March 11 Asian Macro Initial Thoughts Asian to open higher, China good loans data


11 Mar

Asia Expect markets to rally on tame US inflation 
Nikkei Futures opened +50pts but have eased back to flat ahead of premarket data, HK ADR’s +95pts but weakness still in E Commerce names, Australia rallied initially but now flat in early trades (ahead of Consumer Inflation Expectations data and late New Home Sales). S Korea likely to open higher after tame US inflation data. Taiwan to open higher on good TSMC sales and other good local earnings. China good new Loans data but NPC closing, expect Team China to support the market.
US Futures opened Dow +40pts, S&P and NDX also higher
Pfizer Inc has told the Indian government it wants to produce its coronavirus vaccine locally if assured of faster regulatory clearance and freedom on pricing and exports.  Slight -VE to Sinopharm

DOW +1.5%, NDX -0.04%, S&P +0.6%, Russel 2K +1.8% 
Markets opened higher after a tame inflation report but then NDX sold off to close on its lows, S&P opened higher and traded sideways and DOW worked higher all day. Stimulus bill was passed and sent to Biden for signing. Cyclicals rallied, Energy was strong along with Industrial Materials and Financials. Russell 2000 saw good interest as investors focus on value stocks.10-year Treasury auction of $38 billion in notes Wednesday saw adequate demand, easing concerns about the growing debt burden which could hit bond demand and force yields even higher.UBS raised its S&P target to 4,250 from 4,100 in a sign it is more confident about the impact of stimulus and consumer spending.
Banks JPMorgan Chase +2.2%, Citigroup +3.9%, Wells Fargo +3.8%, Amex +1.1%
Work from home names: Facebook -0.3%, Apple -0.9%, Amazon +0.2%, Netflix -0.4%, Disney +0.3%, Zoom Video -1.8%, Alphabet -0.2% and Microsoft -0.6%,
Tech NXP Semi -1.8%, Nvidia -0.4%, Micron -4.4%, AMD -1.3%, Skyworks -2.8%
Re-opening stocks  Boeing +6.4%, Caterpillar +1.9%, Simon Property +3%, Kohl’s -0.6%, Nordstrom +0.2%, Gap +4%, United Airlines +0.9%, Carnival -3.2%, Wynn Resorts +0.6%, Chevron +1.7%, Exxon Mobil +3.1%,  
Lock down names Campbell Soup +1.9% General Mills +2%, JM Smucker +1.8%
AFTER Market 
Bumble +6.1% (was -0.6% normal hours) first quarterly report since going public in February. Bumble posted a revenue of $165.5 million. Analysts polled by Refinitiv expected revenue of $163.3 million.
Oracle -6.5% (was -0.7% normal hours) despite better-than-expected results for its Q3.
AMC Entertainment +9.1% (was -6.5% in normal hours) on stronger-than-forecast revenue for the previous quarter. AMC posted a revenue of $162.5 million, topping a Refinitiv estimate of $142.3 million.
Cloudera -9.5% (was +1.7% in normal hours) on disappointing full-year guidance overshadowed better-than-expected quarterly results.
DATA
MBA Mortgage Applications -1.3% vs +0.5% prior 30 year Mortgage Rate +3.26% vs 3.23% prior
Core Inflation Rate Feb +1.3% YoY vs +1.4% Jan (F/cast was +1.4%)
Core Inflation Rate Feb +0.1% MoM vs 0% Jan (F/cast was +0.1%)
Inflation Rate Feb +1.7% YoY vs +1.4% Jan (F/cast was +1.6%)
Inflation Rate Feb +0.4% MoM vs +0.3% Jan (F/cast was +0.3%)
EIA Gasoline Stock change -11.869m vs -13,624m (consensus was -3.467m)
EIA Crude Oil Stock change +13.789m vs 21.563m (consensus was +0.816m)
Monthly Budget Statement Feb $-311b vs -163b (F/cast was -165b)
10 year note auction 1.523% vs 1.155% prior
USD was flat vs Yen & Euro. Bitcoin +4.7% @ 56,963.47, VIX -6.1% @ 22.56,
US T10 @ 1.521% as auction shows enough demand to ease concerns.
OIL Brent +1%, WTI +1.1% despite inventory build
Gold +0.5%, Silver +0.5%, Copper +0.6%, Platinum +2.6%, Palladium +0.3%
AHEAD Initial Claims, 4 Week Average Claims, Continuing Claims, JOLTs Job Openings, EIA Natural Gas Change Report.
Earnings Ulta Beauty, Vail Resorts, DocuSign, Poshmark, Gogo, Zumiez, JD.com, WPP, Party City

