June 19 Things to know before trading Asia on Monday


19 Jun

This and previous notes can be found at  Substack ( Asian Market Sense )

Check out ERI-C.com for  interesting research and trading analysis

Data this week includes:
Australia
Light in terms of data just Retail Sales (Monday) and Flash PMI’s (Wednesday) but with markets at highs and some rethinking going on in terms of   commodities and inflation market may see initial weakness.  News that Australia is lodging a formal complaint with the World Trade   Organization over China's imposition of anti-dumping duties on   Australian wine exports, which the government announced Saturday a slight +VE for the sector.    

Japan BoJ minutes and Flash PMI’s Wednesday along with Coincident and Leading Economic Index, then Tokyo Core CPI Friday.  

S Korea PPI Tuesday, Consumer Confidence Thursday and Business on Friday.

Taiwan Export Orders Monday, Unemployment Tuesday,  Industrial Production and Retail Sales Wednesday and M2 Money Supply Thursday.

China Loan Prime Rate Monday and Industrial Profits next Sunday.

HK ADR’s closed -247pts @ 28,554 with only CLP and Unicom in the green.

Europe Flash PMIs,

Eurozone Loans data and M3 Money Supply
German 
Ifo data and Consumer Confidence

France Business Confidence & Climate data, Unemployment
UK
  BoE rate decision and Consumer Confidence, CBI Distributive Trades

US More housing data. Richmond Fed Manufacturing Index, Powell’s testimoney, Flash PMI’s, Durable Goods, GDP & PCE data and Michigan Final readings

DOW -1.58%, NDX -0.92%, S&P -1.31%, Russel 2K -2.17%
Triple Witching Friday; which added to the volatility.  Markets open lower after comments from the Fed’s Bullards who expects the first rate rise in 2022.  and traded sideways.  Signs of the reflation trade being unwound with weakness in the Russell.  Energy, Industrials, Commodities and Financials weak

Banks JPMorgan Chase -2.6%, Citigroup -1.8% Wells Fargo -2.4%, Amex -2.4%

Work from home names: Facebook -2%, Apple -1%, Amazon -0.1%, Netflix +0.5%,  Disney -1.3%, Zoom Video +0.4%, Alphabet -1.3% and Microsoft -0.6%,

Tech NXP Semi -2.7%, Nvidia -0.1%, Micron -4.6% second broker downgrade in two days on memory demand concerns, AMD +0.1%, Skyworks -2.4%

Re-opening stocks Boeing -0.8% despite it's newest version of the 737 Max jetliner completed its first test flight Friday, Caterpillar -0.3%, Simon Property -2.6%, Kohl’s -3%, Nordstrom -4.6%, Gap -3.4%, United Airlines +1.3%, Carnival -0.8%, Wynn Resorts -0.7%, Chevron -3.8%, Exxon Mobil -2.6%,  

Lock down names Campbell Soup -0.9% General Mills -2.2%, JM Smucker -2.4%

DATA

Baker Hughes Total Rig Count 470 vs 461 prior

Baker Hughes Oil Rig Count 373 vs 365 prior

USD was stronger vs Yen & Euro. Bitcoin -0.2% @ 35,377.21, VIX +16.6% @ 20.70,

US T10 @ 1.443% after comments from Bullard pre market saying he expected a rate rise in 2020

OIL Brent +0.53%, WTI +0.8%

Gold -0.61%, Silver -0.04%, Copper -1.34% Platinum -1.88%, Palladium -1.6%.

AHEAD

Chicago Fed National Activity Index, NY Fed Treasury Purchases

Fed’s Williams speaks


DAX -1.78%, CAC -1.46%, FTSE -1.9%

Markets opened flat but trended lower all day to close at the lows. UK retail sales were weaker than expected and German PPI was stronger, double the consensus. Commodity prices were weak. Financials were weak but Industrial were +VE Sterling hit a 6 week low.

