Feb 5 Asian Macro Initial Thoughts Expect Asia to work higher

05 Feb

Asian Futures Nikkei Futures opened lower but now -7pts,  HK ADR’s +28pts and Australia higher in early trades.  
US Futures opened flat; Dow +20pts , S&P flat and NDX +0.1%

DOW +1.08%, NDX +1.23%, S&P +1.09%, Russel 2K +1.98% Markets opened higher on good initial claims data (encouraging for Friday’s payrolls number) and after good earnings from EBay +5% and Paypal +7%.  Qualcomm -8% as sales missed in Q1. Dow initially rallying, NDX and S&P traded slowly higher and S&P closed at a new high.  Vix eased.  Democrats progressing with stimulus package
Banks JPMorgan Chase +2.3%, Citigroup +2.1%, Wells Fargo +3%, Amex +3.7%
Work from home names: Facebook -0.1%, Apple +2.6% close to deal with Hyundai/Kia on auto's, Amazon +0.6%, Netflix +2.4%,  Disney +2.2%, Zoom Video +2.5%, Alphabet -0.3% and Microsoft -0.4%,
Tech NXP +4.2%, Nvidia +1% had started -VE as UK and EU open probes into Arm acquisition, Micron +2.7%, AMD +0.1%, Skyworks -0.2%
Re-opening stocks  Boeing +1.6%, Caterpillar +0.1%, Simon Property +1.9%, Kohl’s +5.7%, Nordstrom -6.9% as sales outlook disappoints, Gap +3.7%, United Airlines +0.9%, Carnival +3%, Wynn Resorts +0.3%, Chevron unch, Exxon Mobil +1.9%,  
Lock down names Campbell Soup -0.4% General Mills +0.1%, JM Smucker -0.3%
After Market  Johnson & Johnson +1.5% (was +0.9in normal hours) applied for an emergency use authorisation from the FDA. +VE for sentiment on vaccine roll outs
Challenger Job cuts Jan 79.552k vs 77.03k Dec (F/cast was 65k)
Unit Labour costs Prelim Q4 +6.8% QoQ vs -7% Q3 revised (F/cast was +3.2%)
Non Farm Productivity Prelim Q4 -4.8% QoQ vs +5.1% Q3 revised (F/cast was -2.5%)
Initial Claims 779k vs 812k prior revised (F/cast was 850k)
4 week Average Claims 848.25k vs 849.5k prior revised (F/cast was 865k)
Continuing Claims 4.592m vs 4.785m prior revised (F/cast was 4.78m)
Factory Orders Dec +1.1% vs +1.3% Nov revised (F/cast was +0.7%)
Factory Orders Ex Transport Dec +1.4% vs +1.1% Nov revised (F/cast was +0.6%)
EIA Natural Gas Change -192Bcf vs -128 Bcf prior (Consensus was -192Bcf)
USD was slightly stronger vs Yen & Euro. Bitcoin +0.6% @ 37,185.63, VIX -5% @ 21.77, US T10 @ 1.136%
OIL Brent +1.03%, WTI +1.38% in reaction to yesterdays falling inventories data but a stronger USD limited the gains.
Gold -2.2%, Silver -1.8%, Copper -0.4% as USD strengthens
AHEAD Balance of Trade, Non Farm Payrolls, Unemployment Rate, Participation Rate, Average Hourly Earnings, Average Weekly Hours, Exports, Imports, Baker Hughes Rig Data
Earnings: Cardinal Health, Sanofi, Estee Lauder, Regeneron, Illinois Toolworks, Aon, CBOE Global Markets, Lazard, Biomet

