Feb 15 Asian Macro Initial Thoughts Japan to open higher S.Korea flat, Taiwan, China & HK closed


15 Feb

Asian Futures Nikkei Futures opened higher currently +55pts down slightly from earlier. Australia opened flat but has moved higher in early trades; watch for reporting from BHP, Rio and Fortescue this week.  Commodities increasingly in focus with number of houses expecting a new commodity super cycle.
Markets closed Taiwan, China and Hong Kong
US markets closed Monday for President Day holiday.

Earnings continue this week; including CVS Health, Hilton, Walmart and Deere.  Data wise for the US Fed minutes on Wednesday and Housing data will be closely watched, we also get PPI and  Retail Sales.  Expect the debate over inflation to continue. The passage of the stimulus package will also be watched.  Bitcoin +4.9% @ 49,199.94 as it gets further acceptance by the investing community

WHO Chinese scientists refused to share raw data that might bring the world closer to understanding the origins of the coronavirus pandemic, independent investigators for the World Health Organization said Friday.  The investigators said disagreements over patient records and other issues were so tense that they sometimes erupted into shouts among the typically mild-mannered scientists on both sides.  The White House on Saturday called on China to make available data from the earliest days of the COVID-19 outbreak, saying it has “deep concerns” about the way the findings of the World Health Organization’s COVID-19 report were communicated.
European Centre for Disease Prevention and Control on Friday warned that COVID-19 could last indefinitely even as global infections slowed by nearly half in the past month and vaccine rollouts gathered pace in parts of the world.
Senate votes to acquit Trump.  McConnell who voted to acquit then said the firmer president was clearly to blame for the riot.  The hypocrisy of politics.  57 out of 100 voted that Trump was guilty, which was short of the 67 required to convict.

JAPAN 
Nikkei futures opened higher currently +55pts.  Pre market data will influence the direction of trade.  Yen closed 104.93
Investors will focus on earnings and likely to remain rangebound with 30,000 a psychological resistance.  Brokers and Mega Banks in focus as a play on the bull market for securities.  Japan a 7.1 earthquake hit Fukushima Saturday night injuring 137 and causing damage but no tsunami warning -VE for Insurers.
Data due pre market
GDP data
Growth Rate Q3 was 5.3% F/cast is +2.2%
Growth Annualised Q3 was 22.9% F/cast is 9%
Capital Expenditure Q3 was -2.4% F/cast is 2.5%
External Demand Q3 was +2.7% F/cast is +1.2%
Private Consumption Q3 was +5.1% F/cast is +1.5%
Price Index Q3 was +1.2%
Later Industrial Production and Capacity Utilisation
Tokyo reported 369 covid cases on Saturday below 500 for a week but up 62 from Friday.Japan's Health Ministry said on Sunday it has officially approved Pfizer Inc's COVID-19 vaccine, the first such approval in the country.  Vaccination to start from Wednesday but press reports that 27.4% of those surveyed said they were unwilling to be vaccinated.
Japan's currency in circulation and bank deposits rose at a record pace in January, data showed this week, a sign companies and households continued to hoard cash due to uncertainty over the coronavirus pandemic.
Aeon Co. has plans to rent out spaces in a number of its 290 commercial facilities nationwide to local governments for use as coronavirus vaccination sites. An agreement for the multipurpose hall of the Aeon Mall Zama shopping center in Zama, Kanagawa Prefecture has already been reached, and the company has opened negotiations with several local governments. +VE
Regional Banks More than half of 78 listed Japanese regional banking groups and banks saw a decline in their net profits or incurred red ink in the April-December period, hit by the coronavirus pandemic, an analysis of their earnings reports showed Saturday. Mentioned Fukuoka Financial Group, Jimoto Holdings as seeing profits decrease but Tsukuba Bank and Fukui Bank saw an increase in their net profits, while Michinoku Bank and Shimane Bank swung back in the black.
Mitsubishi Materials Corp said on Friday it had completed its purchase of a 30% stake in Chile’s Mantoverde copper mine from Mantos Copper for $275 million, as the shift to a low carbon economy boosts demand for the metal.
Seiko Hashimoto, minister for the Tokyo Olympic and Paralympic Games, appeared to be a promising candidate for the new president of the Tokyo Organizing Committee for the Olympic and Paralympic Games.
Japan to monitor land acquisitions around Self Defence Force bases and nuclear power plants. A sign of increased wariness about China Slight -VE

