June 11 Asian Marco Initial Thoughts Expect a higher open but upside muted ahead of the weekend.

11 Jun

This and previous notes can be found at SubStack Asian Market Sense
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Asia Summary 
Australia Futures indicate market open higher +1pt having closed at  a new high Thursday. Oil and Gold higher helping. No data due.
Japan Nikkei futures opened higher along with the Chicago futures.  Expect some consolidaton ahead of the weekend with Toshiba likely to be under pressure.  Pre market we get BSI survey.
S Korea Expect markets to open higher, Kospi futures +1.5pts following the US with an easing of permanent inflation fears.  Pre market trade data +VE
Taiwan Market to open higher  following the US and on good local data.
China Market to open higher on good loans data but sentiment remains cautious over international relations and potential debt default issues.  Wild card as ever ‘Team China).
HK ADR’s indicate  50pts at 28,788 Chinese Banks selectively -VE  E-Commerce weak on new data law.
US Futures
Opened Dow and S&P flat, Nasdaq +0.1%

G7 leaders to pledge 1bn Covid-19 vaccine doses for poorer countries  +VE 

DOW +0.06%, NDX +0.78%, S&P +0.47%, Russel 2K -0.68%
Markets opened higher initial claims missed but was the lowest in thepandemic and continuing claims dropped.  Inflation was higher than forecast; with economists blaming used car costs (+7%) skewing the index and seen as temporary.  DOW then sold down to flat worked better but then drifted lower into the close. NDX rallied but sold down to flat again in the first hour before working better to close around the day high.  S&P ticked higher to new high but sold down to flat in first hour, before working higher but failed to regain the early high and dipped slightly into the close.

RH +15.4% as Q1 beat expectations and raised its outlook.
Signet Jewelers +14% Q1 beat and SSS doubled
Gamestop -27% after earnings, news of new hires to run the company and proposed share sale. Other meme’s Clover Health -15.3% Wendys -3.1%, Clean Energy Fuels -15.6%
Banks JPMorgan Chase -1.6%, Citigroup -1.6% Wells Fargo -1.8%, Amex -1.1%
Work from home names: Facebook +0.7%, Apple -0.8%, Amazon +2.1%, Netflix +0.3%,  Disney +0.3%, Zoom Video +3.9%, Alphabet +1.1% and Microsoft +1.4%,
Tech NXP Semi +1.9%, Nvidia +0.4%, Micron +0.8%, AMD +2%, Skyworks +0.5%
Re-opening stocks  Boeing +0.1% off initial high, Caterpillar -3.8%, Simon Property -0.8%, Kohl’s -1.2%, Nordstrom -2%, Gap -0.9%, United Airlines -1.7% off initial high, Carnival -2%, Wynn Resorts -0.4% bounced off the midday lows, Chevron +0.6%, Exxon Mobil +0.2%.
Lock down names Campbell Soup -0.4% General Mills +0.7%,  JM Smucker -0.2%
Core Inflation Rate May +3.8%  YoY vs +3% Apr (F/cast was +3.2%)
Core Inflation Rate May +0.7% MoM vs +0.9% Apr (F/cast was +0.6%)
Inflation Rate May +5% YoY vs +4.2% Apr (F/cast was +4.7%)
Inflation Rate May +0.6% MoM vs +0.8% Apr (F/cast was +0.5%)
Initial Claims 376k vs 385k prior (F/cast was 365k)
4 week Average Claims 402.5k vs 428k prior (F/cast was 399.75k)
Continuing Claims 3.499m vs 3.757m prior revised (F/cast was 3.64m)
EIA Natural Gas Report 98 Bcf vs 98 Bcf prior (Consensus was 98 Bcf)
WASDE report
Monthly Budget Statement May $-132B vs -226B Apr (F/cast was -230B)
USD was slightly weaker vs Yen & Euro. Bitcoin +1.3% @ 36,641, VIX -10% @ 16.1, US T10 @ 1.437% fell slightly after CPI data.
OIL Brent +0.08%, WTI +0.19% hits a two year high on rising demand expectations as initial claims fall to a 12 month low
GOLD +0.31% after inflation data, Silver +0.46%, Copper -0.9% Platinum +0.05%, Palladium +0.26%.
Michigan Data Prelim (Current Conditions, Inflation Expectations, Consumer Sentiment, 5year Inflation Expectations, Consumer Expectations) Baker Hughes Rig Count. 

