Things to know before trading Asia on Monday


14 Aug

This and previous notes can be found at Substack ( Asian Market Sense )
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Asia Summary

Australia Sydney toughened its social distancing measures as the pandemic continues.
Japan Expect a cautious open as the GDP data is announced pre market. But flows light as Obon holiday underway
S Korea Market closedMonday re-opens Tuesday
Taiwan Market to open flat, global concerns about the recovery off-setting the good local results.
China Expect caution ahead of key data out on the open and shortly after.  Covid resurgence and Govenment’s new policy towards the private sector continue to hurt sentiment.
HK ADR/s closed in the US -9pts at 26,382 with weakness in Ecommerce and Petrochems. Expect caution ahead of China data and light volumes hurting too.
European Employment, GDP data, inflation and UK retail sales.
US with earnings essentially over focus now on inflation, covid and economic data.  Key data this week will be Retail Sales, Production and Housing Data.

FT Weekend has a number of articles on the fall of Afghanistan and the expected suffering of the majority of the population.  The mis reading of the situation on the ground seen as a failure for President Biden.
Looks at the Chinese building of missile silos and the implication that China is changing from minimum detterrance to a more aggressivee stance. This was covered in the Economist last week.
An article on the growth of the Steel Sector in China questions President Xi’s emissions pledge.
Also has a piece on the pressure that Japanese PM Suga is under and holding the Olympics hasn’t helped his popularity at home.
Softbanks investment in Argentine fintech Ualá which achieved a valuation of nearly $2.5bn is a bit of good news for the company.
It notes that South Korean businesses have urged Seoul to allow Lee Jae-yong, head of the Samsung tech empire, to return officially to management after he was freed from prison on parole. Although there is no real evidence that his imprisionment has stopped decision making at the company. The Economist also looks at this and questions President Moon’s real commitment to reforming the Chaebols.

The Economist’s leader looks at Beijings attack on its internationally successful Tech sector and its intention to redesign the sector and how the good intention could potentially go wrong and stifle future development.
It has a number of articles on Afghanistan and notes that the surrounding countries are doing little to help and a lot to try and secure their own agenda’s and that includes China. China’s it suggests should learn from the US. In negotiating with the Taliban they were given some verbal assurances that were clearly worthless. So China, in receiveing assurances from the Taliban that they will not support the Uyghurs jihadists should be cautious.
It also looks at the growth of automation in China as it searches for increased productivity. Along with a good article about Poets from the factory floor in China.
There is an article on the rise in the decline of democracy in Asia


DOW +0.04%, NDX +0.04%, S&P +0.16%, Russel 2K -0.93%
Markets traded around flat all day. Michigan data was weak capping the upside and Earnings were in focus: Disney +1% after blowout fiscal Q3 earnings +VE for the Dow.  S&P leaders were consumer staples, utilities  as Tyson Foods +2.3% and NRG Energy +1.3%.  Laggards were Energy and industrials Diamondback Energy -4.7% and United Rentals -2.2%. Ebay shares +7.4%.  Flows were light as American’s go on holiday.
Banks 
JPMorgan Chase -1.1%, Citigroup -2.5% Wells Fargo -1.5%, Amex -1.5%
Work from home names: Facebook +0.2%, Apple +0.1%, Amazon -0.3%, Netflix +1%,  Disney +1%, Zoom Video -2.1%, Alphabet +0.4% and Microsoft +1.1%,
Tech NXP Semi +0.3%, Nvidia +1.4%, Micron +1%, AMD +3.8%, Skyworks flat
Re-opening stocks  Boeing -1.6%, Caterpillar -0.8%, Simon Property -0.1%, Kohl’s -2.2%, Nordstrom -2.6%, Gap -3.7%, United Airlines -1.6%, Carnival -2.1%, Wynn Resorts -1.7%, Chevron -0.7%, Exxon Mobil -1%,  
Lock down names Campbell Soup +1.4% General Mills +1.5%, JM Smucker +1.3%
DATA
Export Prices Jul +17.2% YoY vs +16.9% Jun revised (F/cast was +16.7%)
Export Prices Jul +1.3% MoM vs +1.2% Jun revised (F/cast was +0.9%)
Import Prices Jul +10.2% YoY vs +11.3% Jun revised (F/cast was +10.6%)
Import Prices Jul +0.3% MoM vs +1.1% Jun (F/cast was +0.7%)
Michigan Prelim Data
Consumer Senitment Aug 70.2 vs 81.2 Jul (F/cast was 81.5z)
5yr Inflation Expectations Aug 3% vs 2.8% Jul
Comsumers Expectation Aug 65.2 vs 79 Jul
Inflation Expectations Aug 4.6% vs 4.7% Jul
Current Conditions Aug 77.9 vs 84.5 Jul
Baker Hughes Oil Rig Count 397 vs 387 prior
Baker Hughes Total Rig Count 500 vs 491 prior
USD was slightly weaker vs Yen & Euro. Bitcoin +2.7% @ 47,625.49, VIX -0.9% @ 15.45, US T10 @ 1.283% yield eased as consumer confidence dropped
OIL Brent -1%, WTI -0.9%
Gold +1.5%, Silver +2.5%, Copper +1.1% Platinum +0.8%, Palladium +0.8%.
AHEAD NY Empire State Manufacturing Index, Foreign Bond Investment, Net Long Term Tic Flows, Overall Net Capital Flows.

