Feb 25 Most of Asian to open higher but China muted.


25 Feb

Asian Futures Nikkei Futures +110pts,  HK ADR’s +327pts and Australia opened flat but rallying in early trades.  Expect S Korea and Taiwan to open higher too but China likely to be muted with concerns over US relations and caution over whether the Government will supply more stimulus of focus on debt reduction.
US Futures opened Dow +61pts, S&P +0.17% and NDX +0.14%

Asian plastics makers feeling the impact of the US arctic blast that took out some of the biggest US refineries as plastics makers are facing surging prices for key feedstocks; used in everything from medical masks to vehicle interiors -VE

DOW +1.35%, NDX +1%, S&P +1.14%, Russel 2K +2.38% Markets opened lower/flat but worked better through the day. Dow closed at a new high as Powell maintained his dovish stance but said to the House Financial Services Committee that inflation could be volatile as the economy reopens and there is increased demand. But he does not expect inflation to run hot and said the central bank has the tools to fight it if it should.Tesla +6.2% as Ark Funds continued to buy and Bitcoin saw a rebound.
Johnson & Johnson +1.3% on news its single-shot covid 19 vaccine was FDA approved for emergency use.
President Biden is expected to sign an executive order in the coming days that lays out a new strategy covering products such as semiconductors, high-capacity batteries, medical supplies and rare earth metals, as part of a larger strategy. It’s expected to focus on a key tenet of Biden’s foreign policy — partnering with allies, including Japan, South Korea, Australia and Taiwan.
“Working with allies can lead to strong, resilient supply chains,” -VE for ChinaPresident Biden’s nominee to be director of the CIA, William Burns, told a Senate committee on Wednesday that he saw competition with China - and countering its “adversarial, predatory” leadership - as the key to U.S. national security.
Banks JPMorgan Chase +1.8%, Citigroup +2.8% Wells Fargo +3.1%, Amex +2.2%
Work from home names: Facebook -0.6%, Apple -0.4%, Amazon -1.1%, Netflix +1.3%, Disney +0.2%,  Zoom Video -0.8%, Alphabet +1.2% and Microsoft +0.6%,
Tech NXP Semi +2.8%, Nvidia +2.5% as earn gins beat, Micron +4.9%, AMD +2.6%, Skyworks +3.6%
Re-opening stocks  Boeing +8.1%, Caterpillar +1%, Simon Property +3.3%, Kohl’s -0.1%, Nordstrom -0.5%, Gap +5.2%, United Airlines +8.6%, Carnival +2.1%, Wynn Resorts -1.7%, Chevron +3.7%, Exxon Mobil +3%,  
Lock down names Campbell Soup -0.2% General Mills -1.1%, JM Smucker -1%
DATA
MBA Mortgage Applications -11.4% vs -5.1% prior and 30 yr Mortgage Rate +3.08% vs 2.98% prior
New Home Sales Jan +4.3% vs +1.6% Dec (F/cast was 2%)
EIA Gasoline Stock change +0.012m vs +0.672m (Consensus was -3.063m)
EIA Crude Stock change +1.285m vs -7.258m (Consensus was -5.19m)
Fed Chairman Powell semi-annual economic testimony at House Financial Services Committee; continued his dovish theme.
USD was flat vs Yen & Euro. Bitcoin +2.3% @48,231.75 off the intraday high after news Square was buying. VIX -7.7% @ 21.34, US T10 @ 1.372% but high 1.4% intraday
OIL Brent +2.89%, WTI +2.89% as data shows a slump in US output from Texas freeze.
Gold -0.11%, Silver +1.14%, Copper +3.3% Platinum +2.9%, Palladium +4.8%
AHEAD Durable Goods Data, GDP Data (Price Index, Growth Rate), Initial Claims, 4 week Average Claims, Continuing Claims, PCE Prices, Core PCE Prices, Pending Home Sales, EIA Natural Gas Report.
Earnings: Salesforce.com, Norwegian Cruise Lines, Etsy, Best Buy, HP, Shake Shack, Beyond Meat, Anheuser-Busch Inbev, Dell Technologies, Virgin Galactic, American Tower, Cleveland Cliffs, Airbnb, Carvana, Door Dash