DAX +0.71%, CAC +1.11%, FTSE -0.07% 
Markets FTSE opened lower but initially worked higher but seeing resistance at yesterday’s closing level and traded sideways around flat. CAC and DAX opened flat but worked higher all day. The after market loans data out of China +VE for sentiment. Also watching the progress of the US stimulus bill which should be ready for Biden to sign by the weekend. Chemicals led the gainers and miners the laggards.
Inditex, the owner of ZARA, weak after results for the fiscal year ended January 2021 showed Net income -70% YoY to EUR1.11 billion (around US$1.318 bn).
Adidas +2.7% projected a strong rebound in sales in 2021 and slightly beat on Q4 sales and operating profit expectations
Just Eat +6% Full-year revenue growth of 54%, with active customers up 23% and the number of restaurants listed on its app by 42%, benefiting from lockdown measures throughout Europe.
Quilter +9% after a strong full-year earnings report.
ITV -3.7% after high-profile presenter Piers Morgan resigned following a backlash over his accusations that Megan Markle had lied about her mental health difficulties in an interview with Oprah Winfrey.
Other earnings from Geberit -1.1%, G4S +0.3%, National Express -2.8%, The Restaurant Group -1.6%, Balfour Beatty -2% and Foxtons +10.2%.
Data 
FRANCE  Industrial Production Jan +3.3% vs -0.7% Dec revised (F/cast was +0.5%)
AHEAD
EUROZONE ECB Interest Rate Decision, Marginal Lending Rate, Marcoeconomic Projections
GERMANY No data due
FRANCE No data due
UK No data due

JAPAN 
Nikkei futures opened +50pts but eased back to flat with caution ahead of PPI data and the closing session of the Chinese NPC.  I still expect to see some upside after the tame US inflation report.  Yen currently 108.40
Data pre market 
PPI Feb -0.7% YoY vs Jan was -1.6% YoY ( F/cast was -0.8%)
PPI Feb +0.4% MoM vs +0.4% Jan (F/cast was +0.4%)
Foreign Stock Investment Yen -136.9 vs -453.8 prior revised from -454.6b
Foreign Bond Investment Yen 98.9b vs -1719.6b prior
Tokyo reported 345 new covid cases Wednesday above 300 for the first time in 5 days.
US Secretary of State Anthony Blinken and Defense Secretary Lloyd Austin will travel to Japan and South Korea next week, in the first overseas and in-person trip by top cabinet members of the Biden administration. +VE for relations
Mitsubishi Motors Corp. will source two Renault SA-made models for its European lineup as the Japanese automaker deviates from a decision to pull back from the region. The cars, which will be based on existing Renault platforms and tweaked to fit the Mitsubishi brand, will be sold in some European markets excluding the U.K. from 2023, the carmakers said in a statement Wednesday. Mitsubishi’s European lineup also will feature the Eclipse Cross plug-in hybrid.
Bridgestone said Wednesday it will offer its 33,000 U.S. employees $100 payments to get vaccinated against COVID-19, joining a group of large companies offering incentives for the shots. The tire company is also exploring the possibility of similar programs for employees in Canada and Latin America,

