Feb 9 Asian Macro Initial Thoughts Asia to test higher


09 Feb

Asian Futures Nikkei Futures +20pts after Nikkei and Topix closed at highs with earnings in focus.  HK ADR’s +107pts and Australia opened flat and trading sideways. Expect S Korea to test higher. Taiwan remains closed.  I expect China to open higher with Team China supporting the market ahead of the Lunar New Year holiday.
US Futures opened Dow +15pts, S&P and NDX also flat

DOW +0.76%, NDX +0.95%, S&P 0.74%, Russel 2K +0.2.53% Markets opened higher and traded sideways for most of the day before a small rally into the close; all hitting new highs; including the Russell 2000; showing the confidence in the US recovery and the expectation that they will outperform over large cap stocks; investors looking for value plays.
Airlines +VE on news the democrat proposal includes $14bn for airline payroll assistance, American Airlines +3.4%, United +5.2% and Delta +5.1%.
Bitcoin rallied on news Elon Musk had bought $1.5bn worth and Tesla to accept it for payment.
Biden has set a goal to administer at least 100 million Covid vaccine doses during his first 100 days in office, but he warned it will be very difficult to achieve herd immunity in the U.S. by the end of summer. But work from home stock weak.
Palantir Technologies, strong after announcing that it was teaming up with IBM to develop a cloud data platform aimed at simplifying how businesses build and deploy artificial intelligence applications.
Banks JPMorgan Chase +1.6%, Citigroup +1.7%, Wells Fargo +2.6%, Amex +1.4%
Work from home names: Facebook -0.6%, Apple +0.1%, Amazon -0.9%, Netflix -0.5%, Disney +4.9%,  Zoom Video -2.1%, Alphabet -0.2% and Microsoft +0.1%,
Tech NXP +3.4%, Nvidia +6.2%, Micron +3.6%, AMD +4.1%, Skyworks +1.5%
Re-opening stocks  Boeing +2%, Caterpillar +2.3%, Simon Property +2.2% (Reported was +2.1% in extended trading), Kohl’s +3.2%, Nordstrom +2.1%, Gap -1.7%, United Airlines +5.2%, Carnival +1.4%, Wynn Resorts +0.4%, Chevron +2.5%, Exxon Mobil +4.3%,  
Lock down names Campbell Soup +0.9% General Mills +0.5%, JM Smucker +0.5%
AFTER MARKET
Take-Two Interactive -4.1% in extended trading ((+2.8% in normal hours) despite reporting higher-than-expected revenue for Q3 was $814 million in sales for the period
Electronic Arts flat after hours was initially +1% but sold down (was +0.9$ normal hours) to acquire mobile-games developer Glu Mobile for $2.1 billion, or $12.50 per share in cash; a 36% premium to Glu’s closing price on Friday of $9.19 per share. EA shares rose more than 1% on the news. Glu shares were halted in after-hours trading before jumping +34.2%, shares were +2.2% in normal hours.
Chegg +3.9% on stronger-than-expected Q4 results (was -0.2% in normal hours)
Cleveland-Cliffs -4.6% in extended trading (was +3.9% in normal hours) after the company announced it was holding a secondary stock offering of 60 million shares. The offering includes 20 million shares from the company and 40 million shares from shareholder ArcelorMittal.
DATA
Consumer Inflation Expectations Jan 3.05% vs +3% Dec (F/cast was +3%)
USD was vs Yen & Euro. Bitcoin +15.8% @ 44,364.63 rallied as Elon Musk bought $1.5bn worth and Tesla plans to start accepting is as payment. VIX +1.8% @ 21.24,
US T10 @ 1.176% The T30 briefly traded above 2% for the first time since Feb 2020.
OIL Brent +2.3%, WTI +2.2% with Brent above $60 for the first time in over a year.
Gold +1.1%, Silver +1.24%, Copper +1.46% on expectations of a large US stimulus package.
AHEAD 
US Jolts Job Openings, WASDE Report, API Crude Oil Stock Change Report.
Earnings: Cisco, Twitter, Lyft, Dupont, Mattel, Honda, Nissan, Centene, Hanesbrands, Canopy Growth, Martin Marietta Materials, Masco, Sealed Air, S&P Global, Hains Celestial , Fox Corp, Akamai, Owens-Illinois

