June 8 Asian Macro Initial thoughts expect a weak open; Japan GDP data due pre mkt


08 Jun

This and previous notes can be found at Sub Stack
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Asia
Australia 
Futures indicate market to open slightly higher but expect market to consolidate; Oil weaker but Gold higher.
S&P restored Australia’s rating +VE for sentiment.
Data due New Home Sales, Business Confidence
Japan Nikkei futures opened flat currently 5pts but pre market data will be key.  Expect cautious trading ahead of Chinese and US inflation data later this week.
S Korea Expect markets to open lower following the US with caution ahead of tomorrows unemployment and GDP data and concerns about US inflation remain. 
Taiwan Market to open lower following the US and with caution ahead today’s inflation and trade data.  But watch for bargain hunting as we saw yesterday in large cap tech and further selling in Shipping.
China Market to open lower with caution ahead of Chinese inflation data Wednesday and the potential for loans data too.  Sino/US relations also a concern after Katherine Tai’s comments yesterday.  Team China remains active.
HK ADR’s -11pts at 28,775;  Chinese banks weak and E-Commerce mixed. Expect market to trend lower ahead of inflation and loans data.
US Futures
Opened Dow -18pts (-0.05%), S&P +0.01% and NDX +0.09%

A top World Health Organization official said on Monday the WHO cannot compel China to divulge more data on COVID-19's origins, while adding it will propose studies needed to take understanding of where the virus emerged to the "next level". Comes as US secretary of state Blinkin says global pressure may force China to be transparent on Covid-19 but he dodged questions about US measures if China does not cooperate.   He said a decision on whether to boycott 2022 Beijing Winter Olympics will be announced in ‘weeks to come’.

DOW +0.36%, NDX +0.49%, S&P -0.08%, Russel 2K +1.43%
Markets opened flat, Dow trended lower until 1:30pm and then worked slightly better, NDX traded slowly higher and S&P drifted lower until late morning, then traded sideways until around 2pm and then worked better into the close. Consumer Credit change was much less than expected March was revised down significantly suggesting more caution from consumers.  Market showing a cautious response to the global tax deal.
US authorities say the FBI recovered most of the ransom that had been paid by Colonial Pipeline but seizing a bitcoin wallet.
AMC Ent +14.6% but off highs as retail traders encouraged each other into the stock. BlackBerry +13.8%, Bed Bath & Beyond 7.2%, GameStop 12.8% and Koss +2.4%.
Cruise operators +VE as Carnival +1.2% confirmed to restart July but only to fully vaccinated passengers. Norwegian +3.1% and Royal Caribbean +0.4%.
Eli Lilly +10% after the FDA approved rival Biogen’s Alzheimer’s drug, the first new medicine for the disease in nearly two decades. Eli Lilly is developing its own drug to treat Alzheimer’s.
Tesla +1% off initial lows after it said it has canceled production of the planned Model S Plaid+, which was designed to be a high-end version of the Model S; due to chip and other supply chain problems.
US. Concrete +29% after the company announced it will be acquired by construction materials maker Vulcan Materials -0.9% who will buy the company for $74.00 per share, a nearly 30% premium over U.S. Concrete’s Friday closing price of $57.14.
Apple at the WWDC; announced new features for its products but the share price closed flat.
Banks JPMorgan Chase -0.5%, Citigroup -0.2%,  Wells Fargo +0.3%, Amex +0.6%
Work from home names: Facebook +1.9%, Apple flat, Amazon -0.3%, Netflix flat,  Disney -0.1%, Zoom Video +2%, Alphabet +0.4% and Microsoft +1.2%,
Tech NXP Semi -0.4%, Nvidia +0.2%, Micron +0.3%, AMD -0.3%, Skyworks -0.4%
Re-opening stocks  Boeing +1.1%, Caterpillar -1.8%, Simon Property +1.3%, Kohl’s +1.7%, Nordstrom +1.8%, Gap -0.8%, United Airlines +0.7%, Carnival +1.2%, Wynn Resorts +0.7%, Chevron -0.7%, Exxon Mobil -0.7%,  
Lock down names Campbell Soup -0.4% General Mills -0.5%,  JM Smucker -1.2%
DATA
Consumer Credit Change Apr $18.61B vs 18.58B Mar revised down from 25.84B (F/cast was 23B)
USD was weaker vs Yen & Euro. Bitcoin -4.9% @ 34,025.14, VIX unch @ 16.42, US T10 @1.569% after the Friday’s job report and ahead of this weeks inflation data.
OIL Brent -0.55%, WTI -0.56% after rising intraday after weak Chinese trade data and watching for news about an Iranian deal
GOLD +0.3%, Silver +0.4%, Copper % Platinum +0.7%, Palladium -0.3%.
AHEAD Balance of Trade, Exports, Imports, Redbook, JOLTs Openings, API Crude Oil Stock Change
Earnings Thor Industries, Casey’s General Stores, Navista

