Feb 18 Asian Macro Initial Thoughts China re-opens expect it to play catchup +VE for HK

18 Feb

Asian Futures Nikkei Futures opened +20pts,  HK ADR’s indicate -50pts but expect limited downside as China re-opens and mainlanders play catch up.  Australia opened flat initially ticked higher but then sold down, currently ASX 200 -0.1%.
US Futures opened Dow +10pts, S&P and NDX flat. Inflation concerns and caution ahead of tonights initial claims data.

DOW +0.29%, NDX -0.58%, S&P -0.03%, Russel 2K -0.74% Markets opened lower but worked better through the session; helped by the FOMC minutes showed policy to remain accommodative for as long as the economy is nowhere close to pre pandemic levels.  Tech weak on rising inflation concerns after the strong retail sales and PPI data.
Verizon +5.2% on news Berkshire Hathaway had bought $8bn worth of the stock; Chevron +3% as Berkshire had been buying it too.Bitcoin in focus hitting $51,000 another new high.
Banks JPMorgan Chase +0.3%, Citigroup +1%, Wells Fargo +5.2%, Amex -1.6%
Work from home names: Facebook -0.15%, Apple -1.8%, Amazon +1.2%, Netflix -1.1%,  Disney +0.1%, Zoom Video -3.4%, Alphabet -0.4% and Microsoft +0.4%,
Tech NXP -2.9%, Nvidia -2.8%, Micron -1.9%, AMD -1.7%, Skyworks -1.1%
Re-opening stocks  Boeing -0.8%, Caterpillar -0.1%, Simon Property -1.6%, Kohl’s -1.3%, Nordstrom -0.1%, Gap -1.4%, United Airlines +0.8%, Carnival +3,3%, Wynn Resorts +0.6%, Chevron +3%, Exxon Mobil +1.6%,  
Lock down names Campbell Soup +0.6% General Mills +0.9%, JM Smucker +2.1%
After Market 
Twilio +11% after posting a surprise adjusted profit for Q4 when a loss had been expected (was -2.3% in normal hours)
SunPower -6% after it missed revenue expectations for Q4 (was -6.3% in normal hours).
Baidu +2% after Q4 results beat analyst expectations, (was -5.4% in normal hours).
MBA Mortgage Applications -5.1% vs -4.1% prior and 30 year Mortgage Rate 2.98% vs 2.96% prior
Retail Sales Jan +5.3% MoM vs -1% Dec revised (F/cast was +0.9%)
Retail Sales Jan +7.43% YoY vs +2.53% Dec revised (F/cast was +2.8%)
Retail Sales Ex Ex Auto Jan +5.9% MoM vs -1.8% Dec revised (F/cast was +0.7%)
PPI Jan +1.3% MoM vs +0.3% Dec (F/cast was +0.3%)
PPI Jan +1.7% YoY vs +0.8% Dec (F/cast was +0.8%)
Core PPI Jan +1.2% MoM vs +0.1% Dec (F/cast was +0.2%)
Core PPI Jan +2% YoY vs +1.2% Dec (F/cast was +1.3%)
Redbook +4% YoY vs +0.7% prior (-0.9% MoM vs -2.5%)
Industrial Production Jan -1.8% YoY vs -3.2% Dec revised (F/cast was -2.7%)
Industrial Production Jan +0.9% MoM vs +1.3% Dec revised (F/cast was +0.5%)
Capacity Utilisation Jan 75.6% vs 74.9% Dec revised (F/cast was 74.8%)
Manufacturing Production Jan -1% YoY vs -2.1% Dec revised (F/cast was -2.3%)
Manufacturing Production Jan +1% MoM vs +0.9% Dec (F/cast was +0.5%)
NAHB Housing Market Index Feb 84 vs 83 Jan (F/cast was 81)
Business Inventories Dec +0.6% vs +0.5% Nov (F/cast was +0.3%)
FOMC Minutes
After Market API Crude Oil Stock Change -5.8m vs -3.5m prior (Concensus was -2.175m)
USD was stronger vs Yen & Euro. Bitcoin +7.8% @ 52,371.42 another new high, VIX +0.2% @ 21.5, US T10 @ 1.272% slipping from the recent high.
OIL Brent +2.3%, WTI +2.6% as cold weather in Texas disrupts US production.
Gold -1.3%, Silver +0.4%, Copper -0.23%
AHEAD Import Prices, Export Prices, Initial Claims, 4 week average Claims, Continuing Claims, Housing Starts, Building Permits, Philadelphia Fed Manufacturing Index, EIA oil report, 30 year TIPS auction.
Earnings: Walmart, Applied Materials, Cabot Oil & Gas, Barrick Gold, Southern Co., Waste Management, Marriott, Dropbox, Trip Advisor, Consolidated Edison, Credit Suisse, Barclays, Airbus, Daimler.