DAX +0.91%, CAC +0.82%, FTSE -0.06%  Markets opened higher and initially rallied. FTSE then sold down and traded around flat all day. DAX and CAC traded sideways in the green for most of the day and worked higher in the last hour. Pre market Deutsche +0.3% reported good earnings and a return to profit but shares sold down from the initial high.  Shell +1.5% saw a sharp drop in profit as expected, initially rallied but then sold down.  
Data was mixed; construction PMI’s were weak but Retail Sales beat. BoE left rates unchanged as expected and the Bank’s Prudential Regulation Authority (PRA) also said in a letter to lenders that British banks will need at least six months to prepare for a potential shift to negative interest rates.
Auto’s leading initially with White Household good weak. But Banks rallied after the BoE announcement, Utilities were weak.
BBVA +6.4% after agreeing to sell banking service Holvi.
Dassault Systemes +6.1% after forecasting a rise in 2021 revenues on the back of a strong performance for its clinical trials business.
Bayer +5.3% after it reached a $2 billion deal to settle future compensation claims in the U.S. over cancers linked to its Roundup weedkiller. Technipfmc +1.6% and Valmet Corp +4.4%
Unilever -6.2% after full-year results; closed at the day low.
Construction PMI Jan 44.1 vs 45.5 Dec (F/cast was 45)
ECB Economic Bulletin
Retail Sales Dec +2% MoM vs -6.1% Nov (F/cast was +1.1%)
Retail Sales Dec +0.6% YoY vs -2.9% Nov (F/cast was -0.2%)
Construction PMI Jan 46.6 vs 47.1 Dec (F/cast was 46.6)
Construction PMI Jan 39.5 vs 40.5 Dec (F/cast was 42)
Retail Sales Dec +22.3% MoM vs -18% Nov (F/cast was +8%)
Retail Sales Dec +9.1% YoY vs -15.7% Nov (F/cast was -10%)
BoE Rate Decision No change @ 0.1% as expected.
Construction PMI Jan 49.2 vs 54.6 Dec (F/cast was 54)
New car Sales Jan -39.5% vs -10.9% Dec (F/cast was -34%)
EUROZONE No data due
GERMANY Factory Orders
FRANCE Balance of Trade, Current Account
UK Halifax House Price Index

Nikkei futures opened -25pts; dropped lower but now flat.  Expect a flat open as Household spending was better than expected.  Yen currently 105.53
Data due pre market
Household spending Dec +0.9% MoM vs -1.8% Nov (F/cast was -1.1%)
Household spending Dec -0.6% YoY vs +1.1% Nov (F/cast was -2.1%)
Foreign Exchange reserves Jan (Dec were $1394b)
Later Leading Economic Index and Coincident Index.
Tokyo confirmed 734 new coronavirus cases Thursday, with the figure standing below 1,000 for the seventh successive day, according to the metropolitan government.
Government ministry said on Thursday it was checking if any law had been broken after a magazine reported that PM Suga's eldest son and fellow executives at a satellite broadcaster had wined and dined senior ministry officials.  Slight -VE for PM Suga
Sumitomo Corp has quit the shale oil business in the United States by selling its stake in a project in the Eagle Ford during the October to December quarter of 2020, a company spokesman said on Thursday. Slight +VE
Takeda Pharmaceutical Co said on Thursday its nine-month profit more than doubled from a year earlier, driven by sales of its core branded drugs. Operating profit was 358.7 billion yen in the nine months through Dec 31, the drugmaker said. Takeda held its full-year operating profit forecast steady +VE
A Japanese fund backed by veteran investor Yoshiaki Murakami has raised its offer for energy and environment firm Japan Asia Group (JAG), competing against a management buyout bid backed by Carlyle Group.
Mazda Motor Corp said on Thursday it expects a chip shortage to affect its vehicle production from this month. Likely to effect about 7,000 vehicles in Feb -VE
Netflix Inc on Thursday raised monthly charges in Japan for its standard and basic plan as the streaming giant spends heavily on original content to stave off rising competition.
Nissan Motor Co Ltd said its factory in Myanmar had resumed operations on Wednesday, after operations were suspended this week following a military coup in the Southeast Asian country.

