June 12 Things to know before trading Asia on Monday.

12 Jun

This and previous notes can be found at Substack ( Asian Market Sense )
Check out ERI-C.com for  interesting research and trading analysis

Asia Expect a cautious start to the week with Taiwan, China and HK closed.   Sentiment +VE after the US and Europe closed higher.  

Key this week the  US FOMC, Japan’s trade data and BoJ decsision and Chinese  Industrial Production, Retail Sales, FAI, Unemployment House Price Index and maybe FDI.  

Australia Market likely to open higher after the US and having closed at a new high on Friday.
Japan Nikkei expect a cautious open ahead of the Industrial Production and Capacity Utilisation data due out at lunchtime
S Korea Expect markets to open
Taiwan Market closed Tuen Ng Festival (Dragon Boat Festival)  Re opens Tuesday
China Market closed Tuen Ng Festival (Dragon Boat Festival)  Re opens Tuesday
HK Market closed Tuen Ng Festival (Dragon Boat Festival)  Re opens Tuesday
ADR’s closed -79pts @ 28,763 with weakness in the Chinese Financials, E-Commerce names mixed
US focus this week will be the FOMC meeting but we get PPI Index on Tuesday which is likely to be hot. Some key earnings  Oracle,  Lennar, Kroger, Jabil and Adobe

Tuen Ng Festival
There are many different explanations to the history of the Tuen Ng festival; the one I like is that the festival commemorates the death of the poet and minister Qu Yuan (340–278 BC) of  Chu.  He served the King but when the king decided to ally with the increasingly powerful state of Qin he was exiled for opposing the alliance.  He became a poet but many years later the state of  Qin captured Ying where Qu was in exile. In despair, Qu Yuan died by suicide by drowning himself in the Miluo River.On seeing this the local people, who admired him, raced out in  their boats to save him, or at least retrieve his body. This is said to have been the origin of dragon boat races. When his body could not be found, they dropped balls of sticky rice into the river so that the fish would eat them instead of Qu Yuan's body. This is said to be the origin of chinese dish of Zongzi.

DOW +0.04%, NDX +0.35%, S&P +0.19%, Russel 2K +1.06%
Markets traded around flat as investors assess the prospects of a strong recovery whilst trying to work out if the current inflation indicators are transitory or permanent.  The Michigan data would suggest that people are accepting the Fed’s line that the signs of inflation are temporary.  We may get more information from this weeks FOMC meeting.  
Nasdaq had its fourth winning week closing +1.9% WoW; S&P was +0.4% and the Dow -0.8%
Snowflake -3.3% after investor day fails to inspire investos
Vertex Pharma -11% after halting experimental drug trail.
Chewy -5.8% beat estimates but warned on outlook about higher costs.
Meme stocks AMC +15.4%, GameStop +5.9%, Clover Health +4.8% Blackberry +2%
Banks JPMorgan Chase flat, Citigroup -0.5%, Wells Fargo +1.3%, Amex +1.4%
Work from home names: Facebook -0.4%, Apple +1%, Amazon -0.1%, Netflix +0.3%,  Disney +0.5%, Zoom Video +5.7%, Alphabet -0.2% and Microsoft +0.3%.
Tech NXP Semi flat, Nvidia +2.3%, Micron +0.1%, AMD -0.3%, Skyworks +1%
Re-opening stocks  Boeing -0.4%, Caterpillar -2.2%, Simon Property -0.2%, Kohl’s +2%, Nordstrom +2.7%, Gap +3.2%, United Airlines +0.5%, Carnival +0.3%, Wynn Resorts +0.8%, Chevron +0.5%, Exxon Mobil %
Lock down names Campbell Soup % General Mills %, JM Smucker -0.9%