DAX -1.1%, CAC -0.36%, FTSE -0.56%  Markets opened lower as investors react to US T10 and inflation concerns but FTSE and CAC worked back to around flat before selling off into the close. DAX opened significantly lower, traded sideways and sold down into the close.  
Strong US retail sales adding to inflation concerns. Retail lead the declines and most sectors closed in the red.
Earnings in focus with Kering -7.2% after sales at its Gucci brand dropped by more than expected in the fourth quarter.
British American Tobacco shares -3.9% despite beating profit estimates before the bell, concerns the good results were due to cost cutting and therefore not sustainable
Rio Tinto -0.4% initially rose after posting its best earnings since 2011and with an all time high dividend payment but still sold down over the day
Sinch +12% after announcing the $1.14 billion acquisition of U.S. communications firm Inteliquent.
UK inflation data surprised to the upside on high food prices and lower discounting of household goods.
Data out
New Car Registrations Jan -24% YoY vs -3.3% Dec (F/cast was -36%)
Construction Output Dec -2.3% YoY vs -0.6% Nov Revised (F/cast was -0.6%)
Inflation Rate Jan +0.7% YoY vs +0.6% Dec (F/cast was +0.4%)
Inflation Rate Jan -0.2% MoM vs +0.3% Dec (F/cast was -0.5%)
Core Inflation Rate Jan +1.4% YoY vs +1.4% Dec revised (F/cast was +1.2%)
Core Inflation Rate Jan -0.5% MoM vs +0.3% Dec (F/cast was -0.7%)
PPI Core Output Jan +0.3% MoM vs +0.1% Dec (F/cast was +0.1%)
PPI Core Output Jan +1.4% YoY vs +1.1% Dec (F/cast was +1.2%)
PPI Input Jan +0.7% MoM vs +1.2% Dec revised (Consensus was +0.5%)
PPI Input Jan +1.3% YoY vs +0.6% Dec revised (Consensus was +0.6%)
PPI Output Jan +0.4% MoM vs +0.2% Dec revised (F/cast was +0.2% )
PPI Output Jan -0.2% YoY vs -0.5% Dec revised (F/cast was -0.4%)
Retail Price Index Jan -0.3% MoM vs +0.6% Dec (F/cast was -0.6%)
Retail Price Index Jan +1.4% YoY vs +1.2% Dec (F/cast was +1%)
New Car Registrations, Monetary Policy Meeting Accounts, Consumer Confidence Flash,
GERMANY  No data due
FRANCE  No data due
UK  No data due