SOUTH KOREA 
Expect markets to open higher on signs of tamer US inflation.
No data due
KDCA reported 470 new covid cases;  over 400 for a second consecutive day Wednesday, the highest in 19 days, as cluster infections continued to pile up across the country ahead of adjustments of social distancing rules. Slight -VE
US Secretary of State Antony Blinken and Defense Secretary Lloyd Austin will meet their South Korean counterparts on March 17 and 18 to discuss security policies and global initiatives, in the first senior-level talks to be held in person between the two countries since US President Joe Biden took office, Seoul’s Foreign and Defense ministries said Wednesday. +VE
Government has agreed to a 13.9% increase in its contribution to the cost of hosting some 28,500 U.S. troops for 2021, the biggest annual rise in nearly two decades after U.S. calls for greater funding.
Agricultural ministry said Wednesday it has identified another suspected case of avian influenza for the first time in more than a week, raising concerns over another uptick in the animal disease. -VE
BlackRock said Wednesday it has increased its stake in KB Financial Group to 6.02 percent, from 5.01 percent in May 2014. +VE
South Korean banks’ total outstanding mortgages extended to households gained 6.4 trillion won ($5.6 billion) on-month in February, central bank data showed Wednesday, with the figure marking the second-largest increase for the month. +VE and for Developers.
Kumho Tire Co, said Wednesday it will invest some 340 billion won ($298 million) to expand its production facilities in Vietnam. To raise its tyre production by about 3.8 million units, including 3 million for sedans and some 800,000 for trucks and buses. +VE
LG Energy Solution is in the race for mass production of a new type of battery cells designed in-house by and under pilot production at Tesla, according to industry sources and media reports.  The Korean firm, which currently supplies cylindrical batteries that contain 80 percent nickel to Tesla Model 3 sedans manufactured in China, is making preparations for its major client’s future deployment of larger-format batteries, referred to as 4680 cells. +VE
Samsung Electronics is preparing for another event to unveil some of its newest Galaxy devices next week as a likely move to garner attention for products other than its flagship S series.  The tech giant has sent out invitations to a new unveiling event for its Galaxy devices, “Galaxy Awesome Unpacked.” +VE
Samsung Electronics said Wednesday that the company will roll out the first consumer drive without DRAM -- the 980 Non-Volatile Memory express (NVMe) SSD, which delivers the highest performance among DRAM-less SSDs at a faster speed.  Previously, DRAM-less designs had a disadvantage in speed as they lacked the short-term memory for fast access to data. +VE
Amorepacific said Wednesday it has joined RE100, a global renewable power initiative, becoming the first South Korean cosmetics firm to do so. The company plans to supply electricity in the workplace entirely with renewable energy by 2030 in an effort to help tackle climate change.
S-Oil said Wednesday it will deploy drones and smart helmets at all business sites by 2023 to accelerate its digital transformation.  SLight +VE

TAIWAN 
Expect market to open higher with record sales from TSMC and good results from other local companies 
No data due 
Taiwan Ministry of Health and Welfare announced that the quarantine period on Hong Kong inbound passengers of short-term business trips will be shortened from 14 to 7 days with immediate effect, in view of the gradually controlled pandemic situation of the city.
TSMC announced that on a consolidated basis, net revenues for February 2021 were approximately TWD106.534 billion, -15.9% MoM but +14.1% YoY an new sales record. +VE
ASML Holding NV, the world’s biggest semiconductor equipment supplier, yesterday said that it is launching a large-scale recruitment campaign, with an aim to add 600 engineers this year to cope with rising customer demand. The program is expected to boost ASML’s local workforce to more than 3,400 this year, the Veldhoven, Netherlands-based company said in a statement. ASML currently employs more than 2,800 people in Taiwan, accounting for about 10 percent of its global workforce. +VE
The launch of the Taiwan Offshore Wind Industry Association (TOWIA), which comprises eight major offshore wind farm developers with projects in Taiwan, comes just weeks ahead of a highly anticipated announcement of the “rules of the game” for the third phase of the nation’s wind farm development plan, dubbed “zonal development.” +VE
T3EX Global Holdings Corp’s  board of directors has approved a proposal to distribute a record cash dividend of NT$3.2 per share after the company’s net profit surged 117 percent to NT$541 million (US$19.1 million) last year. The proposed cash divided suggests a payout ratio of 68 percent based on T3EX’s earnings per share of NT$4.72 and a yield of 6.68 percent based on its closing share price of NT$47.9 in Taipei trading yesterday. +VE
Powerchip Semiconductor Manufacturing Corp swung back into the black last year, reporting a net profit of NT$3.81 billion (US$134.51 million) attributable to healthy demand mainly for power management ICs and driver ICs for flat panels, the company said in a filing with the Taiwan Stock Exchange on Tuesday. +VE
Asustek Computer has launched the latest in its Republic of Gamers (ROG) smartphone line targeting Android gamers in markets like China. The ROG Phone 5 maintains the heritage of over-the-top specs and design: Its exterior is decorated with angular motifs and its interior is populated with up to 18GB of memory and Qualcomm Inc’s latest Snapdragon 888 processor. It has a custom-made 6.8-inch Samsung OLED display, contains two battery cells and is cooled by a vapor chamber system — and its higher-tier models bundle an attachable fan cooler for even more performance. +VE
Flow HK’  A new magazine in support of Hong Kong’s struggle for democracy is reaching out to the diaspora and those still living in the territory, offering unvarnished commentary from Taiwan, where it is published.
Taiwan has emerged as a place of refuge for some Hong Kongers after China’s enforcement last year of a new National Security Law in Hong Kong. The Chinese-language quarterly magazine takes its name in Chinese is Ru Shui, or “be water,” after a tactic protesters used to evade Hong Kong police and inspired by a maxim of Chinese martial arts actor Bruce Lee. Likely to annoy Beijing.

