Apr 14 Asian Marco Initial Thoughts mixed open again; China remains weak on international relations

14 Apr

Data due this morning Consumer Confidence and New Home Sales
Market to open flat ahead of the data but trend is for the market to rise, supported by the rise in oil and gold overnight, tech to see a boost from NDX gains overnight too.
Nikkei futures opened +25pts but have eased ahead of the pre market data but expect markets to continue to work higher.
S Korea 
Expect markets to open higher and build on recent gains with investors expecting a good earnings season. Pre market data mixed with import prices much stronger than expected which is likely to hurt margins but unemployment dropped +VE
Market to open slightly higher on expectations of good earnings ahead.
Market to open lower on concerns about US/China relations and caution ahead of key GDP and other data due Friday.
HK ADR’s indicate +79pts at 28,576, broadly +VE only HSBC, Sinopec, BoC and Hutch in the red.  But sentiment remains weak on US/China relations and the renewal of ’surprise lockdowns’ despite the low number of cases.  
US Futures Opened flat Dow +10pts, S&P +0.03% and NDX +0.02%

DOW -0.2%, NDX +1.05%, S&P +0.33%, Russel 2K -0.22% 
Market dipped on the open as the FDA recommended pausing the Johnson and Johnson -1.3% covid vaccine after a series of blood clot cases; Moderna +7.4% but re-opening names and Travel stocks under pressure initially although they did recover later. Inflation was in-line with f/casts.
Dow traded sideways just in the red all day. S&P traded sideways in the green for most of the day with an uptick into the close to close at a new high. NDX opened higher and traded sideways in the morning but worked higher in the afternoon.
Tesla +8.6% which suggests momentum stocks still have interest. But talk that investors are also taking some insurance with interest in defensive stocks (bond proxies) like Utilities and Real Estate
GRAB to go public in a $40bn Spac deal, with Altimeter Growth Corporation.Nvidia (NVDA.US) +3% said its first-quarter revenue will top earlier assumption of US$5.3 billion. On the release, Nvidia's shares leaped 5.6% overnight. Nvidia's CFO Colette Kress expected chip demand to keep exceeding supply for much of 2021 and also announced to adopt its "Grace" central processing unit (CPU) made from Arm's technology, posing a direct challenge to its rival Intel. Intel's -0.3% off early lows.
On Tuesday the 2021 Annual Threat Assessment was released which lays out U.S. spy agencies’ views of the chief foreign policy issues facing President Biden in his first year in office, complicated by the coronavirus pandemic and global climate change. It notes that China’s push for global power is the leading threat to U.S. national security, while Russia’s efforts to undermine American influence and assert itself as a major actor also pose a challenge.
Banks JPMorgan Chase -1.2%, Citigroup -0.9% Wells Fargo -2.4%, Amex -1.1%, PayPal +2.4%
Work from home names: Facebook -0.6%, Apple +2.4%, Amazon +0.6%, Netflix +0.2%,  Disney -0.5%, Zoom Video +6.6%, Alphabet +0.4% and Microsoft +1%,
Tech NXP Semi -2.9%, Nvidia +3.1%, Micron -3.6%, AMD +2.1%, Skyworks +0.6%
Re-opening stocks  Boeing +1.5%, Caterpillar -0.7%, Simon Property -1.2%, Kohl’s -2.6%, Nordstrom -3.1%, Gap -1.5%, United Airlines +0.9% off initial lows along with Carnival +0.3%, Wynn Resorts flat, Chevron +0.5%, Exxon Mobil +0.4%,  
Lock down names  off early highsCampbell Soup flat,  General Mills -0.5%, JM Smucker +0.2%
NFIB Business Optimism Mar 98.2 vs 95.8 Feb (F/cast was 99.1)
Core Inflation Mar +1.6% YoY vs +1.3% Feb (F/cast was 1.6%)
Core Inflation Mar +0.3% MoM vs +0.1% Feb (F/cast was +0.3%)
Inflation Mar +2.6% YoY vs+1.7% Feb (F/cast was +2.6%)
Inflation Mar +0.6% MoM vs +0.4% Feb (F/cast was +0.6%)
Redbook +13.2% YoY vs +10.6% prior. 30yr Bond Auction 2.32% vs 2.295% prior
After Market API Crude Oil Stock Change -3.608vs -2.618m prior (Consensus -2.154m)
USD was flat vs Yen & Euro. Bitcoin +5% @ 63,022.58 ahead of Coinbase listing, VIX -1.5% @ 16.65,
US T10 @ 1.62% fell as J&J vaccine put on hold and inflation being in-line with F/casts.
OIL Brent +1.12%, WTI +0.8% driven by strong demand from China whose crude imports rose 21% in March
Gold +0.8%, Silver +2%, Copper +0.2% Platinum -0.9%, Palladium -0.7%.
AHEAD MBA Mortgage Applications and 30 yr Mortgage Rate, Import & Export Prices, EIA Oil report, Beige Book.
Earnings: JPMorgan Chase, Goldman Sachs, Wells Fargo, Bed Bath and Beyond, Infosys, First Republic Bank