Aegon -5.5% while compatriot pharmacist Shop Apotheke Europe +5%.Data
Eurozone
Current Account Apr€31.4B vs €31BMar (F/cast was €18.5B)
German

PPI May +1.5% MoM vs +0.8% Apr (F/cast was +0.5%)

PPI May +7.2% YoY vs +5.2% Apr (F/cast was +6.2%)

UK

Retail Sales May -1.4% MoM vs +9.2% Apr (F/cast was +2.1%)

Retail Sales May +24.6% YoY vs +42.4% Apr (F/cast was +29.7%)

Retail Sales Ex Food & Energy May -2.1% MoM vs +9.1% Apr revised (F/cast was +2.1%)

Retail Sales Ex Food & Energy May +21.7% YoY vs 37.7% Apr (F/cast was 28.1%)

AHEAD

EUROZONE No data due

GERMANY Bundesbank monthly report

FRANCE No data due  

UK  No data due


JAPAN
Expect markets to open lower on Monday following the US.
Yen close 110.19

No data due

Japanese medical experts said on Friday that banning spectators at the Olympics was the least risky option for holding the Games, even as they appeared resigned to the possibility of fans in venues during the COVID-19 pandemic. Olympic committee expected to make a decision on Monday regarding spectator numbers. But PM Suga likely to be encouraged as recent poll shows only 31% of Japanese against the games down from around 80%.   If  Japan does well PM Suga expected to call an election.

Japan's government pledged on Friday to keep its goal of achieving a primary budget surplus by fiscal 2025, with a caveat that the target will be reassessed this fiscal year due to COVID-19 pandemic, leaving room for a possible delay in fiscal reform.

The Bank of Japan surprised markets on Friday by unveiling a plan to boost funding for fighting climate change, joining a growing number of central banks stepping up efforts to address its economic and financial fallout.

Toshiba in focus with the Chairman Nagayama, under pressure to resign although the former U.S. Ambassador to Japan John Roos on Saturday endorsed Nagayama’s continued leadership.  I think they need a clean sweep as he endorsed the internal whitewash report.

U.S. automotive component maker Joyson Safety Systems' (JSS) Japan unit  said on Friday that it has found 1,000 cases of data falsification in  seatbelt tests at two plants it acquired from former airbag maker Takata  Corp. -VE

Tokyo residents are about to get a bit of a break just as the summer heat arrives with authorities in the Japanese capital preparing to relax a ban on alcohol in restaurants and bars when it lifts a coronavirus state of emergency.  Tokyo will soon allow “solitary drinkers” to order alcohol between 5 p.m. and 7 p.m., but keep an 8 p.m.  closing time for bars and restaurants, while limiting to 90 minutes the time each customer spends on the premises, local media said, quoting city government sources. +VE brewers but likely to promote binge drinking

The government plans to encourage firms to let their employees choose to work four days a week instead of five, aiming to improve the balance between work and life for people who have family-care responsibilities or need more time off to acquire new skills.  The government included the promotion of an optional four-day workweek in its annual economic policy guideline finalized Friday by Prime Minister Yoshihide Suga’s Cabinet.

Sumitomo Corp shareholders on Friday defeated a resolution requiring the Japanese trading house to align its business with international targets on climate change, in a vote at their annual general meeting. -VE


SOUTH KOREA
Expect markets to open lower on inflation and currency worries after comments from the Fed’s Bullard on Friday US time.

No data due

KDCA reported 482 new covid cases on Saturday ahead of the government announcing new 4 tier social distancing measures on Sunday.

A North Korean hacking group known as Kimsuky broke into the network of South Korea’s state-run nuclear think tank last month, the latest in a series of cyberattacks by the North, a South Korean lawmaker said on Friday. -VE

South Korea's industry ministry said Saturday it will spare no efforts to win a nuclear plant project from the Czech Republic as the European country is open to have Asia's No. 4 economy as a potential partner. +VE

Celltrion’s monoclonal antibody treatment Regkirona, or CT-P59, has shown initial promise in treating patients infected with COVID-19 variants, the company said Friday, quoting preclinical results from its recent animal test. +VE

Hanwha Solutions said Friday that its wholly-owned subsidiary Hanwha Compound has signed an agreement with SPC Pack to co-develop a biodegradable plastic material and use it for packaging SPC’s products. +VE

South Korea, which aims to go carbon neutral by 2050, will expand its smart water management by installing floating solar farms near dams and applying hydrothermal energy technologies to data centers. +VE

South Korea’s No. 2 carrier Asiana Airlines and its two affiliated companies face possibilities of being delisted from the nation’s main bourse Kospi, according to industry sources Friday.

