Feb 3 Asian Macro Initial Thoughts Asian markets to open higher after good US earnings


03 Feb

Asian Futures Nikkei Futures opened -VE but now +28pts,  HK ADR’s +85pts and Australia moving higher in early trades.  
US Futures opened slightly higher Dow +30pts, S&P +0.3% and NDX +0.4%

DOW +1.57%, NDX +1.56%, S&P +1.39%, Russel 2K +1.19%  opened higher and Dow saw its best day since November as the retail short squeeze eased, although it dipped into the close as did the S&P. NDX worked better to close at its day high.CDC issued a rule to make wearing masks on planes and public transport mandatory.  Comes as US cases and hospitalisations drop and Democrats push to pass relief bill, but re-opening stocks were mixed.
Gamestop -60% as the momentum ends; the question is will there be another one; I suspect firms making short calls will be more circumspect going forward and allow fundamentals to prove their case rather than seeking to whip up public opinion.
Earnings 
Pre market Alibaba Q3 Net Income attributable to shareholders beat +52% YoY, Non-GAPP net income +27% YoY. Said Ant listing had substantial uncertainties and increased share buyback to US$10bn. Said good 11.11 shopping festival and that cloud computing continues to expand and shows strong growth.
Pfizer -2.3% Adjusted Q4 earnings missed but revenue beat and it raised its guidance
Banks JPMorgan Chase +3.1%, Citigroup +2%, Wells Fargo +2.5%, Amex +3.1%
Work from home names: Facebook +1.9%, Apple +0.6%, Amazon +1.1% ahead of earnings, Netflix +1.7%,  Disney +3.4%, Zoom Video +2.6%, Alphabet +1.4% ahead of earnings and Microsoft unch.
Tech NXP +3.3%, Nvidia +2.4%, Micron +1.5%, AMD +1.4%, Skyworks -0.2%
Re-opening stocks  Boeing +2.6%, Caterpillar +4.3%, Simon Property -0.5%, Kohl’s +0.5%, Nordstrom -3.6%, Gap +3.1%, United Airlines +2.2%, Carnival +2.5%, Wynn Resorts +4.3%, Chevron +0.7%, Exxon Mobil +1.6% after earnings,  
Lock down names Campbell Soup -1.7% General Mills unch, JM Smucker -0./6%
After Market 
Amazon +1.3% earnings beat expectations but cloud division missed and announced CEO Bezos standing down later this year; Andy Jassy to take over in Q3
Alphabet +7.7% as earnings beat but cloud business still losing money and lagging competitors.
Chipotle -4% earnings missed as digital orders drop but revenue was in-line.
Electronic Arts -5% after earnings at 72 cents and revenue beating.
DATA
Redbook +4.4% YoY vs +3.9% prior ( -1.6% vs -2% MoM)
ISM New York Index Jan 51.2 vs 61.3 Dec (F/cast was 58)
IBD/TIPP Economic Optimism Feb 51.9 vs 50.1 Jan (F/cast was 55.1)
After Market API Crude Oil Stock Change -4.261m vs -5.272m prior (consensus was +0.367m)
Total Vehicle Sales due
USD was stronger vs Euro. Bitcoin unch @ 35,648, VIX -15.5% @ 25.56, US T10 @ 1.095%
OIL Brent +2.6%, WTI +2.7% on output cuts. After market API showed a larger than expected drop expect oil to drop.
Gold -1.4%, Silver -9%, Copper -0.6% reversing earlier gains.
AHEAD 
MBA Mortgage Applications and 30 yr Mortgage Rate, Services and Composite PMI, ISM Non Manufacturing Data (Business Activity, Prices, Employment, PMI, New Orders, EIA Oil Stocks Change Report.
Earnings: Qualcomm, Boston Scientific, GlaxoSmithKline, Abbvie, Biogen, Humana, Apollo Global Management, Allstate, eBay, PayPal, Check Point Software, Aflac, MetLife, Grubhub, KLA Corp