DAX +0.02%, CAC +0.47%, FTSE +0.53%  Markets opened higher and worked higher for most of the day but eased into the close.  No major earnings today but covid still overhangs the market with news that the contagious variants continue to spread.  German Industrial Production was weaker than expected, which was a drag on the DAX.  Most sectors in the green except Telco. Media and F&B.  
Italian markets +VE on news Draghi secured support from two key parties for forming a government.
Dialog Semiconductor +16% after Renesas Electronics Corp -3.6% said it had agreed to buy the Frankfurt-listed chip designer for 4.9 billion euros ($5.90 billion) in cash.
AstraZeneca +0.2% on news its vaccine offered “minimal protection” against mild disease caused by the variant first discovered in South Africa.
Veolia -1.5% after a French court blocked any hostile takeover of its smaller rival Suez -0.5%.
1&1 Drillisch jumped on an announcement that Spain’s Telefónica had made an improved offer to the German telecoms group for a national roaming agreement.
Rolls-Royce, the engineering group, fell on news that it was temporarily closing its jet engine factories for two weeks this summer to preserve cash.
DATA 
GERMANY 
Industrial Production Dec 0% MoM vs +1.5% Nov revised (F/cast was +0.2%)
AHEAD
EUROZONE No data due
GERMANY Balance of Trade, Exports, Imports, Current Account
FRANCE No data due
UK No data due

JAPAN 
Nikkei futures opened +20pts after the Topix index closed at its highest since 1991on Monday and Nikkei topped 29,000 for the first time in 30 years plus. Yen flat currently 105.22. Expect market to test cautiously higher but weakness in Auto earnings could limit the upside.Earnings in focus with 231 companies due to report including Honda, Nissan, Daiwa House, Japan Tobacco, MacDonalds Japan, FujiFilm, JFE, Daikin and others.
For full list https://www.tradingview.com/markets/stocks-japan/earnings/
Data due pre market
Average Cash Earnings for Dec (Nov was -2.2% (F/cast is -0.7%)
Due later Machine Tool Orders Jan (Dec was +8.7% and F/cast is +7.5%)
Tokyo confirmed 276 new cases on Monday, the first below 300 since Dec. 7; the average number of new infections over the past week was 555.3 per day, 67.9% of the previous week’s daily average of 818. +VE
The government is considering lifting its fresh state of emergency in Aichi and Gifu in central Japan, and Fukuoka in the southwest, where new COVID-19 infections have dropped off substantially  +VE
SoftBank Group unveiled the first three fiscal quarters' profit before tax of JPY3.36 trillion, up 1.33 times given tech stock investment gains and turnaround of the Vision Fund unit.  In the third quarter alone, net profit burgeoned over 20 times to JPY1.17 trillion (around US$11.09 billion), far topping consensus of JPY171 billion.  Best Q1 since 2017
Japanese automakers Toyota, Nissan and Honda report Q3 results this week buoyed by recovering demand in China and the United States, but a global chip shortage has clouded their earnings outlook and prompted cuts in production.  The impact is higher for Japanese makers because the shortages are mainly from NXP Semi and Infineon.
Japanese bank deposits surged at a record annual pace in January, data showed on Monday, a sign companies and households were continuing to hoard cash to guard against the prolonged damage from the coronavirus pandemic. Comes as a Reuters poll shows that the economic recovery probably moderated in the Oct-Dec period


