June 4 Asian Marco Initial Thoughts Expect a weak open as Biden increases the number of Chinese companies on entity list.

04 Jun

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Australia Futures indicate market to open flat +3pts; Oil names firm after a mixed US inventory report but Gold and Tech likely to be under pressure.  No data due and ahead of the weekend and US jobs report plus the market at highs I would expect some consolidation.
Japan Nikkei futures opened +18pts but have fallen to -42pts after the Household spending data was released which was better than expected. Expect an muted open with caution ahead of US data tonight but downside limited.
S Korea Expect markets to open lower following the US and with caution ahead of the US payrolls data tonight.
Taiwan Market to open lower following US, good local data likely to prompt some bargain hunting but caution ahead of GDP data, US jobs and the weekend
China Market to open lower on news of Biden extending the ban on US investors holding Chinese companies with links to the  military.  The Wild Card will be Team China’s activities
HK ADR’s +92pts at 29,058; Chinese Financials under pressure but E-commerce names seeing a bounce. But the news that Biden is extending Trumps black list of companies -VE for sentiment; especially the Telcos and Railways  
US Futures
Opened flat Dow +9ps S&P -0.01% and NDX -0.03%  

Trading today will be in the shadow of the US NonFarm payrolls data.  Also in focus Global corporate tax proposal in focus at G7 finance ministers' meeting.   Biden increasing the ban on US investors from 59 Chinese companies (up from 31) both direct holdings and via Funds -VE for China and their HK listed entities.
Also today is the anniversary of China’s crackdown on protesters in and around Beijing’s Tiananmen Square on June 4, 1989 with the annual Hong Kong vigil prevented by police from taking place but it is expected that many will light candles in remembrance.

DOW -0.07%, NDX -1.03%, S&P -0.36%, Russel 2K -0.81%
Markets opened lower and  initially sold down to the day lows but then worked better before trading sideways; with the Dow trading around flat, S&P slightly below flat and the NDX well in the red.
Consumer staples and utilities were the biggest gainers among 11 S&P 500 sectors, while consumer discretionary -1.2% and tech -0.9% weighed on the broader market.  General Motors +6.4% after saying it expects its  results for the first half of 2021 to be “significantly better” than  its prior guidance.
AMC Ent -18% but off the day lows having filed to sell up to 11.55 million common shares “from time to time,” Stock continued to fall in after hours. Other meme stock mixed BlackBerry +4.2%, but Koss -24%, GameStop -8.5% and Bed Bath & Beyond -28% after soaring 62% Wednesday.
J.M. Smucker beat estimates by 22 cents a share, with quarterly profit of $1.89 per share. Revenue came in slightly above forecasts. Sales fell compared with a year earlier, however, when homebound consumers stocked up as the pandemic took hold. Smucker did issue an upbeat full-year earnings forecast.
Express reported a quarterly loss of 55 cents per share, smaller than the 58 cents a share that analysts were expecting. Revenue topped Street forecasts and Express said it expects sequential comparable sales improvement throughout this year. Its shares fell 7.1% in the premarket after an initial jump higher.
Amazon will hold its annual Prime Day over two days in June this year, the earliest it has ever held the sales event.
Banks JPMorgan Chase flat, Citigroup -0.3% Wells Fargo -0.8%, Amex +0.2%
Work from home names: Facebook -0.9%, Apple -1.2%, Amazon -1.5%, Netflix -2%,  Disney -0.4%, Zoom Video -2.5%, Alphabet -1% and Microsoft -0.6%,
Tech NXP Semi -3.4%, Nvidia +1.1%, Micron -2.7%, AMD -2.1%, Skyworks -2.7%
Re-opening stocks  Boeing -2.1%, Caterpillar +0.2%, Simon Property -0.9%, Kohl’s -4%, Nordstrom -3.1%, Gap -2.7%, United Airlines -4.3%, Carnival -2%, Wynn Resorts -4%, Chevron -0.5%, Exxon Mobil +0.4%,  
Lock down names Campbell Soup -0.5% General Mills +0.5%,  JM Smucker +1.4% earnings beat.
After Market
CrowdStrike +1% in extended trading on Thursday after reporting better-than-expected earnings.
DocuSign +6% in extended trading after beating on the top and bottom lines of its quarterly earnings. It also reported second-quarter and full-year revenue guidance above estimates.
Broadcom -1.6% strong earnings.
Challenger Job Cuts May 24.586k vs 22.913k Apr (F/cast was 20k)
ADP Employment Change May 978k vs 654k Apr revised (F/cast was 600k)
Unit Labour Costs Q1 +1.7% QoQ vs 14% Q4 (F/cast was -0.3%)
Initial Claims 385k vs 405k prior (F/cast was 400k)
4 week Average Claims 428k vs 458.5 prior revised
Continuing Claims 3.771m vs 3.602m prior (F/cast was 3.58m)
Services PMI May 70.4 vs 64.7 Apr (F/cast was 70.1)
Composite PMI May 68.7 vs 63.5 Apr (F/cast was 68.1)
ISM Non Manufacturing Data
PMI May 64 vs 62.7 Apr (F/cast was 62.8)
Business Activity May 66.2 vs 62.7 Apr (F/cast was 65)
Employment May 55.3 vs 58.8 Apr (F/cast was 58.8)
New Orders May 63.9 vs 63.2 Apr (F/cast was 63.3)
Prices May 80.6 vs 76.8 Apr (F/cast was 77)
EIA Gasoline Change +1.5m vs -1.745m prior (Consensus was -1.479)
EIA Crude Oil Change -5.08m vs -1.662m prior (Consensus was -2.443m)
EIA Natural Gas change 98 Bcf vs 115 Bcf (Consensus was95 Bcf) .USD was slightly stronger vs Yen & Euro. Bitcoin +2.2% @ 38,745.16, VIX +3.2% @ 18.04, US T10 @ 1.625% on good labour data
OIL Brent -0.3%, WTI -0.2%
Gold -1.95%, Silver -2.44%, Copper -2.67% Platinum -2.64%, Palladium -0.89%.
Non Farm Payrolls, Unemployment Rate, Average Weekly Hours, Average Hourly Earnings, Participation Rate, Factory Orders,Baker Hughes Rig Count.
Fed Speakers Chairman Powell on central banks and climate change

