDERSON INV(00097.HK) announced interim result ended June 2021. 
The revenue rose 1.7% year on year to HK$895 million. The net profit amounted to HK$30 million, down 37.5% year on year. EPS was HK1 cent. An interim dividend of HK1 cents was declared against a dividend of HK1 cent in the corresponding period of the previous year.

GRAND BAOXIN(01293.HK) announced interim result ended June 2021. The net profit amounted to RMB393 million, up 324.1% yearly. EPS was RMB0.14. No dividend was declared.

ENN ENERGY(02688.HK) Short selling $70.29M; Ratio 9.938% announced interim result ended June 2021. The revenue rose 30.7% year on year to RMB41.232 billion. The net profit amounted to RMB3.765 billion, up 39.8% year on year. EPS was RMB3.34. An interim dividend of HK$0.59 was declared, against no dividend in the year-ago period.

SMOORE INTL (06969.HK)  announced interim result ended June 2021. The adjusted net profit was RMB2.975 billion, representing an increase of 127.5% yearly. EPS was RMB48.45 cents. An interim dividend of HK21 cents per share was declared, against no dividend in the corresponding period of the  previous year.

CROSS-HAR(HOLD)(00032.HK)  announced interim result ended June 2021. The revenue declined 9.3% year on year to HK$340 million. The net profit amounted to HK$446 million, up 142.1% year on year. EPS was HK$1.2. A second quarterly interim dividend of HK6 cents was declared, flattish against the corresponding period of previous year. The company further remarked that the toll revenue of West Harbour Tunnel (“WHT”) increased by 8.8% to HK$788 million as compared to the last corresponding period, because of the increase in traffic of the tunnel by 10.6%.

WUXI BIO (02269.HK)  Short selling $448.42M; Ratio 19.283%   unveiled the interim results for the six months ended June 30, 2021.  The revenue increased by 126.7% yearly to RMB4.407 billion. The net profit increased by 150.3% yearly to approximately RMB1.842 billion. EPS was RMB0.44. No dividend was declared.

GUOTAI JUNAN I (01788.HK) announced interim result ended June 2021. 
The net profit amounted to HK$938 million, up 54.8% yearly. EPS was HK9.77 cents. An interim dividend of HK5 cents was declared, against HK3.4 cents in the corresponding period of the previous year.

TONGCHENG-ELONG(00780.HK)  Short selling  $26.10M;  Ratio 21.341%   announced interim result ended June 2021.
The revenue rose 70.13% year on year to RMB3.752 billion. The net profit amounted to RMB461 million, compared to a loss of RMB903,000 for the corresponding period of previous year. EPS was RMB0.21. No dividend was declared.

TINGYI(00322.HK) announced interim result ended June 2021. The revenue rose 7.5% year on year to RMB35.396 billion. The net profit amounted to RMB2.035 billion, down 14.5% year on year.  EPS was RMB36.18 fen. A special interim dividend of US6.88 cents per ordinary share was declared.

WATCH

NEW WORLD DEV (00017.HK) Short selling $22.99M; Ratio 30.019% said it had repurchased 282,000 shares through the Stock Exchange today (23 August)
, involving more than $10.434 million.

HSBC announced that Diana Cesar, HSBC Holdings plc's General Manager and Chief Executive for Hong Kong, will replace Louisa Cheang as HANG SENG BANK (00011.HK) 's Director and Chief Executive with effect from 1 September. 
HSBC has kicked off the recruitment of its Hong Kong Chief Executive. Luanne Lim, HSBC's Chief Operating Officer in Hong Kong, will serve as the bank's Acting Chief Executive during the recruitment period.

XTEP INT'L (01368.HK) Short selling $75.62M; Ratio 17.090% China's domestic brand sales have been shored up by the young generation's awareness of, 
recognition of and confidence in the "guochao" wave, opined Chairman and CEO Ding Shui Po. The sportswear maker will start exploring the markets by store opening in tier-1 and tier-2 cities for the second half of 2021, he furthered.

HANG SENG BANK (00011.HK) Short selling $34.35M; Ratio 25.218% announced that Louisa Cheang will be re-posted to The Hongkong and Shanghai Banking Corporation Limited
and will cease to be executive director, vice-chairman and chief executive of the bank, all with effect from 1 September 2021. Diana Cesar, currently group general manager of HSBC Holdings plc and chief executive officer, Hong Kong of The Hongkong and Shanghai Banking Corporation Limited, will be appointed as executive director and chief executive of the Bank, both with effect from 1 September 2021.

The Buildings Department has approved 18 architectural plans in June, including a residential site co-owned by Kaisa (1638) in Kai Tak and CK Asset's (1113) Kwun Tong site for "starter homes."  Sitting on the runway of the former Hong Kong airport at Kai Tak, the approved plan allows the construction of six 22-to-24 story buildings and four six-to-seven story buildings in area 4B, site 4 of Kai Tak, which has a gross floor area of about 575,000 square feet.

CK Asset's domestic site on Anderson Road in Kwun Tong is approved to build six blocks of high-rise apartments with a maximum of 32 stories along with four one-story, single-family houses. The gross floor area of the site is around 1.08 million sq ft.
It is required to offer no less  than 1,000 flats as starter homes for sale at 80 percent of the market  price to eligible applicants of the government's starter homes project.Urban Renewal Authority received at least six tenders for  the Bailey Street/Wing Kwong Street Development Project in To Kwa Wa,  which is the biggest project in seven years with a valuation of as much  as HK$10 billion. The six bidders included CK Assets, Sino Land (0083),  Henderson Land Development (0012), K Wah International (0173), a  conglomerate formed by Kerry Properties (0683) and China Merchants Land  (0978), and another joint bid by Chinachem and Wheelock.

