Aug 27 Asian macro initial thoughts; Expect a risk off day with light volumes


27 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
Trendforce says Q2 Nand Flash Rev +10.8% QoQ and gives +VE outlook for Q3 expect it to hit a record high may give some support to Tech.
Overall expect a risk off day but on light volumes.

Australia Futures indciate to open -10 pts,  Earnings in focus; WestFarmers earnings already out; a slight beat.  Oil weak adding to the downward pressure although Gold edged higher.  Retail sales data out after the open will indicate the impact of the recent lockdowns
Data due Retail Sales
Japan Nikkei local futures opened -15pts and are dropping as at 7.05am,  Chicago Futures were +15pts but have eased  to -5pts.  The CPI number was weaker adding to the risk off tone ahead of the weekend and Jackson Hole symposium.  Already hearing of sell baskets in the market
S Korea Expect markets to open lower and drift lower as investors derisk ahead of the weekend.  Financials slight +VE on Fed official’s commenting about tapering early.
Taiwan Market to open lower dropping below the important 17,000 level ahead of the weekend;  with shipping expected to remain weak but market may see some support from Tech
China Market to open lower expect continued caution ahead with a focus on results; pre market data will give another indicator to the strength of the recovery.  Investors remain sidelined looking for clarity on President Xi’s policies and whether with a slowing economy there will be more Govt or PBoC support.
HK ADR’s -76pts at 25,339 broad weakness (only China Life, Sinopec and Unicom closed +VE),  Shorts increased Thursday, along with share buybacks expect more weakness ahead Jackson Hole symposium and earnings reports as PetroChina earnings were good but PingAn’s weak.  Macau likely to remain +VE on rumours of  entry conditions easing ahead of mid autumn festival
US Futures 
Opened Dow +19pts, S&P +0.4% and NDX+0.06%
Ahead Personal Income & Spending, Goods Trade Balance, Wholesale Inventories, PCE Price Index, Core PCE Price Index, Michigan Data, Jackson Hole symposium, Baker Hughes Rig Count.

DOW -0.54%, NDX -0.64%, S&P -0.58%, Russel 2K -1.13%
Markets opened flat dipped in early trades as Initial claims rose but rebounded on good GDP growth data to trade around flat before selling off to close around the day lows after news of a bomb attacks in Afghanistan. Energy stocks were weak, along with Cruise operators and Airlines. Earnings in focus
Salesforce +2.6% off highs after Q2 earnings and forward guidance beat expectations. NetApp +4.7%
Dollar Tree -12% after it reported a mixed quarter; earnings beat but revenue missed.
Dollar General -3.7% despite beating estimates on both top and bottom lines but issued lower-than-expected earnings guidance for the full year.
Autodesk -9.4% Q2 beat on EPS but revenue was in line with expectations and its third-quarter outlook showed only small increases for both metrics.
Williams-Sonoma +9.5% as earnings and revenue beat
Abercrombie & Fitch -10.3% missed on revenue but earnings beat
Coty +14.6% sales beat for Q4 and said it expects positive sales growth in the year ahead.
J.M. Smucker -2.6% despite beating on the top and bottom lines
Pure Storage +14% beat on top and bottom line
Summary
Banks JPMorgan Chase +0.5%, Citigroup -0.2% Wells Fargo -0.5%, Amex -0.4%
Work from home names: Facebook -1.1%, Apple -0.6%, Amazon +0.5%, Netflix +0.5%,  Disney -1%, Zoom Video +0.9%, Alphabet -0.5% and Microsoft -1%,
Tech NXP Semi +2%, Nvidia -0.7%, Micron -1.7%, AMD -1%, Skyworks -0.1%
Re-opening stocks  Boeing -2.1%, Caterpillar -1.6%, Simon Property -1.1%, Kohl’s -3.3%, Nordstrom -8.5%, Gap -4.1%, United Airlines -1.2%, Carnival -2.7%, Wynn Resorts -1.3%, Chevron -1.3%, Exxon Mobil -1.4%,  
Lock down names Campbell Soup -1.7% General Mills -1.5%, JM Smucker -2.6%
AFTER MARKET
GAP 
good results +VE for Apparel plays in Asia.
Peloton weak after Q4 financial results missed estimates.
DATA
GDP Price Index  2nd Est Q2 +6.2% QoQ vs +4.3% Q1  (F/cast was +6.1%)
GDP Growth Rate 2nd Est Q2 +6.6% QoQ vs +6.3% Q1 (F/cast was +6.5%)
Corporate Profits Prel Q2 +9.7% vs +4.5% Q1 (F/cast was +2%)
Initial Claims 353k vs 349k prior revised (F/cast was 336k)
4 Week Ave 366.5k vs 378k prior revised (F/cast was 362k)
Continuing Claims 2.862m vs 2.865m prior (F/cast was 2.78m)
PCE Prices 2nd Est Q2 +6.5% QoQ vs +3.8% Q1 (F/cast was +6.4%)
Core PCE Prices 2nd Est Q2 +6.1% QoQ vs +2.7% Q1 (F/cast was +6.1%)
EIA Gas Report 29 Bcf vs 46 Bcf prior (Consensus was 40 Bcf)
Kansas Fed Manufacturing Index Aug 22 vs 41 Jul (F/cast was 35)
USD was slightly weaker vs Yen & Euro. Bitcoin -3.4% @ 47,171.88, VIX +12.2% @ 18.84, US T10 @ 1.354% rose ahead of Jackson Hole.
OIL Brent -1.29%, WTI -0.85%
Gold +0.2%, Silver -0.9%, Copper -0.8% Platinum -1.9%, Palladium -1.6%.
AHEAD Personal Income & Spending, Goods Trade Balance, Wholesale Inventories, PCE Price Index, Core PCE Price Index, Michigan Data, Jackson Hole symposium, Baker Hughes Rig Count.

