June 24 Asian Macro Initial Thoughts Expect most markets to open slightly higher.

24 Jun

This and previous notes can be found at Substack ( Asian Market Sense )
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Asia expect most markets to edge higher despite Fed speakers Wednesday suggesting that tapering and rates hikes could come sooner, which I think the market was expecting.  

Australia Futures -29pts with Sydney facing a lockdown as covid cases rise -VE for sentiment. Oil +VE, Gold slight -VE, Miners +VE as China reserve releases less than expected.
Woolworths Group in focus it will spin off its drinks business; so Endeavour Group Limited (ASX: EDV) will join the ASX 200 index. Woolworths’ shareholders will receive one Endeavour Group share for every Woolworths share they hold. The Woolworths share price is likely to decline in order to reflect the spinoff.
Japan Nikkei futures opened +52pts but easing lower (Chicago Futures +55pts) but upside muted as more Fed speakers suggest earlier tapering/rate hikes.
S Korea Expect markets to open slightly higher (Futures +2.5pts) with good Consumer Confidence data but upside muted by rising covid cases -VE.
Taiwan Market to open slightly higher ongood  Industrial data although upside limited by the weak retail sales data
China Market to open lower as US restricts some solar materials from Xinjiang sparking fears of more restrictions ahead.
HK ADR’s -25pts at 28,792 weakness in E-Commerce, Financials and Petrochems.    
US Futures 
Opened Dow +44pts, S%P+0.05% and NDX +0.1%

DOW -0.21%, NDX +0.13%, S&P -0.11%, Russel 2K +0.33%
Markets traded  around flat through the day but dipped into the close. Utilities, Consumer Staples and materials weak.  Energy strong.  Fed speakers suggest the rate rises could come in late 2022
JPMorgan Chase +0.6%, Citigroup +1% Wells Fargo +1%, Amex +0.8%
Work from home names: Facebook +0.5%, Apple -0.2%, Amazon +0.05%, Netflix +0.8%,  Disney 1.1%, Zoom Video +0.6%, Alphabet -0.2% and Microsoft -0.1%,
Tech NXP Semi +0.9%, Nvidia +0.9%, Micron +1.8%, AMD +0.3%, Skyworks +0.8%
Re-opening stocks  Boeing -0.1%, Caterpillar +0.3%, Simon Property +1.5%, Kohl’s +1.7%, Nordstrom +2%, Gap +2%, United Airlines -0.1%, Carnival +0.3%, Wynn Resorts -0.6%, Chevron -0.1%, Exxon Mobil +0.7%,  
Lock down names Campbell Soup -0.8% General Mills -1.7%, JM Smucker -1.1%
MBA Mortgage Applications +2.1% vs +4.2% prior
MBA 30 yr Mortgage Rate 3.18% vs 3.11% prior
Current Account Q1 $-195.7B vs -175.1B Q4 revised (F/cast was -193B)
Flash PMI’s
Manufacturing Jun 62.6 vs 62.1 May (F/cast was 61)
Services Jun 64.8 vs 70.4 May (F/cast was 69)
Composite Jun 63.9 vs 68.7 May (F/cast was 67)
New Home Sales May -5.9% MoM vs -7.8% Apr revised (F/cast was -2.1%)
EIA Crude Oil Stock Change -7.614m vs -7.355m (Consensus was-3.942m)
EIA Gasoline Stocks Change -2.93m vs +1.954m (Consensus +0.833m)
5yr Note Auction 0.904% vs 0.788% prior
USD was slightly higher vs Yen & Euro. Bitcoin +2.2% @ 33,315.00 remains volatile, VIX -2.04% @ 16.32, US T10 @ 1.485%
OIL Brent +0.5% to $75.19, WTI +0.3% to $73.08 after EIA came in lower than forecast following the API report.
Gold +0.07%, Silver +0.3%, Copper +2.06% Platinum +1.13%, Palladium +1.88%.
Durable Goods, GDP Price Index, Corporate Profits, Goods Trade Balance, Wholesale Inventories, Initial Claims, 4 week Average Claims, Continuing Claims, Core PCE Prices and PCE Prices, EIA Natural Gas Report, Kansas Fed Manufacturing Index. Fed Bank Stress Test Results
NY Fed Treasury Purchases 22.5 - 30yrs
FED Speakers Bostic, Williams and Bullard
Earnings: Accenture, Darden, Rite Aid, Nike, FedEx, Blackberry

DAX -1.15%, CAC -0.91%, FTSE -0.22%
Markets opened mixed despite good PMI data +VE for the recovery. Bitcoin remains volatile. UK FTSE opened flat and trading sideways in the green for most but sold down into the close. Germany and France traded sideways in the red and sold off  lower into the close. Utilities and Retail names weak, Resources +VE as the reserve releases from China less than expected.
GlaxoSmithKline +1% after revealing out plans to list its consumer products arm.
Hellofresh -4.9% as the re-opening takes hold.