CHINA 
Expect market to open higher after the US rebound and the good new loans data but upside limited as investors watch for the post NPC press conference for signs of government policy.
No data due but after market Wednesday
New Yuan Loans Feb CNY 1360bn vs 3580b Jan (F/cast was 1050bn)
Outstanding Loan Growth Feb +12.9% YoY vs 12.7% Jan (F/cast was 12.7%)
Total Social Financing Feb CNY 1710b vs 5170b Jan (F/cast was 980b)
M2 Money Supply Feb +10.1% vs 94.% Jan (F/cast was 9.3%)
NPC session ends today focus will be on the closing press conference.
US confirms high-level meeting with Chinese officials in Alaska next week
US Secretary of State Antony Blinken will meet Yang Jiechi, China’s most senior foreign policy official, and Foreign Minister Wang Yi. Blinken and White House national security adviser Jake Sullivan plan to discuss ‘a range of issues’ with their Chinese counterparts Slight +VE but comes after Biden’s meeting with Quad leaders Friday.
The Biden administration is extending tariff exclusions on about 99 categories of medical products from China until Sept. 30, 2021 to aid the fight against COVID-19, the U.S. Trade Representative's office said in a Federal Register notice Slight +VE
Beijing’s plan for the next five years includes a call to mitigate risks and prepare for legal battles over its maritime disputes, which analysts say reflects growing concerns over the South China Sea. The plan; tabled at the ongoing annual legislative sessions in Beijing also calls for China to draw up a basic maritime law, a task carried over from the previous five-year period.
China Securities Regulatory Commission is considering tightening rules for first-time share sales on Shanghai's Science and Technology Innovation Board (Star Board). That will require firms to prove their technology credentials and raise the bar for companies such as Ant Group. Insiders say the commission may introduce revised rules as soon as next month, placing greater emphasis on hardcore technology and innovation. There will also be increased scrutiny of firms' financial health to boost the quality of companies and protect investors. Slight -VE
The American Chamber of Commerce published a business climate report yesterday (9 March), having surveyed 345 US companies in China. 75% of the respondents stayed optimistic on the Chinese market outlook for next two years.   Chinese Foreign Ministry Spokesperson Zhao Lijian said the report indicated the mutually beneficial and win-win nature of China-US trade relations.
China’s coal imports from Russia may increase as supply from Australia ‘expected to decline’ China remains Russia’s biggest trading partner, but the trade deficit rose to US$5.84 billion at the end of 2020.  Reflects the deteriorating relations between Australia and China.
China has approved a 10 billion yuan ($1.54 billion) currency swap with Sri Lanka, a government spokesman in Colombo said on Wednesday, giving some respite from concerns about public finances.
Norway's $1.3 trillion wealth fund will probe whether companies it is invested in may be using the labour of ethnic Uighurs and other Muslims linked to China's internment camp system in the country's Xinjiang region, the head of the fund's ethics watchdog told Reuters. -VE