SOUTH KOREA 
Expect markets to open higher following the US key remains foreign buying.  Earnings remain in focus and Hyundai and Kia could still face more weakness on not being in talks with Apple.  Monday’s trading volume was high at 1.3bn shares worth 19.1tn Won; losers outweighed gainers.
No data due
KDCA reported 289 new covid cases; below 300 for the first time since Nov +VE
AstraZeneca will start delivering the first batch of its COVID-19 vaccine to South Korea starting from Feb. 24, South Korean health authorities said Monday. But news it was less effective against some of the new variants a concerns and prompting calls for tighter border controls.
Hyundai Motor and affiliate Kia confirmed Monday that they are “not in talks” with Apple over the manufacturing of the “Apple Car,” denying weeks of speculative reports. Stocks were weak on Monday and could see further weakness today.
AfreecaTV (biggest live streaming platform in S Korea) saw its revenue and operating profit hit new highs in 2020, the company said Monday.  According to a regulatory filing, the company’s revenue and operating profit soared 17.1 percent and 37.3 percent on-year to 196.6 billion won ($175.7 million) and 50.4 billion won, respectively. Its net profit rose to 36.4 billion won, a 6.5 percent increase on-year. It also saw record Q4 earnings +VE
Kakao Games registered 495.5 billion won ($442.9 million) in revenue last year, the best figure since the company started business.  According to a regulatory filing Monday, the company’s revenue and operating profit in 2020 spiked 27 percent and 90 percent on-year to 495.5 billion won and 66.6 billion won, respectively. Its net profit skyrocketed 659 percent to 67.3 billion won. +VE
LG Electronics; The last batch of smartphones (LG Velvet and LG Wing) released last year are being sold with massive discounts and subsidies through mobile carriers before the company’s final decision on its planned sale of the smartphone business.
LG Display will make an additional $750 million investment in its plant in Vietnam, news reports showed Monday, as the company eyes expanding OLED panel productions. +VE
Korea Shipbuilding & Offshore Engineering Co. said Monday it has won a 152 billion-won ($136 million) order from Oceanian companies. Under the deal, two 40,000-cubic meter liquefied petroleum gas (LPG) carriers will be built by Hyundai Mipo Dockyard Co. and one 40,000-ton petrochemical carrier will be built by Hyundai-Vietnam Shipbuilding Co., Korea Shipbuilding said.
Doosan Infracore Co. said Monday that it has won orders of 221 units of construction equipment from emerging markets such as Asia, the Middle East, Africa and Central and South America.  Doosan Infracore sold 108 units of excavators and wheel loaders in Hong Kong, Thailand and Vietnam this year, the company said.

TAIWAN 
Market closed all week 
Data out Monday was much better than expected.
Balance of Trade Jan $6.19b vs 5.76b Dec (F/cast was 4.9b)
Exports Jan +36.8% YoY vs +12% Dec (Consensus was +15%)
Import Jan +29.9% YoY vs +0.9% Dec (Consensus was +14.7%)
Exports mainly boosted by electronic product (47.5%); information, communication and audio-video products (42.9%); base metals and articles of base metal (27.2%); plastics & rubber and articles thereof (51.1%) and machinery (26.9%).
Imports increased 29.9% to also hit a new high of USD 28.1 billion, due to electronic product (48.9%); machinery (10.7%); chemicals (37.3%); information, communication and audio-video products (70%).
Sales to China jumped 57%, ASEAN countries 40.7% and 21.5% to Japan. Imports from China surged 46.9%. Lunar new year holidays follow in February in 2021 compared to January in 2020.Ministry of Finance expects the momentum to continue Feb despite the Lunar New Year holiday.
Taiwan’s top trade official has called the global shortage of car chips an opportunity for Taipei to build closer relations with western nations.  A move likely to further annoy China but good for Taiwan.
The number of furloughed workers dropped by 748 in the first week of this month, with the manufacturing sector seeing the largest decline, data released yesterday by the Ministry of Labor showed.The number of workers who were on unpaid leave after reaching agreements with their employers totaled 3,703 as of yesterday, down from the 4,451 reported on Monday last week, the data showed. During the same period, the number of companies that implemented unpaid leave programs fell by 62 to 344, the data showed. +VE
United Microelectronics Co yesterday posted record-high revenue for last month. Revenue rose 10.21 percent to NT$15.53 billion (US$547.02 million), compared with NT$14.09 billion in January last year. On a monthly basis, revenue edged up 1.57 percent from NT$15.29 billion.  The main driver being the chip demand which outpaced supply and its utilization rate would be close to 100 percent this quarter from 99 percent last quarter. The company plans to spend US$1.5 billion in capital expenditure this year, which would increase capacity by 3 percent from last year, UMC said at that time.  +VE
Winbond Electronics Corp yesterday reported that consolidated revenue soared 87.45 percent to NT$6.9 billion last month, compared with NT$3.68 billion a year earlier. That represented a 1.4 percent increase from NT$6.81 billion in December. +VE
Macronix International Co, a supplier of chips for Nintendo Co’s game consoles, yesterday said its consolidated revenue expanded 9.09 percent to NT$3 billion last month from a year earlier. On a monthly basis, revenue dipped 9.36 percent from NT$3.31 billion. The company said it is “upbeat” about business this year and sees no “dark clouds” on the horizon. This year would be an “even better” year than last year, it said.  +VE
Fulgent Sun International Holding Co  which supplies sports shoes and functional outdoor shoes to global brands, yesterday posted consolidated revenue of NT$1.375 billion (US$48.4 million) for last month, up 29.28 percent from NT$1.064 billion a year earlier and its highest-ever for January. In a statement attributed the increase to robust orders for spring and summer shoes, which the company started shipping in October last year. But it did warn of shipping disruptions which could be disruptive but overall +VE
The Taipei Cycle Show and the Taipei International Sporting Goods Show (TaiSPO) are to be held digitally next month rather than on-site, the organizer said in a statement yesterday. +VE

