March 3 Asian Macro Initial Thoughts Asian and US Futures indicate a higher open


03 Mar

Asia
Nikkei Futures opened higher and have risen to +110pts, HK ADR’s +124pts and Australia moving higher in early trades despite the Services and Composite PMI’s being weaker than forecast. S Korea futures indicate a slight higher open too.
US Futures 
opened Dow +55pts, S&P +0.15% and NDX +0.2%

DOW -0.46%, NDX -1.69%, S&P -0.81%, Russel 2K -1.93% Dow and S&P opened flat, trended lower in the morning, rebounded after midday but then sold down to close on their lows. Nasdaq and Russell trended lower all day and closed on the lows. Tech and Consumer Discretionary lead the markets lower.  Data was mixed ISM New York missed heavily, IBD TIPP Economic Optimism beat and  After Market API showed a huge increase in Crude stocks
President Biden said Merck +0.7% will help make Johnson & Johnson’s -0.2% single shot Covid vaccine as the country tries to ramp up supply
The U.S. Senate confirmed Rhode Island Governor Gina Raimondo to head the U.S. Commerce Department, the agency that repeatedly sparred with China during the prior administration. One of its roles is to help negotiate trade agreements and enforces laws on trade and national security. In written responses to lawmakers regarding the US black list of entities, Raimondo said she had “no reason to believe” that the listed Chinese companies should not be. “We should have no illusions about China’s objectives, which I believe are to undercut America’s longstanding technological advantage and to displace America as the global leader in cutting-edge research and development and the industries of the future,” she said.
EARNINGS 
Zoom -9% despite opening higher after beating forecasts and giving an upbeat current-quarter forecast in anticipation of millions continuing to use its video messaging platform.
Novavax -14.3% earnings and revenue missed but said its Covid-19 vaccine could be cleared for use in the U.S. as soon as May, depending on whether regulators are willing to authorize it based on the results of a British trial.
Target -6.8% having initially rallied as earnings and revenue beat; Comparable-store sales jumped 20.5% vs 16.8% predicted Target also saw digital sales more than double but sold down as unprepared to give forecast fro 2021
Kohl’s +0.7% Earnings and revenue beat; it announced that it would reinstate its dividend and share buyback program this year. It also forecast sales growth for 2021.
NIO -13% missed by more than expected; also issued a sales forecast for the current quarter that shows slower than expected growth.
Kontoor Brands +7.7% (Lee & Wrangler) earnings and revenue it also gave a better-than-expected full-year earnings forecast.
AutoZone +0.9% beat, Comparable-store sales rose 15.2% vs 8.6% consensus MercadoLibre -4.1% despite reporting record quarterly revenue and beating analysts’ forecasts. The Argentine e-commerce giant benefited from a surge in online shopping and digital payments in the Latin American market.Lemonade -16.6% earnings missed but revenue came in above estimates, however Lemonade issued a weaker-than-expected outlook for the current quarter.
Other 
Beyond Meat -5.1% off initial highs despite a Citi upgraded the stock to “buy” from “neutral.” Citi believes sales and cost issues that impacted the most recent quarter are temporary. The stock had initially fallen in off-hours trading Monday after Beyond Meat said it planned to raise $750 million in a convertible notes offering.
Nike -0.5% North American business chief Ann Hebert has left. Nike saying it will announce a replacement shortly. Hebert’s departure follows a report that her son used a credit card in her name to purchase sneakers for his resale company
Roku -7.3% is buying Nielsen’s +7.6% digital advertising business for an undisclosed amount, allowing it to offer more targeted ads on its streaming platform.
Square +4.7% after announcing that it began operations for its in-house bank, Square Financial Services. The digital payments company’s bank will offer business loans to Square sellers.
Score Media -3% after it said underwriters of its recent initial public offering fully exercised their over-allotment option. That brings the total money raised by the sports betting company’s IPO to $186.3 million.
AFTER MARKET 
Lyft +4.3% (was -0.5% in normal hours) after the company said it had its best week in terms of ridesharing volume since pandemic lockdowns began last year. Lyft also said it expects a narrower EBITDA loss for the first quarter than it previously forecast.
Nordstrom -0.2% off lows (was -1% in normal hours) after saying shipping delays kept some of its inventory from reaching shelves and stockrooms on time. Nordstrom also reported earnings that beat but revenue missed.
Box +1.9% (was -1.3% in normal hours) on the back of better-than-expected fourth-quarter results.
FuboTV -4.1% (was +8.2% in normal hours) despite Q4 revenue beat the first time the company has posted quarterly revenue exceeding $100 million. FuboTV also said it added 92,800 net subscribers in the fourth quarter to end 2020 with more than 547,000 paid viewers.
Hewlett Packard Enterprise +0.6% (was -0.8% in normal hours) on better-than-expected fiscal first-quarter results.
Banks JPMorgan Chase -0.3%, Citigroup -0.9%, Wells Fargo +0.1%, Amex +0.4%
Work from home names: Facebook -2.2%, Apple -2.1%, Amazon -1.6%, Netflix -0.5%,  Disney -0.5%, Zoom Video -9% despite results and upbeat outlook, Alphabet -0.3% and Microsoft -1.3%,
Tech NXP Semi -2.7%, Nvidia -3.2%, Micron -3.9%, AMD -2.6%, Skyworks -3.5%
Re-opening stocks  Boeing -0.5%, Caterpillar -1.6%, Simon Property -2%, Kohl’s +0.7% on good results, reinstating dividend and share buyback, Nordstrom -1%, Gap +0.6%, United Airlines -0.2%, Carnival +4.9%, Wynn Resorts +0.9%, Chevron +0.4%, Exxon Mobil -0.6%,  
Lock down names Campbell Soup +0.2% General Mills +0.6%, JM Smucker +0.9%
DATA
Redbook 27 Feb +4.6% YoY vs +2.9% prior [-0.3% MoM vs -0.8% prior)
ISM New York Feb 35.5 vs 51.2 Jan (F/cast was 52)
IBD TIPP Economic Optimism Mar 55.4 vs 51.9 Feb (F/cast was 52.9)
After Market
API Crude Oil Change 26 Feb +7.356m vs +1.026m prior (Consensus was -1.850m)
USD was firm vs Yen & Euro. Bitcoin -1.5% @ 47,716, VIX +3.2% @ 24.1,
US T10 @ 1.398%
OIL Brent -1.7%, WTI -1.9% ahead of OPEC+ meeting and ahead of the APU data which showed a big increase in crude stocks so expect further weakness in Asia.
Gold +0.8%, Silver +0.7%, Copper +2.5% Platinum +1.5% and Palladium +0.5% rally despite Treasury yields falling
AHEAD 
MBA Mortgage Applications and 30 yr Mortgage Rate, ADP Employment Change, Services and Composite PMI, ISM Non Manufacturing Data (PMI, New Orders, Business Activity, Prices, Employment), EIA Gasoline and Crude Stocks changes
Earnings: Wendy’s, Dollar Tree, Brown-Forman, Vivendi, Splunk, Marvell Tech, Snowflake, Vroom, American Eagle Outfitters