The country’s bourse operator Korea Exchange announced Thursday that it has decided to examine the air carrier’s listing eligibility in line with the former Kumho Asiana Group chief’s arrest over allegedly unfair interaffiliate deals -VE.

South Korea’s government has officially approved three major taxi-hailing service brands as platform operators,  in a gesture to diversity transportation means, the Ministry of Land, Infrastructure, and Transport said Friday. The three brands are Kakao T, run by Kakao Mobility; Banban Taxi by Kornatus; and i.M. Taxi by Jin Mobility.


TAIWAN
Expect market to open lower following the US

Data due after market

Export Orders May (Apr was +42.6% F/cast is +44%)

Taiwan on Saturday reported 128 new cases of COVID-19, all but one of which were domestically transmitted, as well as 20 deaths from the disease, according to the Central Epidemic Command Center.

Three Chinese People's Liberation Army (PLA) vessels sailed through the Pacific Ocean off the coast of eastern Taiwan's outlying Green Island on Friday, Taiwan's military personnel said Saturday. -VE

The US’ top general on Thursday downplayed concern that China would attempt a military takeover of Taiwan in the near term, saying Beijing does not have the capability to do so.  He’s comments are at odds with the US Navy’s view which attributed a higher probability.   Slight +VE

The Canadian House of Commons on Thursday unanimously passed the first reading of a proposal to create a legal framework for efforts to strengthen relations with Taiwan. It was introduced by Canadian Member of Parliament Michael Cooper, who said that not having a formal diplomatic relationship with Taiwan has complicated interactions between the two nations.

The Mainland Affairs Council (MAC) yesterday slammed the Hong Kong government for arresting media executives, describing it as an attack on press freedom.  “The Hong Kong government’s repeated use of an infamous law against the media is beyond belief for a democratic country,” the council said in a statement.

Powertech Technology Inc plans to invest more than NT$20 billion (US$719.17 million) to build a second production facility at the Hsinchu Science Park as part of the government’s Invest in Taiwan initiative, the Ministry of Economic Affairs said yesterday.  Powertech was prompted to “reshore,” or shift its manufacturing facilities from China back to Taiwan, by a US-China trade dispute, InvesTaiwan Service Center interim spokeswoman Nicole Chen said +VE.

China Steel Corp posted NT$7.63 billion (US$274.36 million) in profit before tax for last month, a 24 percent month-on-month increase, thanks to strong demand worldwide as global economies reopen.  In May last year, the steelmaker lost NT$3.60 billion before tax.  The reversal is tied to global demand for steel, CSC executive vice president Hwang Chien-chih  said +VE.

Taiwan allows Foxconn boss Terry Gou and semiconductor giant TSMC to seek Covid-19 vaccines from BioNTech +VE

HSBC Bank (Taiwan) Ltd on Thursday announced that it has approved a two-year sustainability-linked loan (SLL) totaling US$70 million to Uni-President Enterprises Corp  which would use the proceeds to achieve four environmental objectives  +VE.

CHINA
Expect market to open as concerns remain about PBoC policy/tightening, international relationships and the current wave of covid cases.  The wild card as ever remains, Team China.

Data due Loan Prime Rate; no change expected

China reported 30 new confirmed COVID-19 cases on the mainland for June 18, up from 23 infections a day earlier, the country's health authority said on Saturday.

People who are vaccinated against COVID-19 with BioNTech's (22UAy.DE) vaccine were found to have "substantially higher" levels of antibodies than those who received Sinovac's jab, the South China Morning Post reported on Saturday, citing a Hong Kong study.  Some who received the Sinovac vaccine might need a third booster shot as well, the newspaper said, citing lead researcher Professor Benjamin Cowling, an epidemiologist with the University of Hong Kong (HKU). Slight -VE Sinovac.