DAX +0.8%, CAC +0.31%, FTSE +0.5%  Markets opened flat/lower following the lead from Asia but worked better through the day as Investors react to positively to Powell’s testimony, to close at the day highs. Earnings were mixed.Auto’s leading but Media weak. Sterling continues to strengthen on the back of a lockdown exit plan.
German GDP growth was better than expected but French confidence data missed; CAC traded around sideways around flat.
UK house builders +VE on rumours UK stamp duty holiday would be extended
Lloyds +0.3% despite earnings beating forecasts. Had opened higher but sold down
Telecom Italia +9.2% after forecasting a stabilization of profits and sales.
Tui +13% and Carnival +10.5% on hopes of vaccine passports (EU to discuss on Thursday most are +VE but Germany and France resistant) and easing of lockdown. Biomerieux +0.8% off early highs as earnings beat 2020 profit expectations and increased its dividend.
Wolters Kluwe -6.3% as analysts reacted indifferently to the Dutch IT firm’s earnings report and outlook.
Puma weak after warning that its business would continue to be “negatively impacted by the Covid-19 pandemic despite a strong order book and high demand from our retail partners and consumers”.
Earnings from Accor +2.7%, William Hill +0.2%, Metro Bank -10% missed estimates, Reckitt Benckiser -1.5% and Iberdrola +1.4%
DATA
GERMANY 
GDP Growth Rate Final Q4 -3.7% YoY vs -4% Q3 (F/cast was -3.9%)
GDP Growth Rate Final Q4 +0.3% QoQ vs +8.3% Q3 (F/cast was +0.1%)
FRANCE 
Business Confidence Feb 97 vs 96 Jan revised (F/cast was 98)
Business Climate Indicator Feb 90 vs 91 Jan revised (F/cast was 94)
AHEAD
EUROZONE Loans to Household and Companies M3 Money Supply, Economic Sentiment, Consumer Confidence, Consumer Inflation Expectations, Industrial Sentiment, Services Sentiments
GERMANY Consumer Confidence
FRANCE Consumer Confidence
UK No data due

JAPAN 
Nikkei futures opened higher currently +110pts Yen unchanged overnight @ 105.25.  Expect good interest in Tech and large cap names that recently saw consolidation.
Data due late morning
Leading Economic Index Final Dec (Nov 96.1 (F/cast was 94.9))
Coincident Index Final Dec (Nov 87.8 (F/cast was 87.8))
Tokyo reported 213 new cases of the coronavirus, down 62 from Tuesday. Nationwide, the number of reported cases was 917.
Fukuoka Prefecture decided to make a request Wednesday to the central government to lift the state of emergency in its prefecture at the end of this month.
Japan's vaccination chief says Tokyo Olympics not in his planning, Kono also said he is not considering giving single doses of the Pfizer vaccine to the elderly to help stretch out scarce supplies. Said vaccinations for older people will start April 12
Births in Japan hit record low in 2020; preliminary total of 827,683 births across the country in 2020. They expect a final tally of between 830,000 and 840,000, which is still well below 2019’s birth count of 856,239 and the lowest on record. Deaths were also down by 9,373 dropping for first time in over a decade.  
Japan will strengthen efforts to support Asian countries' shift from coal to liquefied natural gas for use in power generation to reduce carbon emissions, in the hope of lowering procurement costs for the energy source, the industry ministry said.
Toshiba Corp’s top investor Effissimo Capital Management has renewed its call for an independent investigation into the company’s annual shareholder meeting (AGM) last year, according to a letter dated Wednesday that was sent to other shareholders. Effissimo said the internal review was “limited in scope”, and called on other shareholders to support its proposal at an upcoming extraordinary shareholder meeting that calls for launching a team of legal experts to investigate.  -VE but as I thought would happen.
Suzuki Motor Corp.’s 91-year old chairman, Osamu Suzuki, announced he will retire in June, and announced it will invest one trillion yen, mostly on electrification technology, over five years.  He says he is stepping aside for a new leader to navigate the shift to electric cars and fight off competition from tech giants such as Tesla and Apple.  His retirement leaves his son Toshihiro Suzuki, already president and CEO, holding the reins of the company.
Takeda Pharmaceutical Co said on Wednesday the first patient had been given Novavax Inc’s COVID-19 vaccine candidate in a Japanese clinical trial. Takeda is helping bring two Western-developed COVID-19 vaccines to the domestic market. It plans to produce about 250 million doses of the Novavax vaccine in Japan and will import 50 million of the one made by Moderna Inc.
FT reports that Nissan is wrestling with a surge in the prices of precious metals that threatens to stall the global car industry’s rebound from Covid-19. The rise in the prices of metals such as rhodium and palladium, which are critical components in catalytic converters for petrol and hybrid vehicles -VE
Former Nissan Chief Executive Hiroto Saikawa told a Japanese court Wednesday he believed the compensation for his predecessor Carlos Ghosn was too low "by international standards," and so he supported Ghosn's retirement packages to prevent him from leaving.