DAX +0.19%, CAC -0.21%, FTSE -0.61%
Markets open lower as PMI data was weaker than expected and concerns over the weaker than expected China data. Markets reversed around 1:30pm on the US jobs data and worked better for the rest of the day. Resources; especially with exposure to China lead the declines (Anglo American -2.9% and Antofagasta -3.6%)
Saint-Gobain +4.1% after it said it expected record operating income and margin for the first half of the year, Reuters reported.
National Grid -4% after going ex-dividend.
Services PMI May 55.2 vs 50.5 Apr (F/cast was 55.1)
Composite PMI May 57.1 vs 53.8 Apr (F/cast was 56.9)
Services PMI May 52.8 vs 49.9 Apr (F/cast was 52.8)
Composite PMI May 56.2 vs 55.8 Apr (F/cast was 56.2)

Services PMI May 56.6 vs 50.3 Apr (F/cast was 56.6)
Composite PMI May 57 vs 51.6 Apr (F/cast was 57)
Services PMI May 62.9 vs 61.0 Apr (F/cast was 61.8)
Composite PMI May 62.9 vs 60.7 Apr (F/cast was 62.0)
Construction PMI, Retail Sales
Construction PMI, New Car Registrations
Construction PMI, Retail Sales
New Car Sales, Construction PMI

Nikkei futures opened +18pts but have fallen to -42pts after the Household spending data was released which was better than expected. Expect an muted open with  caution ahead of US data tonight but downside limited.  
Yen currently 110.28
Data out
Household Spending  Apr +0.1% MoM vs +7.2% Mar (F/cast was -2.4%)
Household Spending Apr +13% YoY vs 6.2% Mar (F/cast was +9.5% )
Government plans to donate 1.2 million AstraZeneca COVID-19 vaccines to Taiwan to help the island following a rise in cases, Japan's public broadcaster NHK reported. +VE
The head of Japan's Olympics organising committee ruled out on Thursday another suspension of the Games, despite deep disquiet at the prospect of thousands of athletes and officials arriving during a fourth wave of COVID-19 infections. Slight -VE
Japan said Thursday it has lodged a protest with Moscow for its decision  to impound a Japanese trawler and detain its crew last week after  determining the boat was sailing in Russia's exclusive economic zone. A fishery cooperative refuted the claim, saying navigational data showed the trawler  was operating in Japan's EEZ.  The Chief Cabinet Secretary Kato said Japan's Foreign Ministry has determined this to be the case  after speaking with officials from the fishery cooperative.after determining the boat was sailing in Russia's exclusive economic zone. -VE