DAX +0.13%, CAC +0.36%, FTSE +0.02% 
FTSE 100 opened slight lower and the DAX and CAC 40 slightly higher; markets then traded sideways. Caution ahead of earnings, US inflation data and vaccine roll out.
Pre market UK GDP and other data slightly better than f/cast, German ZEW weaker than expected. Retail strong on good earnings. Banks were weak.
Earnings LVMH reporting after the bell good demand from China and US.
Reported in the morning U.K.’s JD Sports +3% and French Connection +5.1% Switzerland’s Givaudan +2.1% Q1 like for like sales +7.7% +VE
Just Eat Takeaway +6.7% after delivering strong results with the online food group reporting 200m of orders in the first quarter
ZEW Economic Sentiment Apr +66.3 vs 74 Mar revised (F/cast was +77)
Wholesale Prices Mar +4.4% MoM vs +2.3% Feb (F/cast was +3.3%)
Wholesale Prices Mar +1.7% YoY vs +1.4% Feb (F/cast was +0.6%)
ZEW Economic Sentiment Apr 70.7 vs 76.6 Mar (F/cast was 78)
ZEW Current Conditions Apr -48.8 vs -61 Mar revised (F/cast was -54)
Balance of Trade Feb £-7.1B vs -3.4b Jan (F/cast was -2.2b)
GDP 3 mth Ave Feb -1.6% vs -1.7 Jan (F/cast was -2%)
GDP Feb -7.8% YoY vs -9.2% Jan (F/cast was -8.6%)
GDP Feb +0.4% MoM vs -2.9% Jan (F/cast was +0.4%)
Industrial Production Feb +1% MoM vs -1.5% Jan (F/cast was +0.4%)
Manufacturing Production Feb -4.2% YoY vs -5% Jan (F/cast was -5.4%)
Manufacturing Production Feb +1.3% MoM vs -2.3% Jan (F/cast was +0.4%)
Construction Output Feb -4.3% YoY vs -3% Jan (F/cast was -2.3%)
Goods Trade Balance Feb £-16.442b vs -9.826b Jan (F/cast was -11.6b)
NIESR Monthly GDP Tracker Mar -1.5% vs -1.6% Fed revised (F/cast -2.6%)
EUROZONE Industrial Production
GERMANY No data due
FRANCE  IEA Oil Market Report
Labour Productivity

