March 2 Asian Macro Initial Thoughts Asia to open higher S.Korea and Taiwan to play catch-up


02 Mar

Asia
Nikkei futures opened +13pts and rising, currently +50pts, HK ADR’s +80pts and Australia moving higher in early trades. S Korea and Taiwan re-open and expected to play catch up with the region, with Tech plays strong.
US Futures opened Dow +40pts, S&P +0.15% and NDX +0.3%

DOW +1.95%, NDX +3.01%, S&P +2.38%, Russel 2K +3.37% having opened higher NDX and S&P worked slightly higher through the day, with the S&P dipping slightly into the close.DOW opened higher rallied to test 31,600 and then traded sideways dipping into the close.  Rebounding strong from Friday’s sell-off.  Energy and Financials seeing good interest on +VE vaccine rollout news as Johnson & Johnson’s +0.6% on getting FDA approval and being able to ship 4m doses initially. Along with the House’s approval of Biden’s stimulus package

EARNINGS 
Hilton Grand Vacations +5.9% despite a wider-than-expected loss for its latest quarter, while revenue was also below Wall Street forecasts. Hilton Grand Vacations said the pandemic has created a challenging environment but said 85% of its properties are now open and operating.
NRG Energy +10.6% reported better-than-expected profit and revenue for its latest quarter, and also said the financial impact of the extreme weather in Texas is expected to be within NRG’s current guidance range.
Perrigo +4.7% announced a deal to sell its Generic Rx Pharmaceuticals business to private-equity firm Altaris Capital for $1.55 billion in cash and other considerations. The initial highs eased after it reported lower-than-expected earnings for its latest quarter as sales fell.
OTHER 
Walmart +1.2% dropped its $35 minimum charge for its two-hour express delivery service. However, the $35 minimum will still apply for regularly delivery, curbside pickup and Walmart+ delivery services.
Twitter +0.7% announced its intention to sell $1.25 billion in convertible notes due in 2026, subject to market conditions. Opened higher sold down in choppy trading and then worked better
Citigroup +5.5% as Jane Fraser takes over as Chief Executive Officer of the bank today, becoming the first woman to run a major U.S. bank.Boeing +5.8% as United Airline said it would buy 25 more 737 Max aircraft.
AFTER MARKET 
Zoom Video +8.4% (was +9.7% in normal hours) on better-than-expected fiscal fourth-quarter results. Revenue represents a 369% surge on a year-over-year basis. Zoom also expects revenue to surge by 175% in the fiscal first quarter and by 42% for the full fiscal yearRoku +3.5% (was +6.3% in normal hours) on the news that the company is set to acquire Nielsen’s video advertising business.
Novavax -4.4% (was +3.9% in normal hours) after the company reported weaker-than-expected fourth-quarter results. But said it expects government clearance for its Covid-19 vaccine as early as May.
Banks JPMorgan Chase +2.3%, Citigroup +5.5%, Wells Fargo +2.4%, Amex +2.5%
Work from home names: Facebook +2.8%, Apple +5.4%, Amazon +1.7%, Netflix +2.2%,  Disney +3%, Zoom Video +9.7%, Alphabet +2.4% and Microsoft +2%,
Tech NXP Semi +2.6%, Nvidia +0.9%, Micron +3.5%, AMD +2.2%, Skyworks +4.9%
Re-opening stocks  Boeing +5.8%, Caterpillar +1.7%, Simon Property +0.9%, Kohl’s +3.2%, Nordstrom +4.1%, Gap +2.4%, United Airlines +1.2%, Carnival -1.6%, Wynn Resorts unch, Chevron +2%, Exxon Mobil +3.7%,  
Lock down names Campbell Soup unch, General Mills -0.5%, JM Smucker unch
DATA
Manufacturing PMI Final Feb 58.6 vs 59.1 Jan (F/cast was 58.5)
Construction Spending Jan +1.7% MoM vs 1.1% Dec revised (F/cat was +0.7%)
ISM Manufacturing data
PMI Feb 60.8 vs 58.7 Jan (F/cast was 58.6)
New Orders Feb 64.8 vs 61.1 Jan (F/cast was 60)
Prices Feb 86 vs 82.1 Jan (F/cast was 75)
Employment Feb 54.4 vs 52.6 Jan (F/cast was 52)
Due After Market Total Vehicle Sales Feb (Jan was 16.6m)
USD was stronger vs Yen & Euro. Bitcoin +10.6% @ 49,175.00 as Citi reports says on the cusp of being accepted by institutions, VIX -16.5% @ 23.35, US T10 @ 1.426% eases from last weeks surge.
OIL Brent -1.6%, WTI -2.1% on doubts about Chinese demand outweighs re-opening hopes
Gold -0.3%, Silver +0.8%, Copper +0.4%, Platinum +0.5%, Palladium +1,6%
AHEAD Redbook, ISM New York, IBD.TIPP Economic Optimism, API Crude Oil Change.
Earnings: Target, Box, Hewlett Packard Enterprise, Nordstrom, Ross Stores, International Game Technologies, AutoZone, Kohl’s, Abercrombie and Fitch, Hovnanian

