Apr 17 Things to know before trading Asia on Monday

17 Apr

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This week saw mixed data out of China which suggests its recent strong rebound could moderate in the months ahead.  Coinbase listed and Bitcoin touch new highs along with the Dow which crossed the 34,00 mark.  We had Toshiba in play for privatisation and then the CEO was ousted leaving things ‘up in the air’.  
Tensions between the US and Russia rising over the SolarWinds hack; with Russia on Friday banning top officials from U.S. President Biden's administration from entering the country and announced a wave of tit-for-tat sanctions and expulsions of diplomats. China racketing up pressure on Taiwan as a US delegation visited the country. Excellent results from TSMC and a good start to the US reporting season.
Ahead we have more US and European earnings reporting in focus; earnings growth for the S&P 500 so far is 30.2%, the best quarter since Q3 2010, according to FactSet.  A light week for data but earnings the focus with investors watching profit margins for signs of inflation on the cost side.
Some key names this week Coca-Cola, IBM, United Airlines, Johnson & Johnson, Travelers, Procter and Gamble, Netflix, Abbott Labs, CSX, Lockheed Martin, Philip Morris, Verizon, Chipotle, Whirlpool, Nasdaq, Canadian Pacific Railway, Halliburton, AT&T, Intel, D.R. Horton, American Airlines, Dow, Credit Suisse, SAP, Mattel, Snap, American Express, Honeywell, Daimler, Schlumberger, Kimberly-Clark.
Additionally Covid is re-surging in Asia and India especially.
The Baltic Dry Bulk Freight Index closed +62 pts, (+2.7%) @ 2,385 a 1-year high and up 14.4% on a weekly basis; +VE for Shippers and freight operators.

DOW +0.48% another high, NDX +0.1%, S&P +0.36%, Russel 2K +0.25% 
Opened higher on good Housing Starts day (although Permits missed) and then traded sideways/lower for most of the day before working better in the late afternoon.
Michigan consumer data was mixed.
Fed’s Waller said 'the U.S. economy is set to take off, but there’s still no reason to start tightening policy.’
The White House announced US$1.7-billion investment to help CDC monitor, track, and defeat emerging coronavirus variants that are currently threatening pockets of the country. +VE
In the semi-annual foreign exchange report, U.S. Department of the Treasury did not list China as a currency manipulator. Nevertheless, Washington urged Beijing to improve transparency in terms of foreign exchange intervention activities, her exchange rate management regime, and activities in the offshore RMB market.
Morgan Stanley -2.8% despite a beating estimates driven by strong trading and investment banking. It announced US$644-million credit losses, together with US$267 million in related trading costs, from the Archegos fund meltdown.
PNC Financial +2.3% as earnings beat top and bottom line.Space X has been awarded a US$2.9-billion contract from NASA to use Starship to send astronauts from lunar orbit to the moon.
Banks JPMorgan Chase +0.7%, Citigroup -0.1%, Wells Fargo +3.8%, Amex +1% PayPal -1.5%
Work from home names: Facebook -0.5%, Apple -0.3%, Amazon +0.6%, Netflix +0.5%,  Disney +0.7%, Zoom Video -0.7%, Alphabet -0.1% and Microsoft +0.5%,
Tech NXP Semi -1.2%, Nvidia +1.4%, Micron +0.4%, AMD -1%, Skyworks -0.5%
Re-opening stocks  Boeing -1.2%, Caterpillar +0.4%, Simon Property +2.2%, Kohl’s +0.2%, Nordstrom -0.3%, Gap -0.9%, United Airlines -0.5%, Carnival -1.1%, Wynn Resorts -0.5%, Chevron -0.4%, Exxon Mobil -0.6%,  
Lock down names Campbell Soup +1.2% General Mills +1.3%, JM Smucker +0.7%
Housing Starts Mar +19.4% vs -11.3% Feb revised (F/cast was +11.2%)
Building Permits Mar +2.7% vs -8.8%Feb (F/cast was +2.9%)
Michigan Consumer Prelim data
Inflation Expectations Apr +3.7% vs +3.1% Mar (F/cast was +3.1%)
Consumer Sentiment Apr 86.5 vs 84.9 Mar (F/cast was 89.1)
5yr Inflation Expectations Apr +2.7% vs +2.8% Mar (F/cast was +2.8%)
Consumer Expectations Apr 79.7 vs 79.7Mar (F/cast was 83.7)
Current Conditions Apr 97.2 vs 93 Mar (F/cast was 95)
Baker Hughes Oil Rig Count 344 vs 337 prior
Baker Hughes Total Rig Count 439 vs 432 prior
USD was weaker vs Yen & Euro. Bitcoin -1.6% @ 62,331.10 , VIX -1.9% @ 16.25,
US T10 @ 1.59% a small rebound from Thursday but muted there were no auctions Friday.
OIL Brent -0.24%, WTI -0.5% slight weakness but improving sentiment and the US sanctions on Russia could indirectly help support prices.
Gold +0.59%, Silver +0.29%, Copper -1.28% Platinum +0.48%, Palladium +1.34%.
AHEAD No data due