HONG KONG  
ADR’s +95pts at 29,002; weakness in Ecommerce names and Chinese Financial mixed.  Expect an initial short squeeze but then cautious trading ahead of the NPC closing.  Focus on earnings too.
No data due
IPO 
KWONG LUEN ENG (01413.HK), debut, opened at $0.6 in gray market, up 11% against the listing price of $0.54, PhillipMart data showed. It last posted at $0.55, up 1.9%, on volume of 4.16 million shares.

SHORT SELLING Wednesday 13.5% vs 12.7% Tuesday
Top Shorts Ping An (2318) 48%, Bud Apac (1876) 42%, HSBC (5) 40% (Moodys put on Watch list for downgrade), Bank of China (3988) 39%, AIA (1299) 38%, Sands China (1928) 31%, Wharf REIC (1997) 31%, BankComm (3328) 30%, China Life (2628) 29%, Galaxy Ent (27) 28%, Sunny Optical (2382) 28%, Sinopec (386) 27%, Henderson Land (12) 26%, Country Garden (2007) 26%.
Earnings due Thursday incl 
Swire Pac A (19) and B (87 ) MTRC (66), China Everbright Environ (257), RREEF China Commercial Trust (625), Giordano (709), China Unicom (762), Vakue Partners (806), Sunac (1918), Swire Properties (1972), BOC Aviation (2588), Beijing Tong Ren Tang (3613)
WATCH 
Prada's sales and profits rebounded at the end of last year from a first-half slump due to the coronavirus pandemic, boosted by a strong performance in China and elsewhere in Asia, +VE
CHINA PENGFEI (03348.HK) Positive Profit Alert announced that the Group expected to record a substantial increase of not less than 50% in profit for the year ended 31 December 2020 as compared to the year ended 31 December 2019.
YUE YUEN IND (00551.HK) announced that the net consolidated operating revenue (i.e. equal to the total sales less sales discount and sales return) of the Company for February at USD755 million, up approximately 77% yearly.
The Urban Renewal Authority (URA) said its Oak Street / Ivy Street Development Project has received 41 Expressions of Interest (EOIs) upon closure today (10 March).  According to earlier on-site witness, suitors included TOP SPRING (03688.HK), CHEVALIER INT'L (00025.HK) and Chinachem, COUNTRY GARDEN (02007.HK), CIFI HOLD GP (00884.HK), EMPEROR INT'L (00163.HK), ITC PROPERTIES (00199.HK), Nan Fung, WANG ON PPT (01243.HK), SEA HOLDINGS (00251.HK), SINO-OCEAN GP (03377.HK) and RYKADAN CAPITAL (02288.HK)
The MPFA wrote in a statement that given the announcement by the Government of the Hong Kong Special Administrative Region on 29 January 2021 that BN(O) passport was no longer recognized as a valid travel document as well as proof of identity. Thus, scheme members cannot rely on BN(O) passport or its associated visa as evidence in support of an application for early withdrawal of MPF.   The MPFA pointed out that MPF trustees have the duty to observe Hong Kong laws when handling the administrative matters of MPF schemes. When processing applications for early withdrawal of MPF on the ground of permanent departure from Hong Kong, MPF trustees must act as gate-keeper by reviewing all evidence provided by applicants, and the totality of facts and information.
CATHAY PAC AIR (00293.HK) Chairman Patrick Healy said the company will continue to scout the possibility of increasing capital by commercial means, stressing the airline is now holding $28.6 billion liquidity, which is a healthy level. CEO Augustus Tang complemented that they has no intention to strip off and list HK Express. It also revealed passenger and cargo capacity receded 60% and 25%, respectively, due to the latest isolation measures on air crew, said Group Chief Customer and Commercial Officer Ronald Lam. It is in close talks with the Government in hopes of relaxing these controls, Lam added.

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