From Wednesday, those crossing the border between Zhuhai and Macau can take with them a negative Covid-19 result attained within a week. This is a relaxation from the previous requirement of getting the test within 48 hours before their crossing.  As the pandemic eases on the mainland and in Macau, the SAR announced today that the current measures concerning the Covid test can be relaxed at the Guangdong-Macau border +VE.





DOW +0.6%, NDX +1.55%, S&P +0.85%, Russel 2K +1.88%
Markets opened and worked higher and then traded sideways.  S&P and NDX opened at new highs and worked higher.  Talk is focused on the Jackson Hole symposium and tapering.
Pharma strong as the Food and Drug Administration granted full approval for the two-dose Pfizer-BioNTech vaccine; Pfizer +2.4%. Its partner BioNTech’s +9.5% and Moderna +7.5%, Trillium Therapeutics +188% on news that it’ll be acquired by Pfizer.
Travel and Leisure +VE too especially Airlines and Cruise operators. Energy +VE after recent weakness. Diamondback Energy +5.9% and Occidental Petroleum 6.9% , and Devon Energy gained 6.9%.
Bitcoin surged above US$50k as PayPal says it will offer the payment option to UK clients.
Banks JPMorgan Chase +1.3%, Citigroup +1.1% Wells Fargo +0.4%, Amex +0.4%
Work from home names: Facebook +1.1%, Apple +1%, Amazon +2.1%, Netflix +1.2%,  Disney +1.5%, Zoom Video +1.3%, Alphabet +1.9% and Microsoft +0.1%,
Tech NXP Semi +2.8%, Nvidia +5.5%, Micron +2.2%, AMD +3.9%, Skyworks +1.1%
Re-opening stocks  Boeing +3.2%, Caterpillar +2.1%, Simon Property +0.5%, Kohl’s +1.6%, Nordstrom +4.4%, Gap +0.2%, United Airlines +3.4%, Carnival +4%, Wynn Resorts +5.2%, Chevron +2.6%, Exxon Mobil +4.1%,  
Lock down names Campbell Soup -1.8% General Mills -1.2%, JM Smucker -0.9%
DATA
Chicago Fed National Activity Index Jul 0.53 vs -0.01 Jun revised (F/cast was +0.1)
Manufacturing Flash PMI Aug 61.2 vs 63.4 Jul (F/cast 63)
Services Flash PMI Aug 55.2 vs 59.9 Jul (F/cast 59)
Composite Flash PMI Aug 55.4 vs 59.9 Jul (F/cast 5975)
Existing Home Sales Jul +2% MoM vs +1.6% Jun revised (F/cast was -0.7%)
USD was slightly weaker vs Yen & Euro. Bitcoin +1.8% @ 49,506.65, VIX -7.6% @ 17.15, US T10 @ 1.252% flat ahead of Jackson Hole
OIL Brent +5.4%, WTI +5.5%
Gold +1.3%, Silver +2.3%, Copper +2% Platinum +1.9%, Palladium +5.2%.
AHEAD Redbook, New Home Sales, Richmond Fed Manufacturing Index, API Crude Oil Stock Change.
Earnings: Best Buy, Bank of Montreal, Nordstrom, Intuit, Urban Outfitters, Toll Brothers, Advanced Auto Parts, Medtronic

DAX +0.28%, CAC +0.86%, FTSE +0.3%
Markets opened higher following the rebounds in Asia but initially sold down as Flash PMI’s in Eurozone hit a 2 month low and then DAX and FTSE traded sideways in the green around flat. CAC worked slight higher through the day. Retail stocks lead the initial gains but Oil & gas were the leaders at the end of the day.
Nvidia takeover of British chip designer ARM is hanging in the balance after the U.K.’s competition watchdog said the deal would require a drawn out investigation.
Janus Henderson has projected that global dividend payouts will rise to $1.39 trillion in 2021, nearing pre-pandemic levels.
Sainsburys surged 15% after reports of takeover interest from private equity firms.
Cembra Money Bank -30% plus after terminating a credit card partnership with compatriot retailer Migros.
Data
Eurozone
Manufacturing Flash PMI Aug 61.5 vs 62.9 Jul (F/cast 62.2)
Services Flash PMI Aug 59.7 vs 59.8 Jul (F/cast 59.4)
Composite Flash PMI Aug 59.5 vs 60.2 Jul (F/cast 59.8)
Consumer Confidence Flash Aug -5.3 vs -4.4 Jul (F/cast was -5.2)
Germany
Manufacturing Flash PMI Aug 62.7 vs 65.9 Jul (F/cast 64.8)
Services Flash PMI Aug 61.5 vs 61.8 Jul (F/cast 61.1)
Composite Flash PMI Aug 60.6 vs 62.4 Jul (F/cast 61.8)
France
Manufacturing Flash PMI Aug 57.3 vs 58 Jul (F/cast 57.9)
Services Flash PMI Aug 56.4 vs 56.8 Jul (F/cast 57)
Composite Flash PMI Aug 55.9 vs 56.6 Jul (F/cast 57.1)
UK
Manufacturing Flash PMI Aug 60.1 vs 60.4 Jul (F/cast 59.1)
Services Flash PMI Aug 55.5 vs 59.6 Jul (F/cast 58.8)
Composite Flash PMI Aug 55.3 vs 59.2Jul (F/cast 58.9)
CBI Industrial Trends Orders Aug 18 vs 17 Jul (F/cast was 17)
AHEAD
EUROZONE No data due
GERMANY
GDP Growth Rate
FRANCE No data due  
UK  No data due




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