Expect markets to open higher following US rally and good current account data pre market.  Foreigners & Institutions were net sellers yesterday; watch to see if they turn buyers today.
Data out  Current Account Dec US$11.51 vs 8.97b Nov (F/cast was 9.9b)
Korea counted 452 new covid cases (429 locally transmitted and 22 imported ) on Thursday, bringing the cumulative total to 79,762. Seven more deaths were announced, with the toll now at 1,448.
Prime Minister Chung Sye-kyun on Thursday ordered a revamp of social distancing guidelines in a bid to win greater public support for efforts to stop local transmission of the new more virulent coronavirus which has been found in S Korea.
President Moon Jae-in pledged on Thursday to upgrade the country's alliance with the United States and prepare a comprehensive North Korea strategy in a phone call with U.S. President Joe Biden, Moon's office said.
Korean Air Lines said Thursday its net losses narrowed in 2020 from a year earlier, as it offset the pandemic-caused slump in passenger travel with increased cargo deliveries and enjoyed decent gains from an asset sale. Net losses narrowed to 291.45 billion won ($260 million) last year from 622.76 billion won the previous year, the company said in a regulatory filing. +VE
SK Bioscience is collaborating with GlaxoSmithKline in COVID-19 vaccine development, the company said Thursday.  According to SK Bioscience, its COVID-19 vaccine candidate GBP510 has shown improved T cell activity, or immune response, when used in combination with GSK’s adjuvant AS03. The two companies are running a clinical phase 1/2 trial of GBP510 and AS03, since the local drug authority’s approval of the clinical test design on Jan. 26. +VE
Hyundai Heavy Industries Holdings Co. (HHIH) said on Thursday that it swung to the red last year from a year earlier due to losses from equity ties with its oil refining unit and the new coronavirus pandemic. Its net loss came to 789.7 billion won ($705.8 million) in 2020, compared with a net profit of 115.3 billion won a year ago, the company said in a regulatory filing -VE
Naver Corp. said Thursday it will shut down its online portal's real-time search chart service this month amid a year long controversy over whether it could be prone to advertising or be used to rig public opinion. +VE
SK Materials and Hyosung Chemical’s NF3 gas is enjoying an unprecedented boost in sales as demand for semiconductors and displays have spiked amid the pandemic.  NF3, short for nitrogen trifluoride, is a special type of gas used during the manufacturing process of semiconductor, display and solar panels. The gas removes residue left on inner walls of the manufacturing chamber. +VE

Expect market to open higher following the rebound in the US.Data due after market Wholesale Prices & Inflation Rate
A British man in his 70s on Wednesday became the ninth person, and first foreign national, to die of COVID-19 in Taiwan, the Central Epidemic Command Center (CECC) said yesterday.
The central bank has amended foreign-exchange regulations for companies and individuals to give it more flexibility in curbing currency speculation in a timely fashion.  The changes, due to take effect on Feb. 17, come after moral suasion failed to discourage companies, especially exporters, from currency trading practices intended to hedge against foreign-exchange losses, but contributed to the New Taiwan dollar’s appreciation. +VE
US Arleigh Burke-class guided-missile destroyer USS John S. McCain yesterday transited through the Taiwan Strait, a first for US President Joe Biden’s administration and for the year, official sources said.  Interesting because they don’t usually reveal the ship’s name but this may reflect a closer stance from the US +VE
AU Optronics Corp yesterday reported that net profit last quarter almost tripled as stay-at-home and remote-working trends bolstered demand for larger-screen TVs and computers.  Net profit rose to NT$8.44 billion (US$297.37 million) from NT$2.89 billion in the prior quarter and a net loss of NT$8.83 billion from a year earlier, the company said. That lifted the company’s full-year net profit to NT$3.38 billion, or earnings per share (EPS) of NT$0.36. It posted a net loss of NT$19.19 billion in 2019. +VE
Asustek Computer Inc  yesterday announced plans to form a strategic alliance with Portwell Inc  to jointly build an embedded foundry to accelerate its development in the artificial intelligence of things (AIoT) industry and advancement of related applications. Under the partnership, Asustek is to purchase a 30 percent stake in industrial PC maker Portwell for NT$1.5 billion (US$52.85 million), it told a news conference at the Taiwan Stock Exchange. Asustek said the deal would close by the end of this quarter, and it might purchase another 15 percent of Portwell shares after a year. +VE
ASE Technology Holding yesterday said it expects its chip assembly and testing (ATM) service revenue this year to grow two times faster the global semiconductor industry’s as 5G-related applications drive chip demand. The Kaohsiung-based company said that its ATM revenue last year expanded 10 percent to NT$270.1 billion (US$9.52 billion) from a year earlier. Global semiconductor industry sales, excluding the memory chip segment, are predicted to grow by 5 to 10 percent this year, ASE said.
Hon Hai being sued by the developer of its Wisconsin plant for contract breach.  Slight -VE