DAX +0.19%, CAC +0.29%, FTSE +0.38%  Markets opened lower but worked higher in choppy early trading.  Pre market data was mixed as German retail sales missed.  UK house prices beat and Eurozone inflation was light.  UK markets likely to be cautious ahead of the Budget on Wednesday.
HelloFresh -6.5 after earnings but Kion Group +6.5
Earnings Man Group +1.1% upbeat, record year for AUM , Travis Perkins -3.3% reported a loss and said re starting Wicks demerger, Taylor Wimpey -0.4% profit fell but reinstated dividends, and Hotel Chocolat +2.2% as interim undermined by on line growth Data 
EUROZONE 
Core Inflation Rate Flash Feb +1.1% YoY vs +1.4% Jan (F/cast was +1.2%)
Inflation Rate Flash Feb +0.9% YoY vs +0.9% Jan (F/cast was +1%)
Inflation Rate Flash Feb +0.2% MoM vs +0.2% Jan (F/cast was +0.3%)
GERMANY 
Retail Sales Jan -4.5% MoM vs -9.1% Dec revised (F/cast was -1.6%)
Retail Sales Jan -8.7% YoY vs +2.8% Dec revised (F/cast was +0.9%)
Unemployment Feb 6% vs 65 Jan (F/cast was 6%)
UK 
Nationwide House Prices Feb +6.9% YoY vs +6.4% Jan (F/cast was +6.5%)
Nationwide House Prices Feb +0.7% MoM vs -0.2% Jan revised (F/cast was +0.2%)
AHEAD
EUROZONE Services and Composite PMI, PPI
GERMANY Services and Composite PMI
FRANCE Services and Composite PMI
UK Services and Composite PMI, Budget Speech