Michigan Data Prelim
Current Conditions Jun 90.6 vs 89.4 May (F/cast was 89.7)
Inflation Expectations Jun 4% vs 4.6% May (F/cast was 4.8%)
Consumer Sentiment Jun 86.4 vs 82.9 May (F/cast was 83)
5year Inflation Expectations Jun 2.8% vs 3% May (F/cast was 3.1%)
Consumer Expectations Jun 83.8 vs 78.8 May (F/cast was 78.1)
Baker Hughes Total Rig Count 461 vs 456 prior
Baker Hughes Oil Rig Count 365 vs 359 priorUSD was stronger vs Yen & Euro. Bitcoin -5% @ 35,370, VIX -2.8% @ 15.65, US T10 @ 1.454% easing despite the inflation debate.
OIL Brent +0.18%, WTI +0.7% hitting multi year highs as demand seen recovering.
Gold -0.89%, Silver +0.07%, Copper +1.49% Platinum +0.29%, Palladium -0.1%.
Consumer Inflation Expectations May (Apr was +3.4% F/cast is +3.8%

DAX +0.78%, CAC +0.83%, FTSE +0.65%
Having opened around flat markets worked higher focusing on recovery/growth rather than inflation which many believe to be temporary.  All sectors closed in the green with Resources leading.
Investor also encouraged by the positive vibes coming out of the G7 meeting and combating covid with 1B doses of covid vaccine to be donated to developing countries.
German wholesale prices were stronger than expected. UK data was shy of forecasts.
Scor +8% on news of a truce with mutual insurer Covea following a bitter battle that started with the latter’s failed hostile takeover bid in 2018.
Grifols +8.5% after competitor Vertex Pharma halted an experimental drug trial.
MorphoSys +4.2% on a JPMorgan downgrade because of its planned acquisition of U.S. cancer specialist Constellation Pharma.
Deutsche Bank -1.7% as the ECB pushes it to name a new chairman ahead of Paul Achleitner’s retirement next May
Wholesale Prices May +1.7% MoM vs +1.1% Apr (F/cast was +0.6%)
Wholesale Prices May +9.7% YoY vs +7.2% Apr (F/cast was +8.4%)
Later Bundesbank Semi Annual Forecasts
Oil demand is set to rise above pre-COVID-19 pandemic levels by the end of next year, the report said yesterday, but producers have sufficient capacity rise to the challenge.
Balance of Trade Apr £-0.9B vs £-2BMar (F/cast was £-3.2B)
Construction Output Apr +77.9% YoY vs +6% Mar (F/cast was +80%)
Industrial Production Apr +27.5% YoY vs +3.6% Mar (F/cast was +29.1%)
Industrial Production Apr -1.3% MoM vs +1.8% Mar (F/cast was +1.5%)
Manufacturing Production Apr +39.7% YoY vs +4.8% Mar (F/cast was 40.8%)
Manufacturing Production Apr -0.3% MoM vs +2.1% Mar (F/cast was +1.5%)
GDP 3-month average Apr +1.5% vs -1.5% Mar (F/cast was +1.2%)
Goods Trade Balance Apr £-10.96B vs £-11.71B Mar (F/cast was £-12.8B)
GDP Apr +27.6% YoY vs +1.4% Mar (F/cast was +28.5%)
GDP Apr +2.3% MoM vs +2.1% Mar (F/cast was +2.5%)
NIESR monthly GDP tracker May +3.8% vs +1.5% Apr revised (F/cast was +3.4%)
EUROZONE Industrial Production Apr (Mar was  +10.9% YoY F/cast is +38%  (Mar +0.1% MoM F/cast is +0.4%)
GERMANY No data due
FRANCE No data due
UK No data due