CHINA 
Expect market to open higher with support from Team China
No data due
Clubhouse app inaccessible in mainland China after increased political discussions prompt the Govt to shut it down. Users on the mainland are unable to connect to the servers of Clubhouse and can only access the service through a virtual private network following the proliferation of online discussions about sensitive political topics like the Hong Kong protests.  Does maybe underline the discontent within China.
China eyes ‘17+1’ summit as gateway to European vaccine market.  Meeting of the bloc could allow Beijing to make vaccine diplomacy push and reassert influence as US returns to multilateral stage under Joe Biden.
President Biden says he has ‘no reason not to call’ Xi Jinping – but setting it up is proving harder than some expected.  Both realise things have changed. President Biden says China faces "extreme competition" but not conflict from the United States under his administration.  He noted that he knew President Xi having meet many times before.  But Biden is focusing on calls to allies before Xi overall I think still -VE for sentiment.
An Australian journalist who has been detained for nearly six months in China where she worked for a state-television channel has been formally arrested on suspicion of illegally supplying state secrets overseas, the two countries said on Monday. The announcement came as the family of Cheng Lei, 49, pleaded with authorities to grant the former high-profile news anchor access to her two school-age children
Xi Jinping sends message on growth through innovation, calls for ‘deep integration’ of big data and the real economy.  Comes as study finds 60% of provincial and prefecture-level governments are not sharing any data online.  Statement made during a tour of Guizhou province in China’s south on Friday.
Consumer Insecurity For some Chinese workers, celebrating their 35th birthday is starting to feel like a curse due to increased competition for jobs due to the pandemic, a growing number of employment ads are imposing age limits of 35; leaving many Chinese nearing middle age feeling uncertain about their future. Complaints about age discrimination in the job market, these include positions in the civil service and have flooded Chinese social platforms, and state media even have a name for the trend: the “age 35 phenomenon”. -VE for the recovery.


HONG KONG  
ADR’s +107pts at 29,425 with weakness in Chinese Financials, E Commerce mixed and Petrochems strong as Oil closes over $60 a barrel.  Market could see increased volatility as liquidity reduces ahead of the Lunar New year Holidays; it has decreased (ex IPO’s) for the past two day and today sees the end of Southbound Connect flows.
No data due  
SHORT SELLING Monday 22.5% vs 18.3% Friday 
Top Shorts:  Shenzhou Int (2313) 42%, Country Garden (2007) 38%, CCB (939) 37%, Bank of China (3988) 37%, Hengan (1044) 36%, Anta (2020) 36%, Hang Lung Ppty (101) 34%, AIA (1299) 32%, Tencent (700) 31%, ICBC (1398) 30%, Bud Apac (1876) 30%, HSBC (5) 29%, BankComm (3328) 29%, Wharf REIC (1997) 28%, AAC Tech (2018) 28%, CKI (1038) 28%, Meituan (3690) 27%, Henderson Land (12) 26%, Ping An (2318) 25%, CLP (2) 25%, HK & China Gas (3) 25%, Hang Seng Bank (11) 25%.