Expect market to open flat concerns over US relations and the PBoC’s actions.
No data due
China reported 30 new COVID-19 cases on the mainland on Feb. 3, official data showed on Thursday, up slightly from 25 cases a day earlier but still well below the peaks seen at the height of the latest wave last month.  Still concerns about how cases are reported in China.Press reports that the mandatory testing is driving massive profits for the testing sector.
US President Joe Biden says China is a ‘most serious competitor to our prosperity , security and democratic values’. -VE for sentiment; suggests tough line seen under Trump to continueF
ord Motor has decided to terminate plans to launch electric vehicle joint ventures with China’s Zotye Automobile, it said on Thursday. It said that China’s electric vehicle industry and government policies had undergone major changes since the agreements were signed in 2017 and 2018, prompting Ford’s decision. Ford didn’t specify which changes triggered its move. -VE
Canada said on Thursday that Hong Kong graduates of Canadian universities could apply for a new category of three-year work permit next week and expressed fresh concern about China’s clampdown on the former British territory.
Malaysia's Solution Group Bhd said on Thursday it has signed a term sheet agreement with the government to supply 3.5 million doses of COVID-19 vaccine jointly developed by China's CanSino Biologics Inc and Beijing Institute of Biotechnology under the Academy of Military Medical Sciences.
Zimbabwe will receive 200,000 free doses of China’s Sinopharm COVID-19 vaccine, President Emmerson Mnangagwa said on Thursday, after China and Russia offered shots against the coronavirus to the impoverished southern African nation.
Guyana on Thursday abruptly terminated an agreement with Taiwan to open an office in the South American country, hours after China urged Georgetown to “correct their mistake.” Taiwan’s foreign ministry earlier on Thursday said it had signed an agreement with Guyana on Jan. 11 to open a Taiwan office, effectively a de facto embassy for the island that China claims as its sovereign territory with no right to diplomatic ties. Guyana’s foreign ministry on Thursday afternoon said it was rolling back the agreement and that it continued to adhere to the “One China” policy. -VE
SWIFT, together with the clearing center and the digital currency research institute of the People's Bank of China (PBOC), jointly formed a financial gateway company in China, indicating China is considering a global roll-out of its own Central Bank Digital Currencies (CBDC). The joint venture is called Finance
China calls on nations to ‘objectively view’ its new coastguard law It allows live firing if sovereignty threatened -VE
Britain revokes CGTN’s broadcast licence over ‘political’ ownership concerns. Licence holders cannot be controlled by political bodies, regulator says

ADR’s +28pts  at  29,096, E Commerce mixed and Financials remain weak. Retail selling likely ahead of the weekend and Chinese New Year but Kuaishou IPO expected to go very well.
Data due after market  Foreign Exchange Reserves
IPO KUAISHOU-W (01024.HK) debut today closed at $336.6 in gray market, up 1.927 times or $221.6 against the listing price $115, on turnover of $733 million, Futu Securities data showed. Excluding the handling fee, the book gain is $22,160 per board lot size of 100 shares. Trading was paused for a while due to a system breakdown.Worth noting that TikTok yielded US$128 million in user spending in January 2021, 3.8 times its revenue in January 2020, representing the top grossing non-gaming app worldwide, according to Sensor Tower's report.
JBM HEALTHCARE (02161.HK) debut today opened up almost 17% at $1.4 in gray market before listing debut , PhillipMart data showed. It last posted at $1.44, up 20% against the listing price of $1.2.

SHORT SELLING Thursday 19.5% vs 20.7% Wednesday
Top Shorts:  Ping An (2318) 49%, Sunny Optical (2382) 36%, CCB (939) 34%, Henderson Land (12) 30%, Hengan (1044) 29%, AIA (1299) 28%, Hang Seng Bank (11) 27%, Galaxy (27) 26%, BABA-SW (9988) 26%, CKH (1) 26%.

