Feb 19 Asian Macro Initial Thoughts Asia to open lower; Japan inflation data stronger than f/cast

19 Feb

Asia Nikkei futures opened +10pts but pulled back to -70pts as the inflation data which was slightly stronger than expected, was released.  HK ADR’s -115pts and Australia opened flat but sold down early trades; currently -0.5%

US Futures opened Dow +35pts, S&P and NDX both slightly higher; as Janet Yellen told CNBC Thursday after the bell that more stimulus is necessary even as some economic data suggested a swift rebound.

Britain and Canada imposed sanctions on Myanmar’s ruling generals on Thursday for toppling the civilian-led government while Japan said it had agreed with the United States, India and Australia that democracy must be restored there quickly.

DOW -0.38%, NDX -0.72%, S&P -0.44%, Russel 2K -1.67% US markets opened lower and traded sideways through the morning after poor initial claims data and a weak outlook from Walmart.  Tech continued to see rotational selling. But markets worked better in the PM session and closed near the day highs.More data supporting the rising inflation threat; market likely to see some consolidation and rotation out of tech and into inflation plays.
Earnings Walmart  Q4 earnings missed and forecast slowing sales as the pandemic eases.
Banks JPMorgan Chase +0.3%, Citigroup -2%  Wells Fargo +1%, Amex unch
Work from home names: Facebook -1.5%, Apple -0.9%, Amazon +0.6%, Netflix -0.6%,  Disney -1.8%, Zoom Video -2.7%, Alphabet -0.6% and Microsoft -0.2%,
Tech NXP Semi -2%, Nvidia -0.5%, Micron +2.9%, AMD -1.5%, Skyworks -2.2%
Re-opening stocks  Boeing -3.3%, Caterpillar -1.2%, Simon Property -1.6%, Kohl’s -2.3%, Nordstrom unch, Gap +0.9%, United Airlines -2.4%, Carnival -1.3%, Wynn Resorts -1.9%, Chevron -1%, Exxon Mobil -1.6%,  
Lock down names Campbell Soup +1.6% General Mills +2.1%, JM Smucker +1.1%
After Market 
Tripadvisor -1.4% in extended trading following a wider-than-expected loss. The company did say it sees signals of growing pent-up travel demand (was +1% in normal hours).
Roku +0.2% after an initial rally sold back down; the company’s latest quarterly results beat Wall Street estimates. (Was -0.9% in normal trading)
Dropbox +0.6% after the release of better-than-expected quarterly results. (Was +1.1% in normal hours)
Universal Display +3.7% after the company’s quarterly results topped Wall Street expectations (was -1.1% in normal hours)
Arista Networks +6.9% after the networking hardware company posted better-than-expected results for the fourth quarter (was -1.1% in normal hours)
Import Prices Jan +0.9% YoY vs -0.3% Dec (F/cast was +0.2%)
Import Prices Jan +1.4% MoM vs +0.9% Dec (F/cast was +0.8%)
Export Prices Jan +2.3% YoY vs +0.2% Dec (F/cast was +0.3%)
Export Prices Jan +2.5% MoM vs +1.1% Dec (F/cast was +0.7%)
Initial Claims 861k vs 793k prior (F/cast was 765k)
4 week average Claims 833.25k vs 823k prior (F/cast was 795.5k)
Continuing Claims 4.494m vs 4.545m prior (F/cast was 4.29m)
Housing Starts Jan -6% MoM vs 5.8% Dec (F/cast was -0.7%)
Building Permits Jan +10.4% MoM vs +4.2% Dec (F/cast was -3.5%)
Philadelphia Fed Manufacturing Index Feb 23.1 vs 26.5 Jan (F/cast was 23)
EIA Crude oil stocks change -7.258m vs -6.644m prior (Consensus is -2.429m)
EIA Gasoline stocks change +0.672m vs +4.259m prior (Consensus was +1.397m)
EIA Natural Gas Stocks change -237 Bcf vs 171 Bcf prior (Consensus is -252 Bcf)
30 year TIPS auction -0.04% vs -0.272% prior
USD was slightly weaker vs Yen & Euro. Bitcoin -0.9% @ 51,839.25, VIX +4.6% @ 22.49, US T10 @ 1.282%
OIL Brent -1.3%, WTI -1.4% despite the fall in inventories
Gold +0.1%, Silver -0.9%, Copper +2.2%, Platinum +2%, Palladium -0.9%
AHEAD Flash PMI (Services, Manufacturing and Composite), Existing Home Sales, Baker Hughes Rig data.
Earnings: Deere, Eni, Allianz