Nikkei futures opened +20pts  Yen currently 105.86 Expect market to trade sideways with Tech names under pressure, following the moves in the US but renewed interest in travel and leisure names as the vaccination roll out get underway.
Data due pre market 
Foreigners Bond Investment Prior was Yen 1027.5b
Foreigners Stock Investment Prior was Yen 462.5b
Tokyo reported 378 new covid cases (vs 406 Wednesday) with the nationwide number being 1,445. As Japan began its COVID-19 vaccination campaign.
U.S. Secretary of State Blinken will meet virtually on Thursday with his counterparts from Japan, Australia and India in the “Quad” framework, a grouping seen as part of efforts to balance China’s growing military and economic power.
Japan Olympics Minister Seiko Hashimoto emerged as a candidate to lead the Tokyo Olympics organising committee, public broadcaster NHK said on Wednesday, after ex-prime minister Yoshiro Mori resigned from the post over sexist remarks.
Japan’s ruling Liberal Democratic Party, long seen as a homogeneous redoubt of elderly men, now wants more women at its key meetings - provided they don’t do the talking.  It has proposed allowing five female lawmakers to join its board meetings as observers in a response to criticism that its board is dominated by men.
Toshiba Corp said on Wednesday an internal investigation found no evidence it was involved in any effort to pressure the Harvard University endowment fund over voting at the company’s annual shareholders meeting (AGM). The Japanese conglomerate also said it had concluded there was no need to launch a third-party committee, demanded by its top shareholder Effissimo Capital Management, to investigate if the firm’s AGM in July was conducted fairly.  I doubt that will convince activists. -VE
Toyota forced to idle production at US plants in Texas as a winter weather pattern caused power outages and other disruptions. -VE
Electricity grid is likely to be under pressure as another Arctic blast in the coming days, which is already pushing up wholesale prices and may stress generators as they struggle to keep units running after a powerful quake.
Kuwait Petroleum Corp (KPC) is in talks to shorten its annual supply deals with some customers in India and Japan to nine months this year to meet demand from its new refinery, sources close the matter told Reuters.
Japan and the United States have agreed to keep Tokyo's costs to host U.S. forces stationed in the country at around the current level for fiscal 2021 following the expiration of a five-year deal, the Japanese government said Wednesday.
Tatsuya Maruyama, the governor of Shimane prefecture, said he did not want to host the torch relay and called for the games to be scrapped. “If the current situation does not improve then the Tokyo Olympics should not go ahead,” said Maruyama.

Expect markets to open lower with Tech under pressure, key will be foreign investors who may well continue as sellers on rising inflation concerns after the US data.
No data due
KDCA reported 621 cases as of Tuesday midnight, from in the 300-400s in the previous few days as testing increased after last week’s Lunar New Year holidays. PM Chung Sye-kyun on Wednesday warned against loosening enforcement of social distancing rules after the number of new coronavirus cases hit the highest levels in nearly 40 days.
South Korea will almost certainly miss its goal of vaccinating 80% of its population to reach coronavirus “herd immunity” by November, the head of a doctors’ association whose advice helped the country contain the pandemic’s first wave said on Wednesday.
Government will roll out massive support programs for exporters this year, aiming to return the country’s export volume to pre-pandemic levels, the Ministry of Trade, Industry and Energy said Wednesday. +VE
South Korea’s stock exchange will begin a review next week to examine if executives of Hyundai Motor may have used undisclosed information to trade shares following reports of a tie-up with Apple, an exchange spokeswoman said. -VE
SK Networks An arrest warrant was granted on Wednesday for Choi Shin-won the chairman, on suspicion of setting up a slush fund. Choi is facing charges of embezzlement and breach of trust related to the alleged illicit fund, which has been under investigation by the anti-corruption unit of the Seoul Central District Prosecutors Office. -VE
SK Innovation has been eyeing a split-off of its battery business with a potential initial public offering, but a major setback in the US could pose a challenge to the plan.  By splitting off the battery unit and later debuting it on the stock market, the company would gain access to that much-needed capital.  Though Jee didn’t mention the exact timeline for the reorganization, industry sources predict it will be late 2022 or 2023, by the time the battery division turns a profit. -VE
Naver plans to raise as much as 700 billion won through bond sales to secure funds required to set up a new data center in South Korea and invest in foreign platform startups.  +VE
Samsung; Employment restrictions have been imposed on the jailed Samsung Electronics Vice Chairman Lee Jae-yong following his conviction for bribery. However, the effectiveness of the restrictions on Lee remains questionable. Slight -VE