The new national security education curriculum was published on Thursday.  It will force teachers to warn primary students as young as six years old against “subversion”  and '‘foreign influence" and to throw out library books considered dangerous to the Chinese state. It indicates Beijing does not trust HK schools or teachers.  Schools will be required to set up working groups and submit proposals and reports to the bureau.  Liberal studies will now focus on fostering patriotism and biology will include texts on how the Chinese Govt protected China from covid.  I wonder if that includes denying it in the first place?
Carrie Lam  has announced plans for five major legislative amendments today, including one that will require district councilors to take oaths pledging their allegiance and another allowing qualified overseas doctors who were Hong Kong citizens to be registered in the city.
The government will also table bills to improve fire safety standards in old residential buildings and draw up legislations over rent control in subdivided flats.
Strengthening privacy laws, eliminate doxxing and the spread of false information will also be on the list of the five major legislative amendments, according to Lam.
Govt announced another surprise lockdown in Yau Ma Tei yesterday and its expected to end by 7am
CNOOC (00883.HK) CEO Xu Keqiang, at the strategic guidance meeting for 2021, said the company will communicate with the US government in regards of being put on the blacklist so as to brush off misunderstanding. The company hoped that the related sanction could be removed as soon as possible.  As to oil price, Xu said this year is full of uncertainties and instabilities, and that the impact from the epidemic development and anti-plague measures of different countries on global economy and oil consumption are unpredictable.
CHINA OVERSEAS (00688.HK) January 2021, the contracted property sales amounted to RMB27.018 billion and the corresponding GFA sold was 1.4167 million square meters, with year-on-year increase of 33.3% and 28.4% respectively.
FORTUNE REIT (00778.HK) Annual Income Available for Distribution Dips 2.4% to $970M; Final DPU 24.56 Cents. CEO Chiu Yu, Justina, at the conference call, said the group has been maintaining healthy financial status, hoping it could tide over the pandemic sturdily. As to future dividend payout , the company will make decision based on circumstances.  She projected 34% of the leases to expire in the year of 2021. Given lackluster retail market conditions, the rental reversion may continue to track a negative growth in the short run. As to the timing for a positive rental reversion, Chiu said it would depend on the plague control by the Hong Kong government.
YUXING INFOTECH (08005.HK)  announced that the Company has been allocated with 800 KUAISHOU-W (01024.HK) Shares at the final offer price of HK$115 each. The total amount paid by the Company in respect of the allocated KUAISHOU-W shares is approximately HK$93,000.
HKT-SS (06823.HK) annual result ended December 31, 2020. The net profit amounted to HK$5.303 billion, up 1.6% yearly. Basic earnings per Share Stapled Unit was HK70.01 cents. Final distribution per Share Stapled Unit is HK40.97 cents, resulting in a total distribution of HK71.07 cents per Share Stapled Unit for the year. Total EBITDA decreased by 2% to HK$12.527 billion.
CHINA OILFIELD (02883.HK) released the strategic guidance for 2021. According to the data from third-parties, the total capital expenditure of global upstream exploration and development in 2021 will slightly increase compared with 2020, and the domestic overall exploration and development situation is stable.  It is estimated that the capital expenditure of the Company will be approximately RMB4.3 billion, which will be mainly used for construction of production bases, renovation of the facilities, machinery and equipment.
CNOOC (00883.HK) announced that the Company’s targeted net production for 2021 is 545 million to 555 million barrels of oil equivalent (BOE), of which, production from China and overseas accounts for approximately 68% and 32%, respectively.  The Company’s total capital expenditure for 2021 is budgeted at RMB90 billion to RMB100 billion.
HKMA Deputy Chief Executive Arthur Yuen said No capital has been leaving Hong Kong so far, whilst a lot of fund managers are tracking increased funds under management.  Under the mutual market access between China and Hong Kong, local market still represented abundant opportunities to financial institutions.
MSCI, Inc. released the MSCI China Tech 100 Index, with IT companies having the highest weighting. The top 20 constituents by weight are listed as follows:
Constituents |Weight (%)
MEITUAN-W (03690.HK) |12.85%
Alibaba (BABA.US) |9.62%
TENCENT (00700.HK) |9.42%
Baidu (BIDU.US) |8.11%
JD.com (JD.US)                 |7.3%
XIAOMI-W (01810.HK) |7.01%
NetEase (NTES.US) |6.13%
NIO (NIO.US) |5.6%
Pinduoduo (PDD.US) |5.49%
BYD COMPANY (01211.HK) |2.48%SUNNY OPTICAL (02382.HK)|2.38%
ALI HEALTH (00241.HK) |2.24%
Global Data Solutions (GDS.US)|1.57%
SMIC (00981.HK) |1.32%
IQIYI (IQ.US) +0.600 |1.3%
Tencent Music (TME.US) |1.29%
KINGDEE INT'L (00268.HK) |1.16%
CATL (300750.SZ) |1.1%
XINYI SOLAR (00968.HK) |1.06%
KINGSOFT (03888.HK) |1.04%

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