Nikkei futures opened +25pts but have eased ahead of the pre market data but expect markets to continue to work higher. The pre market data was worse than expected -VE for sentiment and futures sold off heavily. (added at 7am) 
Yen  currently 109.06  
Data out at 6:50am 
Machinery Orders Feb -8.5% MoM vs -4.5% Jan (F/cast was +2.4%)
Machinery Orders Feb -7.1% YoY vs +1.55 Jan (F/cast was +2.1% YoY)
BoJ Kuroda Speaks just after 2pm
Osaka reported 1,099 daily infections, a record high for the prefecture, Tokyo announced 510 new cases Nationwide the total was 3,452 -VE for sentiment and with less than 100 days to the olympics a big concern.
Japan will release more than 1 million tonnes of contaminated water from the destroyed Fukushima nuclear plant into the sea, the government said on Tuesday, a move China called "extremely irresponsible", while South Korea summoned Tokyo's ambassador in Seoul to protest.  -VE for relations with neighbours and environmentalist investors.
Japan on Tuesday proposed holding a naval drill with Germany when a German frigate visits Asia later this year, as Tokyo aims to bolster security ties with other democracies in the face of China's maritime expansion.
Toshiba CEO ousted in board coup which would put CVC bid in question, as KKR is reported to have submitted a rival and higher bid. Hong Kong-based activist fund Oasis Management belies CVC Capital’s $20 billion proposal to take Toshiba Corp private is “far below fair value” and has urged the Japanese conglomerate to seek other offers.
Shoei Kisen -VE on news its Ever Given ship is being held in the Suez Canal as canal authorities pursue a $916 million compensation claim against the ship’s Japanese owner, one of the vessel’s insurers said. -VE

Expect markets to open higher and build on recent gains with investors expecting a good earnings season.  Pre market data mixed with import prices much stronger than expected which is likely to hurt margins but unemployment dropped +VE
Data out 
Export Prices Mar +5.6% YoY vs +0.6% Feb revised from +0.2%
Import Prices Mar +9% YoY vs -0.3% Feb revised from -0.8%
Unemployment Rate Mar +3.9% YoY vs +4% Feb
US President Biden wants semiconductor chips to be produced in his own country, not China, posing a dilemma for foreign chipmakers such as Samsung Electronics, which are torn between two strategically important markets.
Samsung, the world's largest supplier of DRAM and NAND chips, accounted for 49 percent of the global smartphone memory market last year, up 2 percentage points from a year earlier, according to a report from industry tracker Strategy Analytics. +VE it was followed by SK Hynix and Micron Tech.  Also Samsung Electronics  maintained the status as the world's second-largest semiconductor vendor (behind Intel) by revenue last year, industry data showed Tuesday, amid rising demand of memory products on the back of the pandemic-induced stay-at-home economy.
Speculation that Pyongyang could up the ante with further military provocations this week as it marks a major national holiday, following up on its recent missile launches, experts say.  Thursday marks the birthday of Kim Il-sung, the country’s founder. The regime has also repeatedly staged provocations on or around the holiday. -VE for sentiment.
South Korea has cleared potential roadblocks for the local production of Novavax’s COVID-19 vaccine, but it will have to wait until the drug’s safety is proven, government officials said Tuesday.
Coupang is hiring a small number of employees for senior positions in Singapore, a move that has been seen as part of steps to branch out into the Southeast Asian market. +VE potential
Samsung SDI Co. will supply battery cells for US electric vehicle startup Rivian's upcoming vehicles, the companies said Tuesday.  RJ Scaringe of Rivian, backed by Amazon.com Inc. and Ford Motor Co., said in a statement Samsung SDI has been developing the battery cells for its vehicles as it plans to launch an electric pickup and SUV later this year.  +VE
SK IE Technology Co. (SKIET), a battery material subsidiary under SK Innovation Co., said Tuesday its second battery separator factory in China started operations to step up its production capacity. +VE
Blockchain professionals and experts on Tuesday to meet in Seoul to discuss the latest trends surrounding digital assets.  Topics at the seminar, dubbed World Blockchain Summit Marvels Seoul 2021, revolved around wealth transfers with the arrival of digital assets, digital transformation in the world of finance, blockchain-driven business models and regulatory hurdles, as well as the world of decentralized finance.