DAX +0.06%, CAC -0.26%, FTSE +0.1%
Opened around flat and traded around then but started to trend lower around midday ahead of ECB decision and US Initial claims and Inflation data. But then rebounded and continued to trade around flat.  Telcos +VE but Travel & Leisure the laggards.
Manchester United +0.3%, Ted Baker -3.1% and Auto Trader +6.4% on strong earnings
BT 5% on new French telco Altice taking a 12% stake in the company.
Deutsche Bank AG expects to book a 100 million euros (US$122 million) provision in Q2 after a German court ruling allowed some clients to challenge higher fees on their accounts. Germany’s largest lender expects that the ruling would also influence revenue by 100 million euros in the second and third quarter, Deutsche Bank chief financial officer James von Moltke said. Von Moltke reiterating a guidance for a more “normalized” market impact in the second quarter and the remainder of the year.
Rate Decision; left rates at -0.5% and bond buying unchanged
Non Farm Payrolls Q1 +0.3% QoQ vs -0.1% Q4 (F/cast was +0.2%)
Private Non Farm Payrolls Q1 +0.5% QoQ vs -0.2% Q4 revised (F/cast was +0.3%)
Industrial Production Apr -0.1% MoM vs +1% Mar revised (F/cast was +0.6%)
EUROZONE No data due
GERMANY Bundesbank Semi Annual Forecasts
UK Construction Output, Industrial & Manufacturing Production, GDP 3-month average, Goods Trade Balance, GDP, NIESR monthly GDP tracker

Nikkei futures opened higher along with the Chicago futures.  Expect some consolidaton ahead of the weekend with Toshiba likely to be under pressure.  Pre market we get BSI survey.
Yen currently 109.34
Data due pre market
BSI Large Manufacturing Q2  (Q1 was 1.6, F/cast is 2)
Tokyo reported 439 new covid cases Thursday  (-1 DoD) nationwide it was 2,043
A team of scientists led by Hiroshi Nishiura, a member of the health ministry’s expert panel on the coronavirus, projected that a fourth state of emergency in the capital may become necessary in August if the current emergency is lifted on June 20 -VE.
Japanese corporate 2020 Olympic sponsors have hired consulting firms to advise them on whether to push ahead with Olympic-themed marketing plans or limit their association with an event that could damage their brands, the Financial Times reported.
The Trade ministry colluded with Toshiba Corp’s management to unduly influence a key shareholder vote last year, the report of an independent probe released on Thursday found.  It used foreign ownership rules as a threat, PM Suga (then Chief Cabinet Sec) met a senior Toshiba executive; Suga allegedly told the executive: “If we are aggressive, we can get  them with the (foreign ownership rules),” according to the report. The audit committee was aware but failed to take action. -VE and likely to put Toshiba’s management under more pressure and PM Suga, it also raises questions about PM Abe’s goals in improving corporate governance.
PM Suga referred to Taiwan as a country, in a parliamentary debate, immediately drawing fire on Thursday from mainland China, which regards the island as a renegade province.
SoftBank helps Klarna to $45.6bn valuation after latest fundraising