DAX -0.42%, CAC -0.16%, FTSE -0.35%
Markets opened lower rebounded and then traded sideways improving slightly in the PM. European data mixed and caution ahead of US Data and Jackson Hole. Basic Resources weak but Media slightly +VE
Deutsche Bank -2.3% as it’s asset management arm DWS Group is under investigation by U.S. regulators over allegations that it misrepresented its sustainable investing criteria, the Wall Street Journal reported Wednesday.
Vivendi +2.6% after Universal Music projected strong revenue growth and dividend payouts after its public listing. Wizz Air -3.8%.
DATA
Eurozone
Loans to:
Households Jul +4.2% YoY vs +4% Jun (F/cast was 4%)
Companies Jul +1.7% YoY vs 1.8% Jun revised (F/cast was 1.8%)
M3 Jul +7.6% YoY vs +8.3% Jun (F/cast was +7.8%)
Later ECB Monetary Policy Meeting Accounts.
Germany
Consumer Confidence Sept -1.2% vs -0.4% Aug revised (-1.6%)
France
Business Confidence Aug 110 vs 109 Jul revised (F/cast was 111)
Business Climate Indicators Aug 110 vs 113 Jul (F/cast was 114)
UK
Car production Jul -37.6% YoY vs 22.1% Jun (F/cast was -12%)
AHEAD
Eurozone
Germany Import Prices
France Consumer Confidence
UK  No data due

JAPAN
Nikkei local futures opened -15pts and are dropping as at 7.05am,  Chicago Futures were +15pts but have eased  to -5pts.  The CPI number was weaker adding to the risk off tone ahead of the weekend and Jackson Hole symposium.  Already hearing of sell baskets in the market
Yen currently 110.06
Data due 
Tokyo CPI Aug -0.4% YoY vs -0.4% Jul revised from -0.1% (F/cast was -0.1%)
Tokyo CPI ExFresh Food Aug 0.0 YoY vs -0.3% Jul revised from -0.1% (Bberg survey was -0.1%)
Tokyo CPI ExFresh Food,Entertainment Aug -0.1% YoY vs -0.4% Jul revised from 0.0% (Bberg survey was -0.2%)
Tokyo reported 4,704 cases (+476 DoD) with the national total of 24,976
Japan’s government kept its assessment of the economy unchanged Thursday, even after an expansion of its fourth state of emergency amid its worst yet outbreak of COVID-19. The report once again highlighted a divide between Japan’s exporters,  which have benefited from the global recovery, and restaurants, bars and  other service businesses that have struggled all year under  on-again-off-again restrictions to control the virus.
Japan's ruling party on Thursday set a September 29 date for a leadership race ahead of an expected October general election and with Prime Minister Yoshihide Suga facing record-low approval.  Fumio Kishida has entered the LDP leadership race.
Nissin Foods Holdings Co said Wednesday that it has sold a total of 50 billion units of its Cup Noodles worldwide, ahead of the 50th anniversary of the product's launch this September.
Japan suspended the use of 1.63 million doses of Moderna Inc's COVID-19 vaccine on Thursday, more than a week after the domestic distributor received reports of contaminants in some vials. No safety or efficacy issues have been identified in relation to the Moderna vaccine so far, Spanish pharmaceutical firm Rovi said on Thursday.
Softbank’s Nvidia Arm deal to be formally investigated by the EU Competition Section. -VE
Kobe Bussan (3038 JP) July sales +11.6% YoY
Star Mica raised its full year operating profit forecast by 34% to 4bYen +VE