Expect market to open slightly higher on expectations of good earnings ahead.
No data due 
The EU today for the first time is to join Taiwan, the US and Japan to host a meeting of the Global Cooperation and Training Framework (GCTF), the Ministry of Foreign Affairs said yesterday. +VE
Taiwan Semiconductor Manufacturing Co. on Monday took part in a virtual White House summit about a global semiconductor shortage and Washington’s plans to strengthen US supply chains.  US President Biden told executives that there is bipartisan support in the US Congress for efforts to strengthen the US semiconductor industry to better protect the manufacturers that rely on it. +VE
China Airlines Ltd yesterday said that it would cancel its flights between Taiwan and Palau on Saturday, despite the Taiwan-Palau “travel bubble” arrangement, as only two people had booked seats.  Raises questions about travel sectors international recovery
Alchip Technologies which designs application-specific ICs (ASICs) for other companies, yesterday said that it has halted shipments to Chinese semiconductor company Phytium Information Technology Co  which could lower its revenue this year by as much as 25 percent.  Alchip said that it has put on hold all production activity originally planned for Phytium after the Chinese chip company was put onto the entity list of the US Department of Commerce’s Bureau of Industry and Security on Thursday last week, along with six other Chinese companies. -VE
Scientech Corp  yesterday said that it is building its first Chinese plant to capture a share of China’s rapidly growing reclaimed wafers market. The company supplies silicon wafers that have been processed and stripped, polished and then cleaned for reuse. +VEDelta Electronics Inc on Monday reported that revenue last month increased 28 percent year-on-year and 33 percent month-on-month to NT$27 billion. The monthly figure meant that first-quarter revenue increased 30 percent year-on-year, but declined 8 percent quarter-on-quarter to NT$72.49 billion — better than market expectations. +VE
Cathay Real Estate Development Co’s  bid of NT$3.395 billion yesterday beat 16 other bidders for a plot near the rezoning area of the Er Chung floodway, the New Taipei City Department of Land Administration said in a statement. Cathay Real Estate’s winning bid for the 1,983 ping (6,555m2) parcel was NT$1.4 billion higher than the price floor, the department said, adding that the bid translated into NT$1.71 million per ping. +VE

Expect market to open lower on concerns about US/China relations and caution ahead of key GDP and other data due Friday. No data dueChina told the United States on Tuesday to stop playing with fire over Taiwan and lodged a complaint after Washington issued guidelines that will enable U.S. officials to meet more freely with officials from the Nation that China claims as its own.  China believes the United States is colluding with Taiwan to challenge Beijing and giving support to those who want the island to declare formal independence. The reality is that Taiwan’s people have already formally declared independence by rejecting Beijing’s claims.The US on Monday urged Beijing to stop its multifaceted pressure campaign against Taiwan after China sent 25 military jets into Taiwan’s air defense identification zone.
“The United States notes with concern the pattern of ongoing PRC [People’s Republic of China] attempts to intimidate the region, including Taiwan,” a US Department of State spokesperson said in an e-mail response to questions. “We urge Beijing to cease its military, diplomatic and economic pressure against Taiwan, and instead engage in meaningful dialogue with Taiwan.”  China’s envoy to Canada urges against ‘decoupling’.   Ambassador Cong Peiwu pitches closer cooperation amid frayed relations over tit-for-tat arrests of a Huawei executive and two Canadian nationals.  Illustrates China’s ambivalence to western concerns over its policies and the global implications .
China looks set to reopen border with North Korea  The city authorities in Dandong appear to be preparing to open a long-delayed bridge across the Yalu river that connects it with the city of Sinujiu.  Trade between the two countries had been badly hit by UN sanctions and then ground to a halt last year following the start of the Covid-19 pandemic     and recently the North warned of more hardship and possible famine.  The People’s Bank of China (PBOC) on Tuesday said it appointed U.S.-educated economist Li Bo, until recently the vice mayor of the municipality of Chongqing, as a deputy governor, Reuters reports.  Li, who is in his late 40s, worked at China’s central bank for 14 years until 2018, including nine in monetary policy departments. He will serve as one of seven deputies to governor, Yi Gang.Huarong bonds tumble to record low following execution of former boss  Raises questions about the financial health of the company.  Among those holding Huarong debt are BlackRock and Goldman Sachs Asset Management. S&P on Friday issued a warning over Huarong’s credit profile -VEChinese researchers say they’ve developed an AI text censor that is 91 per cent accurate.  They claim it could be useful to ‘identify and filter sensitive information from online news media’.  China’s internet is tightly controlled and the government relies on a huge army of censors to vet content.