SOUTH KOREA 
Market reopens likely to open flat with little to drive the market higher. Key will be foreign buying but with US markets closed T/O today likely to be muted.
No data due
KDCA announced 326 Sunday 362 new covid cases Saturday (vs 362 Saturday and 403 Friday) but noted fewer tests being carried out over the lunar new year weekend.  But are still warning they might surge after the weekend.The government decided Saturday to lower social distancing levels by one notch each for the greater Seoul area and the other regions next week, but kept tight vigilance to curb COVID-19 by retaining a ban on gatherings of five people or more.
South Korea and the United States are preparing to hold their annual springtime combined military exercise next month, sources said Sunday.  Likely to annoy N Korea.
S-Oil, South Korea’s  is expected to see an improvement in profits this year, continuing a recovery momentum from the final quarter of 2020, according to the industry sources Sunday.  S-Oil was the only refiner -- among four local refiners in the nation -- that avoided plunging into the red. +VE
Nexon has paid a record amount of cash in dividends to its parent company NXC after posting all-time high earnings last year, according to the Japanese electronic disclosure system Sunday which showed Nexon provided a dividend of 29.9 billion yen (320 billion won) to its parent company last year. In total, Nexon provided 61.4 billion yen of dividends through last year, +30% from 2019‘s 46.7 billion yen.  NXC is expected to use the money to buy back shares up to 100bn Yen by 2023. +VE
South Korea's steel production fell below 70 million metric tons for the first time in four years in 2020 as demand from carmakers, shipbuilders and construction firms plunged amid the COVID-19 pandemic, industry data showed Sunday. -VE
Tesla’s Model Y has officially launched in South Korea, with prices starting from 59.9 million won for the lowest trim and is eligible for government subsidy.
Four vehicles of South Korea’s leading automaker Hyundai Motor Group have been included in a ranking of 12 best new cars of 2021, compiled by a US automotive third-party car listings brand Autotrader.  Comes as Hyundai and Kia are targeting to sell a combined 1,360,000 vehicles in the US market in 2021, up from 1,208,374 units they sold a year earlier, the companies said. +VE
Coupang Inc, backed by Japan’s SoftBank Group Corp, on Friday filed to go public on the New York Stock Exchange, hoping to cash in on strong demand for high-growth tech stocks as it reported a near-doubling of annual revenue and narrowing losses.
SK Group has the largest number of affiliated companies, data showed Sunday; it had 144 affiliates as of Jan. 31, the most among 64 conglomerates subject to tighter curbs, such as limited inter-affiliate trading. Kakao Corp came next in line with a total of 105 affiliates, including 99 non-financials and six financials.
South Korean mobile carriers are aiming for mass user migration to 5G networks this year after failing to meet their subscriber targets in 2020 amid the pandemic.
Korean Air Lines has joined other airlines to offer "flights to nowhere" as a way to ride out the coronavirus crisis, the transport ministry said Sunday. +VE Comes as S Korea's air passenger traffic plunged 68 percent last year in the face of the coronavirus pandemic, the transport ministry said Sunday.  
Convenience stores outperformed major department stores for the first time in terms of offline sales last year amid the country's yearlong social distancing scheme, data showed Sunday.  The combined sales of the top three convenience store chains -- GS25, CU and 7-Eleven -- took up 31 percent of the total offline sales in local retail industry, up from 29.2 percent a year ago, according to the data from the Ministry of Trade, Industry and Energy.  On the other hand, the combined percentage of big three department stores – Lotte, Hyundai and Shinsegae – shrank to 28.4 percent, down from 30.4 percent the previous year.
Brokers earnings soared to a record-high last year amid a stock rush, chasing closely after those of first-tier banks. The combined operating profit of the top 20 brokerages by capital base stood at 7.85 trillion won ($7.09 billion) in 2020, soaring 36.7 percent from the previous year, according to the Financial Supervisory Service's regulatory filing.  The annual operating income of Mirae Asset Daewoo surpassed the 1 trillion won-mark for the first time, closely followed by Kiwoom Securities Co.'s 954.9 billion won.Only two of the 20 firms, Hanwha Investment & Securities and Korea Investment & Securities suffered operating losses last year.
South Korea’s top 1 percent of streamers earned an average of 671 million won in 2019, according to data released Sunday by the National Tax Service.   According to a report by Yang Kyung-sook of the ruling Democratic Party here, the top 1 percent of tax-registered streamers by income, or 27 individuals, made a total of 18.1 billion won, accounting for around 21 percent of the total income made by all local one-person media creators registered with the tax office.