DAX +0.25%, CAC+0.2%, FTSE +0.35%
Expect market opened higher and trading sideways in the green. Covid remains a concern but Travel and leisure +VE but Tech weak
Adidas +VE on its sold Reebok for $2.5 billion to Authentic Brands.
Ipsen weak after the French pharmaceutical company withdrew a new drug application in the U.S.
Vestas +4%.
Data
Eurozone 
Balance of Trade Jun €18.1B vs €12.3B May (F/cast was €18.2B)
German 
Wholesale Prices Jul +11.3% YoY vs +10.7% Jun
Wholesale Prices Jul +1.2% MoM vs +1.5% Jun
France
Inflation Final Jul +1.2% YoY vs +1.5% Jun (F/cast was+1.2% )
Inflation Final Jul +0.1% MoM vs +0.1% Jun (F/cast was+0.1% )
AHEAD
EUROZONE No data due
GERMANY
No data due
FRANCE No data due  
UK  No data due

JAPAN
Expect a cautious open with the GDP data due 10 mins ahead of the open. Recently estimates have been cut due to the covid resurgence. Obon holiday started Friday meaning domestic accounts likely to be quieter.
Yen closed 109.57; strengthened -VE for exports
Data due premarket
Q2 GDP Data
GDP Growth Rate Q1 was -1% QoQ (F/cast is +0.4%)
GDP Growth Annualised Q1 was -3.9% (F/cast is +0.8%)
GDP Expenditure Q1 was -1.2% QoQ (F/cast is +1.5%)
GDP External Demand Q1 was -0.2% QoQ (F/cast is 0.1%)
GDP Private Consumption Q1 was -1.4% QoQ (F/cast is 0.0%)
GDP Price Index Q1 was -0.2 YoY
Later
Industrial Production
Capacity Utilisation
Tokyo reported 1,521 new covid cases Saturday a new record high (+43 DoD) -VE
Torrential rain hit western Japan  triggering floods and landslides -VE Insurers and slight +VE infrastructure names
Support for Japan's Prime Minister Yoshihide Suga slid further below 30% in August in a survey by Jiji news agency, a blow for him as members of his party start to question if he should lead them into a general election that must be held by October.
The survey underscores how the Tokyo Olympics have failed to offset the disapproval over Suga's handling of the pandemic, with Japan battling a fifth wave of infections, in line with other polls that show his ratings are at record lows.
China and South Korea on Friday blasted Defense Minister Nobuo Kishi’s visit to the war-linked Yasukuni Shrine in Tokyo earlier in the day.  China expresses its strong dissatisfaction and resolute opposition, National Defense Ministry spokesman Wu Qian said in a statement. -VE for sentiment.
The Japanese government is planning to increase the daily upper limit of the number of foreigners entering Japan from 2,000 to 3,500, starting from Monday, reported NHK, citing sources.
Ninety percent of major Japanese companies expect the country's economy to expand in 2022 on hopes that the fallout from the coronavirus pandemic will subside, according to a Kyodo News survey.
The survey on 111 companies, including Toyota Motor Corp and Sony Group Corp, also showed companies increasingly joining global efforts to curb greenhouse gases and striving to ensure economic security amid an intensifying U.S.-China rivalry, with a focus on supply chains for chips and energy resources. +VE for sentiment
Nearly 30% of large companies across Japan plan to expand their capital investment in technologies to reduce carbon dioxide emissions, a recent survey showed, reflecting global efforts to achieve a carbon-free society.  The survey conducted by the Development Bank of Japan showed 27% of some 1,000 large companies, defined as those with 1 billion yen ($9 million) or more in capital, will boost their investments in decarbonization, such as in technologies related to electric vehicles and renewable energy.