DAX +1.64%, CAC +1.57%, FTSE +1.62%  Markets opened higher FTSE rallied in the first 20 minutes then drifted lower into lunch and then traded sideways to the close. CAC and DAX worked slightly higher initially but dipped into lunch but worked better in the PM.  Markets following the rebound in Asia; despite China’s PMI data showing slowing. Treasury yields are easing +VE for equities. Sentiment helped by further vaccine roll-outs and the House approving Biden’s stimulus package.  All sectors in the green lead initially by Retail but later by Travel and Leisure.
AstraZeneca sold its stake in Moderna for more than $1 billion, according to the London Times.Logitech +1.6% warned operating income for fiscal 2022 would be between $750 million and $800 million, down from the $1.1 billion it expects to report for fiscal 2021. Logitech had seen a boom in demand for devices like computer mice and keyboards due to the pandemic, with more people working and attending school from home.
Persimmon +5.4%, Barratt Developments +5%, Taylor Wimpey +5.7% and Bellway +6.7% ahead of Wednesday’s U.K. budget and reports that U.K. Finance Minister Rishi Sunak could introduce a new mortgage guarantee scheme.
Data 
EUROZONE
Manufacturing Final PMI Feb 57.9 vs 54.8 Jan (F/cast was 57.7)
GERMANY
Manufacturing Final PMI Feb 60.7 vs 57.1 Jan (F/cast was 60.6)
Inflation rate Feb prelim +1.3% YoY vs +1% Jan (+0.8% MoM) F/cast is 1% YoY (+0.4% MoM)
Inflation rate Feb prelim +0.7% MoM vs +0.8% Jan (F/cast was +0.4% MoM)
FRANCE
Manufacturing Final PMI Feb 56.1 vs 51.6 Jan (F/cast was 55)
New Car Registrations Feb -20.9% YoY vs -5.8% Jan
UK
Manufacturing Final PMI Feb 55.1 vs 54.1 Jan (F/cast was 54.9) Mortgage Lending Jan GBP 5.2b vs 5.3b Dec (revised) F/cast was 5.1b)
BoE Consumer Credit Jan GBP -2.392b vs -0.87b Dec (F/cast was -1.7b)
Mortgage Approvals Jan 99k vs 102.8k Dec (F/cast was 97.5k)
Net Lending to Individuals Jan GBP 2.8B vs 4.5b Dec revised (F/cast was 4.2b)
AHEAD
EUROZONE Core Inflation Rate, Inflation Rate
GERMANY Retail Sales, Unemployment
FRANCE No data due
UK Nationwide House Prices.