Expect markets to open lower following the US and with caution ahead of the US payrolls data tonight.
No data due
KDCA reported 681 more COVID-19 cases, 
including 672 local infections; due to continued cluster infections, while the country's inoculation drive is on a roll with a smooth vaccine supply.
Lime Korea said Thursday it has cut the price of the company’s monthly subscription plan Lime Prime to 7,500 won ($6.70) from 12,500 won to make its service more accessible to daily commuters. +VE
SK Inc said Thursday that it has  acquired a stake in Monolith, the world’s first company to have  successfully mass-produced “turquoise hydrogen.”   The strategic  investment was made by a consortium led by SK Inc., of which NextEra, a  leading clean energy company in the US, was also a participant. SK did  not disclose the investment amount, but industry sources said it would  likely be in the range of tens of millions of dollars.
Porsche Korea has launched Taycan Turbo, a high-performance model of the brand’s first electric vehicle, the company said Thursday. +VE
Kumho Tire is exclusively supplying its best-selling tire Ecsta HS51 for  Renault Samsung Motors’ compact sports utility vehicle Arkana -- known  as the XM3 in South Korea -- distributed in Europe, the company said  Thursday.  +VE
Samsung to roll out Galaxy Book Go laptops under $350. The Galaxy Book Go and the Galaxy Book Go 5G are the newest additions to the tech giant’s notebook lineup powered by Qualcomm’s Snapdragon compute platforms. +VE
South Korea's antitrust regulator said Thursday it has not approved a proposal by major affiliates of Samsung Group to address their alleged unfair business practice over in-house cafeteria business.

Expect market to open lower following US, good local data likely to prompt some bargain hunting but caution ahead of GDP data, US jobs and the weekend
Data due after market
GDP Growth Rate
Foreign Exchange Reserves
Taiwan’s Central Weather Bureau (CWB) issued a land warning for Tropical Storm Choi-Wan on Thursday, as it approaches the country.
CECC confirmed 366 Covid diagnoses Thursday (3 June), including 364 local infections and two imported cases, together with 219 backlog cases, Taiwan reported 583 local diagnoses for the day.
The Ministry of Economic Affairs (MOEA) yesterday said that a relief fund of NT$42.7 billion (US$1.54 billion) has been earmarked to help food and beverage, entertainment and other service industries that have been heavily affected by a resurgence of COVID-19 infections in Taiwan. +VE
The economy remains solid, despite an escalating COVID-19 outbreak that appears thus far to have no impact on manufacturing activity, the backbone of exports, central bank Governor Yang Chin-long  said yesterday. +VE
The Industrial Technology Research Institute (ITRI) has raised its growth forecast for the production value of Taiwan’s manufacturing industry to 10 percent for this year, more than double the estimate of 4.75 percent it made in November last year, as local producers benefit from the robust demand for steel, chips and electronics amid a global economic recovery. +VE
Nanya Technology Corp  yesterday reported NT$7.6 billion (US$274.33 million) in revenue last month, its highest in nearly three years, as robust demand lifted prices.  Revenue rose 2.84 percent from April and soared 37.02 percent from a year earlier, as its factories ran at full capacity, Nanya said.
The company in April said that chip prices would gradually pick up in the second quarter amid tight supply and strong demand for DRAM chips used in consumer electronics, servers and notebook computers. +VE
Presale housing market sentiment remains sluggish.  A gauge for buying sentiment in the presale housing market in northern Taiwan last month flashed a “yellow-blue” light, signifying a sluggish market, for the 15th consecutive month, as a surge in locally transmitted COVID-19 inflections chilled transactions, the Chinese-language My Housing Monthly said in a report yesterday. Slight  -VE Developers
EVA Airways Corp yesterday said it plans to offer more flights between Taipei and Los Angeles starting next week to meet increasing demand.  The airline currently offers three round-trip flights per week between Taiwan Taoyuan International Airport and Los Angeles International Airport. It plans to raise the number to seven from Monday next week, with one flight per day, it said.