Expect market to open lower following yesterday’s strong re-opening.
No data due 
The Central Epidemic Command Center (CECC) yesterday said it is considering extending the autumn-winter COVID-19 prevention program beyond its planned expiry date on Sunday next week.
Political pressure from Beijing meant Taiwan failed at the last minute to secure an agreement for the Pfizer-BioNTech coronavirus vaccine, Health Minister Chen Shih-chung said Taiwan could have clinched a deal last month with German pharmaceutical company BioNTech for 5 million doses of its vaccine were it not for the last-minute objection of a third party. “Apparently some people did not want Taiwan to be happy,” he said in an interview with local radio station Hit FM.  -VE for China
Makalot Industrial  yesterday said that pretax profit grew more than 25 percent year-on-year last month, buoyed by a rapid recovery in demand as nations eased COVID-19 restrictions. Company chairman Frank Chou told investors in November last year that customer demand was recovering at a faster-than-expected pace, as some cities in the US and Europe ended lockdowns in the second half of last year. It makes apparel for Gap, Fast Retailing Co’s GU sub-brand, Kohl’s Corp, Target Corp, Walmart Inc and Hanesbrands Inc.To cope with rapidly growing demand, the company plans to boost capacity at its major manufacturing sites in Vietnam and Indonesia. To fund the expansion, Makalot plans to raise NT$2.99 billion through a rights issue. +VE
Quang Viet Enterprise saw revenue decline at a slower pace of 17.5 percent annually last month to NT$600 million. On a monthly basis, revenue jumped 17.3 percent from NT$512 million. Quang Viet said that it was a positive sign for a faster recovery. Analysts are forecasting that revenue would regain its momentum from April, and gather pace in the second and third quarters. Quang Viet customers include Patagonia Inc, North Face and Adidas AG. +VE
Elan Microelectronics, a supplier of touchpad controllers and fingerprint sensors, yesterday reported that net profit last year rose 30 percent to a record NT$3.25 billion (US$114.52 million), thanks to increased demand for laptops amid the COVID-19 pandemic. +VE
Lite-On Technology Corp yesterday reported consolidated revenue of NT$14.08 billion (US$496.12 million) for last month, up 4.74 percent month-on-month and 24.42 percent year-on-year. The company said in a statement that the revenue increase reflected “stable demand” among clients for its core information technology (IT) business, while other business segments, such as optoelectronics, also showed positive growth. +VE
Delta Electronics  the nation’s leading power and thermal solutions provider, yesterday reported consolidated revenue of NT$25.12 billion for last month, down 6.7 percent month-on-month, but up 29.92 percent year-on-year. The company attributed the annual growth in sales to robust demand for power electronics used in notebook computers and gaming devices. +VE

Market reopens and expect a significant up tick on the open as markets play catch up.
No data due
China’s Baidu Inc reported quarterly revenue above Wall Street expectations on Wednesday, helped by a recovery in advertising and an uptick in demand for its cloud services and artificial intelligence platforms. However, Baidu’s streaming affiliate, iQIYI, saw subscribers fall by 3.1 million to 101.7 million by December, when compared with the third quarter.  It is facing competition from Tencent Video and Alibaba’s Youku, calling for heavy investments on content to retain consumers. Overall +VE
Cambodia’s government has issued a decree establishing a China-style internet gateway that will allow online traffic to be controlled and monitored, prompting local concern that democratic freedoms could be under threat.
China has dismantled dozens of structures and moved vehicles to empty out entire camps along a disputed Himalayan border, where Indian and Chinese troops have been locked in a face-off since last summer, satellite images released on Wednesday show.  An Indian official said similar action has occurred on the Indian side too.
The U.S. Navy’s 7th Fleet said destroyer USS Russell sailed by islands claimed by China in the South China Sea on Wednesday in a freedom of navigation operation, marking the latest move by Washington to challenge Beijing’s territorial claims in the contested waters.
US communications watchdog seeks to accelerate removal of Huawei, ZTE equipment by rural carriers. The FCC aims to increase the number of rural network carriers eligible for ‘rip-and-replace’ funds  -VE
China has voiced opposition to “exclusive cliques” after the US said the “China challenge” would be on the table during Friday’s virtual meeting of the Group of Seven industrialised nations. In a statement on Sunday, the White House said “the importance of updating global rules to tackle economic challenges, such as those posed by China” would be among the key issues for discussion, along with the international response to the Covid-19 pandemic and the world economic recovery. It will be US President Joe Biden’s first G7 meeting since taking office in January. The group of leaders last met in April.
Beijing was one of the biggest spreaders of misinformation, including claims about bioweapons, an analysis by the Pew Research Centre of social media posts finds. Investigation also finds that media and officials in Russia, Iran and US – including Donald Trump – also ramped up politically charged claims.