JAPAN Expect Nikkei futures opened +13pts and rising, currently +50pts  expect market to continued to work higher although up side muted. Pre market data slightly +VE  Yen currently 106.76
Data out
Unemployment Rate Jan 2.9% vs +2.9% Dec (F/cast was 3%)
Jobs/application Ratio Jan 1.1 vs 1.06 Dec (F/cast was 1.07)
Due pre market Capital Spending Q4 (Q3 was -10.6% YoY (F/cast is -5.5%)
Tokyo reported 121 new COVID-19 cases Monday the lowest daily total since early November. As six prefectures exited the coronavirus state of emergency.
Tokyo has requested Beijing to stop taking anal swab tests for COVID-19 on Japanese citizens as the procedure causes psychological pain, a government spokesman said on Monday. Chief Cabinet Secretary Katsunobu Kato said the government has not received a response that Beijing would change the testing procedure, so Japan would continue to ask China to alter the way of testing. Seems that the claimed 'mistake’ by China of subjecting US personal to anal testing wasn’t the only ‘mistake’.
More than 1,000 shots of coronavirus vaccine went to waste in Japan after storage temperatures deviated from a required range due to a freezer malfunction, the health ministry said on Monday, the country’s first such case of wasted vaccines. A reminder of the risks associated with vaccines.
Prime Minister Suga apologised on Monday following the resignation of a key spokeswoman, who along with other senior bureaucrats were reprimanded for attending expensive dinners hosted by Suga’s son.
NTT Docomo Inc. said Monday it will lower its new 20-gigabyte monthly mobile plan to ¥2,700 ($25), offering the price cut amid intensifying competition in Japan’s telecom industry spurred by government pressure. -VE for shareholders
SoftBank’s Z Holdings (the merger of Softbanks Yahoo Japan and Navers Line)  is seeking to invest JPY500 billion (around USD4.7 billion) in technology field over the coming five years, Reuters reported.
Tepco, the operator of Japan’s wrecked Fukushima atomic plant, said it had successfully removed spent uranium fuel from a damaged reactor building in a key step in its clean up of the site after a nuclear disaster a decade ago.
Mizuho Bank announced on Monday that all its ATMs have been restored to normal operation after the previous day’s system glitches left customers unable to withdraw cash from some machines.
Toyota The U.S. government is investigating complaints of engine compartment fires in nearly 1.9 million Toyota RAV4 small SUVs. It  began investigating after getting 11 fire complaints involving the 2013 through 2018 model years. -VE

SOUTH KOREA 
Expect markets to re open expect a large rebound as the markets play catch-up although the pre market data was mixed; Monday’s export data was +VE
Data out 
Industrial Production Jan -1.6% MoM vs +3.7% Dec (F/cast was +0.8%)
Industrial Production Jan +7.5% YoY vs +3.4% Dec (F/cast was +4.5%)
Manufacturing Production Jan +7.4% YoY vs +3.4% Dec (F/cast was +5.5%)
Construction Output Jan -6.4% YoY vs -2.5% Dec (F/cast was +1.5%)
Retail Sales Jan 0% YoY vs -2% Dec (F/cast was -1.5%)
Retail Sales Jan +1.6% MoM vs +0.2% Dec (F/cast was +0.5%)
Later Manufacturing PMI Feb (Jan was 53.2 F/cast is 53)
Data on Monday showed the volume of exports continue growing for a fourth consecutive month in February, +VE signs of recovery, on the back of strong chip and automobile demand.  “Despite expectations for global economic recovery and trade improvements, there are still uncertainties over the prolonged coronavirus crisis, protectionism, and changing trade conditions,” Sung Yun-mo, the Minister of Trade, Industry, and Energy, said. “The ministry will try to find ways to keep the export momentum, and prepare support programs,” he added.
Government reported 355 new covid cases Monday (-1 DoD) and in the 300’s for a second day.  338 local transmitted and 17 imported.The government said on Sunday that of the 21,177 people vaccinated a cumulative 112 instances of adverse reactions were reported after people were given the vaccination. Among them, 111 people reported side effects after receiving AstraZeneca vaccines and one from Pfizer. The most frequent adverse reactions were headaches, fever and nausea. This is a symptom that can occur during immunity formation and most of it disappears within three days, the government said.
Naver Corp. and Softbank Corp. have completed a merger of their subsidiaries (Line and Yahoo Japan) into Z Holdings to tap deeper into the Japanese market with a wide range of services, their joint venture said Monday.
Coupang Inc, backed by SoftBank Group Corp, is targeting a market debut that would value the e-commerce giant at well over $50 billion and make it the largest U.S. initial public offering this year.Pension funds extend stock selling streak to 42nd straight session Friday; selling large tech and rotating into S-Oil, Lotte Chem and KT amongst other as they seek to balance their porfolio's after the rally in equities.
March proxy season is to herald unprecedented changes, including virtual meetings, e-voting systems and the rising presence of environmentally friendly corporate policy frames; all reflecting the COVID-19 pandemic situation.  While top-tier conglomerates swiftly moved to adjust the date and format of their upcoming shareholders meetings, smaller businesses were observed struggling with epidemic-caused new market norms.