JAPAN  Nikkei Futures opened +50pts and have risen to +110pts indicating a higher open after yesterday’s sell off.  But we could still see selling after the local PMI data and the China Caixin data due out this morning.  Yen currently 106.68
Data due after the open
Services PMI Feb (Jan was 46.1 (F/cast is 45.8))
Composite PMI Feb (Jan was 47.1 (F/cast was 47.6))
Tokyo reported 232 new covid cases Tuesday, up 111 from Monday. Nationwide, the number of reported cases was 888.  Tokyo expected to ask government to continue emergency restriction on it and three neighbouring prefectures.  
Lower House expected to pass PM Suga’s budget as he seeks to move past the recent scandals involving his son. +VE
Moderna and Takeda seek covid vaccine approval, which could come as soon as Friday +VE
Nippon Steel, the world's No. 3 steelmaker, will boost research and development (R&D) spending to speed up decarbonization in steelmaking as it faces growing pressure to cut carbon emissions to help tackle climate change, a company executive said. +VE

SOUTH KOREA 
Expect markets to open flat  after yesterday’s rally with concerns over inflation and the recovery overhanging the market.  Futures indicating a slight +VE 
No data due
KDCA reported 344 new cases and said 23,086 people were given first doses of AstraZeneca and Pfizer shots by Monday midnight.
Government proposed this year’s first extra budget worth 15 trillion won ($13.3 billion) Tuesday, to cover emergency relief funds for small business owners and the jobless population reeling from the COVID-19 pandemic, sparking concerns over the quickly growing national debt.
Nexon said Monday it would disclose the draw probabilities of its “random” cash items to regain trust from users, as it is engrossed in scandal over the company’s alleged manipulation of game odds. In the second apology posted on the official website of its fantasy adventure PC game MapleStory, Nexon director Kang Won-ki said the company is preparing to disclose data and records that would dispel suspicions surrounding the game’s random item draw system by Friday at the latest.
Hanmi Pharmaceutical announced Tuesday that the US Food and Drug Administration has postponed its commercialization approval of Oraxol. Oraxol is an oral formulation of paclitaxel, a drug used to kill dividing tumor cells. The novel treatment for metastatic breast cancer currently outlicensed to the company’s US partner Athenex. -VE
As South Korea ramps up its COVID-19 vaccinations, two local biopharmaceuticals are leading the supply and distribution of foreign jabs -- Green Cross and SK Bioscience. +VE
Hyundai Motor Group Chairman Chung Euisun and SK Group Chairman Chey Tae-won met Tuesday in a top-level talk, giving shape to the “hydrogen alliance” between South Korea’s No. 2 and No. 3 conglomerates. +VE
SK Innovation has asked the US president to intervene in its battery patent fight with LG Energy Solution, saying it might have to “abandon” a $2.6 billion production base in Georgia after its defeat last month in the top US trade court.  Slight -VE LG ENergy Hyundai Motor Group began construction of its first overseas fuel cell system plant in China, holding a virtual ground breaking ceremony on Tuesday.  HTWO Guangzhou is the automaker’s first foreign plant producing fuel cell systems, and the construction is expected to be complete by the second half of 2022. HTWO is the group’s fuel cell system brand. +VE