Expect market to open lower on news of Biden extending the ban on US investors holding Chinese companies with links to the  military.  The Wild Card will be Team China’s activities
No data due 
But Trade Data due Monday
Guangdong province has reported 15 more locals who are infected with the coronavirus disease on Wednesday. Four of them are previously non symptomatic virus patients.  The provincial health commission said Thursday also reported five new local non symptomatic patients, state news agency Xinhu reports.
US adds 59 Chinese companies to the banned list. FT reports
The ban will take effect on August 2. But investors can make trades during the next 12 months to divest their holdings. While Americans are not required to divest the securities, they will be unable to sell their holdings after the one-year period without special approval from the US Treasury, which will oversee the new regime. Also the ban includes banning Americans from investing in funds that contain Chinese securities in their portfolios -VE for ETF’s, Mutual Funds and Index trackers. The new ban has a stronger legal footing than the one Trump introduced; FT reports ‘The targeted companies also include Aviation Industry Corporation of China, China National Offshore Oil Corporation, China Railway Construction Corporation and China National Nuclear Corporation. The list contains three big Chinese telecommunications companies: China Mobile, China Telecom and China Unicom.’ -VE
The Chinese government has accused H&M, Nike, Zara and other brands of importing unsafe or poor quality children's clothes and other goods, adding to headaches for foreign companies after Beijing attacked them over complaints about possible forced labor in the country’s northwest.  -VE
Major shipping companies have warned clients of worsening congestion at Shenzen's Yantian port in southern China following the discovery of several asymptomatic cases of COVID-19 in the city. -VE
Food prices in mainland China dropped 0.8 percent from a week ago, with pork prices falling 3.3 percent, said the Ministry of Commerce.  The wholesale price of pork was 24.71 yuan per kilogram, down 3.3 percent week-on-week. The average wholesale price of 30 kinds of vegetables was 4.3 yuan per kilogram, down 0.2 percent. Rice and oil prices also had a slight fall.  Comes as World food prices rose in May at their fastest monthly rate in more than a decade +VE for sentiment
The United Arab Emirates and Bahrain have made the Pfizer/BioNTech coronavirus vaccine available as a booster shot to those initially immunised with a vaccine developed by the China National Pharmaceutical Group (Sinopharm). Abu Dhabi has offered the Sinopharm shot to the general public since December and started using the Pfizer/BioNTech vaccine in April. It has been offering third Sinopharm doses since at least last month after it was discovered the shot had not created enough antibodies for some recipients. There have been concerns about the efficacy of the Sinopharm vaccine,  granted emergency approval by the World Health Organisation (WHO) in  May, due to limited published clinical data being available. Slight -VE
Tesla Inc’s vehicle orders in China nearly halved in May, when compared to April, against the backdrop of increased government scrutiny on the U.S. electric carmaker, the Information reported on Thursday, citing internal data. -VE
UK ‘Uygur Tribunal’ begins as China and West clash over Xinjiang genocide allegations.  Inquiry to examine human rights of Uygur Muslims in China’s Xinjiang region. China said the planned hearings in London were neither legal nor credible. The  hearings were requested by the Germany-based World Uygur Congress, the  US-funded Uygur lobby group that wants greater autonomy for Xinjiang, to “investigate ongoing atrocities and possible genocide”. The  independent inquiry has no enforcement powers, but organisers hope to  hold China accountable for its treatment of Uygur Muslims and other ethnic minorities. -VE
Boris Johnson urged to ensure ‘crisis in Hong Kong’ is high up on G7 agenda next week, with Xinjiang also among possible topics.  A group of ex-British foreign ministers urge Boris Johnson to rally international action over Beijing’s Hong Kong actions. China expected to feature heavily at next week’s G7 leaders’ summit.