TAIWAN 
Expect market to re open significantly higher as the market plays catch up.
Data due Manufacturing PMI Feb (Jan was 60.2 F/cast is 60)
Taiwan’s economy might expand 4.1 percent this year, accelerating from a 3.11 percent pickup last year, as its exports would continue to benefit from surging demand for electronics products amid and after the COVID-19 pandemic, global research body IHS Markit said yesterday.
Taiwan Semiconductor Manufacturing Co is expected to post a 25 percent year-on-year increase in sales in the first quarter of this year to US$12.91 billion, up from US$10.31 billion a year earlier, as its production is at full capacity, market advisory firm TrendForce Corp said in a note last week.  The increase would help TSMC cement its leadership in the industry by taking a 56 percent market share in the global pure wafer foundry business, TrendForce said.  +VE
Life insurers’ first-year premiums (FYPs) continued to fall in January, but the pace of decline slowed from previous months, helped by sales of investment-linked products, the Life Insurance Association said in a report on Feb. 19.  FYPs fell 14% YoY to NT$78.19 billion (US$2.76 billion), following an annual decrease of 28.76 percent last year, the report said. The market share of investment-linked policies climbed to 43.5 percent, from 17.5 percent a year earlier, with FYPs advancing 113.6 percent to NT$34.04 billion, the report said, adding that the increase reflected rallying stock markets, which boosted investors’ interest in such products. Slight +VE

CHINA 
Expect market to open higher following the +VE moves in the US over higher but upside limited ahead of the ’two sessions’ which start on Thursday.  Investors will be looking for indications about policy on stimulus and dealing with the growing bad debt issues.  
No data due
Under growing global pressure over its treatment of minority Muslim Uighurs in far west Xinjiang, China is mounting an unprecedented and aggressive campaign to push back, including explicit attacks on women who have made claims of abuse to discredit them.
The Biden administration said on Monday it would consider carbon border adjustment taxes to help cut greenhouse gas emissions in global trade and to combat China's use of forced labor among Uighur Muslims in its western Xinjiang region.
The Biden administration is seeking to Semiconductors, AI and next generation networks at the centre of its strategy to get ’techno democracies’ to stand up to China. -VE for China
China on Monday denied accusations by Taiwan that a ban on pineapples from the island was about politics, saying it was purely a matter of biosecurity, in an escalating war of words that has added to existing tensions. China announced the ban last week, citing “harmful creatures” it said could come with the fruit, threatening China’s own agriculture.Taiwan, which China claims as its own territory, says there is nothing wrong with its pineapples and that Beijing is using the fruit as another way to coerce the island.
China's aviation regulator said on Monday its major safety concerns with the Boeing Co 737 MAX had to be "properly addressed" before conducting flight tests but it was studying a plan with U.S. planemaker for clearing aircraft to fly. -VE
China’s Inner Mongolia will end all cryptocurrency mining projects and stop reviewing new projects in industries which consume large amounts of energy, such as steel, coke and methanol production, as it attempts to meet energy efficiency targets. -VE for the industries curtailed.
China has pledged to deliver 400,000 doses of Sinopharm's COVID-19 vaccine to Afghanistan, Afghan officials said on Monday, in a boost for an immunisation campaign begun last week. +VE
Chile plans to ramp up its purchase of vaccines from China’s Sinovac and hopes to sign a deal shortly with Johnson & Johnson, the health minister said on Monday, as the South American nation moves to strengthen its widely lauded coronavirus vaccination campaign.
China’s rare earths, a group of 17 minerals used in military equipment and consumer electronics, are being undersold due to “vicious competition” domestically and face low resource utilisation, the country’s industry minister said on Monday. Prices for some rare earths in China, such as praseodymium-neodymium (PrNd) - used in rare earth magnets - have spiked to multi-year highs this year amid strong demand from the electric vehicle sector. However, prices for other rare earths mined simultaneously, such as cerium and lanthanum, used in catalysts for oil refining, remain depressed due to abundant supply. -VE
China used coronavirus prevention measures, intimidation and visa curbs to limit foreign reporting in 2020, ushering in a “rapid decline in media freedom,” the Foreign Correspondents’ Club of China (FCCC) said on Monday. -VE