SOUTH KOREA Markets closed for Liberation Day
No data due
KDCA announced 1,930 new covid cases Saturday (-60 DoD) but still high.
GS Retail Co Ltd said on Friday it had partnered with two private-equity firms to buy Delivery Hero’s food delivery app, Yogiyo, in a deal valued at 800 billion won ($685 million).  The deal is expected to further intensify competition in the world’s third-largest online food delivery market, which is growing at a record pace since the COVID-19 pandemic started spreading in the country. +VE
Govt on Friday signed a deal to buy 30 million doses of Pfizer's (PFE.N) COVID-19 vaccine for 2022, and the government urged people to cut holiday travel amid a worsening fourth wave of infections and a slow inoculation campaign.  Prime Minister Kim Boo-kyum asked companies to be flexible about allowing people to work from home and urged those returning from holiday to get tested, especially before clocking in for work. +VE
HMM’s operating profit rose to a record high during the second quarter on the back of growing shipping costs and strong demand.
The company racked up 1.38 trillion won in operating profit, a regulatory filing released on Friday revealed, up over 900 percent compared to the same time one year ago. +VE
Samsung SDI may build a battery plant in central Illinois, according to a report by Reuters on Friday.  The news came after Illinois Sen. Dick Durbin said in a press conference that there were discussions to bring in a “major Samsung battery facility” during their meeting with South Korean delegations this week. +VE
Celltrion on Friday said the company’s operating profit fell 10.2 percent in the second quarter through an earnings report. The firm’s operating profit stood at 163.2 billion won during the April-June period, down 10.2 percent from the same period last year. Its sales inched up 0.7 percent to 431.8 billion won. Slight -VE
Hyundai Motor said Friday its manufacturing plant in Alabama in the US has produced 5 million vehicles in total since the facility began operations in May 2005  +VE.
Korea Investment Corp., divested the entirety of 2.9 million shares in Alibaba Group Holding -- the 25th-biggest United States-listed stock it was holding earlier this year -- during the second quarter of this year, a filing showed Friday.
Samsung Electronics (005930.KS) Vice Chairman Jay Y. Lee, convicted of bribery and embezzlement, walked out of prison on parole on Friday, with South Korea's president calling on the public for understanding over his controversial release. Broad support for his parole grew amid anxiety that major strategic decisions are not being made at the world's biggest memory chip and smartphone manufacturer without him. President Moon Jae-in's office said the decision to release Lee was in the national interest.  He still needs justice department permission to return to work.

TAIWAN Expect market to open flat
No data due
CECC  reported 7 new covid cases including 4 imported cases
The annual production value of Taiwan’s semiconductor industry is expected to surpass NT$4 trillion (US$143.6 billion) for the first time this year, the Industrial Economics and Knowledge Center (IEK) said yesterday, bolstered by robust demand for emerging technologies worldwide and a booming global stay-at-home economy +VE.
TaiMed Biologics Inc an HIV/AIDS drug developer, yesterday gave an upbeat outlook for the next three years, on expectations that its development of two new drugs would bear fruit and its gross margin would improve after a change in manufacturing partner, chairman James Chang told an investors’ conference +VE.
China Steel Corp the nation’s largest steelmaker, yesterday said it would raise domestic prices by 1.2 percent to reflect higher manufacturing costs and rising steel demand after a two-month price freeze. The revised prices take effect next month.  During the COVID-19 pandemic, CSC raised steel prices straight for 12 months before freezing them last month, citing concerns for downstream companies, and advising them to use the price freeze to adjust their business needs and “prepare for changes that are to come.”