DAX +1.56%, CAC +1.86%, FTSE +0.78%  Markets opened higher and worked higher in the first couple of hours of trading; following the lead from Asia for a second day.  Encouraged by the expectation of more vaccine supplies shortly.  Auto’s lead in the morning but Travel & Leisure was strong in the PM; as expectations of more vaccine suppliers to Europe encouraged investors. Most sectors in the green but Basic Resources and Telco’s ended in the red. BP -4.5% reported a larger than expected loss
Siemens Energy -0.4% off early +VE highs as Q1 Net Profit 99m Euro and announced to cut 7,800 jobs by 2025
Fresenius Medical Care -10% after cutting its profit guidance.Coloplast +8.8% health devices
EQT strong in early trades
DATA
EUROZONE
GDP Growth Rate Q4 -0.7% QoQ vs +12.4% Q3 revised (F/cast was -2.2%) GDP Growth Rate Q4 -5.1% YoY vs -4.3% Q3 (F/cast was -6%)
FRANCE
Inflation Rate Prelim Jan +0.6% YoY vs 0% Dec (F/cast was +0.2%)
Inflation Rate Prelim Jan +0.2% MoM vs 0.2% Dec (F/cast was -0.3%)
UK
Nationwide Housing Prices Jan +6.4% YoY vs +7.3% Dec (F/cast was +7%) Nationwide Housing Prices Jan -0.3% MoM vs +0.9% Dec revised (F/cast was +0.3%)
AHEAD
EUROZONE Services and Composite PMI, Core Inflation Rate, Inflation Rate, PPI
GERMANY Services and Composite PMI
FRANCE Services and Composite PMIUK Services and Composite PMI

JAPAN 
Nikkei futures opened -17pts but are currently +13pts expect market to trade higher. Yen currently 105.04
Data due 8:30 HK time
Services Jan PMI F/cast is 45.7 (Dec was 47.7)
Composite Jan PMI F/cast is 46.7 (Dec was 48.5)
Tokyo announced 556 new covid cases on Tuesday (vs 393 Monday)
Govt announced extending state of emergency to March 7 as expected. But removed Tochigi from the list and said it could be dialled back or lifted if the situation improves.
Tokyo 2020 President Yoshiro Mori said on Tuesday that Japan would hold the Summer Olympics regardless of the situation with the COVID-19 pandemic and was working closely with the International Olympic Committee to make them happen.
East Japan Railway Co., or JR East, started trialing Monday a “Shinkansen office,” which allows passengers to telework while on board Tohoku Shinkansen trains. Passengers in the designated car can make phone calls or hold video conferences. Slight +VE
Panasonic Corp. on Tuesday raised its earnings forecasts for the current year through March, projecting a net profit of ¥150 billion ($1.4 billion), helped by stronger-than-expected sales in home appliances and a pickup in demand for automotive equipment. +VE
Suzuki Motor Corp and auto parts maker Denso Corp said Tuesday they have halted production in Myanmar to ensure the safety of their employees following a military coup the previous day.  Slight -VE
Japan's National Tax Agency said Tuesday it received details on around 2.06 million offshore accounts held by Japanese individuals and corporations in 86 countries and regions in the year to June 2020, under an internationally agreed standard to prevent tax evasion.

SOUTH KOREA 
Expect markets to open higher with continued interest in Tech, Ecommerce and Pharma.  The won weakened.  Trading volume Tuesday was moderate with Foreigners net buyers and Retail and Institutions as sellers.No data dueKorea Disease Control and Prevention Agency reported  336 more COVID-19 cases on Tuesday, raising the total caseload to 78,844. The number has stayed in the 300s for three straight days amid the extension of tough virus restrictions and a continued rise in cluster cases.
The Defense Ministry dropped its description of Japan as a "partner" in the latest defense white paper published Tuesday, a move painted by local media as a "downgrade" that reflects worsening ties between the two countries.  It also refrained from calling N Korea the enemy.
Spotify Technology SA on Tuesday made a long-awaited debut in South Korea, the sixth largest music market in the world and home to the K-pop music genre. The company will compete with music streaming companies such as Melon, Genie, FLO and Apple Music.
South Korean shipbuilders, led by top player Hyundai Heavy Industries Co., are expected to undergo a temporary shortage of order backlogs in the second half of the year due to a decline in new orders last year, an industry watcher said Tuesday. -VE
Tension lingers among Korean firms in Myanmar in wake of military coup; 107 companies have some form of operations there include Posco Int, Hyosung, LS Cables & Systems.  Slight -VE
Iran has agreed to allow the crew members of a South Korean ship it seized for alleged environmental pollution to leave the country, Foreign Ministry spokesman Saeed Khatibzadeh said on Tuesday.
SsangYong Motor An investor consortium led by US auto retailer HAAH Automotive is ready to lay out plans to buy a stake; once it presents its reorganization plan to creditors, Korea’s state-run lender Korea Development Bank said Tuesday.  Slight +VE

