Apr 5 Asian Macro Initial Thoughts Australia, Taiwan, China and HK remain closed

05 Apr

Australia Market closed
Japan Nikkei futures opened  -37pts but have since risen to +32pts   expect markets to open higher with +VE sentiment about the recovery after the strong US jobs number Friday and positive sentiment on the global recovery.
S Korea Expect markets to open higher on good US jobs data which added to the positive sentiment.  Building on Friday’s close, Kospi finished at 6 week high. Additionally improved earnings forecasts ahead of results also good for sentiment.  Kospi 3,000 likely to be seen as the support level. Investors will also be watching for the mayoral election results; seen as a referendum on Moon’s administration which saw high voter turnout despite the poor weather at the weekend.Pre market data slightly light but still around year highs.
Taiwan Market closed
China Market closed
HK Market closed
Europe Markets closed
US Futures opened Dow+136pts, S&P +0.4% and NDX +0.2% after the strong jobs numbers on Friday.  Plus the US reported another daily record of new Covid vaccinations Saturday, pushing the weekly average of new shots per day above 3 million.+VE
IMF/World Bank Spring meetings throughout the week.

Key data ahead this week 
Japan Household spending, Leading Economic Index, Coincident Index, Consumer Confidence and Eco Watchers data.
S Korea Current Account
Taiwan Inflation Rate, Wholesale Prices and Trade Data
China Caixin Services and Composite PMI’s, Inflation Rate and PPI
Hong Kong PMI

Eurozone Unemployment, Services, Composite and Construction PMI’s and PPI
Germany, France and UK: Services, Composite and Construction PMI’s.
Germany Trade data, Factory Orders
France Industrial Production, Trade data
UK Halifax House Price Index.

US Services and Composite PMI’s, ISM Non Manufacturing Data, Factory orders, Jolt’s job openings, Consumer Inflation Expectations, Balance of Trade, FOMC minutes and PPI data.

OPEC+ expressed growing confidence in the global economic recovery by agreeing to increase oil production gradually in the coming months. Highlight from Thursday’s meeting. Key being as countries like the US rapidly expand their vaccination programs, there are growing signals that the oil market is healing.

US markets were closed Friday but re-open today
US Trade Representative (USTR) Katherine Tai on Thursday raised concerns about Vietnam’s currency practices during a virtual meeting with her Vietnamese counterpart.
Tai also addressed US concerns on illegal timber practices, digital trade and agriculture, according to a readout from her office of the meeting with Vietnamese Minister of Industry and Trade Tran Tuan Anh. Key is that Vietnam has been a big beneficiary of the US/China trade war and will now come under greater scrutiny from the US. They agreed to a “sustained dialogue” in the future, it said.
Non Farm Payrolls Mar 916k vs 468k Feb revised (F/cast was 680k)
Unemployment Rate Mar 6% vs 6.2% Feb (F/cast was +6%)
Non Farm Payrolls Private 780k Mar vs 558k Feb revised (F/cast was 455k)
Ave Hourly Earnings Mar +4.2% YoY vs 5.2% Feb revised (F/cast was 4.7%)
Ave Hourly Earnings Mar -0.1% MoM vs +0.3% Feb revised (F/cast was +0.2%)
Ave Weekly Hours Mar 34.9 vs 34.6 Feb (F/cast was 34.8)
Participation Rate Mar 61.5% vs 61.4% Feb (F/cast was 61.7%)
Government Payrolls Mar 136k vs -90k Feb revised (F/cast was 225k)
Manufacturing Payrolls Mar 53k vs 18k Feb revised (F/cast was 35k)
AHEAD Servies & Composite PMI, ISM New York Index, ISM Non Manufacturing Data (PMI, Business Activity, Prices, New Orders, Employment), Factory Orders.