Expect markets to open higher,Kospi futures +1.5pts following the US with an easing of permanent inflation fears.  Pre market trade data +VE
Data out
Export Prices May  +12.3% YoY vs 11.1% Apr revised from 10.6%
Import Prices May +13.8% YoY vs 15.3% Apr revised from 15%
KDCA reported 611 new covid cases, the second day above 600.
Govt is considering plans to vaccinate workers at key businesses including  chip and electronics firms to minimise disruptions to production, the  government said on Thursday, amid global efforts to boost supply of  scarce computer chips. +VE but contraversial
Chinese Foreign Minister Wang Yi condemned the US’ Indo-Pacific strategy as evidence of a “Cold War mentality,” and called for China and South Korea to stick to their political consensus as President Moon Jae-in prepares for the G-7 summit, where Washington is expected to encourage its allies to take a tougher stance toward Beijing. Slight -VE
Samsung Electronics Co. on Thursday introduced a new mobile image sensor, the industry's smallest pixel size, as the South Korean tech giant eyes to beef up its presence in the non-memory sector. +VE
Samsung Group’s de facto chief Lee Jae-yong attended a court hearing on Thursday as part of an ongoing trial on alleged irregularities surrounding his ascension to the helm of the South Korean tech conglomerate. Slight -VE
Automakers and mobility service providers gathered at Seoul Smart Mobility Expo on Thursday to show off their latest electric vehicles and mobility technologies. +VE
Leaders of four South Korean conglomerates -- Hyundai Motor, SK, Posco and Hyosung -- have agreed to launch a CEO-level consultation body for the local hydrogen economy. +VE
Hyundai Motor Group is developing a hydrogen robot taxi with the aim of launching a commercial service within the next few years. Slight long term +VE
Hyundai Motor Co. said Thursday it has suspended some assembly lines of its mainstay plants here due to parts supply disruptions following COVID-19 infections at a key parts supplier. -VE
SsangYong Motor set to sending its factory workers on rotating unpaid leave for up to two years, in a desperate move to save costs and minimize layoffs under a new buyer. -VE
South Korean shipbuilders outpaced their Chinese rivals to regain the top spot in global new orders of ships in May, industry data showed Thursday. +VE
Hanwha Systems is seeking partnership deals with ride-hailing apps, including the industry’s biggest Kakao T, to include flying taxis on the platforms, the company said Thursday.

Expect market to open higher  following the US and on good local data.
No data due
CECC reported 266 new covid cases 
(263 domestic) and 28 deaths. Thursday was the fourth consecutive day case totals have been in the 200s, which Health Minister Chen Shih-chung said indicates case numbers are on a downtrend.  +VE
The Central Epidemic Command Center (CECC) yesterday outlined its strategies to expand COVID-19 testing within communities. 
The measures are being taken to identify possible undetected cases of COVID-19 in communities as soon as possible, Minister of Health and Welfare Chen Shih-chung, who heads the center, said at a daily briefing in Taipei.
Senior Taiwan and US officials move to resume trade talks US trade representative Katherine Tai and her Taiwanese counterpart John Deng discussed plans to resume talks on the trade and investment agreement +VE
The national treasury last month collected NT$293.2 billion (US$10.58 billion) in tax revenue, an increase of 28.5 percent from a year earlier, as all tax categories posted strong gains on the back of economic improvement, the Ministry of Finance said yesterday. +VE
Average monthly take-home wages in April gained 2.77 percent from a year earlier to NT$43,190, while total wages — including overtime and performance-based compensation — grew 4.27 percent to NT$49,930, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday, attributing the trend to an improving economy. +VE
A fire that broke out at Taichung Power Plant yesterday morning has been put out, causing no disruptions to the nation’s power supply, state-run Taiwan Power Co said. +VE
Taiwan’s three major telecoms yesterday reported that revenue grew annually last month on increased demand for mobile and broadband services, as working from home, online shopping and distance learning became new norms amid a nationwide level 3 COVID-19 alert. +VE
ASE Technology Holding Co  is planning to invest about NT$2.36 billion (US$85.19 million) in new production facilities to expand its advanced chip testing and packaging capacity in Kaohsiung, the company said yesterday. +VE