TAIWAN 
Market closed re-opens Wednesday February 17
No data due 
Taiwan expressed its thanks to US President Joe Biden after he raised concerns with Chinese President Xi Jinping about China’s increased pressuring of Taiwan, Presidential Office spokesperson Xavier Chang said.
The Central Epidemic Command Center (CECC) yesterday reported no new domestic or imported COVID-19 cases for the second consecutive day.
MSCI lowered Taiwan’s weighting in its Emerging Markets as well as All-Country Asia ex-Japan indices, leaving the All-Country World Index unchanged.  Not expected to have much impact Earlier last week, MSCI announced it had lowered Taiwan’s weighting in the MSCI Emerging Markets Index,  to 13.27 percent from 13.37 percent after its quarterly index review. It was the eighth consecutive downgrade of Taiwan’s weighting in the MSCI Emerging Markets Index. MSCI also cut Taiwan’s weighting in the MSCI All-Country Asia ex-Japan Index by 0.11 percentage points to 14.91 percent, while leaving Taiwan’s weighting in the MSCI All-Country World Index unchanged at 1.83 percent.
The index adjustments are scheduled to take effect after markets close on Feb. 26.
EU mulls TSMC, Samsung deal to establish foundry.   The aim is to limit dependence on countries such as the US and Taiwan for 5G, connected cars and high-performance computing but nothing has been decided yet.  The EU is exploring how to produce semiconductors with features smaller than 10 nanometers, and eventually down to 2-nanometer chips, according to people familiar with the project.  +VE if it goes ahead.

CHINA 
Market closed re-opens Thursday February 18
No data due
Beijing was once again shrouded in smog on Saturday after several days of heavy pollution which have plagued China’s capital during the Lunar New Year national holiday.
ByteDance walks away from TikTok deal with Oracle after Donald Trump’s White House exit.  The app’s Chinese owner had agreed in principle to sell a stake in its US operations after the former president threatened to ban it
Huanxi Media Chairman aimes to turn it into ‘China’s Disney+’ as pandemic leaves cinemas reeling. The studio responsible for Crouching Tiger, Hidden Dragon said “Our revenue from the theatre box-office is top-notch, but it is not our goal. We are using the money we raked in from theatre distribution to grow our movie streaming platform Huanxi.com. Our ultimate goal is to become China’s Disney+,”
China sees leverage as Portugal takes presidency of European Council.  Beijing is keen to get its investment pact with Brussels ratified and has urged Lisbon to help speed up the process. Analyst says Portugal’s clout in Europe might be limited but the country is seen as China-friendly.  It has not been outspoken in commenting on China.
SCMP reports China’s top 5 infrastructure projects set to cost US$131 billion, but overall investment set to drop amid debt fears.  Notes how last year, China turned to its old playbook to drum up growth amid the coronavirus outbreak by boosting investment spending on infrastructure projects.  But growing pressure on local government finances are among the reasons that the growth of infrastructure investment could slow this year.
FT reports  Porsche has ruled out building a factory in China, its largest and most profitable market, despite struggling to ship enough German-made sports cars to meet a surge in Asian demand at the end of last year. “It is a quality and a premium argument still to produce from Europe for China,” chief executive Oliver Blume told the Financial Times. “Today it doesn’t make any sense [to move production].”
China’s GDP ‘paradox’: SCMP reports looks at why young Chinese despair about future prospects despite rapid economic growth.  Young Chinese are using social media platforms like Bilibili to voice despair over rising house prices, widening inequality and the price of everyday goods. The growing frustration about social mobility highlights a ‘serious divergence’ between China’s fast-growing economy and the life satisfaction of citizens
US condemns China over BBC World News ban.  State Department says Beijing maintains an oppressive media environment while using open systems elsewhere to push misinformation.  Said China should allow the public full access to the internet and media.  British foreign secretary said the decision will damage China’s reputation in the eyes of the world.
China’s Lunar New Year TV extravaganza hit again by ‘blackface’ scandal.  Criticism over the 2021 Spring Festival Gala follows a similar controversy in 2018 after a Chinese actress in blackface make-up wore costume with huge fake buttocks.  But the opening performance was criticised both within China and from outside the country. International audiences condemned the blackface incident while Chinese people said they could not understand why dances from other countries should be included in the programme, a celebration of the country’s most important holiday.
German state pulls plug on China’s CGTN channel after Britain revokes broadcasting licence.  It was being distributed in Germany under licensing agreement with British regulator.  Vodafone Germany says it has stopped airing China Global Television Network and trying to clarify its legal status.
Beijing's mission in Brussels says the European Union should not make ‘irresponsible comments’ on Hong Kong affairs following BBC World News ban.  The EU earlier pointed to RTHK’s ban on BBC broadcasts as evidence of increasing ‘erosion of the rights and freedoms’ in Hong Kong after imposition of security law    