Europe markets closed re-open Tuesday 

Nikkei futures opened -37pts but have since risen to +32pts   expect markets to open higher with +VE sentiment about the recovery after the strong US jobs number Friday and positive sentiment on the global recovery.
Yen currently 110.67
Data due 30 mins after market opens.
Services PMI Final Mar (Feb was 46.3 F/cast is 46.5)
Composite PMI Final Mar (Feb was 48.2 F/cast is 48.3)
Tokyo reported 355 new covid cases and Osaka 593 new cases, out numbering Tokyo for a sixth day but below 600 for the first time in four days.  Tokyo below 400 for the first time in five days.  Saturday’s nationwide total was 2,771.  
PM Suga designates Osaka and Hyogo and Miyagi for semi-emergency measures in the light of rising covid cases.  Comes as Around 70% of coronavirus patients tested at a Tokyo hospital last month carried a mutation (E484K to ‘Eek’) known for reducing vaccine protection, none of them had travelled abroad or had contact with people who had.
Japan, the United States and South Korea agreed in high-level security talks on Friday to work together to keep up pressure on North Korea to give up its nuclear and ballistic missile programs.
Japan and the United States will cooperate on the supply of critical parts for chips, aiming for an agreement when the leaders of both countries meet later this month, originally scheduled for April 9 but now pushed back to April 16.  
PM Suga on Sunday said Taiwan's peace and stability is key to the region and that Japan will cooperate with the United States to calm rising tensions between China and Taiwan.“It is important for Japan and the United States to cooperate and use deterrence to create an environment where Taiwan and China can find a peaceful solution,” Suga said on a television talk show Sunday. Likely to annoy China.
Japan is considering deploying F-35B advanced stealth fighter jets to an Air Self-Defense Force base in Miyazaki Prefecture, government sources said Sunday, in a bid to boost defense capabilities on the country's remote southwestern islands in light of China's muscle-flexing at sea.
Automakers likely to make further production cuts due to Renesas fire, with production at Renesas’s plant unlikely to return to normal until summer.  -VE
Nikon Corp. will end the production of single-lens reflex cameras at its affiliate Sendai Nikon Corp.’s facility by the end of this year. Slight -VE
Solar power generation on agricultural land expands in Japan not only to grow crops, but also to generate power. The combination provides a “two-birds-with-one-stone” source of income by allowing the more effective use of farmland. +VE
Kioxia Holdings Corp is focused on pursuing an initial public offering (IPO) as soon as this summer, rather than engaging with potential foreign acquirers and navigating foreign regulatory approvals, four people familiar with the matter said.  Comes after Western Digital and Micron are rumoured to be considering bids for the company.
Sony announced that it will be ending online support and PlayStation Store access for PlayStation 3 and PlayStation Vita in the next few months.
With the start of the new year there is an expectation that the Japanese will resume their purchases of foreign bonds having eased back over the past month.