DAX +1.34%, CAC +0.85%, FTSE +0.52% 
Opened slightly higher following the good US data but with some caution on the mixed data out of China and ahead of the Eurozone data; which showed a ramp up in consumer prices driven by services and energy. DAX and CAC slowly working better whilst the FTSE traded sideways.
Auto sector +2.1% after good results from Daimler but Household goods weak.
Daimler +2.7% Q1 EBIT to 5 billion euros ($6 billion) vs 719 million euros Q1 2020.
Finnish retail conglomerate Kesko +4.2% but off early high after reporting 16.9% sales growth YoYin March.
German meal-kit delivery firm Hellofresh +3.3% after a strong first-quarter earnings report.
WH Smith +1.5 after RBC upgraded the stock to “outperform” and raised its target price.Ambu +6% after Morgan Stanley initiated coverage of the stock with an “overweight” rating.
New Car Registrations Mar +87.3% YoY vs -19.3% Feb (F/cast was +150%)
Balance of Trade Feb €+17.7B vs +11b Jan Revised (F/cast was +24b)
Core Inflation Final Mar +0.9% YoY vs +1.1% Feb (F/cast was +0.9%)
Inflation Final Mar +1.3% YoY vs +0.9% Feb (F/cast was +1.3%)
Inflation Final Mar +0.9% MoM vs +0.2% Feb (F/cast was +0.9%)
EUROZONE Current Account and Construction Output
GERMANY Bundesbank Monthly Report
FRANCE No data due
UK No data due