CHINA
Expect a cautious open ahead of key economic data although the unemployment number probably doesn’t reflect the impact of the covid resurgence and the recent clamp down on the Ecommerce companies.
Data due
On open House Price Index Jul (Jun was +4.7% F/cast is +4.5%)
Later
NBS Press Conference
Fixed Asset Investment Jul (Jun was 12.6% F/cast is 12.3%)
Industrial Production Jul (Jun was 8.3% F/cast is 8.2%)
Retail Sales Jul (Jun was 12.1% F/cast is 12.3%)
Unemployment Rate Jul (Jun was 5% F/cast is 5%)
Out Friday after market
FDI (YTD) Jul +25.5% vs +28.7% Jun (F/cast was +25%)
The National Health Commission (NHC) reported 66 COVID-19 confirmed cases with 30 of them being local cases.  18  of the local infections were reported in Yangzhou with the remaining  local cases reported in Henan, Hubei, Hunan and Yunnan respectively.  Reflects the benefits of mass testing and lockdowns.
Shanghai Stock Exchange (SSE) announced an adjustment to the Southbound Trading list of Shanghai-Hong Kong Stock Connect. CIMC VEHICLES (01839.HK) Short selling $175.95K; Ratio 9.748% will be included to the list, effective from Monday.
The General Office of the State Council published certain opinions on reforming and improving the management of central government-funded scientific research spending. Accordingly, the State Council suggested expanding the funding channels for scientific research. China shall also woo private capital to support the commencement of technology and innovation businesses.
Russian Defence Minister Sergei Shoigu praised military cooperation between Moscow and Beijing on Friday and suggested it could develop further, after flying to China for joint manoeuvres involving more than 10,000 troops.  The Sibu/Cooperation-2021 wargames concluding in China’s Ningxia region on Friday have been watched by other nations for signs that China and Russia are expanding military ties as they spar with the West.

HONG KONG 
ADR’s closed -9pts at 26,382 weakness in Ecommerce and Petrochems. HK announced 2 new imported covid cases Saturday
No data due after market Friday  
GDP Growth Rate Q2 -0.9% QoQ vs +5.5% Q1 (F/cast was -1%)
GDP Growth Rate Q2 +7.6% YoY vs +8% Q1 (F/cast was +7.5%)

EARNINGS due Monday includes:  Chinese Est (127), China Lit (772), China State Construction Dev (830), Mongolian Mining (975), Weimob (2013), Sunny Optical (2382), Lingbao Gold (3330), China Harmony New Energy Auto (3836), Sino Ocean Service (6677),

SHORT SELLING Friday 15.9% vs 19% Thursday
Top shorts 
Bud Apac (1876) 51%, Country Garden (2007) 51%, Bank of China (3988) 39%, Sunny Optical (2382) 39%, Hang Lung Ppty (101) 36%, Shenzhou Int (2313) 36%, Haidilao (6862) 36%, CK Asset (1113) 34%, CKI (1038) 34%, CCB (939) 32%, Henderson Land (12) 31%, HK & China Gas (3) 31%, NWD (17) 30%, Sinopec (386) 30%, Geely Auto (175) 29%, HKEX (388) 28%, Baba (9988) 28%, Galaxy (27) 28%, Wharf REIC (1997) 26%,  Xiaomi (1810) 26%, CKH (1) 25%, BankComm (3328) 25%

WATCH

WYNN MACAU (01128.HK)  Short selling $53.64M; Ratio 42.296%   announced the interim results for the six months ended 30 June 2021. 
Adjusted EBITDA amounted to HK$660 million, compared to a EBITDA loss of HK$1.397 billion for corresponding period of 2020. The loss for the period narrowed to HK$2.157 billion from HK$3.918 billon. LPS was HK$42 cents. No interim dividend was declared.

CM BANK (03968.HK) Short selling $275.43M; Ratio 29.565% unveiled the interim results ended June 2021. Operating income added 13.4% YoY to RMB166.645 billion. Net profit was RMB61.15 billion, representing a YoY increase of 22.8%, topping the brokers' forecast as compiled by our reporters at RMB57.605-58.783 billion.
EPS was RMB2.35. No dividend was declared. +VE
CHINA TOWER (00788.HK) Short selling $29.79M; Ratio 36.397% mentioned the severe damages to communication infrastructure amid torrential rains in northern Hubei Province during 11-12th August. As of 9:00 on 13th August, CHINA TOWER reported power outages at 3,813 base station sites in Hubei. 309 stations were forced to halt operation. -VE

Centa-City Leading Index (CCL) last posted 191.34, up 0.65% WoW, 
setting a historical new high. The index has gained 2.38% over the past three weeks.
CCL Mass last stood at 193.57, up 0.37% WoW, likewise reaching its record high.
CCL (small-and-medium units) 191.21, up 0.4% WoW and CCL (large units) 191.99, up 1.95% WoW both at record highs.