SOUTH KOREA 
Expect markets to open higher with bargain hunting in large tech following the rebound in US markets.
Data due BoK rate decision no change expected
Agricultural ministry said Wednesday it is investigating yet another suspected case of highly pathogenic bird flu, with the total caseload reaching 101.The local consumer price of eggs continued to grow, rising 48.1% YoY over the past week. That of chicken meat, on the other hand, expanded at a narrower margin of 9.2 percent over the period.
Celltrion’s COVID-19 antibody treatment, Europe’s drug regulator said on Wednesday it was evaluating the drug against the disease, it is the third to go under real-time review in the region.
Samsung Electronics Co.'s market share in the global foundry industry is expected to increase in the first quarter of the year from the previous three months, a report showed Wednesday, though its growth was projected to be lower than the industry average amid high demand for chips.
Hyundai Motor will replace the battery systems in about 82,000 electric vehicles sold in S Korea and abroad due to fire risks, the company announced Wednesday. -VE
GS Group said Wednesday it had launched an environmental council consisting of its chief governance officers in an effort to strengthen the group’s ESG approach. +VE
Apple will open its second Apple Store in South Korea this Friday in a move to expand its presence in the main turf of archrival Samsung Electronics. Slight -VE Samsung

TAIWAN 
Expect market to open higher following the rebound in the US and good Export data after market Wednesday
Data due after market: Unemployment, Retail Sales, M2 Money Supply
After market Wednesday
Export Orders Jan +49.3% vs 38.3% Dec (F/cast was +44%)
Rising for an 11th month on the back of a low comparison base last year due to the timing of the Lunar New Year, the Ministry of Economic Affairs said yesterday. Orders for information and communications technology (ICT) products were US$15.09 billion, up 55.6 percent year-on-year, it said.The increase reflected the continued effect of “a certain delayed smartphone product by an international company,” along with continued demand for ICT products related to work-from-home needs amid the COVID-19 pandemic, Huang said. Looking forward the ministry is cautiously optimistic. +VE
Moody’s Investors Service yesterday affirmed Taiwan’s sovereign credit rating of “Aa3” and changed its credit outlook for the nation to “positive” from “stable,” the first time the ratings agency has given the nation that credit outlook since 1994. +VE
United Microelectronics Corp, yesterday said that its board of directors has approved a plan to pay a cash dividend of NT$1.6 per share this year, up from NT$0.75 last year and the highest in 21 years. +VE
Delta Electronics said that its board of directors approved a plan to pay a cash dividend of NT$5.5 per share this year, a filing with the Taiwan Stock Exchange showed. The planned cash dividend represents a payout ratio of 56.07 percent, based on the company’s earnings per share of NT$9.81 last year. +VE
Silicon Motion Technology Corp, the world’s biggest supplier of controllers used in NAND flash memory chips, yesterday said it plans to invest NT$4 billion (US$141.31 million) to build a new headquarters in Hsinchu County’s Jhubei City as chip demand continues to grow.  It expects robust demand for NAND flash memory chips used in smartphones, PCs and Internet-of-Things (IoT) applications to help fuel growth of its revenue. +VE 
CHINA 
Expect market to open lower with continued concerns on US relations and on whether the Govt will add stimulus or focus on debt reduction.
No data due
China hit back on Wednesday at growing criticism by Western powers of its treatment of ethnic minorities in the regions of Xinjiang and Tibet and of citizens in the former British colony of Hong Kong; saying “At this high-level segment, the U.K., EU, Germany, USA, Canada, and some other countries abused this forum of the Council to make groundless charges against China, to interfere in internal affairs of our country. We firmly oppose and categorically reject these attempts,”   European Union foreign policy chief Josep Borrell called on China on Tuesday to allow U.N. human rights boss Michelle Bachelet to visit and investigate alleged mistreatment of Muslim Uighurs in Xinjiang and of people in Tibet.
EU-China investment deal (Comprehensive Agreement on Investment) faces backlash in European Parliament as MEPs accuse Brussels of ignoring concerns over China’s labour conditions, the crackdown in Hong Kong and ‘showing the middle finger’ to new US administration. But EU’s top negotiator defends the agreement, saying bloc ‘needs the economic growth that exists in a country like China’
A unit of China National Pharmaceutical Group (Sinopharm) and CanSino Biologics Inc (CanSinoBIO) have applied for public use of their COVID-19 vaccines in China, which if granted would mean China has four locally developed approved vaccines.
Zimbabwe will buy an additional 1.2 million COVID-19 vaccine doses from China at a preferential price, President Emmerson Mnangagwa's spokesman said on Wednesday, after Beijing agreed to give more free doses to the southern African country.
China’s Geely Automobile and its Swedish sister company Volvo Cars will abandon merger plans but launch a new entity to combine their powertrain operations and expand cooperation on electric vehicles, the companies said. +VE
China stopped more than 23,000 litres of wine at Chinese ports as trade spat continues. The batches of wine from Penfolds and Badger’s Brook Estate are the latest to be held up at Chinese ports, reportedly over labelling issues -VE
ByteDance plans to move the chief of its Chinese news aggregator Jinri Toutiao, Zhu Wenjia, to Singapore to head global research and development for its hit short video app TikTok +VE
Boyu Capital, an investor in Chinese technology titans including billionaire Jack Ma’s Ant Group, is raising a new, China-focused fund targeting as much as $6 billion, three people with knowledge of the matter said.
FT reports A Chinese brokerage Shanghai Dalu has helped fuel the rally in the price of copper since the end of the Lunar Year Holiday by amassing a $1bn bet in less than a week.  It increased its holding of Chinese copper futures to almost 24,000 lots from 2,500, since Thursday, according to data from the Shanghai Futures Exchange. The figure is equivalent to 120,000 tonnes of the metal.  Its not clear if the holding is proprietary or on behalf of clients.