At this stage expect markets to open higher although the covid surge is a concern.  Yen closed 108.77
Data due Pre market 
Balance of Trade Mar (Feb was ¥217.4B; F/cast is +300b)
Exports (Feb was -4.5%; Consensus is +11.6%)
Imports (Feb was +11.8%; Consensus is +4.7%)
Industrial Production Feb (Jan was +4.3% MoM (-5.2% YoY) F/cast is -2.1% (-2.6%))
Capacity Utilisation Feb (Jan was +4.7% F/cast is +2.1%)
U.S. President Biden said he had a productive summit with Japanese PM Suga and the two countries were committed to working together to meet the challenge posed by China and issues including North Korea. The two leaders addressed an array of geopolitical issues, including Taiwan, with Suga saying they reaffirmed “the importance of peace and stability of the Taiwan Strait,” a slap at Beijing’s increased military pressure on the Chinese-claimed, self-ruled island. Biden said the two countries had agreed to work together on 5G, semi-conductor supply chains, artificial intelligence, genomics and quantum computing.
Government announced Friday that countermeasures imposed in parts of the country earlier this month will be expanded to Kanagawa, Chiba, Saitama and Aichi prefectures. Effective Tuesday until May 11, restaurants and other dining establishments have been asked to close by 8 pm. With residents urged to stay indoors and avoid travel — in the cities of Yokohama, Kawasaki and Sagamihara in Kanagawa; Funabashi, Ichikawa, Matsudo, Kashiwa and Urayasu in Chiba; Saitama and Kawaguchi in Saitama; and Nagoya.  -VE
The head of the Tokyo Olympics on Friday was again forced to assure the world that the postponed Games will open in just over three months and not be canceled despite surging COVID-19 cases in Japan.
Private equity firm CVC Capital Partners will delay submitting a formal proposal to buy Toshiba Corp, following the appointment of a new chief executive officer by the Japanese industrial group, the Nikkei reported on Friday.
Slight -VE
Renesas Electronics Corp. resumed production at a plant in Ibaraki Prefecture on Saturday, about a month after fire damaged the facility, sources close to the matter said. +VE
Honda Motor Co. unveiled to the press on Friday the GYRO e, an electric business scooter that was launched in March for corporate customers.  The three-wheeled electric scooter can run up to 72 kilometers on a single charge, and the replaceable battery can be recharged using a household power source.  The price for the scooter costs ¥550,000 including tax. The battery and charger, which are only leased, are sold separately. (An interesting possible new source of income from leasing?)
Nissan Motor Co will slash production at several factories in Japan next month, three sources with direct knowledge of the plan said, in the latest hit to an automaker from a global shortage of semiconductors.  It will idle its factory in Kyushu for eight days between May 10 and 19, the sources said, declining to be identified because the plan is not public.
A senior Bank of Japan (BOJ) official played down the potential for China’s digital yuan to threaten the US dollar’s position as the world’s main reserve currency. “The [US] dollar’s status as the key global currency won’t change so easily,” said Kazushige Kamiyama, head of the BOJ’s payment systems department and the person in charge of looking into a virtual Japanese currency. “In fact, the [US] dollar’s advantage may strengthen further if the US goes with digitalization.”
Expect markets to open higher following the positive moves in the US.No data dueKDCA reported 658 new covid cases with 630 local infections down from Friday's 698  and Thursday’s 731.  But concerns remain about a new wave -VE for sentiment.
President Moon Jae-in on Friday replaced the prime minister and six other cabinet members in a bid to revive his party, after devastating local election defeats, and his policy agenda.
U.S. President Biden will meet President Moon Jae-in in Washington next month, Moon's office and the White House said, in talks that will include how to push forward efforts to stem North Korea's nuclear programme.
Government has decided to halt financing for Myanmar infrastructure projects until next year, a source told The Korea Herald on Friday.
General Motors Co (GM.N) and South Korean joint-venture partner LG Energy Solution on Friday said they will build a second U.S. battery cell manufacturing plant, revealing plans for a $2.3 billion factory in Spring Hill, Tennessee.
Huons Global Co Ltd (084110.KQ) will lead a consortium to produce 100 million doses of Russia's Sputnik V COVID-19 vaccine per month, as Moscow seeks to increase production  globally to meet rising demand.  Huons shares were +29.8% Friday on the news, to their highest level since Sept 2018.
South Korea’s top fiscal policymaker and conglomerate leaders met Friday to promote public-private cooperation amid the post-coronavirus economy and pending market challenges including the semiconductor supply shortage.
Hyundai Motor and Kia, are joining hands with SK Innovation to develop batteries for hybrid electric vehicles, the group said Friday. +VE
Hyundai Motor Co. said Friday it will again suspend the Sonata-producing plant in South Korea for two days next week due to an electronic parts shortage.
Posco C&C decided to end their business partnership with Myanma Economic Holdings Public Company Limited (MEHL), one of Myanmar’s two largest military holding companies, the company said Friday.  The steel product manufacturer owns a 70 percent of stake in the joint venture, and it will purchase the remaining 30 percent held by MEHL, in as early as the first half of this year.
Shares in Hanjin Heavy Industries & Construction Co. slumped Friday after its creditors signed a deal to sell the financially troubled shipbuilder.