TAIWAN 
Expect market to open higher with continued interest in Tech names and helped by easing fears about China tightening.
No data due 
The UK’s application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is an opportunity for Taiwan, the Ministry of Foreign Affairs (MOFA) said yesterday, adding that the government would submit its application to join the trade partnership at “the most favourable time.”  +VE and a test of international support for Taiwan since the recent change in stance by the US become more forthright in its defence of Taiwan’s independence from China.
Vanguard International Semiconductor Corp yesterday said that it plans to allocate 41.2% more capital expenditure to expand capacity this year as demand has greatly surpassed its capacity amid a stay-at-home trend. Part of the spending would be to expand automotive chips, which make up less than 10 percent of its total shipments, Vanguard said. +VE
Realtek Semiconductor Corp yesterday said that there has been healthy demand for Ethernet switch and Wi-Fi chips through the first half of this year, as the work-from-home and distance-learning trends are stimulating a broad infrastructure upgrade. Realtek said that growth momentum is extending from last year as the trends are here to stay amid the COVID-19 pandemic this year. That is also spurring demand for Internet surveillance devices and outdoor LED displays that incorporate Realtek’s Ethernet chips, the company said. +VE
Taiwan Life Insurance Co would inject NT$1.58 billion (US$55.66 million) into Wu Zi Asset Development Co to fund construction of a shopping mall near the Taichung Intercontinental Baseball Stadium, the insurance company said on Monday. It would be Taiwan Life’s second capital injection to Wu Zi after it provided the asset development firm with NT$495 million last year, the insurer said in a filing with the Taiwan Stock Exchange.
Housing transactions last month totalled 24,052 units in the nation’s six special municipalities, -8.3% MoM but +55% YoY data compiled by real-estate agencies and released on Monday showed.

CHINA 
Expect market to open higher following the US rally but with caution over US relations as Biden says no hurry to engage China.
Data due 9:45 am HK time
Caixin Services PMI Jan F/cast is 55.8 (Dec was 56.3)
Caixin Composite PMI F/cast is 55.4 (Dec was 55.8)
The Biden administration indicated on Tuesday it is in no hurry to engage with China and would do so once it was in “lockstep” with allies and partners.  No date yet for when a call might take place between Chinese President Xi Jinping and President Joe Biden, who has spoken to many world leaders since taking office on Jan. 20. -VE for sentiment.
FT reports that in the first speech by a Chinese official to a US audience since Biden took office, Mr Yang, China’s top diplomat, blamed Donald Trump for the dismal state of US-China ties and told Mr Biden not to meddle in Beijing’s affairs. “The US should stop interference in the affairs of Hong Kong, Tibet and Xinjiang, which all matter to China's sovereignty and territorial integrity,” he told the National Committee on US-China Relations, a US-based non-profit.
Suspected Chinese hackers used SolarWinds bug to spy on US agency, insiders say Press reported the software flaw exploited by the suspected Chinese group is separate from the one allegedly used by Russian operatives.  The development marks a new twist in the massive cybersecurity breach that US lawmakers have called a national security emergency and -VE for US/China relations.
Beijing has appointed Chen Feng, 52 a veteran police officer with experience overseas to serve as the main contact person between mainland Chinese and Hong Kong police. He appeared in public for the first time on Sunday as head of the police liaison department at the cental government’s liaison office in Hong Kong, accompanying office director Luo Huining on a visit to the Hong Kong police headquarters in Wan Chai and Tsim Sha Tsui Police Station, according to mainland media reports. According to a mainland government source, Chen arrived in the city about two months ago and has already met most of the senior officials in Hong Kong’s disciplinary forces.