HONG KONG  
Market closed reopens Tuesday February 16
ADR’s +107pts on Friday in US   
No data due
HK reported 12 new covid cases on Sunday (vs 12 Saturday) 2 from untraceable sources.
SHORT SELLING Thursday 23.6% vs 16.2% Wednesday Top Shorts:   Hengan (1044) 39%, China Res Land (1109) 39%, AAC Tech (2018) 38%, Bank of China (3988) 38%, SHKP (16) 38%, BABA-SW (9988) 38%, Shenzhou (2313) 37%, Country Garden (2007) 33%, Hang Seng Bank (11) 32%, Hang Lung Ppty  (101) 32%, AIA (1299) 32%, BankComm (3328) 32%, Bud Apac (1876) 32%, Anta (2020) 31%, CCB (939) 31%, Ping An (2318) 29%, Meituan (3690) 28%, Sino Biopharm (1177) 28%, CITIC (267) 27%, Sunny Optical (2382) 27%, Galaxy Ent (27) 27%,  CLP (2) 25%, Henderson Land (12) 25%, HSBC (5) 25%.
WATCH
RTHK’s decision to axe BBC services citing Beijing’s ban on the BBC as the reason for its decision sets a worrying precedent.  It raises more questions about Hong Kong’s relationship with Beijing and concerns that other international news sources may be restricted. -VE
FT Reports Hong Kong plans stricter money laundering checks on Chinese officials
The Hong Kong government has proposed changes to the requirements on financial institutions and advisers that would introduce checks on the bank accounts and transactions of politically connected people from mainland China.
Techtronics (669 HK) could see more upside after Mohawk Industries reported a strong Q4.  +VE cross read to Techtronics flooring business and the strong US residential renovation market.

