June 15 Asian Macro Initial Thoughts Expect a higher open but cautious trading ahead of FOMC; China under pressure.

15 Jun

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Asia Summary  Expect a flat open ahead of the FOMC meeting Wednesday and the US Retial Sales and PPI data today.  Australia, Taiwan, China and Hong Kong re-open.  

Australia Future indicate market to open +56pts to a new high; sentiment +VE on the expectation of more details of a trade agreement with UK. Oil names +VE as crude rose in US trading but Gold names weak, and Tech likely to see interest. S&P Dow Jones Indices Rebalance names in focus; On 21 June, Chalice Mining Ltd, Orocobre Limited, and Uniti Group Ltd will join the index. They will be replacing Austal Limited, Perenti Global Limited, and Resolute Mining Limited (ASX: RSG).
RBA Meeting Minutes, House Price Index Q1 (Q4 was +3.6% YoY or +3% QoQ (F/cast is +9.5% YoY and +5.1% QoQ)
Japan Nikkei futures opened +12pts (Chicago futures +35pts, Singapore +175pts); expect a +VE open and similar trading to Monday;  upside likely to remain muted ahead of US data and FOMC meeting.
S Korea Expect markets to open flat having hit all time highs on Monday on moderate trading volumes but to work cautously higher.
Taiwan Market to re-open higher playing a slight catch-up good news out of TSMC +VE for the sector and expectShipping and Steel to remain firm.  The easing of the covid outbreak +VE
China Market to re-open lower as G7 takes a harder line with China -VE for semtiment.  Team China remain the wild card.
HK ADR’s +92pts at 28,934 but expect cautious trading after the increased G7 pressure on China and ahead of US FOMC meeting. Chinese banks remained weak.
EUROPE  will release Eurozone Trade balance and Inflation data for Germany and France 
US Futures 
Opened Dow futures -20 points. S&P 500 futures were flat and Nasdaq 100 futures ticked 0.1% lower. Tonight PPI and Retail sales data likely to keep investors cautious

NATO warns that China poses a  “systemic challenges” to the rules-based international order.

DOW -0.25%, NDX +0.74%, S&P +0.18%, Russel 2K -0.41%
Nasdaq opened higher with tech stocks seeing interest at Treasury yields fell. It traded sideways for most of the day and ticked higher into the close. S&P and Dow opened lower. S&P traded slightly in the red for most of the day but ticked higher into the close.  Dow drifted lower until around 2pm after which it worked higher but still closed in the red.  Nasdaq and S&P closed at new highs.  
Bitcoin rallied as Musk tweeted that Tesla would resume using it when its miners use reasonable clean energy.
Iraq says deal ready with the US.
JP Morgan -1.7%; sees a 38% drop in trading volumes in Q2. He also says the bank is hoarding cash as ‘there is a good chance’ inflation is permanent.
General Motors -1.1% plans to announce more U.S. battery factories later this week. President Mark Reuss gave no details of where the factories would be located or exactly what they would manufacture.
Aftermarket news
Airbus and Boeing to resolve dispute; with Biden expected to make an announcement on Tuesday from Europe.
JPMorgan Chase -1.7%,  Citigroup -1.7% Wells Fargo -1.1%, Amex -0.4 %
Work from home names: Facebook +1.7%, Apple +2.5%, Amazon +1.1%, Netflix +2.3%,  Disney +0.5%, Zoom Video -0.1%, Alphabet +0.8% and Microsoft +0.8%, released more titles for its Xbox.
Tech NXP Semi +1.5%, Nvidia +1.1%, Micron +1.5%, AMD +0.3%, Skyworks +1.6%
Re-opening stocks  Boeing -0.9%, Caterpillar -0.8%, Simon Property -0.7%, Kohl’s -3.2%, Nordstrom -2.9%, Gap +0.4%, United Airlines -1.4%, Carnival -3.9%, Wynn Resorts -1.8%, Chevron flat, Exxon Mobil -0.2%,  
Lock down names Campbell Soup -0.6% General Mills +0.2%, JM Smucker -0.1%
Consumer Inflation Expectations May +4% vs 3.4% (F/cast was +3.8%) highest in 8 years.
USD was slightly weaker vs Yen & Euro. Bitcoin +7.2% @ 40,205.88, VIX +4.7% @ 16.39, US T10 @ 1.497% rising slightly ahead of the FOMC meeting.
OIL Brent +0.69%, WTI +0.39% hitting a 2 year high on hopes of demand growth
Gold -0.63%, Silver -0.54%, Copper -0.29% Platinum +1.36%, Palladium -0.95%.
Retail Sales, PPI and Core PPI, NY Empire Stake Manufacturing Index, Redbook, Industrial Production, Manufacturing Production, Capacity Utilisation, Business Inventories, NAHB Housing Market Index, Foreign Bond Investment, Net Long Term Tic Flows, Overall Net Capital Flows, API Crude Oil Stock Change.
Earnings: Oracle, La-Z-Boy, H&R Block