Expect market to open higher following US markets Friday and the positive joint statement from US and Japan seeking stability in the region.
No data due 
US delegation wraps up three-day visit to Taipei. During the meeting, members of the delegation asked about the KMT legislators’ interpretation of the so-called “1992 consensus,” sources said.  Chiang yesterday said that he responded by clarifying the “1992 consensus” from three aspects.  First, the “consensus” does not mean “one country, two systems,” a model that the KMT firmly opposes; second, it is a historical fact that has been the basis for cross-strait interaction; and third, there has been discussion within the KMT about whether it should replace the “consensus” with something that could garner more support.”  He also told the visitors that Taiwan needs more international space for development and hopefully the US would lend more support for Taiwan to join international organizations, especially the WHO.
KMT Legislator Lin Wei-chou who was also invited to the meeting, said yesterday that he did not attend because the American Institute in Taiwan did not clarify the meeting’s purpose in advance. He said Chinese President Xi Jinping is to blame for Taiwan’s antipathy toward the “1992 consensus,” because he falsely connected the “consensus” with the concept of exploring a “Taiwan model” under the “one country, two systems” framework.
New US Treasury report does put Taiwan on the watch list but was not designated as a currency manipulator
Citibank Taiwan Ltd yesterday said that credit card clients could continue using their cards as operations would continue normally until it sells its consumer banking business.  As of February, the bank had 2.86 million credit cards in circulation in Taiwan, of which 2.17 million had been used in the past six months, ranking it sixth among all banks, data from the Financial Supervisory Commission showed.
CSBC Corp, Taiwan Friday reported a pretax profit of NT$34 million (US$1.2 million) for last quarter, ending five consecutive quarters of losses. The turnaround could be attributed to cost improvements and lower foreign exchange volatility.  Although the shipbuilder’s revenue fell 17.65 percent annually to NT$4.52 billion in Q1 its costs dropped at an even faster rate, thanks to production improvements at its two plants in Keelung and Kaohsiung.
TSEC Corp has secured a NT$2.3 billion to NT$2.5 billion (US$81.15 million to US$88.21 million) major supply contract for two new ground-mount solar farms in Taiwan, boding well for the company’s hopes of making a turnaround.  The new orders would start to contribute to revenue from this month through February next year, TSEC said in a statement on Thursday. The new contract is the biggest deal it has landed in recent years.

Expect market to open flat as investors assess the recent Chinese data and the continues deterioration in international relations.  Key though could be the actions of Team China.
No data due. The only data this week will be the Loan Prime Rate due Tuesday
China said Friday it has expressed “serious concerns” to the United States and Japan over what it calls negative moves and collusion between the two countries against China.  Zhao told reporters at a daily briefing that Japan and the United States  should “take China’s concerns and demands seriously, avoid words and actions that interfere in China’s internal affairs and harm China’s interests.”  “China has no objection to the development of normal bilateral relations between Japan and the United States, but such relations should help enhance mutual understanding and trust among regional countries and contribute to peace and stability in the Asia-Pacific region, and should not target or harm the interests of third parties," Zhao said.
China would “make necessary responses as appropriate," he said. The statement from Foreign Ministry spokesperson Zhao Lijian came just before President Biden welcomed PM Suga to the White House on Friday in his first face-to-face meeting with a foreign leader.
China's Vice Minister of Foreign Affairs Le Yucheng has  called U.S. policy on China “too negative,” saying it highlights confrontation over cooperation.  Le said Friday that cooperation could be critically important as U.S. President Biden’s administration focuses on the coronavirus disease pandemic and economic recovery.  Le told The Associated Press in an interview that the two countries could tide over many difficulties by working together. He said the emphasis on competition and confrontation lacks a forward-looking spirit.  But he added that cooperation needs to be on an equal basis and should not be “one side drawing up a laundry list or demands to the other side.”
China's Sinovac COVID-19 vaccine was 67% effective in preventing symptomatic infection, data from a huge real-world study in Chile has shown, a potential boost for the jab which has come under scrutiny over its level of protection against the virus.  The CoronaVac vaccine was 85% effective in preventing hospitalizations and 80% effective in preventing deaths, the Chilean government said in a report, adding that the data should prove a "game changer" from the vaccine more widely.
China is set to give green light to the first foreign coronavirus vaccine across the country before July, people familiar with the matter were quoted as saying by the Wall Street Journal.  +VE  It will be interesting to see if a foreign vaccine sees more demand than the local ones.
China is willing to strengthen cooperation with France and Germany to cope with climate change, President Xi Jinping told his French counterpart Emmanuel Macron and German Chancellor Angela Merkel, Chinese state media reported on Friday.
China says climate onus on US in John Kerry talks.  The US envoy and Chinese Vice-Premier Han Zheng held virtual talks during the former’s trip to Shanghai, signalling hopes that the two powers can work together on the global challenge
Hungary has blocked a European Union statement criticising China's new security law in Hong Kong, two diplomats said, in a move likely to undermine efforts to confront Beijing's curbing of freedoms in the former British colony. "Hungary's argument was that the EU already has too many issues with China," a senior EU diplomat told Reuters. A second senior diplomat confirmed the blockage and Hungary's position. Budapest reluctantly supported the EU sanctions last month, calling them "pointless", and hosted China's defence minister for an official visit days after the EU sanctions decision.  Hungary is a large recipient of Chinese investment. In the past both Hungary and Greece, where China's COSCO Shipping has a majority stake in Greece's largest port, have blocked EU statements on China.
Chinese market watchdogs asked banks not to withhold loans to CHINA HUARONG (02799.HK), Reuters learnt from inside sources, whereas some state-owned banks were notified to get prepared to support the embattled asset management firm.
China is set to grant permission to import large amounts of gold into the country, involving roughly 150 tonnes and US$8.5 billion, Reuters learnt from sources familiar with the matter.  The gold will be imported this month, said the insiders.
FT Report on Hainan ‘on fire’ as luxury’s centre of gravity tilts to ChinaWestern brands bet on Chinese shoppers staying at home beyond the Covid-19 pandemic +VE for luxury brands.