DAX -0.16%, CAC -0.65%, FTSE -1.4%  Markets opened slightly lower following the weakness is Asia and initially traded sideways around flat but then drifted lower after US initial claims rose. Investors were also reacting to earnings but the rising concern about US inflation.  Most sectors closed in the red.
Barclays -4.4% despite reporting FY profit of £1.53 billion ($2.11 billion) for 2020, -38% YoY but beating f/casts
Credit Suisse -3.2%; reported a net loss of 353 million Swiss francs ($392.8 million) for the fourth quarter of 2020 on the back of higher provisions.
Airbus -2.8%; restored its business targets after generating cash in the final quarter of 2020, but posted a full-year operating loss of 510 million euros ($614.5 million), with core operating profit falling 75% as a result of the pandemic.
Other earnings from Air France KLM -0.3%, Orange -2.6%, Carrefour -0.6%, Bouygues -1.8%, Valeo -2.6%, EDF -2.9%, Moncler -0.1% and Nestle -1.1%.
Temenos +19.3% after announcing optimistic targets for 2025.
Acciona +11.4% after the Spanish energy and engineering company said it was considering spinning off its renewable unit.
Varta -13.2% after its earnings report.
K&S tumbled on news its accounts were being examined. The German potash supplier said the country’s Audit Office for Accounting was looking at its financial statements in relation to an impairment requirement.
Consumer Confidence Flash Feb -14.8 vs -15.5 Jan (F/cast was -14.9)
After market Consumer Confidence.
EUROZONE Flash PMI (Services, Manufacturing and Composite)
GERMANY PPI, Flash PMI (Services, Manufacturing and Composite)
FRANCE Inflation Rate, Flash PMI (Services, Manufacturing and Composite)
UK Retail Sales, Flash PMI (Services, Manufacturing and Composite), Public Sector Borrowing, CBI Industrial Trends.

JAPAN Nikkei futures opened +10pts but pulled back to -70pts as the inflation data which was slightly stronger than expected, was released.  PMI flash data due out shortly after market open; expect more downside weakness.  Yen currently 105.69
Inflation Rate Jan -0.6 YoY vs -1.2% Dec (F/cast was -1%)
Inflation Rate Jan +0.5% MoM vs -0.3% Dec (F/cast was -0.2%)
Core inflation Rate Jan -0.6% YoY vs -0.4% Dec (F/cast was -0.3%)
Inflation Ex Food and Energy Jan +0.1% YoY vs -0.4% Dec (F/cast was -0.3%)
At 8:30am HK time we get Flash PMI (Services, Manufacturing and Composite)
Tokyo reported 445 new covid cases on Thursday  (vs 378 Wednesday) with the national tally at 1,537
U.S. Secretary of State Antony Blinken discussed Myanmar, COVID-19, climate and Indo-Pacific territorial and navigation issues with his counterparts from Japan, India and Australia on Thursday, the State Department said.
Russian President Vladimir Putin told local media he will adhere to the country’s constitution, which was revised last year to bar the transfer of territory to a foreign power, indicating Moscow will not engage Tokyo in negotiations over the nations’ long-running territorial dispute.
Nissan Motor said on Thursday it will suspend production at two assembly plants for two days next week due to disruptions in the supply of parts after an earthquake that hit northeastern Japan. Slight -VE
WingArc1st Inc, which is backed by U.S. buyout firm Carlyle Group Inc, on Thursday launched an initial public offering (IPO) worth up to 18.2 billion yen ($171.8 million), a regulatory filing showed.
Seiko Hashimoto has been chosen as president of the Tokyo 2020 Organising committee, replacing a man who resigned after setting off a furore with sexist remarks.