Expect market to open higher on good loans data but sentiment remains cautious over international relations and potential debt default issues.  Wild card as ever ‘Team China).
No data due, could get Vehicle Sales but after market Thursday
New Yuan Loans May CNY 1500B vs 1470B Apr (F/cast was 1300B)
Outstanding Loan Growth May +12.2% YoY vs 12.3% Apr (F/cast was 12.2%)
Total Social Financing May CNY 1920B vs 1850B Apr (F/cast was 1800B)
M2 Money Supply May 8.3% YoY vs 8.1% Apr (F/cast was 8.2%)
The PBoC is trying to normalise policy by reducing pandemic-driven stimulus and contain debt as the economy rebounds from the coronavirus-hit. China's policymakers are close to setting an average annual economic growth target of around 5% for the next five years, at the lower end of ranges previously considered as global risks cloud the outlook, Reuters reported citing policy sources.
China's top banking and insurance regulator said banks should guard against a rise in non-performing assets, as the country rolls back some of the relief measures implemented during the pandemic to help firms withstand the fallout.
China passed a law on Thursday to counter foreign sanctions, as it strives to resist U.S. and EU pressure over trade, technology, Hong Kong and Xinjiang.  Individuals or entities involved in making or implementing discriminatory measures against Chinese citizens or entities could be put on an anti-sanctions list by a "relevant department" in the Chinese government.
Those on the list may be denied entry into China or be expelled from China. Their assets within China may be seized or frozen. They could be restricted from doing business with entities or people within China. -VE The EU Chamber of Commerce in China expresses concern at lack of transparency and says the measures are ‘not conducive to attracting investment’
Beijing yesterday passed a data security law, strengthening its control over digital information amid a crackdown on local technology giants and market access disputes with the US.  The full text of the legislation was not immediately released. An earlier draft called for establishing a categorical and hierarchical system for data and risk-assessment mechanisms -VE
Didi Chuxing, China’s biggest ride-hailing firm, on Thursday made public its filing for a U.S. stock market listing, setting the stage for what is expected to be the world’s biggest initial public offering this year.
With the foundations for a global tax deal finally laid down by the G7, officials are limbering up for a clash over exemptions and other carve-outs for specific industries and special economic zones, with China at the centre which has for decades used special economic zones with low taxation to  attract foreign investment, which has been central to its economic  development. Beijing said to have "legitimate concerns" about such zones, but China also  offers attractive tax rates to its technology firms, some of which like  Alibaba and Tencent (0700.HK) are incorporated in the Cayman Islands, where there is no corporate tax. Slight -VE
SCMP report ‘Are formal interactions with China helping legitimise Myanmar’s junta in the eyes of the world?’  A recent Chinese embassy statement referring to coup architect Min Aung Hlaing as the ‘leader of Myanmar’ is among the exchanges decried by the shadow National Unity Government.  But analysts say while there are concerns over Beijing’s actions, they should not be over-interpreted – and Asean’s next moves could play a significant role in how the regime is perceived

ADR’s 50pts at 28,788 Chinese Banks selectively -VE  E-Commerce weak on new data law.
No data due

Short Selling  Thursday 15.4% vs 13.1% Wednesday
Top Shorts Ping An (2318) 34%, Anta Sports (2020) 34%, Mengniu Dairy (2319) 32%, Geely Auto (175) 30%, Sunny Optical (2382) 27%, Hengan (1044) 27%, Henderson Land (12) 27%, Bank of China (3988) 26%, Haidilao (6862) 24%

A U.S. senator on Thursday slammed American companies, including  Amazon.com Inc, Apple Inc and Nike Inc, for turning a blind eye to  allegations of forced labor in China, arguing they were making American  consumers complicit in Beijing’s repressive policies.  Could have -VE impact on Yue Yuen and others.

The High Court today turned down Next Digital's request for police to return a part of seized documents in a raid last August. 

In a police raid of its headquarters last August, police seized around 30 boxes of documents and arrested 10 people. The company was hoping it would order the police to return any privileged legal and journalistic materials seized during the raid, and also paperwork not covered by the police's search warrant.
It also applied for an injunction to stop the police from using the materials seized when investigating the defrauding case. The legal representative for Next Digital earlier said the search warrants of the police were issued based on national security law, not the Police Force Ordinance. Therefore the material seized should only be used in investigations relevant to the national security law.