Expect markets to open higher on good US jobs data which added to the positive sentiment.  Building on Friday’s close, Kospi finished at 6 week high. Additionally improved earnings forecasts ahead of results also good for sentiment.  Kospi 3,000 likely to be seen as the support level. Investors will also be watching for the mayoral election results; seen as a referendum on Moon’s administration which saw high voter turnout despite the poor weather at the weekend.Pre market data slightly light but still around year highs.
Data out
Foreign Exchange Reserves Mar $446.13b vs $447.56b Feb (F/cast was 453b)
KDCA reported 543 new covid cases above 500 for a fourth day in a row on Sunday; but the same as Saturday but with 514 local infections.  Government re-iterated for people to comply with the social distancing rules.
Foreign minister said on Saturday he expects China to play a role in peacemaking between South and North Korea, inviting China’s president to visit as the United States and its allies agreed to continue pushing Pyongyang to denuclearise.  Speaking after meeting State Councillor Wang Yi, in Xiamen. Wang said China and South Korea had agreed “to promote the process to politically resolve issues surrounding the Korean Peninsula,” Yonhap reported. The visit comes as S Korea seeks to mend ties with its biggest trading partner after a 2016 row over a US antimissile system placed in South Korea.
The valuation of the South Korean stock market has risen 2.7% in Q1 vs Q4 2020 falling behind other global stock markets that logged an over 4% gain, according to Bloomberg data Sunday.  Also as the number of South Koreans investing in the local stock market nears 10 million, about one-third of those investors are also overseas stock traders, according to local securities firms Sunday.
Yoon Suk-heun, chief of South Korea‘s financial watchdog, pledged on Friday to beef up its oversight to prevent a spillover of risks associated with environmental, social and governance factors in the Korean finance industry.
KAI sets sights on Asia No. 1 in ‘new space’ era. S Korea‘s sole aircraft manufacturer aims to carve out a niche in satellite biz; KF-X fighter price set at $65m. KAI laid out strategies at a press conference on Friday on how it will raise the revenue from this year’s projected 3 trillion won ($2.6 trillion) to 10 trillion won by 2030.  +VE
South Korean shipbuilders clinched orders in the first quarter worth ten times more than the total orders logged for 2020, as the shipyard industry is recovering from the fallout of the pandemic, data showed Sunday. Korean shipbuilders led by Hyundai Heavy Industries Co. won new orders for 126 ships or 5.32 million compensated gross tons (CGTs) in the January-March period, according to the data provided by global market researcher Clarkson Research Service.  +VE Korea Shipbuilding & Offshore Engineering Co. (KSOE), Samsung Heavy Industries Co and Daewoo Shipbuilding & Marine Engineering Co
A massive agriculture complex will be developed in Pocheon, Gyeonggi Province as part of a joint project between Korean and Chinese industry players, the Korea-China Private Economic Association announced Sunday. From South Korea, Doosan Fuel Cell, CJ OliveNetworks and Shinhan Bank will join the project. The three companies signed a memorandum of understanding during a ceremony held Saturday to invest in the development of the agriculture complex. +VE
South Korea's consumption of petroleum declined to a five-year low last year amid the pandemic, data showed Sunday.  The country's consumption of petroleum reached 878 million barrels last year, -5.8% YoY, according to Korea National Oil Corp. -VE  Refiners and drillers.
Genesis, the independent luxury brand of Hyundai Motor Co., said Friday it will debut its flagship sedan and sports utility vehicle (SUV) in China to target the high-end segment in the world's largest vehicle market. +VE
The power struggle over Hanjin KAL, the holding company of Hanjin Group, seemed to settle at last as the three-way alliance of an estranged sister of the Korean Air chairman, an activist fund and a builder officially disbanded, industry data showed Friday.
Cast.era, a media technology joint venture between SK Telecom Co. and US media giant Sinclair Broadcast Group Inc., will launch a next-generation broadcast solution that boosts television content quality this year, the South Korean company said Friday.The telecom operator said Cast.era has completed testing of the 5G-ATSC3.0 platform, which boosts broadcast quality using SK Telecom's 5G cloud and artificial intelligence (AI) technology.
Hanwha Systems, the affiliate spearheading Hanwha Group’s space and defense IT business, will set up its first US office, according to industry sources Friday.
Hyundai Motor denied a rumour that it is about to establish a joint venture with US tech giant Google to develop a self-driving service.