SOUTH KOREA Expect markets to open lower following the US and with inflation concerns after stronger than expected PPI data 
Data out 
PPI Jan +0.8% YoY vs +0.1% Dec (F/cast was -0.1%)
PPI Jan +0.9% MoM vs +0.7% Dec (F/cast was +0.2%
KDCA reported 621 new covid cases above 600 for a second day but the Agency's Deputy Director Kwon Jun-wook said Thursday, the COVID-19 pandemic in South Korea will be “sufficiently tamed by November, or possibly earlier,” referring to the vaccination timetable.
South Korea's President Moon Jae-in on Thursday visited a factory that can make 10 million syringes a month and plans to double capacity to prevent shortages as the nation rolls out its coronavirus vaccination campaign next week.
South Korea confirmed another case of highly pathogenic bird flu in poultry Thursday, bringing the total caseload to 98. -VE
The prolonged pandemic has intensified a polarization between top South Korean game companies and small and mid-sized ones. While the smaller players took a hit in revenue and employment amid the COVID-19 outbreak, the big three -- Nexon, NCSoft and Netmarble -- have reaped strong earnings and are returning part of them to staff and shareholders with dramatic hikes in salary and dividends. +VE
Samsung Electronics will hold a launch show for its TV products, dubbed “Unbox & Discover,” next month. Samsung said Thursday it has sent out invitations to global partners and media for the event set for March 2. +VE
But the market capitalization of Samsung Group has shrunk by around 42 trillion won ($38.01 billion) after its de facto head Lee Jae-yong was sent back to jail last month, the Korea Exchange’s market data showed Thursday. -VE
SsangYong Motor, the cash-strapped Korean affiliate of Indian carmaker Mahindra & Mahindra, is pinning hopes on the government’s apparent reluctance to let it go bankrupt, company officials said Thursday. Holding the key to the carmaker’s crisis is its largest creditor, Korea Development Bank which, despite its earlier refusal for additional loans, is under pressure to keep the carmaker afloat.
Hanwha Solutions on Thursday announced its first year-over-year results after its launch on Jan. 2, 2020 through the merger of Hanwha Chemical and Hanwha Q Cells & Advanced Materials.  According to its regulatory filing, the company’s revenue shrank 2.8 percent to 9.19 trillion won ($8.3 billion) on-year, but its operating profit surged 29 percent to 594.2 billion won, improving its profitability despite economic downturn from the COVID-19 crisis. Meanwhile, net profit saw a whopping 221 percent growth to 301.7 billion won in the same period.  +VE
Prime Minister Chung Sye-kyun, Hyundai Motor Group Chairman Chung Euisun and LG Energy Solution President Kim Jong-hyun on Thursday met to discuss a business model reusing expired EV batteries.  Comes amid a heightening blame game over the cause of Kona Electric Vehicle fires, but finding a solution would be very +VE
Real estate investment trusts, which allow individuals to make indirect investment in properties, have gained traction recently from investors facing heavier regulations on home buying.

TAIWAN Expect market to open flat; good local results likely to offset US weakness but likely to see investors remaining cautious ahead of data due out on Saturday.
No data due but on Saturday we get GDP Growth Rate, Export Orders
The government has budgeted NT$8.5 billion (US$300 million) to develop electric buses over the next four years as part of its program to upgrade public buses by 2030, the Ministry of Transportation and Communications (MOTC) said yesterday. +VE
The Financial Supervisory Commission (FSC) yesterday said that it is considering raising the cap on sales of insurance policies denominated in foreign currencies from 35 to 40 percent, which would allow life insurers an additional NT$690 billion (US$24.36 billion) of overseas investment.  +VE
Representatives from Taiwan’s top chipmakers yesterday met with government officials to discuss establishing a “semiconductor academy” that would supply the local industry with talent, the Ministry of Economic Affairs said. The semiconductor industry would have a “big say” in how the academy is to be structured, as the private sector is paying for half of it, Minister of Economic Affairs Wang Mei-hua said.  +VE and would probably make it harder to catch up with Taiwan.
Winbond Electronics yesterday reported that net profit last year increased 3.17 percent thanks to strong demand for chips as telecommuters and distance learners required notebook computers and networking equipment amid the COVID-19 pandemic. Net profit increased to NT$1.3 billion (US$45.89 million) from NT$1.26 billion in 2019, a company filing with the Taiwan Stock Exchange showed. Earnings per share edged up to NT$0.33 from NT$0.32 in 2019, while gross margin improved to 28.08 percent from 26.47 percent, it said.  President James Chen told investors in July last year that demand for notebook computers; mostly Chromebooks for students, would continue to drive the chip market. +VE
In a separate filing with the Taiwan Stock Exchange yesterday, Winbond said that its board of directors approved capital expenditure of NT$11.9 billion — up from NT$10 billion last year — which the company plans to use on manufacturing facilities and equipment. +VE

CHINA Expect market to open lower as investors watch to see if the PBoC acts again today.  
No data due but on Monday we get Loan Prime Rate
The U.S. House of Representatives on Thursday reintroduced a bipartisan bill that would ban imports from China's Xinjiang region unless it is certified they are not produced with forced labor, and allow further sanctions against Chinese officials responsible for abuses against Muslims. -VE
European Union unveiled a new trade policy, it warned of measures to blunt ‘negative spillovers’ from China, the more assertive foreign trade policy that signals greater cooperation with Washington.  But EU data shows that China overtook the US as the regional grouping’s biggest trading partner last year
Credit Suisse is looking to boost its wealth management business by building up its China onshore presence and expanding elsewhere in the Asia-Pacific region, Chief Financial Officer David Mathers told Reuters in an interview.
US farm exports to China are expected to hit a record US$31.5 billion during President  Biden’s first year in office, the US Agriculture Department said in its latest quarterly forecast. That is US$4.5 billion higher than the department forecast in November. US farm sales and shipments to China have surged since late last year, most notably for corn, USDA said.
China set to be first country where e-commerce sales outstrip bricks-and-mortar retail in 2021.  Some 52.1 per cent of China’s overall retail sales are expected to come from e-commerce transactions next year, according to research firm eMarketer