TAIWAN 
Expect market to open flat following the weakness in the US overnight. But good local data and earnings should limit the downside
No data due 
Tuesdays PMI climbed to a decade high; on the back of improvements at home and abroad, while inventory and container shortages threatened production capability, an IHS Markit survey showed yesterday. The latest PMI reading, the strongest since April 2010, advanced 60.2 from January, signaling further improvement in operating conditions. “Taiwan’s manufacturing sector [last month] continued to enjoy its best period of growth for a decade,” said IHS Markit. +VE
Consumer sentiment increased modestly last month as confidence in stock investments and economic growth, and other gauges except inflation rose, a National Central University survey showed yesterday. The consumer confidence index registered 74.64 last month, increasing 2.66 points from a month earlier, the survey showed. The gauge on stock investment had the biggest monthly increase of 5.8 points, as rallies in the TAIEX during the survey period from Feb. 18 to 21 pushed the confidence level higher, it said.  +VE
Chinese Nationalist Party (KMT) Chairman Johnny Chiang yesterday said that he is in no rush to travel to China to meet Chinese President Xi Jinping , and that Beijing’s proposals to get Taiwan to accept communist rule have “no market” among Taiwanese. Since the KMT lost heavily in the presidential and legislative elections in January last year, the party has been unable to shake accusations by the Democratic Progressive Party (DPP) that it is Beijing’s lackey.
The Office of the US Trade Representative (USTR) has expressed “serious concerns” about Taiwan’s agricultural policies that “are not based on science,” and said that removing barriers to US pork and beef products was high on its agenda. “Priorities for the United States included removing Taiwan’s various barriers to market access for US pork and beef products,” the USTR said in its 2021 Trade Policy Agenda and 2020 Annual Report, which was released on Monday. The report highlighted “Taiwan’s rice procurement systems, the regulatory process for setting pesticide maximum residue limits and market access barriers facing US agricultural biotechnology products” as other priorities.
Tatung Co yesterday signed a supply contract with Tangeng Advanced Vehicles Co, paving the way for the firms to deepen their partnership as they seek a share of the global electric vehicle market. Tatung is to supply 100 high-efficiency power systems for electric buses to Tangeng, Tatung said in a statement. +VE
Taiwan Pelican Express board of directors has approved a proposal to distribute a cash dividend of NT$1.8 per share, the highest in the company’s history, as its net profit rose 29 percent annually last year thanks to booming e-commerce sales. The home delivery service provider had offered cash dividends ranging from NT$0.45 to NT$1.2 per share from 2012 to last year, company data showed. The proposal suggested a payout ratio of 82 percent, based on Taiwan Pelican’s earnings per share of NT$2.19 last year;  up from NT$1.69 in 2019 and a dividend yield of 5.57 percent given its share price of NT$32.3 yesterday. +VE
The nation’s new car sales edged down 0.64 percent annually to 27,174 units last month, online market researcher U-Car.com said in a report yesterday. On a monthly basis, sales dropped 46.89 percent from 51,170 units. During the first two months of this year, new car sales grew 17.4 percent annually to 78,353 units, the report said. Overall +VE
Shin Kong Financial Holding board of directors has approved a proposal to distribute a cash dividend of NT$0.4 per common share, flat from a year earlier, although the company’s net profit fell 27.43 percent annually to NT$14.39 billion (US$508.14 million) last year. Given Shin Kong Financial’s earnings per share of NT$1.12 for last year and its share price of NT$8.29 on Friday, the proposed dividend suggests a payout ratio of 35.7 percent and a dividend yield of 4.82 percent. Slight +VE as it seeks to retain investor confidence.
Kinmen Kaoliang Liquor  yesterday announced a 6 to 12 percent price hike for some of its products, effective immediately. It is its first price hike in nine years. The firm, which boasts a share of more than 80 percent of Taiwan’s white spirits market, said it made the decision to reflect production cost increases. Many of the company’s regional dealers in Kinmen County said the hike was too high and asked whether the price adjustment was proportionate to the increase in production costs or simply a move to increase revenue for the county government, which owns 99 percent of KKL’s shares. The actual price increases were not announced.
Microsoft Corp yesterday announced that it has partnered with Hon Hai Precision Industry on smart manufacturing development. Under the partnership, Hon Hai hopes to accelerate the upgrade of its cloud technology by using Microsoft’s services, including Azure AI (artificial intelligence) applications, Microsoft said in a statement. Hon Hai is to link its more than 20 manufacturing sites through the Azure AI service to optimize management of its operations from its headquarters. It is also expected to use Microsoft’s digital databank in combination with cloud-based technology to boost its ability to innovate and develop products, Microsoft said. +VE