Expect markets to open higher at this stage. But caution ahead of Trade Data on Wednesday, Inflation data and BoJ Rate decision Friday  
Yen closed 109.65
Data due Monday at lunchtime
Industrial Production  Apr (Mar was +1.7% MoM F/cast is+2.5% (Mar +3.4% YoY  F/cast is +15.4%)
Capacity Utilisation Apr (Mar was +5.6% MoM F/cast is +4.2%)
Tokyo reported 435 new covid cases Friday, (-4 DoD) and Nation wide the number dropped to 1,937.
Japan is considering easing covid restrictions in areas including Tokyo and Osaka on June 21 when the state of emergency is lifted, a government official said Friday
Japan's exports likely posted their largest monthly rise in four decades in May, a Reuters poll showed on Friday, but the flattering milestone was largely reflective of a rebound in shipments from last year's pandemic-driven plunge.
Sega Sammy Holdings said on Friday it had submitted a proposal to build a casino complex in Yokohama in a partnership with Genting Singapore.  Japan has sought to build several Las Vegas-style casino complexes to  boost tourism. Analysts have previously estimated Japan’s casino market  could be worth about $8 billion a year, although enthusiasm has waned in  the past few years, with Las Vegas Sands and Wynn Resorts withdrawing  from projects in Japan. +VE
Itochu Corp  and 22 industry players are conducting a joint study into the potential  adoption of ammonia as a carbon-free marine fuel, it said on Friday.  Ammonia,  a hydrogen-carrying chemical used as a fertiliser but also in other  applications such as explosives, is one of several candidates to become  the shipping industry’s preferred zero-carbon shipping fuel. +VE
Four Toshiba Corp (6502.T) directors called on Friday for a shake-up of its management and board, in a sign of revolt after an investigation found the conglomerate colluded with the Japanese government to "beat up" foreign shareholders.  The very public push-back by the independent directors, all non-Japanese, is the latest twist in a scandal that shows how the old guard of Japan Inc, while still powerful, can no longer exert full control over shareholders. Japan's trade minister on Friday denied his officials directed an adviser to lean on Toshiba's foreign shareholders to ensure management won a key vote on board membership last year.  This is likely to put a number of managements on warning along with the government and given that PM Suga has been mentioned in report it is not likely to go away.  -VE
The Japan Fair Trade Commission (JFTC) plans to demand that three major mobile phone carriers review their relationships with mobile phone resellers, claiming that the carriers’ systems of evaluating the resellers could result in consumers being led to sign up for excessively high-rate plans, which is undesirable from the perspective of fair competition.   -VE Telco operators
Toyota said Friday it aims to make its production carbon-neutral by 2035, replacing the previous target date of 2050.  The Japanese firm’s chief production officer, Masamichi Okada, made the pledge during an online presentation on Friday, as the G7 leaders meet in Britain to discuss tackling climate change and other pressing issues. +VE
British PM Boris Johnson on Friday gave the Tokyo Olympics a show of public support at a meeting with PM Suga and welcomed efforts to ensure the Games can take place safely.
The number of employees offered voluntary early retirement by listed companies in Japan has exceeded 10,000 so far this year, three months faster than in 2020, a private survey has shown.  Fifty companies have made such offers, and about 70% of them have reported net losses, according to Tokyo Shoko Research Ltd.