ADR’s +92pts at 29,058; Chinese Financials under pressure but E-commerce names seeing a bounce. But the news that Biden is extending Trumps black list of companies -VE for sentiment; especially the Telcos and Railways  
No data due

Short Selling Thursday 17.6% vs 20.3% Wednesday
Top Shorts 
Power Assets (6) 43%, Bud Apac (1876) 35%, Country Garden (2007) 34%,  Henderson Land (12) 34%, BoC HK (2388) 32%, Bank Comm (3328) 31%, Geely Auto (175) 31%, ICBC (1398) 29%, Sunny Optical (2382) 28%, Petrochina (857) 28%, Hengan (1044) 28%, Sands China (1928) 28%, Baba (9988) 27%, Galaxy (27) 25%, BoC (3988) 25%.
Tiananmen Square vigil
Police will cordon off part of Victoria Park and deploy up to 7,000 officers across the city today amid online calls to commemorate the June 4 incident, sources said.  
Of the officers, some 3,000 will be deployed at the park in Causeway Bay, where the annual candlelight vigil used to take place. Police may also cite the Public Order Ordinance to cordon off the park if people start to gather in the evening.  The deployment plan follows a call by Tiananmen Mothers, which said remembering June 4 is a patriotic act and should not be banned on political grounds.
YUZHOU GROUP (01628.HK) announced that in the first five months of 2021,
the accumulated sales of Group was RMB41.694 billion, up 35.6% YoY. +VE
More than 27,000 subscription registrations were received for The Pavilia Farm III, a residential project co-developed by NEW WORLD DEV (00017.HK) and MTR CORPORATION (00066.HK) 
atop Tai Wai Station, breaking the record of The Pavilia Farm I.  Adrian Cheng, executive vice-chairman and CEO of NEW WORLD DEV, said the group is negotiating with MTR CORPORATION to launch more units as soon as possible given robust demand.  +VE
China Evergrande (3333) chairman Hui Ka-yan has pledged to reduce the company's debt to under 600 billion yuan (HK$727.94 billion) by the end of this month, as investors dumped their shares and bonds on fears of regulator's investigation.  The property tycoon said yesterday that the company, whose leverage ratios are still much higher than Beijing's minimum requirement, will meet at least one of the "three red lines" by the end of June. Evergrande said it has lowered its interest-bearing debt by nearly 300 billion from March 2020. +VE if achieved
Angelalign Technology's IPO Retail investors have subscribed HK$198 billion shares through margin  financing, data from 23 brokers showed, meaning the retail portion was  678 times oversubscribed.  If that pace continues it could attract more money than the JD Logistics deal.
Chongqing Ant Consumer Finance Co. Ltd. obtained approval from CBIRC to operate while the latter demanded Ant Group to take effective measures to ensure that consumers will be able to acquire adequate information regarding the names of the loan provider.  
In response, Ant Group said that, the company will endeavor to fulfil consumers' expectations for financial services, under the guidance of regulatory department, by active participation in financial service system building and continuous enhancement of service quality as well as risk prevention and control. According to the reform proposal, Ant Group should complete the brand reform of "Check Later" and "Cash Now" within 6 months of the opening of Ant Consumer Finance Co. Ltd., said CBIRC. After said reform, "Check Later" and "Cash Now" shall become consumer financial loan products exclusive for Ant Consumer Finance Co. Ltd., and any other consumer loans offered by other financial organizations using digital information provided by Ant Group must not be labelled with the same names, so as to avoid confusion. +VE
Huarong International had completed as scheduled the payment for the five-year US$900 million bonds issued on 3 June 2016, according to the company's official social media platform. +VE
CATHAY PAC AIR (00293.HK) announces that it has further elevated its support for the Hong Kong SAR Government’s Covid-19 community vaccination drive by offering one lucky winner the opportunity to host a private party 
on board the new, state-of-the-art Airbus A321neo aircraft. In addition, the airline is also giving away 20 million Asia Miles in a lucky draw. Eligible participants must be Hong Kong Identity Card holders who have been fully vaccinated before the end of August 2021 +VE for sentiment.
The new generation of business leaders will have to overcome multitude of difficulties as they navigate post-pandemic recovery while considering sustainable development, said Peter Wong, Deputy Chairman and Chief Executive of HSBC.

Fortunately, Wong added that, Asian regions have accumulated substantial experience and capability over the years to propel the global economy and the development of innovation and technology in the future.

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