CHINA 
Expect market to open lower with caution not only on the Caixin PMI data but after comments from the CBIRC chief about asset bubbles and ahead of the NPC and CPPCC meetings later this week
Data due 
Caixin Services PMI Feb (Jan was 52.0 F/cast is 51.7)
Caixin Composite PMI Feb (Jan was 52.2 F/cast is 51.9
China aims to vaccinate 40% of its population against COVID-19 by the end of July, a senior health adviser told Reuters on Tuesday, requiring a significant increase in inoculations even as it ramps up exports of vaccines. But the 40% target takes into account  the proportion of people who do not want to be vaccinated.  
China’s top banking regulator warned yesterday of the risk of bubbles in international markets and within China’s own real estate sector, in the latest sign of mounting concerns over elevated global asset prices. Financial markets in Europe and the US are out of sync with their economies and fuelled by monetary and fiscal policy, Guo Shuqing, chairman of the CBIRC said on Tuesday in comments that pointed to a potential spillover into China’s financial system. -VE
China on Tuesday rejected an allegation by a cyber intelligence firm that a state-backed hacking group targeted the IT systems of two Indian coronavirus vaccine makers. Cyfirma told Reuters that hacking group APT10, known as Stone Panda, had identified gaps and vulnerabilities in the IT infrastructure and supply chain software of Bharat Biotech and the Serum Institute of India (SII), the world’s largest vaccine maker.  “Without showing any evidence, the relevant party made baseless speculation, distorted and concocted facts, to malign a specific party,” China’s foreign ministry told Reuters. -VE
A China-linked cyberespionage group has been remotely plundering email inboxes using freshly discovered flaws in Microsoft mail server software, the company and outside researchers said on Tuesday - an example of how commonly used programs can be exploited to cast a wide net online.  In a blog post, Microsoft said the hacking campaign made use of four previously undetected vulnerabilities in different versions of the software and was the work of a group it dubs HAFNIUM, which it described as a state-sponsored entity operating out of China. -VE
China said on Tuesday that it was discussing a visit to its Xinjiang region by United Nations human rights chief Michelle Bachelet, but that she should not set out with the aim of condemning its policies.  “The door to Xinjiang is always open, and we welcome the High Commissioner to visit Xinjiang. Communication is kept up between the two sides, but the aim of the visit is to provide exchanges and cooperation rather than ... so-called investigation based on ‘guilty before proven’,” China’s delegate Jiang Duan told the U.N. Human Rights Council. -VE
China, the world's biggest emitter of greenhouse gases, succeeded in lowering "carbon intensity" by 18.8% in the five years through 2020, a Ministry of Ecology and Environment (MEE) report said on Tuesday, showing the economy's reduced reliance on fossil fuels. +VE
Malaysia on Tuesday granted conditional approval for the use of vaccines made by UK firm AstraZeneca and China's Sinovac, just days after launching its nationwide COVID-19 inoculation programme. +VE
India is ready to offer incentives to ensure Tesla Inc’s cost of production would be less than in China if the carmaker commits to making its electric vehicles in the south Asian country, transport minister Nitin Gadkari told Reuters. Gadkari’s pitch comes weeks after billionaire Elon Musk’s Tesla registered a company in India in a step towards entering the country, possibly as soon as mid-2021. -VE