COVID 
Administration announced another surprise lockdown in Jordan
TAXES
Rumour that Financial Secretary Paul Chan Mo-po is considering whether or not to increase the stamp duty on stock transactions.  The tax; currently levied at 0.1 percent on sellers and buyers- to be moderately adjusted without fear of inflicting permanent damage on Hong Kong's status as a major financial center.  Slight -VE for brokers
MONEY FLOWS 
HKMA says funds keep flowing in Hong Kong and not much has left the city via offshore accounts, said Eddie Yue Wai-man, chief executive of the Hong Kong Monetary Authority, adding that there will be more breakthroughs in the local capital market.  It would be interesting to have more detail.  The surge in Mainland funds suggests that either local or international money has been leaving the city.  Recent IPO’s may also have given the impression that money is not leaving too.  He also said 'Hedge funds, asset managers or even banks come and go for various business reasons and some of them departed to shift their business focus, while some as a result of consolidation at group level,’.
NATIONAL SECURITY 
Hong Kong authorities no longer recognise dual nationality, UK warns it may no longer be able to help those who hold local and UK passports. -VE for sentiment.
WATCH
BlackRock boosted 5.0235 million shares of BYD COMPANY (01211.HK) at an average price of $261.4113 last Tuesday (2nd), according to HKEX.  Upon completion, BlackRock's shareholding in BYD COMPANY rose from 4.57% to 5.05%.
Hang Seng Indexes Company Limited announced that KUAISHOU-W (01024.HK)   meets the Fast Entry Rule of various indexes and will be added to the following indexes after market close on 22 February 2021 (Monday): Hang Seng Composite Index (Hang Seng Composite Industry Index – Information Technology, Hang Seng Composite LargeCap Index and Hang Seng Composite LargeCap & MidCap Index); Hang Seng China Enterprises Index (Hang Seng China Enterprises Equal Weighted Index, Hang Seng China Enterprises Smart Index and HSCEI ESG Index); Hang Seng TECH Index, and Hang Seng Internet & Information Technology Index. All changes will come into effect on 23 February 2021 (Tuesday).  The weightings of KUAISHOU-W in HSCEI 5% and HSTI 8%.
Xiaomi (1810) will increase research and development expenditures by 30-40 percent this year, according to media reports. Founder Lei Jun said the mainland smartphone maker spent 10 billion yuan (HK$12 billion) in research and development last year, according to the reports. He also said the company will recruit another 5,000 engineers this year.
TENCENT (00700.HK) announced that it has recently signed a corporate payment cooperation agreement with BANKCOMM (03328.HK) for partnership in industrial finance. Pursuant to which, BANKCOMM shall be the first banking partner of Tencent Financial Technology's business version of TenPay. +VE
Q TECH (01478.HK) announced that total sales volume of camera modules was 36.424 million units in January 2021, up 28.2% yearly. +VE
SUNNY OPTICAL (02382.HK) announced that in January 2021, handset lens sets shipment grew 36.1% yearly to 148 million units; vehicle lens sets shipment rose 53.9% to 7.346 million units. +VE
GEELY AUTO (00175.HK)  announced that the total sale volume for the month of January 2021 was 156,300 units, being an increase of approximately 40% from the same period last year, and achieving more than 10% of the full year sales volume target of 1.53 million units in 2021. +VE
The production volume of China's broad-sense passenger vehicles amounted to 1.866 million units in January, up 31.8% YoY, according to data from China Passenger Car Association (CPCA). The sales volume of broad-sense PVs climbed 25.6% YoY to 2.18 million units. +VE
CHINA COMM CONS (01800.HK)  announced that in 2020, the value of new contracts of the Group amounted to nearly RMB1.07 trillion, representing a year-on-year increase of 10.59%.
SINO-OCEAN GP (03377.HK) announced that the contracted sales for January of 2021 amounted to approximately RMB5.5 billion, up 56.25% yearly. +VE
LONGFOR GROUP (00960.HK) announced that in January 2021, the Group recorded contracted sales of RMB19.51 billion, up 93% yearly, with contracted sales in terms of GFA amounting to 1.171 million sq.m.. +VE
The Government is seriously weighing, based on the pandemic situation, a mandatory order on users of designated premises to scan "Leave Home Safe" QR code before entry, said Secretary for Innovation and Technology Alfred Sit. The mobile apps, displayed at 69,000 premises, has to date recorded 520,000 installs, furthered Sit.

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