The Urban Renewal Authority (URA) announced today (10 June 2021) that the contract for the development of the Oak Street / Ivy Street Development Project (the Project) in Tai Kok Tsui has been awarded to Gain Concept Holdings Limited, a wholly owned subsidiary of Charming King Limited, 
with a tender amount at approximately HKD618 million. After careful deliberation, the URA board considered that the tender offer made by Gain Concept Holdings Limited has met the tender requirements. The project, which covers a site area of 619 square meters, was commenced in March 2018. Upon completion, it will provide a maximum total gross floor area of 5,571 square meters.
SHK PPT (00016.HK)'s residential project at No. 1 Wetland Park Road, Tin Shui Wai is named "Wetland Seasons Bay" for phase one, and projected to seize pre-sale consent within this month very likely, said Victor Lui, Deputy Managing Director of SHK PPT, at the press conference. The sales will be unfolded as soon as after the pre-sale consent is approved. The company introduced that the project will offer 1,224 flats with the key date at the end of June 2022. The property is comprised of six low-density 9-to-10-storey residential towers and ten 6-storey villas.
GREENLAND HK (00337.HK) announced that for the first five months of 2021, the contracted sales
of the Group amounted to approximately RMB13.721 billion, up 33.79% YoY, and the contracted gross floor area sold amounted to approximately 1.0406 million square meters.
CHINA RES LAND (01109.HK) announced for the month ended 31 May 2021, the company achieved gross contracted sales of approximately RMB25.09 billion +18.2% YoY with contracted GFA of approximately 1.4139 million square meters, +11.2% YoY. It also announced that in May, the Group acquired 6 land parcels in Wuxi, Hangzhou, Beijing, Qingdao, Nanjing and Harbin with total GFA of approximately 2.11 million square meters. The attributable consideration payable by the Group of the land acquisition amounted to approximately RMB23.8 billion.
GOOD FRIEND (02398.HK) announced that the total sales for the first five months of 2021
amounted to RMB393 million, representing an increase of 41% yearly.
GANFENG LITHIUM (01772.HK) is planning to launch placing of 48 million new H-shares, at prices ranging from $99.2-$101.35 per share, indicating a 5-7% discount, calculating with today's (10th) closing price.
The placing, with a lock-up period of 90 days, is expected to raise as much as $4.86 billion and the proceeds obtained will be utilized for capacity expansion, potential investment and ordinary operational purposes.
LINK REIT (00823.HK) and AlipayHK announced the launch of a shopping offer at Link’s fresh markets to drive digital payment transformation.
Link will offer shoppers of its fresh market a total of HK$5 million worth of cash coupons exclusively through the AlipayHK platform. This initiative will drive sales to the nearly 2,000 stalls at 26 Link’s directly managed fresh markets.
DICKSON CONCEPT (00113.HK) announced results for the year ended 31st March, 2021.
The net profit amounted to HK$462 million, down 28.5% yearly.  EPS was HK117.2 cents. A final dividend of HK27 cents was declared.
The Governments of the Hong Kong Special Administrative Region (HKSAR) and Singapore will review in early July
the target date of inaugural flights under the Hong Kong-Singapore Air Travel Bubble (ATB), taking into account the latest development of the COVID-19 epidemic situation in Singapore, which has been stabilising since early June. An announcement on the way forward would be made in early July.
Centa Valuation Index (Major Banks) (CVI) last stood at 75.38 this week, up 6.95 pts weekly with the sharpest rally in 11 weeks.

The index stood firmly around 70 for three consecutive weeks, zooming past 75 this week, meaning banks had remained bullish on home market outlook, said the research department of Centaline Property. They believed CVI will hold steady at around 75, with a persistent home price rally.
EGL HOLDINGS (06882.HK)'s executive director Yuen Ho Yee said that, since laying off hundreds of tourist guides last year, most of the group's employees in store are still on no-pay leave at the moment. The group's two hotels, among which the one in Okinawa is still operating, are subsidized by the Japanese government which has greatly reduced the operating cost. Yuen expressed that she hopes travelling, on which the recovery of the travel industry absolutely hinge, to resume as soon as possible and that the company is preparing to hold lucky draw activity to encourage vaccination, with details to be released later.
Having considered expert committee's opinion, Secretary for Food and Health Sophia Chan said the Government had approved to lower the Comirnaty vaccination age limit to 12 years old.  On another note, campus activity resumption will depend on the overall epidemic development, expert opinion and preparation made by schools, said Secretary for Education Kevin Yeung. Based on the opinion of expert committee yesterday, schools may revive full-day classes conditionally should they record a vaccination rate of 70%-80% among teachers and pupils.

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