ADR’s +91pts at  29,061 with HSBC, Petro names and some Chinese Financials +VE but weakness in the Ecommerce names.  I would expect cautious trading with concerns over international relations and the easing of China’s recovery.  Friday’s late rally looked to be Team China led; so key to Monday’s trading     will be their presence.
No data due
TRIP.COM-S (09961.HK) debut Monday. On Friday it opened at $271 in gray market, up 1.1% against the offer price. of $268. It closed at $278 in gray market, up 3.7% or $10 against the offer price of $268, on volume of 294,000 shares and turnover of over $81.1 million, PhillipMart data showed

Short Selling Friday 13.4%  vs 17.7% Thursday
Top Shorts
  Bud Apac (1876) 40%, Ali Health (241) 35%, BankComm (3328) 34%, Bank Of China (3988) 29%, Henderson Land (12) 29%, Sino BioPharm (1177) 29%, Sands China (1928) 27%, Longfor (960) 25%
Edward Yau, Secretary for Commerce and Economic Development, expressed high concerns to the first confirmed COVID variant case in Hong Kong.  Along with variant cases reported in Britain, South Africa and such other countries, Hong Kong Government will think about such factors when discussing customs clearance resumption with foreign governments, said Yau.
Health officials have ordered 21-day quarantine for 81 residents of a building in Jordan that is home to a probable mutant Covid-19 case.