HONG KONG  ADR’s -115pts at 30,480 broad based weakness with Ecommerce leading the declines.
No data due
PANGAEA CONNECT (01473.HK), debut, closed at $0.63 in gray market, up 12.5% or 7 cents against the listing price of $0.56, on turnover of $39.7 million, PhillipMart data showed. Excluding handling fee, the book gain was $280 per board lot size of 4,000 shares.
SHORT SELLING Thursday 14.2% vs 19.7% Wednesday
Top Shorts:   Bud Apac (1876) 48%, Ping An (2318) 48%, CKI (1038) 47%, Power Assets (6) 45%,  Henderson land (12) 41%, Hang Lung Ppty  (101) 40%, Bank of China (3988) 32%, BankComm (3328) 30%, Hengan (1044) 27%, Sands China (1928) 26%, CCB (939) 25%.
NEXT DIGITAL (00282.HK) Founder Jimmy Lai Chee-ying was rejected by the High Court for his re-appeal of bail, and hence remains remanded, local media reported.
Changes are necessary to ensure only patriots rule Hong Kong, a former central government liaison office legal chief said, fueling speculation that Beijing will overhaul the SAR's electoral system during the "Two Sessions" meetings next month. The patriot requirement has been long established, Wang Zhenmin of Tsinghua University's Center for Hong Kong and Macau Research said in an interview with the Xinhua News Agency. Deng Xiaoping laid down rules for "Hong Kong people ruling Hong Kong," he said, which meant it must be run mainly by patriotic Hongkongers.
Chief Executive Carrie Lam Cheng Yuet-ngor wrote on her social media today that she will be getting the Chinese-made Sinovac jabs.
One of the largest and most authoritative coronavirus surveys has found that infections are quickly falling in England, confirming that lockdown is working to suppress the virus, Sky News reports. Imperial College London's REACT study found that infections had fallen by more than two-thirds since the last time it reported in mid-January. Last time, REACT found that 1 in 63 people currently had the virus. This time, it estimates that 1 in 196 people are infected. This means that infections are now at a similar level to where they were when REACT reported in September.
Wheelock Properties released 68 units in the first price list of Grande Monaco in Kai Tak, at an average price of HK$23,795 per sq ft after discounts, about 5 percent higher than the first price list of the phase 1 of Monaco development.  The units measure between 351 sq ft and 961 sq ft. The cheapest unit, measuring 351 sq ft, is offered at HK$7.66 million.
Hong Kong Ferry (0050) and Empire Group will offer 128 units of Skypoint Royale for sale tomorrow. The developers had received 4,227 checks as of yesterday, an over-subscription of 32 times.
Sino Land (0083) plans to offer five new projects for sale this year, providing nearly 4,680 units. Sino Land expects to launch One Soho in Mong Kok next month which will provide 322 homes.
SINOPEC SSC (01033.HK) announced that recently, Sinopec International Petroleum Services Corporation, a wholly-owned subsidiary of the Company, entered into a five-year contract with one-year extension option on 10 workover rigs services with Kuwait  Oil Company (KOC), which has a contract value of US$360 million.
Total visitor arrivals in Macau slipped 65.3% YoY to 90,600 throughout the 2020 Spring Festival Golden Week (February 11-17) according to provisional data from Macau Government Tourist Office. Of which, visitor arrivals from Mainland sagged 44.9% YoY to 82,200 in the period.
PICC P&C (02328.HK) announced that the original insurance premium income for January 2021 reached RMB53.112 billion, up 1.2% yearly.
NCI (01336.HK) announced that the accumulated gross premium income of the Company for January 2021 was RMB34.63 billion, up 12.78% yearly.
"Commodities King" Jim Rogers told India's Economic Times that he has not seen full-fledged bubbles except in the bonds market.  Rogers is currently upbeat on stock markets in Japan and Russia, citing massive fund inflows. However, he is not buying American shares for their highest-ever position right now
MCC (01618.HK) announced that the value of newly signed contracts of the Company in January 2021 amounted to RMB103.59 billion, representing an increase of 129.7% from the same period of last year.
PICC GROUP (01339.HK)  announced that the aggregate premiums income for January 2021 ballooned 6.67% yearly to RMB97.985 billion.
HANG LUNG PPT (00101.HK)  told local press that Chinese central government has given green light to the group's acquisition of U.S. consulate dormitory, situated at Shouson Hill, and that the group is in talks with the seller about the transaction. Public disclosures will be made in due courses.
Centa Valuation Index (Major Banks) (CVI) last stood at 65.23 this week, up 5.86 pts from the previous week, said the research department of Centaline Property. The reading indicated that the second-hand property transactions were prosperous during Chinese New Year holiday, and that banks upheld optimism towards the market outlook by raising mortgage valuation.   If the CVI breaks through 70, the housing prices will pick up, Wong predicted.

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