Flash PMI’s
Services Jun 58.0 vs 52.2 May (F/cast was 57.6)
Manufacturing Jun 63.1 vs 63.1 May (F/cast was 62.2)
Composite Jun 59.2 vs 57.1 May (F/cast was 58.9)
Flash PMI’s
Services Jun 58.1 vs 52.8 May (F/cast was 54.7)
Manufacturing Jun 64.9 vs 64.4 May (F/cast was 63.8)
Composite Jun 60.4 vs 56.2 May (F/cast was 56.9)
Flash PMI’s
Services Jun 57.4 vs 56.6 May (F/cast was 58.7)
Manufacturing Jun 58.6 vs 59.4 May (F/cast was 58.5)
Composite Jun 57.1 vs 57 May (F/cast was 58.7)
Flash PMI’s
Services Jun vs 62.9 May (F/cast was 62.5)
Manufacturing Jun vs 65.6 May (F/cast was 64.5)
Composite Jun vs 62.9 May (F/cast was 62.7)
EUROZONE ECB General Council Meeting
GERMANY Ifo Business Climate, Current Conditions and Expectations
Business Confidence and Climate Indicator
UK BoE Interest Rate Decision, MPC Meeting Minutes, BoE QE. After Market Consumer Confidence

Nikkei futures opened +52pts but easing lower (Chicago Futures +55pts) but upside muted as more Fed speakers suggest earlier tapering/rate hikes.
Yen currently 110.97
Data due 
Foreign Stock and Bond Investments.
Tokyo reported 619 new covid cases Wednesday (+184 DoD) -VE
Japan is suspending approval for companies to inoculate staff amid concerns that an increase in such applications will hamper smooth delivery of vaccines, a government minister said on Wednesday.
The Japanese government is looking at tightening regulations on foreign funds that hold stakes in domestic firms with important technology in areas such as nuclear power and defence, the Yomiuri newspaper reported on Wednesday.
Eisai Co and partner Biogen Inc said on Wednesday the U.S. Food and Drug Administration had granted breakthrough therapy designation to their experimental therapy, lecanemab, for patients with early Alzheimer's. +VE
Toshiba Chairman facing a vote for survival as opposition grows to his continuing.  -VE
Kansai Electric Power (9503.T), which serves Osaka and its industrial environs said it restarted the No. 3 reactor at its Mihama station in western Japan earlier on Wednesday. Despite  some calls for it not to.  +VE
Honda has said publicly it will phase out sales of gasoline-powered cars completely, setting 2040 as the goal. Slight +VE
Mazda Motor Corp (7261.T) said on Wednesday that it will suspend production at a factory in Japan for a total of ten days in July due to a chip shortage.  The automaker's Hofu Plant No.1 in Yamaguchi prefecture, located in southwest Japan, will halt production between July 5 and 9 as well as July 12 and 16. -VE
Egyptian officials and Shoei Kisen Kaisha Ltd; owners of the giant Ever Given vessel have reached a preliminary deal over compensation, according to the ship’s representatives. +VE
Mercari (4385): Raises forecasts, now expects full-year operating profit of 4.5b yen vs previous range of 1.5b yen loss to 1.5b yen profit

Expect markets to open slightly higher (Futures +2.5pts) with good Consumer Confidence data but upside muted by rising covid cases -VE.

Data out
Consumer Confidence Jun 110.3 vs 105.2 May (F/cast was 104)
Due BoK to release inflation targeting report.
KDCA reported 645 new covid cases (+250 DoD) -VE , Health Minister Kwon Deok-chul said “Cluster infections are occurring in places with many risk factors such as schools, academies, workplaces, churches, hospitals, restaurants, karaokes and entertainment facilities.” -VE
N  Korea; Currency exchange rates and commodity prices appear to be wildly  fluctuating in North Korea as a resumption in major trade with China  hasn't materialised, media reports and analysts say, increasing the  hardship for residents facing food shortages -VE.
Samsung offers 6G vision, private network, through its first event to introduce an array of 5th generation network  technologies late Tuesday, Samsung Electronics has put its emphasis on  preemptive investments in 6G to cement its position in the global  network industry. +VE
Chipmakers worldwide will break ground on 29 new semiconductor fabrication plants (fabs) by 2022, including two in South Korea, a report showed Wednesday, as they try to meet rising demand.  Semiconductor firms will start the construction on 19 new high-volume fabs by the end of this year and another 10 in 2022, according to SEMI, a global industry association representing companies in the electronics design and manufacturing supply chain.  +VE
SoftBank Ventures Asia said Wednesday that it has injected $9 million into the series A funding of VoyagerX, a South Korean artificial intelligence software developer.  +VE
Winia Dimchae, a South Korean home appliance brand specializing in kimchi fridges, announced Wednesday that the company would begin local sales of its ultra-low temperature freezer for COVID-19 vaccines, named Medibox +VE.