DAX -0.1%, CAC +0.43%, FTSE +0.12%
Markets open lower as German Factory orders were weaker than expected -VE but UK housing data was slightly better. Sentiment cautious as UK re-opening may be delayed and weak China data.
FTSE trading sideways in the green, DAX worked back into the green then higher but sold down into the close. CAC worked slowly higher all day. Auto leading, Basic Resources weak.
IWG -10% but off initial lows on after warning of a sharp drop in profits due to covid impact on shared space.
DATA
GERMANY
Factory orders Apr -0.2% MoM vs +3.9% Mar revised (F/cast was +1.2%
UK
Halifax House Price Index May +1.3% MoM vs +1.5% Apr revised (F/cast was +1%)
Halifax House Price Index May +9.5% YoY vs +8.2% Apr (F/cast was +9.6%)
BBA Mortgage Rate May 3.62% vs 3.62% Apr (F/cast was 3.61%)
AHEAD
EUROZONE 
Employment Change, GDP Growth Rate, ZEW Economic Sentiment Index  
GERMANY Industrial Production, ZEW Economic Sentiment & Current Conditions
FRANCE Balance of Trade, Current Account
UK No data due

JAPAN 
Nikkei futures opened flat currently 5pts but pre market data will be key.  Expect cautious trading ahead of Chinese and US inflation data later this week.
Yen currently 109.24
Data out
Ave Cash Earnings Apr +1.6% YoY vs +0.2% Mar (F/cast was +0.5%)
Due pre market
Current Account Apr  (Mar was ¥2650.1B F/cast is ¥2000B)
Bank Lending May YoY vs +4.8% Apr (F/cast was +4.5%)
GDP data final
Growth Rate Q1 QoQ vs +2.8% Q4 (F/cast was -1.3%)
Price Index Q1 QoQ vs +0.3% Q4
Private Consumption Q1 QoQ vs +2.2% Q4
External Demand Q1 QoQ vs +1.1% Q4 (F/cast was -0.2%)
Capital Expenditure Q1 QoQ vs +4.3% Q4 (Consensus was -1.2%)
Growth Annualised Q1 vs 11.7% Q4 (F/cast was-5.1%)
Later 30yr JGB Auction, Eco Watchers Survey Current and Outlook
Tokyo reported 235 new covid cases Monday (-116 DoD)  Nationwide the total was 1,278  +VE but news says Okinawa has started closing schools to try and prevent the spread of covid.
EISIA in focus after the FDA approved of Biogen’s Alzheimer’s drug, being strongly bid pre market, shares were +56% in US trading.
Walmart Inc-owned Indian e-commerce firm Flipkart is in talks to raise  at least $3 billion from investors including Japan's SoftBank Group Corp  and several sovereign wealth funds, Bloomberg News. Slight +VE
Construction startup Katerra Inc, which is backed by SoftBank Group Corp, said on Sunday it has filed for bankruptcy protection in the United States.  Katerra said it had secured commitments for $35 million in debtor-in-possession (DIP) financing from SB Investment Advisers(UK) Limited to fund operations during the Chapter 11 process, adding that the company's international operations are not affected by this filing.
The company had estimated liabilities of $1 billion to $10 billion and assets of $500 million to $1 billion, according to the court filing made in the United States Bankruptcy Court for the Southern District of Texas. Slight -VE
A South Korean court on Monday dismissed a lawsuit filed by 85 victims of wartime forced labour seeking compensation from 16 Japanese firms, saying accepting the case might violate a 1965 treaty under international law.  +VE for S Korean relations
The demand for shopping online has seen a steady rise since consumers started to refrain from going out amid the coronavirus crisis. After wading in first mainly by necessity, Japan’s retail giants have started to get serious about expanding their online supermarket operations, making significant moves to also compete with Amazon.com.  Mentions Seven & I, Ito Yokado, Aeon Co., Seiyu teaming  +VE up with Rakuten   +VE