The tender for the residential site located at the junction of Lau Yip Street and Chung Yip Road, Yuen Long has closed at noon today (13th).
The government expressed that 16 tenders were received. The sole-proprietary bidders include CK ASSET (01113.HK), K. WAH INT'L (00173.HK), CHEVALIER INT'L (00025.HK) , SEA HOLDINGS (00251.HK), K&K Property Holdings, FE CONSORT INTL (00035.HK), GRAND MING (01271.HK) and CHUANG'S CHINA (00298.HK) . SINO LAND (00083.HK) and CIFI HOLD GP (00884.HK) also submitted their bids. +VE for sentiment

BYD Auto Industry Co Ltd. and Management Committee of Shenzhen-Shantou Special Cooperation Zone forged a strategic cooperation agreement for an intended alliance in BYD Auto Industrial Park (Shenshan) Project, Shenzhen TV reported. 
The planned total investment of the project amounted to RMB5 billion, and the annual output value may hit about RMB10 billion after production commencement. The project has the largest investment in Shenzhen-Shantou Special Cooperation Zone in recent years, representing a blockbuster project with broadest outlook.  +VE

Hang Seng Indexes Company announced that LI AUTO-W (02015.HK) meets the Fast Entry Rule of various indexes 
and will be added to the related indexes after market close 25 August 2021. All changes will come into effect on 26 August 2021. The stock will be added to Hang Seng Composite Industry Index - Consumer Discretionary, Hang Seng Composite LargeCap Index and Hang Seng Composite LargeCap & MidCap Index, which are under Hang Seng Composite Index; and will be added to Hang Seng Consumer Goods & Services Index.

The Government tuned up Hong Kong's economic growth forecast to 5.5%-6.5% for this year, in view of remarkable economic surge YoY in 1H21, 
after balancing the factors of Delta variant virus threat and local consumer coupons boost, said Government Economic Advisor Andrew Au at the press conference. As to inflation projection, Hong Kong may see faster inflation in 2H21 with economic revival and heightened external price pressure. Yet, the Government left the underlying consumption price forecast for this year unchanged since the inflation YTD roughly aligned with the previous estimate.
Andrew Au mentioned in the press conference the vibrant property market for the second quarter. On another note, current home prices are only 1% lower than the historical high, pointed out Principal Economist Desmond Hou. The Housing Affordability Index climbed to 75% in the second quarter, way above the 20-year average of 47%. This means home prices are still losing touch with economic fundamentals and citizens' affordability.
The Census and Statistics Department of Hong Kong announced yesterday (12th) the population size decreased by 87,000 YoY in mid-year. Government Economic Advisor Andrew Au analyzed that population loss estimate is affected by different factors, such as lower birth rate and less foreign domestic helpers and foreigners coming to Hong Kong under plague. On Hong Kongers' fleeing to foreign countries, Au said it is now too soon to talk about the impact on labor market and economy. He conceded that only after epidemic finishes could the government gauge the severity and actual impact from immigration.Five individuals including a current senior executive and a former senior executive of a listed company have been arrested in a joint operation “Jade Qilin” of the Securities and Futures Commission (SFC) and the Independent Commission Against Corruption (ICAC). The SFC conducted the search on suspicion of breaches of the Securities and Futures Ordinance in relation to the suspicious money lending activities of the listed company; in this connection, the management might have engaged in misfeasance or other misconduct prejudicial to the listed company or its shareholders.On 10 August 2021, the Securities and Futures Commission (SFC) published its consultation conclusions to proceed with the implementation of an investor identification regime at trading level for the securities market in Hong Kong (HKIDR). HKEX (00388.HK) Short selling $440.48M; Ratio 28.430% today issued an Information Paper to provide more information about the operational logistics of the regime to facilitate market readiness. Based on its consultation conclusions, the SFC plans to implement in the second half of 2022, subject to the completion of system testing and market readiness. HKEX will support the SFC in implementing HKIDR, including the development of the relevant systems, the arrangements of necessary market readiness activities such as market testing and market rehearsals, and to provide ongoing operational support.


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