Market closed Qingming Festival re-opens Tuesday
No data due Anaylsts expect the Taiex to move higher when it re-opens after the good US jobs data but then likely to see some consolidation.  TSMC likely to lead following is unveiling of a rare multiyear investment plan to meet the current chip shortage.  Also Q1 earnings about to start and expected to be strong.  
Taichung braces for water supply cuts The city government said it would install water purification machines to provide drinking water to residents and would close all public swimming pools.  Officials, residents and businesses in Taichung have been gearing up for water cuts that are to take effect tomorrow as Taiwan deals with a water shortage. The city government said it has established six water recycling centers where residents can obtain water for free to water their plants and clean their homes. -VE for sentiment  +VE for makers of buckets and jerry cans.
Evergreen Marine Corp on Friday dismissed a foreign news report that it was being sued by the Japanese owners of the Ever Given container ship, saying that Evergreen is just “an involved party” listed in the lawsuit.
Siemens Taiwan expects revenue growth to gather pace this year, benefiting from an uptrend in demand for its energy management solutions from local semiconductor companies and machine tool manufacturers, which were hit hard by the COVID-19 pandemic. Revenue last year beat expectations as business activity returned to normal, thanks to the government’s fast and appropriate response to contain the pandemic, Siemens Taiwan president and chief executive officer Erdal Elver said +VE
Kwang Yang Motor Co, which has been selling gasoline-powered scooters for more than half a century under the name KYMCO, is reshaping its brand image by adopting a second brand name, Ionex, for its electric scooter business as it moves to challenge market leader Gogoro Inc.
New vehicle sales grew at an annual pace of 15.9% last month, due to stable economic growth and new model launches against a decline in global auto sales due to chip shortages, online market researcher U-Car.com said in a report on Thursday.
CPC Corp, Taiwan and Formosa Petrochemical Corp yesterday announced that they would keep gasoline prices unchanged this week, ending six consecutive weeks of hikes. However, the companies still raised diesel prices by NT$0.1 per liter this week, following an increase of NT$0.2 per liter last week, they said in separate statements.

Market closed for Ching Ming Festival to re-open Tuesday
No data due
China’s stock market eased as its market size decreased by 2% in Q1 2021 vs Q4 2020, according to Bloomberg data, probably due to the tightening policies of the PBoC and the impact of the Ant Group IPO being pulled.
The Shanghai Stock Exchange (SSE) Friday said it is tightening scrutiny over corporate bond issuance, and has punished a brokerage for lax due diligence in bond underwriting. The move comes after Chinese exchanges strengthened inspections on initial public offerings (IPOs), as regulators seek to limit financial risks while promoting growth of Chinese capital markets. China has about US$4.5 trillion of outstanding corporate bonds traded on the country’s exchanges and the interbank market. SSE said it has launched onsite inspections on select bond issuance applicants, with a focus on robustness of due diligence by underwriters. The bourse said in a statement it publicly censured metal products maker Ningxia Yuangao Industrial Group Co for “fake” and inadequate disclosure ahead of its default, and sent warning letters to its underwriter Huaxi Securities Co and its law firm. -VE for short term but +VE long term.
Ex-boss of arms company Norinco placed under investigation.  Yin Jiaxu accused of ‘serious violations of discipline and the law’, anti-corruption watchdog says.   Yin was Communist Party chief and chairman of China North Industries Group Corp until his retirement in 2018   Highest member of the defence industry to be caught in President Xi anti corruption campaign that started in 2012
Chinese air travel soars on first day of holiday,  Domestic passenger numbers almost back to pre-pandemic levels as 1.5 million people take to the skies on Saturday.  An estimated 14 million people were expected to travel by train on the first day of the annual tomb-sweeping festival. It will be interesting to see if China reports any covid cases.  But +VE airlines and railway operators.
Beijing’s Covid-19 vaccine drive ramps up as it rolls out incentives from eggs to shopping vouchers.  After setting a goal to vaccinate 40 per cent of its 1.4 billion-strong population by the end of June, China has a steep task ahead of it.  In Beijing, local authorities are pulling out all the stops to coax people into getting vaccinated, from public pressure to free shopping vouchers
FT reports China looks to rein in lending to cool property boom Small and foreign banks rush to ‘radically’ reduce loans that buoyed Covid recovery after the PBoC requested them to do so.  -VE Banks and Property Developers.
Reuters report In China's small cities, home buyers suffer as debt-ridden developers fail to finish projects.  In Zhuozhou, a small city in China’s north, Zhu has stopped making mortgage payments on her apartment after its developer (China Fortune Land Development, who defaulted on $5,7b of debt ) did not build a promised rail line that would have allowed residents to commute to Beijing for work.  In Dali in the southwest, Li, a small business owner, is still waiting to move into an apartment that was meant to be handed over more than two years ago.  The fourth postponement and believed to be due to the developer (Dali Haidong Development & Investment Group) not having have the money to pay its contractors.  Shows the contrast between the demand in major cities and oversupply in smaller ones and highlights the need for due diligence.  But also raises concerns about the banks and other financial institutions exposure to the sector.  -VE
Chinese state media denouces ‘two-faced’ Xinjiang officials accused of colluding with extremists.  A documentary shown by CGTN onFriday says the ‘enemy within’ includes a former deputy head of the political and legal committee and ex-education chief.Beijing’s policies in the region have attracted increasing international criticism amid accusations of genocide and forced labour which it denies.
China’s expat tax reform could see more than a third of American firms leave Shanghai, AmCham says.   China is ending tax exemptions on foreign employee allowances next year, a move that has sparked concern among multinationals in Shangha i.  More than a third of foreign companies based in the commercial hub say they are considering relocation, American Chamber of Commerce (AmCham) in Shanghai survey shows. -VE
China’s advanced manufacturing upgrade backed to gather pace, driven by top priority status in five-year plan.  Beijing outlined a comprehensive plan to upgrade its manufacturing capabilities by 2025 via eight priority areas, including robotics, aircraft engines, new energy vehicles and smart cars.  Hi-tech manufacturing and equipment manufacturing outperformed overall manufacturing in March’s official manufacturing purchasing managers’ index (PMI) +VE robotic makers