DAX -0.13%, CAC +0.24%, FTSE +0.18%
Markets opened higher and initially saw an uptick before trending lower and then trading around flat in the PM with the DAX ticking lower into the red at the close.  Investors cautious ahead of the US FOMC meeting
TeamViewer +5.9% after announcing a new partnership with SAP, while Philips -4.2% after recalling some of its ventilator machines in the U.S.
PM Johson extended the UK lockdown for up to 4 weeks; -VE Airlines and Leisure names.
Industrial Production Apr +39.3% YoY vs  11.5% Mar revised (F/cast was +38%)
Industrial Production Apr +0.8% MoM vs +0.4% Mar revised (F/cast was +0.4%)
EUROZONE Balance of Trade  
GERMANY Inflation Rate
FRANCE Inflation Rate  
UK  Claimant Count,Employment Change, Unemployment Rate, Average Earnings. BoE Gov Baily Speaks.

Nikkei futures opened +12pts (Chicago futures +35pts, Singapore +175pts); expect a +VE open and similar trading to Monday; upside likely to remain muted ahead of US data and FOMC meeting.
Yen currently 110.06
Data due at lunch.

Tertiary Industry Index Apr (Mar was +1.1% MoM (F/cast was +0.9%)
Earnings Hoshino Resorts REIT Inc. (3287 JP), Invesco Office J-Reit Inc. (3298 JP), Kenedix Office Investment Corp. (8972 JP), Mirai Corp. (3476 JP), Sekisui House REIT Inc. (3309 JP), Starts Proceed Investment Corp. (8979 JP)
Tokyo reported 209 new covid cases Monday (-95 DoD), the nationwide total was 936  +VE for sentiment
PM Suga's Cabinet will face a no-confidence motion from opposition parties over its refusal to extend the current parliamentary session, the Kyodo news agency reported on Monday, though it is very unlikely to succeed.
The central government is considering placing Tokyo under a quasi-state of emergency during the Olympics, after a number of health experts expressed concerns over a potential spike in COVID-19 cases, a government official said Monday. Slight -VE
The government said Monday it has launched an investigation into allegations China and South Korea are exporting iron wire at inappropriately low prices following complaints from Japanese producers.
Toshiba Corp. apologized to shareholders Monday and said it would remove two directors, after a probe found the Japanese conglomerate had sought government help to try and influence a boardroom vote.  Board chair Osamu Nagayama acknowledged a “lack of awareness on our part, including our dealings with METI,” referring to the Ministry of Economy, Trade and Industry.  But the chairman resisted calls to quit.

Expect markets to open flat having hit all time highs on Monday on moderate trading volumes but to work cautously higher.
No data due

KDCA reported 399 new covid cases Monday; the first time in more than two months to drop below 400.
South Korea began easing restrictions on large concerts and sports events on Monday after announcing last week it would loosen a series of coronavirus curbs as the country pushes ahead with its vaccination drive.
Samsung Electronics said Monday it will supply its latest 5G network solutions to Vodafone, a London-based teleco giant, a move that will expand its presence in Europe. The value of the deal was not disclosed. +VE
Hyundai Motor Co and General Motors Co said on Monday they are pushing ahead with developing flying cars, with the South Korean company expressing optimism it could have an air-taxi service in operation as soon as 2025.
Daewoo Shipbuilding & Marine Engineering, said Monday that it has won a trillion won unit order to build an offshore crude oil storage facility.  The latest order marked the first offshore facility order for DSME in three years as well as the first trillion won unit order in seven years, officials said.  +VE but stock closed flat after an initial rally.
Celltrion announced Monday that its COVID-19 antibody treatment has significantly shortened the recovery time and rate of progression for severe symptoms +VE.
Hanwha Systems said Monday that it will develop autonomous underwater drone swarms for search and rescue missions by 2025.
It has formed a consortium with partners including the Korea Advanced Institute of Science and Technology for the 25 billion-won project ($22.4 million) commissioned by the Korea Institute of Marine Science and Technology Promotion. +VE
Half of SsangYong Motor Co.'s workers will go on unpaid leave for two years beginning next month as part of self-help measures as the debt-ridden automaker is striving to speed up its sales process, the company said Monday.  Slight +VE

Expect market to open higher playing a slight catch-up good news out of TSMC +VE for the sector and expectShipping and Steel to remain firm.  The easing of the covid outbreak +VE
No data due

CECC reported 185 new covid cases, all domestically transmitted, and 15 new deaths. First time below 200 since May 15, suggesting that the outbreak is easing.   But the CECC warned people not to let their guard down.  +VE
Taiwan's president and Presidential Office welcomed the latest G7 communique, which, for the first time in the group's history, called for the peaceful resolution of cross-Taiwan Strait issues.
The Ministry of Economic Affairs is to maintain feed-in tariffs for new solar power installations and grant a three-month grace period for manufacturers to complete their projects, as renewable energy installations have slumped due to the COVID-19 pandemic.  The ministry made the announcement after government officials and industry experts met on Thursday last week and agreed to extend feed-in tariffs to solar power projects that have been approved in the first half of this year.  Developers were not happy saying the rates were outdated.