Expect markets to open higher following the US, no data this week but investors will be watching the US PPI and FOMC meeting.
No data due
KDCA reported 565 new covid cases Saturday 
below 600 for a second day but +9 DoD  Still overall +VE
North Korean leader Kim Jong Un chaired a Central Military Commission meeting, state media KCNA said on Saturday, where he called for boosting military power, but KCNA did not have details of any military activities planned.  The meeting on Friday called for a "high-alert posture" against the "recent fast-changing" situation on the Korean Peninsula, said KCNA.
Kim discussed "important tasks" to make "a fresh turn in the overall work of national defense," KCNA said without elaborating on details.
McDonald's said on Friday that a data breach in South Korea and Taiwan 
has exposed some customer and employee information, making it the latest global company to be targeted by cybercriminals. -VE
Krafton, the company behind blockbuster video game PlayerUnknown’s Battlegrounds (PUBG), will launch its IPO early next week in what could be South Korea’s largest listing in 11 years, people familiar with the matter said. The Tencent-backed company aims to raise at least $5 billion in the initial public offering (IPO) by selling 20% of its shares, one said after the Korea Exchange announced that Krafton had preliminary approval for its planned listing.  +VE Tencent.
Naver Labs unveiled a solution on Friday at the Seoul Smart Mobility Expo  that could support the digitalization of large cities.  Dubbed “Alike,” the solution can be used to create “digital twins” of cities, complete with roads and buildings. Expected to be used for smart city projects, autonomous driving, service robotics and metaverse services, according to the company. slight +VE
SK Telecom, will showcase four new video games at a world-class gaming conference, in a bid to expand into the global console game industry, the company said Friday.
The “E3 2021,” the largest electronic game exhibition in the US starts  Saturday, and will be held online to run from June 12 to 14.  The four games are Action shooter Anvil by Action Square, role-playing game Little Witch in the Woods by Sunny Side Up, action adventure game Vapor World by Alive and card action game Neoverse by Tino Gamez. +VE
South Korea's domestic demand is extending an improving trend as retail sales and consumer sentiment gained ground amid an economic recovery, the finance ministry said Friday.  In its monthly economic assessment report, the ministry presented a positive assessment of private consumption for the second straight month. Last month, the government said domestic demand is "gradually" improving.  +VE
Hyundai Motor Co. said Friday it has resumed operations at its four domestic plants following a half-day suspension due to the disruption of parts supply caused by the COVID-19 pandemic at a key parts supplier. +VE

Market closed re-opens Tuesday.
No data due but this week there is a Central Bank interest rate decision on Thursday; no change expected. On Friday we get unemployment.
CECC reported that Taiwan’s R number had dropped to 0.7  
(from a peak of 15) a sign that the recent outbreak is being brought under control. But they still called for vigilance.  CECC reported 287 new covid cases Friday and recommended people did not travel over the long weekend.
US. Sec. of State Antony Blinken on Saturday (June 11) urged China's Director of the Central Foreign Affairs Commission Office Yang Jiechi to stop exerting pressure on Taiwan 
and seek instead a peaceful resolution to cross-strait issues.  Blinken spoke with Yang over the phone to discuss North Korean denuclearization, the pandemic, Iran, the military coup in Myanmar, and climate change. They also touched upon the origin of COVID-19, as well as Taiwan and Hong Kong, according to a U.S. State Department press release.  +VE for sentiment. 
A magnitude 5.3 earthquake struck off the coast of southeastern Taiwan at 5:58 a.m. on Saturday, according to the Central Weather Bureau.
No damage or injuries from the quake were immediately reported.
Hon Hai Precision spent 108 million ringgits (US$26.27 million), or NT$726 million, for a 5.03% stake in Dagang NeXchange Bhd a Malaysian holding company with semiconductor interests to boost its presence in the IC sector.
TSMC Closed Friday abover NT$600 as May sales hit a new high with analysts attributing the growth to growing global demand for emerging technologies, particularly high performance computing (HPC) devices.  It posted NT$112.36 billion (US$4.07 billion) in consolidated sales, +0.9% MoM reversing a month-on-month decline of 13 percent in April, (semiconductor sector slow season effects.)  In the first five months of this year, TSMC's consolidated sales totaled NT$586.09 billion, up 17.1 percent from a year earlier.
Almost all local financial conglomerates reported a monthly drop in net profit last month, as their investment and wealth management businesses were affected by a COVID-19 outbreak in the home market.
Except for SinoPac Financial Holdings Co, whose net profit rose 4 percent sequentially to NT$1.25 billion (US$45.24 million) last month, the 14 other local financial conglomerates said their net profit declined by a high single-digit or double-digit percentage from April. -VE Financials
Formosa International Hotels Corp yesterday said that its board had approved plans to sell all its shares in Domino’s Taiwan to Australia-listed fast-food operator Dominio’s Pizza Enterprises Ltd for US$61.2 million.  The deal, scheduled to be completed in 90 days, would give FIH the financial means to stay competitive and safeguard the interest of employees and shareholders as the hospitality industry at home and abroad is hit hard by the COVID-19 pandemic, the Taipei-based company said.  +VE