SOUTH KOREA
Expect markets to open lower and drift lower as investors derisk ahead of the weekend.  Financials slight +VE on Fed official’s commenting about tapering early.
No data due
KDCA reported 1,882 new covid cases (-273 DoD).
Businesses and individual borrowers in South Korea voiced criticism on Thursday over the central bank’s decision to raise its key interest rate for the first time in 15 months, due to a possible increase in their debt burdens. -VE
Govt  will launch another round of COVID-19 cash handouts for nearly 90 percent of Koreans, as well as other financial support for small merchants, before the Chuseok holiday in September.
Authorities plan to provide 11 trillion won ($9.4 billion) to people in the bottom 88 percent income bracket under this year’s second extra budget, worth 34.9 trillion won. The government aims to distribute 90 percent of the subsidies by the end of September +VE.
Fair Trade Commission will commission a research project to determine the major problems that consumers face when they use e-commerce platforms, in an effort to seek a better understanding of the booming e-commerce sector. +VE
P&O Chemical, a joint venture between Posco Chemical and OCI, will produce petroleum pitch material for lithium-ion batteries, to respond to increasing demand for battery cells around the globe, Posco Chemical said Thursday. +VE
Retail sales in South Korea advanced 13 percent in July from a year earlier, data showed Thursday, on the back of strong demand for food delivery services amid the prolonged social distancing measures.  +VE

TAIWAN
Expect market to open lower dropping below the important 17,000 level ahead of the weekend;  with shipping expected to remain weak but market may see some support from Tech
No data due
The Executive Yuan yesterday approved a fiscal 2022 budget of NT$2.2491 trillion (US$80.506 billion) put forth by the central government, which focuses heavily on social welfare funding.
The bill represents an annual 9 percent increase over last year’s budget, with a deficit of NT$23 billion, as central government spending is forecast to rise by about 5.9 percent next year, the Cabinet said +VE.
Taiwan will tighten its laws in an effort to fight talent poaching and intellectual property theft from its lucrative tech industry by China, officials said Thursday.  The planned amendment to the island's national security act will make economic espionage a crime punishable by a jail term of between five to 12 years.
Sales of electric vehicle (EV) components are forecast to surpass sales of conventional vehicle parts, China Fineblanking Technology Co (CFTC) said yesterday.  CFTC’s business has not been affected by a global chip shortage, the vehicle components maker said +VE.

CHINA
Expect market to open lower expect continued caution ahead with a focus on results; pre market data will give another indicator to the strength of the recovery.  Investors remain sidelined looking for clarity on President Xi’s policies and whether with a slowing economy there will be more Govt or PBoC support.
Data due Industrial Profits YTD Jul  (Jun was 66.9% F/cast is 45%)
The Formosa Club, a group of Europe-based lawmakers, on Wednesday called for “a far stronger response” from EU officials to address China’s economic and political campaign to pressure Lithuania for developing ties with Taiwan.
China Logistics Property Holdings Co said on Thursday its top shareholder was in talks to sell its controlling stake in the company to an undisclosed buyer, which could result in a takeover offer for the storage facilities manager. Earlier in the day, Bloomberg News reported that Chinese e-commerce  giant JD.com Inc was in advanced discussions to acquire a controlling  stake in China Logistics, citing people familiar with the matter.
China's drive for "common prosperity", as President Xi Jinping aims to ease inequality in the world's second-largest economy, does not mean "killing the rich to help the poor", an official from the ruling Communist Party said on Thursday.