HONG KONG  
ADR’s +124pts at 29,219 with weakness in E Commerce and Chinese Financials but I would expect a lower open with Petrochems weak after the API data.
Data due Pre market PMI  Feb (Jan was 47.8 F/cast is 48)
After Market Retail Sales  Jan (Dec was -14% F/cast is -6%
IPO 

SCICLONE PHARMA (06600.HK), Debut, opened at $20 in gray market and closed at $19.18 on the, up 2% or $0.38 against the listing price of $18.8, on volume of 6.95 million shares and turnover of $134 million. Excluding handling fee, the book gain is $190 per board lot size of 500 shares.
SHORT SELLING Tuesday 16.7% vs 14.3% 

Monday Top Shorts:  Bud Apac (1876) 56%, Ping An (2318) 42%, CCB (939) 39%, Bank of China (3988) 39%, Hengan (1044) 38%,  HSBC (5) 38%,  Hang Seng Bank (11) 36%,China Res Land (1109) 35%, Country Garden (2007) 34%, Sunny Optical (2382) 33%,  AIA (1299) 32%, CLP (2) 30%,  Hang Lung PPTY (101) 30%, BankComm (3328) 28%, ICBC (1398) 28%, CITIC (267) 27%, Sinopec (386) 25%, Henderson Land (12)  25%, MTRC (66) 25%.
 
Earnings due Wednesday include  
Techtronics (669), MMG (1208), Prudential (2378)  
PROFIT WARNING
PHOENIX TV (02008.HK) Profit Warning expecting a loss of approximately HK$1.05 billion for the financial year ended 31 December 2020, compared to a profit of approximately HK$122 million for the financial year ended 31 December 2019. -VE
REGENT PACIFIC (00575.HK) Profit Warning. It is expected that the Group will record a loss for the year ended 31 December 2020 of between US$21 million (or approximately HK$164 million) to US$25 million (or approximately HK$195 million), which is a substantial decrease as compared to a loss of US$66.05 million (or approximately HK$515 million) for the corresponding period in 2019. -VE

WATCH
ALIBABA as FT reports that Ant is still resting Beijing’s demands that it shares consumer data with the PBoC that could lead to further pressure on the company.
Altissimo, jointly developed by COUNTRY GARDEN (02007.HK), WANG ON PPT (01243.HK) and CHINA STATE CON (03311.HK), has recently unrolled two featured flats, in salable area of 1,289 sq. ft. and 1,352 sq. ft., for tender. The two units of the Ma On Shan residential project carry intended price of $43 million and $45 million. +VE
WHARF HOLDINGS (00004.HK) 's 77/79 Peak Road project, developed and dealt by Wheelock Properties, sold the 77F Peak Road's house at over $558 million, representing a floor price of $92,088 per sq.ft.. +VE
KWG GROUP (01813.HK) announced that the pre-sales achieved in February 2021 amounted to RMB4.56 billion, up 167.1% yearly. +VE
Tencent Music announced the profound strategic partnership with HIM International Music. Pursuant to which, HIM will put up legitimate sound sources on TME's QQ Music, KuGou, Kuwo Music, WeSing and other platforms.+VE
SHK PPT (00016.HK)  displayed today show flats of Prince Central to the press.  The first price list may be coming this week after the Ho Man Tin project displays another show flat, said the developer.

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