ADR’s +79pts at 28,576, broadly +VE only HSBC, Sinopec, BoC and Hutch in the red.  But sentiment remains weak on US/China relations and the renewal of ’surprise lockdowns’ despite the low number of cases.  
No data due
Short Selling Tuesday 14.6% vs 14.8%Monday
Top Shorts  Bud Apac (1876) 48%, Country Garden (2007) 45%, BankComm (3328) 33%, ICBC (1398) 27%, Bank of China (3988) 27%, Henderson Land (12) 27%, Anta Sports (2020) 25% HSBC (5) 25%,  SinoPharm (1177) 25%

The government announced today that a new offence will be introduced to prohibit any person from inciting another person not to vote, to cast a blank or invalid vote by way of public activity during an election period. Violators may face imprisonment for up to three years.
At least four disciplinary forces will demonstrate PLA-style marching instead of traditional British drills as their training schools open to the public on National Security Education Day tomorrow.  Five training schools will open as part of the National Security Education Day.  The Customs and Excise, Immigration, Correctional Services and Fire Services departments will perform the "goose-stepping" foot drill. A further sign of Beijing’s direct influence.

Guangzhou Juhe Information Technology, an affiliate of BABA-SW (09988.HK)'s UC Browser, was fined RMB2.0916 million for alleged false and illegal advertising, announced SAMR's Guangzhou branch.  The penalty comprised a fine of RMB2.078 million and confiscation of RMB13,400 in advertising fees.
Zhejiang Geely Holding Group is planning to float Polestar, the EV manufacturer, onto Nasdaq through another SPAC, luring US$300 million, foreign media cited sources. The valuation is as high as US$40 billion.+VE
In view of the present economic condition and epidemic repercussion, the Hong Kong government does not perceive now is the right time to adjust rates of profit tax and salary tax, yet review will be ongoing with timely amendment, said Christopher Hui, Secretary for Financial Services and the Treasury.  Separately, there is no condition to introduce new tax items as the government is focusing on fighting plague and revitalizing the economy, Hui added. However, relative study and preparation work will be moved along to seek consensus on new tax items.
Although the Macau SAR government has been striving to revive the Individual Visit Scheme (IVS) e-visas, this is under the purview of the central government, as Radio Macau cited Chief Executive Ho Iat Seng.  Ho is in close contact with China's tourism industry, which promised to put priority on Macau tours once Beijing resumes e-visa approval for travelling abroad.
The NPC Standing Committee had decided to refine Hong Kong's election systems and approved amendments to Annex I and II of the Basic Law, said Chief Executive Carrie Lam at the press conference.  The new Legislative Council election, originally slated for 5 September 2021, shall be postponed until 19 December 2021, Lam added.   The Election Committee subsector elections will be held on 19 September 2021, while the Chief Executive election will be carried out on 27 March 2022.
MEITUAN-W (03690.HK), purportedly planning for share placement, cratered nearly 7.45% to close at $276.  The MEITUAN-W's shares owned by Goldman Sachs or held on behalf of customers rose from 132 million to 434 million weekly, i.e. a stake increase from 2.24% to 7.36%, according to CCASS shareholding information. This may imply the transfer of over 300 million MEITUAN-W shares (or 5.12% shareholdings held in real name) from investors to Goldman Sachs. -VE
NCI (01336.HK) announced that the accumulated gross premium income of the Company for the first three months of 2021 was RMB63.392 billion, up 8.8% year-over-year.
CHINA LIFE (02628.HK) announced that the accumulated premium income of the Company for the period from 1 January 2021 to 31 March 2021 was about RMB323.9 billion (unaudited), up 5.23% yearly.Bitcoin notched another record high, surpassing US$62,000. The cryptocurrency expanded by 2.47% to last post at US$62,418, after peaking at US$62,568.
TRIP.COM-S (09961.HK) (TCOM.US) IPO was over-subscribed by more than 16 times, with frozen capital of approximately HK$12.5 billion, according to market sources.  The stock was said to be priced at HK$268 each, representing a discount of around 2% to its US closing price yesterday.

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