HONG KONG  ADR’s +85pts at 29,334 with weakness in Chinese Financials ahead of  Ping An earnings.  Baba ADR was weak despite good results having said Ant IPO had substantial uncertainties.  
Data due Pre market Jan PMI F/cast is 44 (Dec was 43.5)
SHORT SELLING Tuesday 17.5% vs +17.8% Monday
Top Shorts: Bud Apac (1876) 50%, Ping An (2318) 44%, Hang Seng Bank (11) 38%, CCB (939) 36%, Hengan (1044) 36%, Bank of China (3988) 31%,  MTRC (66) 31%, HSBC (5) 30%, Country Garden (2007) 29%,  ICBC (1398) 28%,  CKI (1038) 29%, AIA (1299) 26%, CK H (1) 25%, Anta (2020) 25% (following broker upgrades Monday).
WATCH
WUXI BIO (02269.HK) proposed to place 88 million shares to raise up to $9.94 billion, Reuters' IFR reported. The placing price of $110.5-113 represented a discount of 6.1%-8.2% to today's closing price of $120.4.
Chairman of Hong Kong Retail Management Association (HKRMA), at the conference call, predicted retail sales of Hong Kong in the first half of the year to be flattish yearly, in wake of multiple uncertainties, such as unknown end of fourth spike of plague.  HKRMA members were pessimistic about sales during January and Chinese New Year, mainly owing to consumption sentiment undermined by gathering ban and higher jobless rate after the expiry of Employment Support Scheme.
TENCENT (00700.HK) issued a statement, clarifying that it has not received any materials regarding the lawsuit of Douyin against the company. TENCENT said the related allegation made by ByteDance was untrue and of malicious framing since Douyin has been seizing user personal information in breach of regulation and has been ordered by court for several times to stop infringement.  TENCENT will proceed with lawsuit against ByteDance.
Douyin lodged a lawsuit at Beijing Intellectual Property Court, suing TENCENT (00700.HK)  of monopoly, according to Chinese media. Douyin said TENCENT restricted users from sharing Douyin's contents via WeChat and QQ, constituting violation of China's Anti-Monopoly Law.   Douyin requested the Court to immediately ban TENCENT's restriction on Douyin, order TENCENT to make public statement brushing off adverse impact, and compensate Douyin with RMB90 million as economic loss and reasonable fee.
SING TAO (01105.HK) Chairman Ho Tsu Kwok, Charles unloaded almost 247 million shares of the company at $1.5 each off the market on 28 January, with his stake cut to 3.37% from 31.37%, involving nearly $370 million, according to the disclosure of the Stock Exchange. The transaction price represented a premium of 64.8% over the closing price as quoted before trading suspension last week.   On the same day, KAISA PROSPER (02168.HK) Vice Chairman Kwok Hiu Ting acquired almost 247 million shares of SING TAO at $1.5 each off the market. Upon completion, she would become the substantial shareholder of SING TAO with 28% stake.
SUNLIGHT REIT (00435.HK) and DBS Hong Kong have secured a HK$500 million sustainability-linked loan Tuesday.
SINOPHARM (01099.HK)  announced that the coupon rate for the public issue of the 2021 corporate bonds (1st tranche) eventually came in at 3.65%. The actual size of issue would be RMB1 billion.
Shanghai Gold Exchange said the precious metals on international market have marked more rattled prices with escalated market risk. The Exchange hence alerted investors of enhancing risk prevention and making rational investment.
BONJOUR HOLD (00653.HK) announced a plan to run Chinese New Year event on 1-21 February via the new e-commerce platform. A six-day pre-sale period has started from 26 January.
MODERN LAND (01107.HK) announced that for the month ended 31 January 2021, contracted sales of the Group amounted to approximately RMB2.44 billion, up 20.9% yearly.
Tesla (TSLA.US) intends to acquire 20% equity interest in BYD COMPANY (01211.HK)  with US$36 billion, as rumour swirled on the market. Yet, some Chinese media later cited BYD COMPANY that the rumor was untrue. BYD COMPANY's shares leaped 7% to close at HK$262.2 today.  BYD COMPANY (01211.HK)  (002594.SZ) announced that it had today reviewed and passed a resolution under which it will give up its investment in subsidiaries BYD Auto Industry, BYD Auto and BYD Supply Chain by roughly RMB5.43 billion, RMB3 billion and RMB3 billion respectively.
RONSHINECHINA (03301.HK) announced that during the month ended January 2021, the total contracted sales amounted to approximately RMB12.296 billion, up 67.1% from RMB7.358 billion in the same period in 2020.
PA GOODDOCTOR (01833.HK)  announced the annual result ended December 2020. The loss widened to RMB948 million from RMB734 million in the corresponding period of the previous year. LPS was RMB0.92. No dividend was declared.
China Mobile and China Three Gorges Corporation (CTG) held the signing ceremony for their strategic cooperation framework deal in Beijing today.  Accordingly, both sides will team up for fundamental communication construction, enterprise digital transformation, 5G innovative applications, new infrastructure construction and international business.

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