HONG KONG 
ADR’s -76pts at 25,339 broad weakness (only China Life, Sinopec and Unicom closed +VE), Shorts increased Thursday, along with share buybacks expect more weakness ahead Jackson Hole symposium and earnings reports as PetroChina earnings were good but PingAn’s weak. Macau likely to remain +VE on rumours of entry conditions easing ahead of mid autumn festival
No data due but after market Thursday
Imports Jul +26.1% YoY vs 31.9% Jun
Exports Jul +26.9% YoY vs 33% Jun
Balance of Trade Jul HK$-34.9b vs -40.5b Jun (F/cast was -39b)

EARNINGS aprox 335 HK companies due Friday including: China Aerospace (31), Far East (36), Shangri La Asia (69), Clear Media (100), Shenzhen Int (152), Jiangsu Exp (177), Citic (267), BYD Electronic (285), Angang Steel (347), Jiangxi Copper (358), Sinopec (386), Gome (493), SiS (529), Tiande Chem (609), Kerry Logistics (636), China High Speed Trans (658), Tongda (698), Shangdong Xinhua Pharma (719), Skyworth (751), Air China (753), Solargiga (757), ZTE (763), Global Brands (787), Global Biochem (809), Beijing Jungkelong (814), Tianneng Power (819), Mingfa (846), Anhui Conch (914), China Longyuan Power (916), CCB (939), Chaowei Power (951), SMIC (981), Aeon Stores (984), Anhui Exp (995), China Southern (1055), Huadian Power (1071), Dongfeng Elec (1072), China Shenhua (1088), Tibet Water (1115), Qingling Motor (1122), Harbin Elec (1133), Yanzhou Coal (1171), BYD (1211), Symphony (1223), China Cinda (1359), ICBC (1398), Postal Savings Bank (1658), CRRC (1766), GF Sec(1776), KWG (1813), China Mingsheng Bank (1988), China Sunshine Paper (2002),  SSY (2005), China Vanke (2202), GtWall Motor (2333), Dawnrays Med (2348), Baoye (2355), AviChina (2357), China Pac Ins (2601), China National Building Materials (3323), BoComm (3328), Qinhuangdao Port (3369), SinoTruk (3808), Town Health (3886), Global Sweeteners (3889), CanSino Biologics (6185)
 
SHORT SELLING Thursday 21.4% vs 14.9% Wednesday
Top shorts 
Hengan (1044) 50%, Bank Comm (3328) 49%, Sunny Optical (2382) 46%, Ali Health (241) 41%, Bank of China (3988) 41%, Country Garden (2007) 41%, Xiaomi (1810) 39%, CLP (2) 38%, New World Development (17) 37%, AIA (1299) 37%, Sino Biopharm (1177) 36%, AAC Tech (2018) 36%,  Henderson Land (12) 35%, CKI (1038) 31%, HKEX (388) 31%, Haidilao (6862) 31%, CCB (939) 31%, CSPC Pharma (1093) 31%, SHKP (16) 31%, HSBC (5) 30%, Hang Lung Ppty (101) 28%, MTRC (66) 26%, Shenzhou (2313) 26%, BYD (1211) 26%, Geely (175) 25%, China Life (2628) 25%.
Many of the names are the same as Wednesday were shorted Thursday.

NATIONAL SECURITY
A powerful new Hong Kong committee tasked with vetting politicians and officials for their loyalty disqualified an opposition lawmaker for the first time on Thursday,
as authorities purge its institutions of anyone deemed disloyal to Beijing.  Cheng Chung-tai, one of just two opposition figures left in the city's legislature, was deemed disloyal on the basis of his previous statements and behaviour, chief secretary John Lee, who heads the vetting committee, told reporters.  Undermining the politican that had been elected by his constituents and without being given an exact reason or scope to appeal.

RESULTS after market Thursday
GREAT EAGLE H (00041.HK) announced interim result ended June 2021.
The loss narrowed from HK$6.513 billion in the corresponding period of previous year to HK$784 million. LPS was HK$1.09. An interim dividend of HK33 cents was declared, flattish against the corresponding period of the previous year.

CHENMING PAPER (01812.HK) announced interim result ended June 2021. The net profit amounted to RMB2.021 billion, up 291.4% YoY. EPS was RMB0.604. No dividend was declared.

XPENG-W (09868.HK)  (XPEV.US)  announced the result for the second quarter ended June 30, 2021. The total revenues reached RMB3.761 billion, a 536.7% increase year-over-year. The loss widened to RMB1.195 billion from RMB1.142 billion in the corresponding period of the previous year. LPS was RMB0.75.

CHOW SANG SANG(00116.HK) announced interim result ended June 2021. The net profit amounted to HK$536 million, up 153.6% YoY. EPS  was HK79.1 cents. An interim dividend of HK14 cents was declared against a dividend of HK5 cents in the corresponding period of the previous year.