Expect market to open slightly higher ongood  Industrial data although upside limited by the weak retail sales data

Data due  
M2 Money Supply
After market Wednesday
Industrial Production May +16.51% YoY vs +14.1% Apr revised from 13.62 (F/cast was +10%)
Retail Sales May +2.8% YoY vs +18.27% Apr (F/cast is +21%).
Industrial production the 16th consecutive month of annual growth at a pace that was faster than April’s 14.1%, as demand in the electrical and traditional sectors remained bullish, the Ministry of Economic Affairs reported yesterday +VE.
CECC reported 104 new covid cases (all domestic) and the Level 3 restrictions were extended to July 12. Slight -VE
The central bank yesterday raised the cap on special loans to small business owners from NT$500,000 to NT$1 million (US$17,853 to US$35,707) to help them with cash flow problems induced by the local COVID-19 outbreak +VE.
The policy is to be implemented today due to growing demand for loans from small business owners, the bank said in a statement.
The American Chamber of Commerce in Taiwan (AmCham) yesterday proposed a Taiwan commercial initiative (TCI) that would elevate Taiwan-US economic ties to a new level, and possibly lead to a bilateral trade agreement (BTA).  +VE
Australian businesses and industry groups with connections to Taiwan are trying to coax Canberra into advocating for Taiwan’s membership into a large trans-Pacific trade block, spurred on by Britain becoming the first new country to begin talks to join the pact since its inception in 2018. +VE
Vice President William Lai yesterday urged Beijing to stop media repression in Hong Kong, where the pro-democracy newspaper Apple Daily is printing its last edition today after a police crackdown last week.
A US Navy destroyer on Tuesday sailed through the Taiwan Strait, making it the sixth transit by a US warship through the waterway in five months.  China condemned the move.
Hon Hai Precision Industry Co yesterday signed a memorandum of understanding (MOU) with Gogoro Inc to help accelerate the electric scooter maker’s global expansion.  The move followed announcements by Gogoro that it is extending its reach to India and China.  +VE
Chip lead times, the gap between ordering a semiconductor and taking delivery, last month increased by seven days to 18 weeks from April, an indication that chipmakers’ struggles to keep up with demand are worsening, Susquehanna Financial Group said a report.  -VE for users but +VE for producers.
Securities firms in Taiwan last month reported combined net income of  NT$4.76 billion (US$169.96 million), down 64.14 percent from April, the  Taiwan Stock Exchange said in a statement on Tuesday -VE

Expect market to open lower as US restricts some solar materials from Xinjiang sparking fears of more restrictions ahead.
No data due
Profits at Chinese state-owned enterprises rose 170 percent to 1.79 trillion yuan (HK$2.11 trillion) in the first five months year on year, the ministry of finance said yesterday.   
That made the average growth in the past two years 13.5 percent.  The major efficiency indicator remained at higher growth, which means an upward trend is in line for the state-owned economy.
US to bar some solar materials from Xinjiang -VE solar names but they had already seen weakness yesterday.  Customs & Border Protection is expected to announce a “withhold and release order,” targeting Hoshine Silicon Industry (Shanshan) Co., Ltd. Imports from that company would be blocked from entry at U.S. ports and only released if they can prove the goods are not made with forced labor.  Separately, the Commerce Department will add five Chinese entities to its export blacklist. According to a notice set to be published in the government’s Federal Register on Thursday, they are Hoshine; Xinjiang Daqo New Energy, Co. Ltd; Xinjiang East Hope Nonferrous Metals Co. Ltd.; Xinjiang GCL New Energy Material Technology, Co. Ltd; and Xinjiang Production and Construction Corps.American companies that sell to those entities will then require approval from the U.S. government. -VE
Coronavirus impact on China’s exports may have been underestimated amid Guangdong outbreak, analysts say -VE
Ant Group on Wednesday sought to draw a distinction between non-fungible tokens (NFTs) available on its platforms and cryptocurrencies currently subject to a crackdown by Beijing, after users expressed confusion.
China has attacked the United States, Australia, Canada and Britain over their records on migrants and refugees, continuing a blistering war of words with the West at the UN Human Rights Council this week. -VE for sentiment
China is insecure and defensive and this means it perceives threats where there are none, Australia's most senior diplomat said on Wednesday, a characterisation Beijing dismissed as "wholly untrue".  The comments come at a time of increased tensions between Canberra and Beijing over Chinese telecoms firm Huawei, China's handling of the coronavirus pandemic and its human rights record, though the two countries remain strong trading partners. -VE for sentiment and relations
WeRide, a China-based autonomous driving startup, said on Wednesday that it would deepen development with Nissan Motor (7201.T) on autonomous driving technology for the China market as it raised $310 million at a $3.3 billion valuation.  +VE  