Expect market to open lower as G7 takes a harder line with China.
No data due but released on Monday

FDI (YTD) May +35.4% vs 38.6% Apr (F/cast was 34%)
Two medical workers in the southern Chinese city of Guangzhou
have been infected with the coronavirus. 
Four new cases of infection were reported on Sunday, bringing the total to 146 cases of locally transmitted infections in this wave since May 21, including seven asymptomatic infections.
China on Monday accused the G7 of "political manipulation" after it criticized Beijing over its human rights record in Xinjiang and Hong Kong. It also accused it of interfering; and said the statement was "lies, rumors and baseless accusations".
Concerns over a possible fission leak at a nuclear reactor in Guangdong China after requests were made by the EDF the French company partnering with the local operators of the facility.  Comes after EDF asked for a waiver that would grant the company permission to share American technical know-how in handling the matter; according to a CNN report.  EDF said the plant was operting safely.
At least five mainland cities have banned related companies of developers from bidding for plots to increase the winning rate, the latest move to cool the property market.  The cities are Nanjing, Suzhou, Wuxi in Jiangsu province, Nanchang in Jiangxi province, and Dongguan in Guangdong province.  For example, Dongguan will only allow companies that have filed tax returns for more than a year to bid for land, on risk being banned from auctions for a year, according to an announcement on June 11. To improve the chance of tendering success, many mainland developers register shell companies and let them participate in land auctions.
China's home prices are expected to grow faster this year than anticipated a few months earlier fuelled by hot demand in major cities and easy liquidity, despite Beijing's heightened cooling measures, a Reuters poll showed earlier this month. -VE
GS report ‘Too Big to Fail’ May Not Apply in China Anymore:
Looks at the potential for defaults -VE
At least 12 people were killed and more than 100 others injured after a gas explosion tore through a residential community in the Zhangwan district of Shiyan city in Hubei province central China on Sunday, official media reported.  The blast took place at about 6:30 am local time Sunday trapping a large number of people Slight -VE.
Cambodian officials accuse Washington of interference after denying US attaché full access to Ream Naval Base.  Comes over possible privileges given to China at the Ream naval base and comes after the US asked to see the site where US facilities stood until being demolished last year.  Comes as the Khmer Govt says China would help modernise and expand Ream, but added that Beijing would not be given exclusive privilege to use the base. Slight -VE

ADR’s +92pts at 28,934 but expect cautious trading after the increased G7 pressure on China and ahead of US FOMC meeting. Chinese banks remained weak.
Data due after market Industrial Production

Short 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%.

A new position has been created to implement national security education in schools.  
Teresa Chan Mo-ngan, formerly the bureau's principal assistant secretary, has become deputy secretary for education (special duties) and will be responsible for coordinating measures linked to school administration and the security law.
Chan will also be in charge of formulating strategies for the development of government schools and reviewing people's work in the Education Bureau.

KATO (HK) HLDGS (02189.HK) announced net profit for the year ended 31 March 2021
of HK$79.87 million, representing an increase of 66.9% YoY. EPS equaled HK7.99 cents. The final dividend was kept at HK2 cents.
DAISHOMICROLINE (00567.HK) PROFIT WARNING The Group is expected to record a loss of an amount not more than HK$70 million for the year ended 31 March 2021, as compared to a net loss of HK$87 million for the preceding year.
China Overseas Land and Investment (0688) has received presale consent for One Victoria in Kai Tak and expects it to be the first residential project to go on sale on the former Kai Tak airport runway. The project offers 1,059 flats.  The project sits in Kai Tak Area 4B Site 2, which has a site area of 97,392 sq ft and a maximum gross floor area of 594,082 sq ft.
New World Development (0017) has released 170 flats in the fourth price list for the third phase of The Pavilia Farm above Tai Wai Station at an average price of HK$24,858 per square foot after discounts, 24 percent higher than the first price list. The third phase offers 892 flats.
COUNTRY GARDEN (02007.HK) announced that the Company has redeemed an aggregate principal amount of US$650 million of all outstanding September 2023 Notes on 11 June at the redemption price equal to 102.3750% of the principal amount, plus accrued and unpaid interest.
DIT GROUP (00726.HK) announced that Guo Weiqiang, an executive Director and the chief executive officer, acquired 1.1 million shares of the Company at an average price of HK$0.967 per share and HK$0.949 per share on 10 June and 11 June in the open market for an aggregate consideration of approximately HK$1.05 million.
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.
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.
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.

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