SOUTH KOREA 
Expect markets to open lower following the US with caution ahead of tomorrows unemployment and GDP data and concerns about US inflation remain.
Data out
Current Account  Apr $1.91B vs 7.82B Mar (F/cast was 7.3B)
KDCA reported 485 new covid cases Monday  (vs 556 Sunday) +VE but testing at the weekends is lower.
Moderna may produce the drug substance for its messenger RNA-based COVID-19 vaccine in South Korea, a local media outlet reported Monday.  Saying it was reviewing its options. It has a production partnership with Samsung Biologics, one of the world’s largest contract manufacturers of drugs, under which the Korean firm will handle the fill-finish process of Moderna’s COVID-19 vaccine.  +VE for sentiment
Hyundai Motor’s flagship model, the Sonata is apparently losing out to all-electric vehicles as the automaker moves to convert its Asan plant for the production of Ioniq 6. +VE
Hanwha Techwin will deploy a cutting-edge surveilling camera system on South Korea’s easternmost Dokdo islets, the company announced Monday.  near the islets, the firm explained. Two cameras with 8K superhigh resolution from the firm will be installed at the residential accommodation and heliport. Offering a live feed of images, they will help authorities to monitor and prevent any disaster or accident near the islets, the firm explained  +VE.
Hanwha Defense eyes first UK export with upgraded version of K9 howitzer, after being selected as the sole preferred bidder for an Australian artillery gun procurement project last year. +VE
South Korea’s personal computer market expanded to its largest in 10 years in the first quarter of 2021, industry data showed, due to robust demand for online education and remote working amid the pandemic.  Domestic PC shipments stood at 1.89 million units in the January-March period, up 30.7% YoY, according to the data from market researcher IDC Korea. +VE
SK Telecom Co. denied a news report Monday that it is planning to sell a stake in its e-commerce unit 11Street to US retail giant Amazon.com Inc. in a bid to bolster its online retail business. +VE

TAIWAN 
Expect market to open lower following the US and with caution ahead today’s inflation and trade data.  But watch for bargain hunting as we saw yesterday in large cap tech and further selling in Shipping.
Data due After market: 
Wholesale Prices, Inflation Rate, Balance of Trade, Exports, Imports.
U.S. Secretary of State Antony Blinken on Monday signaled a possible resumption of trade and investment talks with Taiwan stalled since the Obama administration, but gave no indication of any willingness to pursue a full-scale trade pact Taipei has been seeking, Reuters reports.  +VE for sentiment
Timely plum rains have significantly alleviated a historic water shortage in Taiwan, allowing water restriction measures to be lifted in some areas, while the hardest-hit areas remain on alert, the Ministry of Economic Affairs (MOEA) said yesterday. Slight +VE
The Ministry of Economic Affairs (MOEA) yesterday said it is tightening restrictions on stores and businesses in coordination with efforts by the Central Epidemic and Command Center (CECC) to further curb the COVID-19 outbreak as a nationwide level 3 alert is extended to June 28.  Slight -VE
Sales posted by the four major Formosa Plastics Group units last month surged from a year earlier due to higher international crude oil prices, the nation’s largest industrial conglomerate said yesterday.  Data released by the group showed that the four entities; Formosa Plastics Corp, Nan Ya Plastics Corp, Formosa Chemicals & Fibre Corp  and Formosa Petrochemical Corp; posted a combined NT$143.9 billion (US$5.19 billion) in consolidated sales, rising 87.9 percent from a year earlier, after an 84.1 percent year-on-year increase in April. +VE
Major passive-component makers yesterday reported that revenue continued to expand last month on an annual basis due to steady demand, but said they remain cautious as the COVID-19 pandemic has not eased worldwide. Yageo Corp, said that revenue last month grew 2.1 percent month-on-month and 105.1 percent year-on-year to NT$9.2 billion (US$332 million). “Despite fewer working days in China due to holidays, revenue last month continued to grow and set a new monthly record for the company,” Yageo said in the filing.
The company attributed the increase to higher sales in Europe and the US, a gradual improvement in factory utilization in the “greater China” region.  Chilisin Electronics Corp reported that revenue last month fell 3.69 percent  month-on-month, but rose 19.96 percent year-on-year to NT$1.56 billion. “Last month’s consolidated revenue was lower than the previous month,  mainly due to reduced working days because of the Workers’ Day holiday  in China,” Chilisin said in a statement, adding that it remains  cautiously optimistic given steady demand for inductor components amid a  work-from-home economy.   Smaller MLCC supplier Holy Stone Enterprise Co posted  revenue of NT$1.54 billion for last month, up 8.74 percent from the  previous month and 25.73 percent higher than a year ago.  Overall outlook +VE
Online insurance sales fall, FSC says. A total of 465,689 insurance policies were sold online in Taiwan in the first quarter, down 25 percent from a year earlier,
as demand for international travel insurance and interest-sensitive annuities fell due to border controls and falling returns respectively, Financial Supervisory Commission (FSC) data showed. -VE