ADR’s -25pts at 28,792 weakness in E-Commerce, Financials and Petrochems.
No data due
Short Selling Wednesday 15.6% vs 15.1% Tuesday
Top Shorts 
BankComm (3328) 45%, Bud APAC (1876) 45%,Bank of China (3988) 40%, Country Garden (2007) 36%, Citic (267) 35%, Haidilao (6862) 32%, CLP (2) 32%, Ping An (2318) 29%, Henderson Land (12) 26%, MTRC (66) 25%, Meituan (3690) 25%.
FT reports Hong Kong’s pro-Beijing lawmakers successfully intervened for the first time at a high-profile judicial hearing 
in Hong Kong in what lawyers described as the latest attack on the city’s valued independent legal system.  Judge Maria Yuen Ka-ning, the wife of Geoffrey Ma Tao-Ii, the city’s former chief judge, was due to be named the next permanent judge at the Hong Kong Court of Appeals but she withdrew her candidacy after lawmakers raised concerns about the appointment;  arguing that Yuen could be influenced by her husband, whom pro-Beijing groups have criticized in the past after defending the neutrality of the Hong Kong judiciary, according to a person who knows her thinking -VE.

National Security
Secretary for education Kevin Yeung Yun-hung said the Education Bureau willd follow up on the case of a teacher distributing copies of the Apple Daily newspaper to his colleagues. 
The teacher, who teaches at a Tin Shui Wai school, brought 10 copies of Apple Daily to school last Friday, a day after five of the newspaper's executives were arrested. He was reported by his colleagues, after which the school stopped him from teaching some of his classes.
The First national security prosecution case started in court Wednesday.

Next Digital likely to be delisted if the govt keeps its assets frozen. 
-VE for shareholders.

New World Development (0017) sold a four-bedroom flat in the third phase of the Pavilia Farm in Tai Wai at HK$35,000 per square feet, setting a record for New Territories standard flats.
The 1,269 sq ft unit fetched a top price of HK$44.42 million.
Three four-bedroom units were sold through tender yesterday for prices ranging down from that to HK$39 million. The group quickly launched additional units to meet market demands.
Sales for 85 more units will open Saturday, while another 10 units will be open for tender.

China Dongxiang (3818) said net profit jumped 3.9 times to 1.81 billion yuan (HK$2.17 billion) for the year to March, thanks to a consumer recovery in the mainland.  The owner of the Kappa brand said sales rose 27.8 percent to 1.94 billion yuan.  Offline retail sales revenue saw a more than 10 percent growth for the year, thanks to a mid-single-digit increase in the third quarter with more than 70 percent growth in the fourth quarter. Revenue from e-commerce channels rose more than 30 percent. +VE

The vice chairman and executive director of WYNN MACAU (01128.HK), Linda Chen, expressed her wish for the COVID-19 outbreak in Guangdong and Hong Kong to become under control, 
so that the number of inbound visitors to Macau would see a rebound during the Summer holiday and subsequently boost the GGR, reported Radio Macau. +VEMTR CORPORATION (00066.HK) announced the next phase of the corporate reorganisation, where Adi Lau Tin-shing, currently the Managing Director – Operations and Mainland Business of the Company, will be appointed as the Managing Director – Mainland China Business and Global Operations Standards of the Company. He will continue to be a Member of the Executive Directorate of the Company. All changes will take effect from 1 July.

Bond (04246.HK), on debut, opened at $103.1, up 3.1%. It logged the peak and trough at $103.25 and $102.9. In last printing, the iBond stood at $102.95, up 2.95% 
against the offer price at $100.

FE CONSORT INTL (00035.HK)’s chief of property Raymond Fong expressed the company project in Shatin will be named "Mount Arcadia".  
The project will provide 62 flat units and 4 houses, with sizes of the flat units ranging from 1,018-1,548 sq.ft. and that of the houses ranging from 2,800-3,400 sq.ft.. Fong revealed that the prices will be ranging from approximately $25,000-30,000 per sq.ft. and that the project will be launched next month at the earliest and will be sold by way of tender as complete flats.  +VE

REGENT PACIFIC (00575.HK) announced that the stock short name of the Company for trading in the Shares on the HK Stock Exchange will be changed from “REGENT PACIFIC” to “ENDURANCE RP” in English with effect from 28 June 2021. The stock code of the Company on the HK Stock Exchange remains unchanged.

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