DONGFENG GROUP (00489.HK) announced interim result ended June 2021. The net profit amounted to RMB8.629 billion, up 136.9% YoY. EPS was RMB100.15 fen. A special dividend of RMB0.4 was declared, against an interim dividend of RMB0.1 in the year-ago period.

NCI(01336.HK) -0.150 (-0.676%) Short selling $12.77M; Ratio 22.435% announced interim result ended June 2021.
The revenue rose 12.3% year on year to RMB130.386 billion. The net profit amounted to RMB10.546 billion, up 28.3% year on year. EPS was RMB3.38.

PETROCHINA (00857.HK) Short selling Ratio 18.974% announced the interim results for the six months ended 30 June 2021.
The revenue for the period stretched 28.8% YoY to RMB1.196581 trillion. Net profit of RMB53.037 billion was recorded, compared to a loss of RMB29.983 billion for the corresponding period of previous year. Operating profit amounted to RMB88.463 billion, compared to a loss of RMB6.043 billion in the year-ago period. EPS was RMB0.29. An interim dividend of RMB13.04 fen was declared, against a dividend of RMB8.742 fen for the corresponding period of previous year.

PING AN (02318.HK) -1.500 (-2.362%) Short selling $381.17M; Ratio 23.268% announced the interim results. 
Net profit decreased 15.5% year on year to RMB58.005 billion. EPS was RMB3.29. The Company declared an interim dividend of RMB0.88 per share. New business value fell by 11.7% year on year to RMB27.387 billion.

CHINA EB LTD(00165.HK) announced interim result ended June 2021. 
The turnover rose 68.5% year on year to HK$15.277 billion. The net profit amounted to HK$1.781 billion, up 132.7% year on year. EPS
was HK$1.057. An interim dividend of HK$0.28 was declared against a dividend of HK$0.14 in the corresponding period of the previous year.

COSCO SHIP PORT(01199.HK) announced interim result ended June 2021.
The revenue rose 24.8% year on year to US$565 million. The net profit amounted to US$176 million, up 7.5% year on year. EPS was US5.3 cents. An interim dividend of HK16.4 cents was declared.WATCH
EVERGRANDE (03333.HK) -0.330 (-7.237%) Short selling Ratio 17.618% sold its football stadium and the relevant apartments in the Panyu District of Guangzhou to Guangzhou City Construction Investment (GZCI), Chinese media citing sources. 
The football stadium is adjacent to the Guangzhou South Railway Station, with a total investment of RMB12 billion, reported Guandian Real Estate New Media. It has a site area of 150,000 sq.m. and a gross floor area of about 300,000 sq.m., with a seating capacity of 100,000 people. Slight +VECKH HOLDINGS (00001.HK) on 26th repurchased 300,000 shares of the company on the Stock Exchange at a price ranging from $57.35 to $57.55 per share, involving a total of approximately $17.2481 million. Year to date, the company has repurchased a total of 14.5685 million shares, accounting for 0.3778% of the company's share capital.

XIAOMI-W (01810.HK)  -0.900 (-3.550%)    Short selling $2.69B; Ratio 38.625%   announced that it repurchased 8.15 million shares through the Stock Exchange on August 26 at a price of $24.2-24.45 per share, involving $198 million.

NEW WORLD DEV (00017.HK)  -0.050 (-0.135%)    Short selling $43.97M; Ratio 36.980%   announced that it repurchased 1.1 million shares on August 26 at a price of $36.85-37 per share, involving $40.6623 million.

WANT WANT CHINA (00151.HK)  -0.030 (-0.568%)    Short selling $17.70M; Ratio 47.818%   announced that it has repurchased 2.099 million shares on the Stock Exchange on Aug 26th, at a price ranging between $5.23-5.25 per share, involving approximately $11.0146 million.  Year to date, the company has repurchased a total of 15.928 million shares, accounting for 0.133% of the company's share capital.

CHINA GAS HOLD (00384.HK)  -0.500 (-2.183%)    Short selling $45.83M; Ratio 26.354%   announced that the Company had repurchased 1.2314 million shares on the Stock Exchange today (26th), involving about $27.5493 million.

CG SERVICES (06098.HK) announced that it repurchased 4.69 million shares through the Stock Exchange on August 26 at a price between $59.35 and $60.95 per share, involving $282 million.

The Macao Government Tourism Office announced 21,000 visitor arrivals yesterday (25 August), retrieving a single-day visitation of 20,000.

HK and Macau along with Guangdong Province will co-host the National Games in 2025 Slight +VE

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