SHENZHOU INTL (02313.HK) announced that in view of the recent developments in respect of the Epidemic in Cambodia, the Cambodian government has declared a lockdown in Phnom Penh from April 15, 2021 to April 28, 2021. To cooperate with the containment measures imposed by the Cambodian government, operations at the Group’s production bases in Cambodia will be suspended.
Fitch Ratings affirmed XIAOMI-W (01810.HK)'s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) rating at BBB with a Stable Outlook.   The rating was based on the agency's expectation that the company will expand its shares in the smartphone market, extend its presence in premium smartphone segments, and revive revenue growth in its internet of things (IoT), lifestyle products and internet services businesses in the coming years.
Li Ka Shing Foundation uploaded on its Facebook page a picture of Li Ka Shing being vaccinated, although no disclosure was made on which jab Li chose to receive.
BABA-SW (09988.HK)'s community group buying business Freshippo Market is now available at TENCENT (00700.HK)'s WeChat Mini Program, which supports WeChat payment.  The Freshippo Market provides fresh food and lifestyle goods sales services.
MTR CORPORATION (00066.HK) announced that the tender for THE SOUTHSIDE Package Six Property Development has been awarded to Modern Expert Limited, a subsidiary of Wheelock Properties.  Wheelock Properties is a well-established and reputable property developer in Hong Kong and has been working with the Corporation over the years on various development projects. The Corporation looks forward to working with Wheelock Properties to make the Development a success. Slight +VE but developers are cautious ahead of the expected govt review of policy which seems to the directive from Beijing
MGTO Deputy Director Ricky Hoi told Radio Macau that May 1 Golden Week's hotel booking rate approximates 40-50% at this moment. The visitor traffic of the gambling hub surmounted 190,000 in the latest week, disclosed Hoi.
CHI MER LAND (00978.HK) announced that for the period from 1 January 2021 to 31 March 2021, the Group had achieved aggregate contracted sales of approximately RMB14.208 billion (representing a year-on-year increase of 1.99 times).
CHINA TAIPING (00966.HK) announced that the gross premium income of Taiping Life Insurance for the period from January 2021 to March 2021 was RMB58 billion, up 3.2% yearly.
China's real estate loan growth declined to 12% YoY at the end of the first quarter of 2021, hitting the trough in eight years, announced China Banking and Insurance Regulatory Commission (CBIRC).
In 1Q21, China's banking industry tracked a net profit growth of 1.5% yearly, laying a solid foundation for maintaining reasonable capital replenishment and risk resistance, said Liu Zhiqing, Deputy Director of China Banking and Insurance Regulatory
CCL last printed at 179.95, down 0.75% weekly.
CCL edged up 1.57% during the six weeks after the Spring Festival holiday, said the research department of Centaline Property. Luxury homes saw more outstanding rally among the top four indices.
CCL (large units) +3.12% WoW
CCL (small-to-medium flats) +1.28% WoW
CCL Mass +0.97% WoW
The number of bankruptcy petitions filed increased by 44 percent on March month-on-month, data from Official Receiver's Office showed.  From the same month, the year before, petitions fell by 5.3 percent to 779 last month.  In the first three months, petitions increased by nearly 30 percent to 1,986.  The number of compulsory winding-up petitions last month jumped by 26 percent year-on-year and 16 percent month-on-month to 44.
The Hong Kong Monetary Authority (HKMA) announced today the progress made in its handling of banking complaints received as at end-March 2021. Banking complaints include cases concerning general banking services and conduct-related issues.  In March 2021, 290 cases were received and the handling of 270 cases was completed. As at end-March, the handling of 653 cases was in progress.
NEXT DIGITAL (00282.HK) Founder Jimmy Lai was sentenced to a eight-month imprisonment after pleading guilty of unauthorized assembly on Hong Kong Island dated 31 August 2019. Among which, two months of the imprisonment will be enforced separately from the "8.18" case in 2019. Therefore, Lai is subject to a total of 14-month jail.
Seven pro-democracy activists were found guilty of organizing and taking part in an unauthorized assembly on 18 August 2019. Earlier this week, the tabloid published a hand-written letter Lai sent to his colleagues from prison, saying: "It is our responsibility as journalists to seek justice. As long as we ... do not let evil get its way through us, we are fulfilling our responsibility.” It is "time for us to stand tall," he wrote.
Senior barrister Martin Lee, who helped launch the city's largest opposition Democratic Party in the 1990s and is often called the former British colony's "father of democracy," was given an 11-month suspended sentence.
"The wrongful prosecution, conviction and sentencing of these activists underlines the ... government’s intention to eliminate all political opposition," Amnesty International’s Asia-Pacific Regional Director Yamini Mishra said.
In prominent barrister Margaret Ng's mitigation speech, she said the law must not only be defended in courts or the legislature, but also in the streets. "When the people, in the last resort, had to give collective expression to their anguish and urge the government to respond, protected only by their expectation that the government will respect their rights, I must be prepared to stand with them, stand by them and stand up for them," she said. She was given a 12-month jail term, and be on probation for two years.
A sad day for Hong Kong’s justice system in my view.

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