A World Bank-led project declined to award a contract to lay sensitive  undersea communications cables after Pacific island governments heeded  U.S. warnings that participation of a Chinese company posed a security threat, two sources told Reuters. The former Huawei Marine Networks, now called HMN Technologies and  majority owned by Shanghai-listed Hengtong Optic-Electric Co Ltd,  submitted a bid for the $72.6 million project priced at more than 20%  below rivals Alcatel Submarine Networks (ASN), part of Finland’s Nokia,  and Japan’s NEC, the sources said.


HONG KONG
ADR’s pts -247pts @ 28,554 with only CLP and Unicom in the green.

No data due

The government expected to report 1 imported new covid case Satuday. (vs 3 imported cases Friday)


National Security Law
Apple Daily staff will "fight till the end" despite the government's crackdown, the newspaper wrote in a letter to readers.

Suggesting it is now "the worst of times in Hong Kong," the newspaper said its staff will continue to carry out their duties faithfully and "press on till the end to see the arrival of dawn."

It added: "The law enforcers have labeled journalistic materials that were openly gathered as evidence of crime; the regime has publicly called on journalists to keep a distance from fellow media workers who are merely doing their jobs."

Comes as Next Digital's CEO Cheung Kim-hung and editor-in-chief of Apple Daily Ryan Law Wai-kwong saw their bail application denied by the court on Saturday morning.

The Hong Kong police raid at pro-democracy tabloid Apple Daily "sends a further chilling message for media freedom", the chief U.N. human rights spokesperson told Reuters on Friday.

"We call on Hong Kong authorities to respect their obligations under the International Covenant on Civil and Political Rights, in line with the Basic Law, in particular freedom of expression, freedom of peaceful assembly and association and the right to participate in public affairs," Rupert Colville said by email.


Short Selling +Friday 22.14% vs 16.92% Thursday
Top Shorts  
Xiaomi (1810) 43%, Henderson Land (12) 41%, Bank of China (3988) 37%, Hengan (1044) 33%, Baba (9988) 32%, Petrochina (857) 29%, CKAsset (1113) 29%, Country Garden (2007) 28%, Mengniu Dairy (2319) 26%, HSBC (5) 25%, Hang Seng Bank (11) 25%, Ping An (2318) 25%.


WATCHOn the first day of public offering of Nayuki (02150.HK), brokers granted almost $72.86 billion margin to the IPO as at around 6 pm. The IPO was thus over-subscribed by more than 142 times based on the fundraising amount of $509 million from the public offering.  


HUTCHMED (00013.HK) (HCM.US) , on its first day of public offering as well, recorded almost $277 million margin. The subscription was only 47.3% based on the public fundraising amount of $585 million.

SWIRE PACIFIC A (00019.HK) announced that CATHAY PAC AIR (00293.HK), of which 45% stake is held by SWIRE PACIFIC A, expected to incur a substantial loss in the first half of 2021, but the loss should be lower than that reported in both the first and second halves of 2020.

The company continues to face significant challenges and uncertainties in 2021 as a result of COVID-19. The effect on the Aviation Division, particularly Cathay Pacific, is severe. However, the performances of Swire Pacific’s businesses in the first half of 2021 are now expected to be somewhat better than was the case when the 2020 results were announced. As a result, Swire Pacific no longer expects to incur a recurring loss in the first half of 2021.

The Lands Department (LandsD) announced that a site, Fanling Sheung Shui Town Lot No. 278 at Area 24, Kwu Tung, New Territories, in the 2021-22 Land Sale Programme will be disposed of by public tender. 
The tender invitation for the lot will commence on June 25 and close on July 23. Fanling Sheung Shui Town Lot No. 278 has a site area of about 7,624 square metres and is designated for non-industrial (excluding godown, hotel and petrol filling station) purposes. The minimum gross floor area and the maximum gross floor area are 27,447 sq m and 45,744 sq m respectively.