HONG KONG  
ADR’s +327pts to open at 30,045 with most stocks positive rebounding from Wednesday’s knee jerk reaction to the budget.  BABA and Chueng Kong’s ADR’s closed in the red.  Still expect some initial margin call selling on the open and then after the initial rebound for the market to trade sideways.  Retail and Property +VE from the HK Budget proposals.
DATA out after market Wednesday
GDP Growth Rate Final Q4 +0.2% QoQ vs +2.7% Q3 (F/cast was +0.2%)
GDP Growth Rate Final Q4 -3% YoY vs -3.6% Q3 (F/cast was -3%)
After Market today due to get Balance of Trade, Exports, Imports

SHORT SELLING Wednesday 11.2% vs12.8% Tuesday  
Top Shorts:  Ping An (2318) 38%,  Bud Apac (1876) 36%,  Hengan (1044) 32%, China Res Land (1109) 29%, Henderson Land (12) 28%, Wharf REIC (1997) 28%, Galaxy (27) 27% reports Thursday, NWD (17) 25% reports Friday,  SHKP (16) 24% reports Thursday.
Earnings due Thursday include Hysan (14), SHKP (16), China Motor Bus (26), Galaxy (2), Sino Land (83), TST Properties (247), ASM Pacific (522), Bossini (592), UMP Healthcare (722), NW Dept Store (825), Kantone (1059), APAC (1104), Sino Hotels (1221), Plover Bay Tech (1523), Pacifc Basin Shipping (2343), Standard Chartered (2888)
BUDGET 
Key is that the stamp duty hike means paying an extra $30 on a $100,000 lot of shares. A rate that is still lower than the UK’s at 0.5% and there is still no capital gains tax in HK.

WATCH
HSBC and Barclays, which have pledged to stop financing new coal projects, have been challenged by a legal group over a Japanese bond it says will contribute to the financing of coal-fired power in Vietnam. -VE
Chinese Estates (0127) Profit Warning it may record a decrease in net profit ranging from 20 percent to 30 percent in 2020 and an increase in revenue ranging from 127 percent to 137 percent. -VE
LINK REIT (00823.HK)  has acquired 50% Equity Interest in Qibao Vanke Plaza in Shanghai, the PRC at RMB2.772 billion. The consideration is based on the Agreed Property Value of RMB6.4 billion of the property, representing a discount of 2.7% to the Appraised Property Value of RMB6.58 billion as at 31 December 2020. +VE
SCICLONE PHARMA (06600.HK), whose public offering has closed today, recorded over 430,000 subscribers, representing 1,067 times of over-subscription, freezing approximately $235.1 billion, said market rumors.  It is expected to be priced at the upper end of the range.

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