DOW +0.09%, NDX +0.5%, S&P +0.47%, Russel 2K +0.18% Markets opened lower and spent most of the day trading around flat picking up slightly into the close.  Disney opened higher but saw heavy selling on the good results and then traded sideways.
President Biden announced having secured a further 200m vaccine doses
Democrats advanced the portion of their coronavirus relief bill that includes $1,400 direct payments, an extension of unemployment programs and payments to families with children. Several committees have now advanced parts of the proposal, which the House hopes to combine into one bill and pass before the end of the month.
US Treasury Secretary Janet Yellen stressed the need for the G7 countries to “go big” with fiscal stimulus to support economic recovery from the global pandemic. In her first call with foreign counterparts and central bankers from the G7, Yellen said that “the time to go big is now” and that the group should focus on how to help the economy, the US Treasury Department said in a statement after the virtual meeting held on Friday.
Bank of America Corp and Citigroup Inc trimmed compensation for their chief executive officers last year, a year in which banks exercised restraint in compensating employees as the pandemic ravaged the economy.
Banks JPMorgan Chase +1.4%, Citigroup +0.7%, Wells Fargo +2.4%, Amex +1%
Work from home names: Facebook +0.04%, Apple +0.2%, Amazon +0.5%, Netflix -0.2%,  Disney -1.7%, Zoom Video +0.1%, Alphabet +0.3% and Microsoft +0.2%,
Tech NXP Semi +0.2%, Nvidia -1.9% as US Fed Trade Comm launches in-depth review of purchase of Arm. Micron +1.8%, AMD +1.2%, Skyworks +0.7%
Re-opening stocks  Boeing +0.2%, Caterpillar -0.2%, Simon Property unch, Kohl’s +0.9%, Nordstrom +1%, Gap -0.8%, United Airlines +1.1%, Carnival -0.6%, Wynn Resorts +2.9%, Chevron +0.6%, Exxon Mobil +1.3%,  
Lock down names Campbell Soup -0.5% General Mills +0.4%, JM Smucker +1%
DATA
Michigan Prelim Data
Current Conditions Feb 86.2 vs 86.7 Jan (F/cast was 88)
Inflation Expectations Feb 3.3% vs 3% Jan (F/cast was 3%)
Consumer Sentiment Feb 76.2 vs 79 Jan (F/cast was 81)
5 yr Inflation Expectations Feb 2.7% vs 2.7% Jan (F/cast was 2.7%)
Consumer Expectations Feb 69.8 vs 74 Jan (F/cast was 77)
Baker Hughes Oil Rig Count 306 vs 299 prior
Baker Hughes Total Rig Count 397 v 392 prior
USD was slightly stronger vs Yen & Euro. Bitcoin +4.9% @ 49,199.63, VIX -6% @ 19.97, US T10 @ 1.21%
OIL Brent +2.1%, WTI +2.1% on stimulus hopes and despite a weaker outlook from OPEC and the IEA
Gold -0.11%, Silver +1.5%, Copper +0.7% Palladium +1.7% (up 10% over the week)
AHEAD  No Data due

DAX -0.06%, CAC +0.6%, FTSE +0.94%  initially sold down as data showed the UK economy contracted by 9.9% in 2020 (vs -8% F/cast) but then worked better through the day.  Media and Tech led the gains.
Earnings in focus GN Store Nord +7.1% and ING Groep +6.7% after strong fourth-quarter earnings. ProSiebenSat.1 +6.4%.
Verbund -9% and EDP Renovaveis -7.5%.
Draghi sworn in as Italy’s new prime minister.
DATA
UK 
Balance of Trade Dec GBP -6.2b vs -6.6b Nov (F/cast was -4.1b)
Construction Output Dec -3.9% YoY vs -1.4% Nov (F/cast was -0.6%)
Construction Orders Dec -12.9% vs +0.6% Nov (F/cast was +4.5%)
GDP Dec +1.2% MoM vs -2.3% Nov revised (F/cast was +1.1%)
GDP Growth Rate Prel Q4 +1% QoQ vs +16.1% Q3 revised (F/cast was +0.5%)
GDP Growth Rate Prel Q4 -7.8% YoY  vs -8.7% Q3 revised (F/cast was -8%)
GDP 3 Month Average Dec +1% vs +4.5% Nov revised (F/cast was +0.5%)
Industrial Production Dec +0.2% MoM vs -0.1% Nov (F/cast was +0.6%)
Industrial Production Dec -3.3% YoY vs -4.7% Nov (F/cast was -4.2%)
Manufacturing Production Dec -2.5% YoY vs -3.8% Nov (F/cast was -3%)
Manufacturing Production  Dec +0.3% MoM vs +0.7% Nov (F/cast was +0.4%)
Business Investment Prel Q4 +1.3% QoQ vs +9.4% Q3 (F/cast was +2.6%)
Business Investment Prel Q4 -10.3% YoY  vs -19.2% Q3 (F/cast was -12%)
Goods Trade Balance GBP Dec -14.315b vs -16.012b (F/cast was -14.3b)
NIESR Monthly GDP Tracker Jan -2.5% vs +1% Dec revised from +0.9% (F/cast was -2.8%).
AHEAD
EUROZONE Balance of Trade, Industrial Production,
GERMANY No data due
FRANCE No data due
UK  No data due

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