CATHAY PAC AIR (00293.HK) announced that it carried a total of over 24,000 passengers last month,
an increase of 30% compared to May 2020, but a 99.2% decrease compared to the pre-pandemic level in May 2019. The month’s revenue passenger kilometres (RPKs) rose 24.5% year-on-year, but were down 98.9% versus May 2019.  

It said the first half of 2021 has seen the tightening of travel restrictions and quarantine requirements as Hong Kong and the company's major markets continued the fight against COVID-19. These measures and the resulting increased quarantine for its aircrew have restricted its ability to operate passenger services beyond a single-digit percentage of its passenger capacity and have reduced its effective freighter capacity.

However, with the cost-saving measures implemented in 2020 (which are continuing) and a strong underlying cargo performance, its losses in the first half of 2021, while still very substantial, are expected to be somewhat lower than the losses reported in both the first and second halves of 2020. It said it is continuing to add more passenger flights to the Chinese mainland, UK and US in June.

London frequencies will be increased to serve students returning to Hong Kong.

The Lands Department said it had received six tenders for the commercial site at New Central Harbourfront, the tender of which had closed today (18 June). 
CK ASSET (01113.HK), SHK PPT (00016.HK), HENDERSON LAND (00012.HK) and a consortium formed by SINO LAND (00083.HK), CHI MER LAND (00978.HK) and GREAT EAGLE H (00041.HK) were among the bidders.  

JLL expressed that the commercial site at New Central Harbourfront received better-than-expected bidding reactions from the market. As this is first harbor-front site in the district to be up for sale in 25 years, with no other similar sites pending for sale in near-terms, JLL expects relatively aggressive bids from developers due to the scarcity of sites of this nature.  

The Hong Kong Monetary Authority announced that the composite interest rate, which is a measure of the average cost of funds of banks, decreased by 1 basis point to 0.20% at the end of May 2021
, from 0.21% at the end of April 2021.

The decrease in composite interest rate mainly reflected a decrease in the weighted funding cost for deposits during the month.

GREATWALL MOTOR (02333.HK) is weighing up acquiring a Daimler factory in Brazil 
in hopes of furthering its overseas expansion, Bloomberg citing insiders.

JD-SW (09618.HK) announced that the order value for JD's 618 Festival had accumulated to RMB305.6 billion
from 12am on June 1st to 2:04pm today (June 18th).

Thailand decided to go ahead with its Phuket pilot project from July 1st by exempting fully vaccinated tourists from the 14-day hotel isolation. 
The Asian country is gearing up for a nationwide reopening slated as early as October.

HK & CHINA GAS (00003.HK) and China's State Power Investment Corporation (SPIC) held the smart energy innovation TERRA Award in global pursuit of future-oriented smart energy innovative technology and solutions through competition. 
HK & CHINA GAS and SPIC are already partners in PV, wind power and other new energy projects in Mainland.


AlipayHK expressed that they will be partnering with a vast amount of offline and online businesses to give out rewards and discounts 
of a total worth of over $1 billion to users who choose to collect the consumption vouchers through AlipayHK.


Centa-City Leading Index (CCL) last stood at 186.58, up 0.49% weekly;
CCL Mass last printed at 189.33, up 0.53% weekly;

CCL (small-and-medium flats) last reported at 186.80, up 0.47% weekly, said the research department of Centaline Property. The three key indexes logged 94-week highs altogether, and ascended for three weeks.

The national security unit of the Hong Kong Police Force arrested five executives of NEXT DIGITAL (00282.HK) yesterday morning (17th), on the allegation of infringing The National Security Law,
and froze $18 million of assets belonging to Apple Daily and connected companies.The police has charged the CEO of NEXT DIGITAL Cheung Kim-hung and the chief editor Ryan Law for violating the article 29 of the law, namely colluding with a foreign country or external elements to endanger national security, reported local media. The two will be taken to the West Kowloon Magistrates' Courts for the first appearance to trail tomorrow morning (19th).

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