Market closed Monday and Tuesday; re-opens Wednesday
ADR’s last closed Thursday +117pts 
HK reported 7 new covid cases Sunday with no local infactions.
FT reports that some people are taking the Sinovac vaccine in order to get visas to travel to China as it said “Visa facilitation applies only to applicants who have been inoculated  with Covid-19 vaccines produced in China,” the Chinese government said last month,“Visa facilitation applies only to applicants who have been inoculated with Covid-19 vaccines produced in China,” last month.  Yet some were concerned that European and other western governments might not accept Chinese-made vaccines for quarantine-free travel.  Having taken one vaccine then you cannot take a different one until about 12 months later.
Chief Secretary Matthew Cheung Kin-chung hoped that the electoral law amendments could be up for deliberation at the Legislative Council in mid-April. 
He said the authorities are working hard to finish the amendment, which included over 20 principal ordinances and subsidiary legislation. Cheung said his goal was to have the amendment bill to be approved in the third reading by the end of next month. This would allow the authorities to carry out the elections on schedule, including a LegCo election in December and the Chief Executive election in March 2022.F
ormer chief executive of the Hong Kong Monetary Authority Joseph Yam Chi-kwong said it was unlikely for the United States to break the peg that tied the Hong Kong dollar to the US dollar.  The peg between the two currencies had lasted for 38 years. On a radio program, Yam said it was hard to predict the future of the Sino-US relationship. He said that it was "highly unlikely" for the US to weigh restrictions on capitals and control the foreign exchange given that China is the US's biggest creditor.
Representatives from the Licensed Bar & Club Association of Hong Kong and the karaoke industry are going on a hunger strike during the Easter holiday, demanding business resumption. The representatives said they would go on a relay outside the Central Government Complex till Wednesday, demanding to reopen the businesses as well as seeking compensation from the government.
Lau Chi-pang, chairman of the Curriculum Development Council committee on the Citizenship and Social Development subject, says police from the National Security Department should provide more information to teachers to help with their teaching. 
Speaking on a radio program, Lau said the changes on the subject of Liberal Studies was "quite revolutionary," as teachers will no longer only teach students how to deal with tests.

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