ADR’s -50pts to open at 31,034 with weakness in Ecommerce and Chinese Financials.  But down side likely to be limited as China re-opens its expected that mainland buyers will be active buyers.
Data due after market Jan Unemployment Rate (Dec was +6.6% and F/cast is +6.5%)
SHORT SELLING Wednesday 19.7% vs 15.1% Tuesday
Top Shorts:   CKI (1038) 49%, Ping An (2318) 49%, CLP (2) 48%, Power Assets (6) 45%, Wharf REIC (1997) 44%, China Res Land (1109) 41%, Hang Lung Ppty  (101) 38%, Bud Apac (1876) 37%, CCB (939) 34%, MTRC (66) 34%, Henderson land (12) 33%, Sands China (1928) 31%, SHKP (16) 31%, Hengan (1044) 30%, SinoBiopharm (1177) 29%, AIA (1299) 28%, Sunny Optical (2382) 27%, Hang Seng Bank (11) 27%, CSPC Pharma (1093) 26%, Bank of China (3988) 26%, Shenzhou (2313) 25%, CKH (1) 25%.

NEW HORIZON HEALTH (6606.HK) to debut tomorrow, opened at $58.4 in gray market, up 1.2 times against the listing price of $26.66, PhillipMart data showed. It last posted at $79, up 1.96 times, on volume of 180,000 shares.
The Lands Department announced that the tender for a site, New Kowloon Inland Lot No. 6604 at Kai Tak Area 4E Site 2, Kai Tak, Kowloon, has been awarded to the highest tenderer, CK ASSET (01113.HK), at a premium of $10.28 billion, beating K. WAH INT'L (00173.HK) , Wheelock, SINO LAND (00083.HK) and SHK PPT (00016.HK). The price waste the upper end of market estimates.  The floor price per square foot is $15,860.7, whilst the market had originally estimated that the price was between $13,000-16,000.
On 10 February, PRU (02378.HK) disposed on-market of 6.758 million ANGANG STEEL (00347.HK)  shares, involving $20.7734 million, according to shareholding disclosures at the Stock Exchange. Upon completion, PRU's shareholdings in ANGANG STEEL were reduced from 9.13% to 8.65%.
CATHAY PAC AIR (00293.HK) announced that it had last month carried a total of 30,400 passengers, a decrease of 99% compared to January 2020 and 108,900 tonnes of cargo and mail, a decrease of 28.3% compared to January 2020. Aside from a few pockets of intra-Asia demand, overall demand remained very weak, said Group Chief Customer and Commercial Officer Ronald Lam.  The flagship carrier carried an average of just 981 passengers per day in January, the first time this number has dipped below 1,000 since June last year, while load factor was the lowest on record at just 13.3%. -VE
Staff members of eateries which are planning to revive nighttime dine-in services and premises which are poised to reopen must take COVID-19 tests by 24 February, said Under Secretary for Food & Health Chui Tak-yi. There is no hurry to complete the tests by tomorrow  (18 February). A plenty of mobile specimen collection stations will be set up to meet extra testing requirements, he added. Apart from the 19 existing stations, 22 more mobile specimen collection stations were established today, with 11 built especially for the aforementioned staff.
NEXT DIGITAL (00282.HK) Founder Jimmy Lai Chee-ying, remanded at Stanley Prison, was arrested by Hong Kong Police last night (16 February) for allegedly committing crime of conspiracy to collude with foreign countries or forces to endanger national security and crime of conspiracy to assist criminals, local media cited sources.  Lai was purportedly involved in assisting the illegal immigration of the pro-democracy activist Andy Li, one of the 12 Hongkongers fleeing to Taiwan.
CHINESE EST H (00127.HK) announced that Chan, Sze-wan has tendered her resignation as an Executive Director, the Chief Executive Officer and an Authorised Representative, and Chan, Hoi-wan, an Executive Director, has been appointed as the Chief Executive Officer and an Authorised Representative, both with effect from 17 February 2021.
A reason for the IPO fiasco of BABA-SW (09988.HK)'s Ant Group was Beijing's concern about Ant's complex ownership structure, WSJ citing over a dozen officials and government advisers.  Powerful political families with potential threats to President Xi Jinping may have pocketed billions of US dollars from Ant's IPO, given their stakes in the firm via investment vehicles.
For instance, Boyu Capital, founded by former Chinese leader Jiang Zemin's grandson Jiang Zhicheng, holds Ant shares behind layers of investments.
Centa-Salesman Index (CSI) last stood at 66.32, up 4 pts from the previous week, said the research department of Centaline Property.  The index has sustained the uptrend for eight weeks in a row and amassed 18.78 pts of growth.

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