HONG KONG  
ADR’s +80pts to open at 29,532 but expect more upside. E Commerce names seeing renewed interest but Chinese Financials remain under pressure as investors watch to see if China will announce more stimulus or focus on debt reduction.  News that the HSI will undergo an overhaul viewed as +VE.
No data due
SHORT SELLING Monday 14.3 % vs 11.2% Friday 
Top Shorts:  Hengan (1044) 55%, Bud Apac (1876) 54%, Ping An (2318) 40%, hang Seng Bank (11) 36%, Sands China (1928) 34%, CCB (939) 33%, MTRC (66) 32%, Bank of China (3988) 32%, Sinopec (386) 32%, BankComm (3328) 31%, HSBC (5) 31%, AAC Tech (2018) 29%, CLP (2) 27%, Country Garden (2007) 26%, Henderson Land (12)  26%, China Life (2628) 26%, China Res Land (1109) 25%
Earnings due Tuesday include  Lee & Mann Chems (746), Lifestyle (1212), Lee & Mann Paper (2314), China Tobacco (6055)
NATIONAL SECURITY 
John Lee Ka-chiu HK’s security minister defended the controversial legislation at a side event webinar at the ongoing session of the United Nations Human Rights Council in Geneva, and said the Chinese government had no choice but to close the “vacuum” created after Hong Kong failed to pass its own legislation as required by the Basic Law since the 1997 handover.  He said Hong Kong residents enjoy “extra protection” from violence under the national security law and their rights and freedoms remain intact.  Comes as 47 pro democracy citizens were charged under the new law for protesting against the administration.

WATCH
HK announced the extension of existing social  distancing measures by two weeks until 17 March. With new instructions taking effect from 4 March, Diane Wong Shuk-han, Deputy Director of Food and Environmental Hygiene Department, said catering premises would be required to arrange staff specifically for table cleaning. Restaurants should either have at least six air changes per hour, or be installed with air purification devices fulfilling the specifications by end-April.
XINYI SOLAR (00968.HK) annual result ended December 2020. The net profit amounted to HK$4.561 billion, up 88.7% yearly. EPS was HK55.4 cents.  A final DPS of HK17 cents was declared, against HK8.5 cents in the corresponding period of the previous year. Together with interim DPS, the full-year DPS climbed 82.1% annually to HK25.5 cents.CEO Lee Yau Ching, at the results conference, forecast the price for solar glass to remain promising this year, given high level last year.  He expressed optimism on this year's outlook, unworried about the future development. As the group is pursuing long-run profitability, it will be normal if there is retreat in glass price and gross profit of the sector in future, in view of current high level.
BABA-SW (09988.HK)'s headquarters construction in Beijing is moving along well, expected to complete in June next year, Beijing Daily reported. The operation is projected to commence in 2023. According to the report, the Beijing headquarters has had more than 20,000 employees, where scientific and technological talents account for more than 65%.
Link Asset Management Limited, the manager of Link REIT (0823), has appointed Lincoln Leong Kwok-kuen, former chief executive of MTR Corporation (0066), as an independent non-executive director and a member of the audit and risk management committee.
HSI Co. Aims to Boost HSI Constituents to 80 by Mid-2022; Eventual Target Size 100
Hang Seng Indexes Company announced changes that reflect the results of a month-long stakeholder consultation exercise, in which a wide spectrum of market participants took up the call to share their views on proposed enhancements to the HSI, followed by in-depth analysis and deliberation of the findings with the HSI Advisory Committee.
1. increasing the Number of Constituents to 100. Hang Seng Indexes Company targets to increase the number of HSI constituents to 80 through the regular index reviews by mid-2022 and, ultimately, to fix the number at 100.
2. to achieve a more balanced representation of the Hong Kong stock market, the HSI constituents will be selected from seven Industry Groups. The target is to achieve a market capitalisation coverage of not less than 50% for each Industry Group. The combination of the Industry Groups will be reviewed at least every two years.
3. The consultation also proposed that the listing history requirement will be shortened to three months. This will provide flexibility for the timely addition of new listings. Hang Seng Indexes Company will maintain 20 to 25 constituents that are classified as Hong Kong Companies in the HSI. The number of Hong Kong constituent stocks in the index will be evaluated at least every two years.
4. is adopting a Weighting Cap of 8% on All HSI Constituents All HSI constituents, including weighted voting rights and/or secondary-listed constituents, will be subject to an aligned weighting cap of 8%. The same cap will be applied to the Hang Seng China Enterprises Index.

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