Market closed re-opens Tuesday.
No data due but this week we get Fixed Asset Investment,Industrial Production, Retail Sales, Unemployment, House Price Index and could get FDI.
China confirmed 35 additional COVID-19 cases yesterday, 
including eight local infections in Guangdong, reported by the National Health Commission.
BlackRock has won the first approval for a foreign asset manager to  launch a wholly owned mutual fund business in China, 
as the US group  boosts its presence in the country’s rapidly expanding investment  industry.+VE
SCMP Report Why Asean is wary about stronger ties with China?  Concerns that  a disagreement over the wording of China-Asean joint statement indicates that Asean nations are being cautious which could jeopardise negotiations for South China Sea code of conduct.  Evidently a  disagreement arose on Monday during a meeting between Chinese Foreign Minister Wang Yi and his counterparts from the 10-member Association of Southeast Asian Nations (Asean) Slight -VE for sentiment.
China is broadening a political education campaign as it celebrates the 70th anniversary of its control over Tibet.
  Chinese officials say the campaign is key to the future of Tibet, a region which makes up over 12% of China’s land mass but is home to just 3.5 million people, mostly ethnic Tibetans.  Reuters has an article about a press tour that was recently arranged. https://www.reuters.com/article/us-china-tibet/xi-jinping-is-my-spiritual-leader-chinas-education-drive-in-tibet-idUSKCN2DN1CA

closed -79pts @ 28,763 with weakness in the Chinese Financials, E-Commerce names mixed
No data due this week we get Industrial Production and Unemployment

Selling Friday 14% vs 15.4% Thursday
Top Shorts 
Hengan (1044) 34%, Ping An (2318) 32%, Citic (267) 32%, Bank of China (3988) 30%, Geely Auto (175) 27%, Country Garden (2007) 26%, Mengniu Dairy (2319) 25%.

National Security
US Consul-General Hanscom Smith in Hong Kong said the imposition of a new national security law had created an “atmosphere of coercion” that threatens both the city’s freedoms and its standing as an international business hub. Full Reuters interview

A JD.com (JD.US) an ADR holder intends to sell 2.75 million ADRs at a placing price of US$70.75 each,
representing a 1.53% discount to yesterday's closing price of US$71.85, to pocket US$195 million (around HK$1.52 billion), Bloomberg citing insiders.

HSBC announced that the subscription for the new batch of iBond received overwhelming response with the number and amount of applications toppling the 2020's level. 
This reflected that customers kept seeking products with stable return amid low rate environment. The number of applications for iBond via HSBC even hit the record high. HANG SENG BANK (00011.HK), on the other hand, said the iBond was well-received by clients this year, with the total subscription amount setting all-time high and the total subscribers rising almost 40% over last year. BOC HONG KONG (02388.HK) said iBond was in hot demand with the amount and number of subscriptions logging new highs.

CST GROUP (00985.HK) announced that the Subscriber, a wholly-owned subsidiary of the Company, entered into the Subscription Agreement with the Fund - Princeville Global III LP, pursuant to which the Subscriber agreed to subscribe for the Limited Partner Interests in the Fund, for a capital commitment of US$10 million.

FLAT GLASS (06865.HK) announced that the China Securities Regulatory Commission (CSRC) had approved the Company’s application for the issuance of additional H shares. It is approved that the Company would issue not more than 76 million overseas listed foreign shares with a par value of RMB0.25 each, all of which are ordinary shares.

Application for a new batch of the Green Form Subsidised Home Ownership Scheme (GSH) flats was closed yesterday (10th).
Roughly 50,000 applications were received
for this batch, according to the Housing Department. Based on 3,437 flats on sale, an over-subscription of 13.5 times had been recorded for this batch of GSH flats.