CHINA 
Expect market to open lower with caution ahead of Chinese inflation data Wednesday and the potential for loans data too.  Sino/US relations also a concern after Katherine Tai’s comments yesterday.  Team China remains active.
No data due 
but after market Monday
Foreign Exchange Reserves May $3.22T vs 3.198T Apr (F/cast was $3.2T)
Key they increased for the first time in four months to USD 3.198 billion in April of 2021 from USD 3.17 trillion in March, in line with forecasts of USD 3.2 trillion. With the value of the gold reserves rose to USD 119.02 billion from USD 110.73 billion  
China expressed fury over US Senators visiting Taiwan to donate coronavirus vaccines,
saying it could embolden "separatist forces" on the island.
China's apex legislature, the Standing Committee of the 13th National People's Congress, started its 29th session Monday to review multiple draft laws and law amendments, state news agency Xinhua reports.  The session's agenda includes reviewing draft laws on Hainan free trade port, on stamp tax, and on opposing foreign sanctions.
Didi Chuxing has dropped its Hong Kong initial public offering plan and aims to go public in New York as soon as the third quarter, mainland media reported, citing people familiar with the matter.  The Beijing-based company has filed confidentially with the US Securities and Exchange Commission for an IPO, Bloomberg reported in April. Didi was considering a second listing in Hong Kong after the IPO in the US, the report said.   Didi, backed by SoftBank, Alibaba (9988) and Tencent (0700), is looking to list as soon as July, eyeing a valuation of at least US$100 billion (HK$780 billion), Reuters reported earlier. The New York listing plan partly reflects concerns that a Hong Kong IPO application could run into tighter regulatory scrutiny over its business practices, including the use of unlicensed vehicles and part-time drivers, the report said.

HONG KONG  
ADR’s -11pts at 28,775;  Chinese banks weak and E-Commerce mixed. Expect market to trend lower ahead of inflation and loans data.  
No data due but after market Monday
Foreign Exchange Reserves May $494.5B vs 490.6b Apr

Short Selling Monday 10.8% vs13.6% Friday
Top Shorts 
Shenzhou Int (2313) 39%, Sunny Optical (2382) 34% (after poor numbers from Largen), Bud Apac (1896) 32%, Bank Comm (3328) 30%, BoC HK (2388) 26%, Wharf REIC (1997) 25%, Country Garden (2007) 24%.

IMMIGRATION
Hong Kong residents leaving the city for good withdrew a total of HK$1.931 billion from their Mandatory Provident Fund pension accounts
in the first quarter of 2021, up 49.1 percent from the same period a year earlier.   -VEWATCH
China Evergrande (3333) yesterday clarified that its recent promotions were only available for leftover stocks, adding that the group's operations were going well.  
China Evergrande has continued to report funding shortages, and was reportedly investigated by mainland regulators regarding a transaction of more than 100 billion yuan (HK$121.29 billion) with Shengjing Bank (2066).  The group emphasized that the financial services carried out by the group and the bank are in compliance with the relevant national laws and regulations.
GEELY AUTO (00175.HK) announced that the total sales
volume in the first five months of 2021 was
approx 530,000 units, an increase of circa 26% from the same period last year, achieving 35% of the Group’s full year sales volume target in 2021.
Emperor Group announced that its Emperor Cinemas give away 20,000 tickets to encourage residents to get vaccination.
CRRC (01766.HK) announced that the Company is not included in the Annex to the latest Executive Order by US President Biden. prohibiting investment in relevant securities investments in certain Chinese companies.

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