XIAOMI-W (01810.HK)'s directly-operated Mi Home stores in Beijing and Shanghai, 
as well as exclusive stores in Beijing are now supporting digital yuan payments, announced by Airstar Wallet.

Leung Chun Ying, vice chairperson of CPPCC and former chief executive of Hong Kong, suggested on his personal social media that the government could utilize the 70-hectare outskirt area of the Tai Lam Country Park to build HOS flats.  
The former chief executive said that the area is estimated to be able to provide 25,000 units with a salable area of approximate 500 sq.ft. and over a thousand low-density units for the elderly. Leung suggested the government to sell the flats at the cost price of $6,000 per sq.ft. and predicted the project to be able to benefit around 70,000 people.

Hang Seng Indexes Company announced that, subject to all the conditions of the privatisation proposal being fulfilled or waived, CAR INC (00699.HK) will be delisted from the Stock Exchange of Hong Kong. 
Appropriate constituent changes will therefore be made to Hang Seng Composite Index (HSCI), Hang Seng Consumer Goods & Service Index, Hang Seng Stock Connect Hong Kong Index, Hang Seng SCHK Mainland China Companies Index, Hang Seng SCHK ex-AH Companies Index, Hang Seng SCHK HK Companies Index, and Hang Seng Small Cap (Investable) Index after market close on 23 June. The changes will come into effect on 24 June.

HKEX (00388.HK) issued a notice to brokers, stating that, brokers who wish to participate in this upcoming Silver Bonds issuance have to submit the signed letter of undertaking to the HKMA on or before 23 June.
According to the previously released Budget, the government plans at least $24 billion of Silver Bonds, with the eligible age for subscribing lowered from 65 to 60 years old.

CPIC (02601.HK) announced that the accumulated primary insurance premiums of China Pacific Life Insurance Co., Ltd. and China Pacific Property Insurance Co., Ltd., both of which are the subsidiaries of the company, for the period between 1 January 2021 and 31 May 2021 amounted to RMB121.173 billion and RMB67.609 billion respectively. The combined income amounted to RMB188.782 billion, up 5.16% year-over-year.

PICC P&C (02328.HK) announced that its accumulative original insurance premium income for the period from 1 January 2021 to 31 May 2021 amounted to RMB202.622 billion, up 1% year-over-year.PICC GROUP (01339.HK) announced that the aggregate premiums income as derived from operating subsidiaries PICC P&C (02328.HK), PICC Life and PICC Health for the first five months of 2021 were RMB202.622 billion, RMB57.408 billion and RMB21.73 billion, respectively. The sum added up to RMB281.76 billion, up around 0.37% YoY.

The total gross value of construction works (GVCW) performed by main contractors in the first quarter of 2021 slightly decreased by 0.6% in nominal terms over a year earlier to $55.5 billion, according the Census and Statistics Department (C&SD).  
After discounting the effect of price changes, the provisional results showed that the total GVCW performed by main contractors slightly increased by 0.2% in real terms over the same period.

NCI (01336.HK) announced that the accumulated gross premium income of the Company for the first five months of 2021
was RMB82.671 billion, up nearly 4.64% yearly.

Centa-City Leading Index CCL hiked 0.28% week-over-week to 185.68, setting a new high in the past 93 weeks. 

CCL Mass rose 0.41% week-over-week to 188.33;
CCL for small and medium units climbed 0.29% week-over-week to 185.93.
Said research department of Centaline Property, predicting the New Territories West area to be leading an uptrend for the entire housing market over the next few weeks as the property price in the area continues to soar with a CCL Mass edged near its historical high.

Chip scarcity was the most pressing issue facing China's auto sector amid sales decline in May, China Business Network citing CAAM's Deputy Secretary General Shi Jianhua, who was not very bullish on the June sales data. He predicted chip shortage, which had dealt a heavy blow in the second quarter, to ease at the end of the third quarter or in the fourth quarter.

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