May 20 Asian Marco Initial Thoughts Expect a weak open as FOMC to consider tapering

20 May

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Australia Futures indicate market to open +3pts Gold edging higher but oil stocks weak.  Nufarm in focus ahead of results.
Japan Nikkei expect market to open lower with caution after the US FOMC minutes and pre market data.
S Korea Expect markets to reopen lower on inflation concerns.
Taiwan Market to open lower following the US
China Market to open lower as investors remain concerned about PBoC tightening, defaults and international relations
HK ADR’s indicate  -97pts with broad weakness.
US Futures
Opened lower Dow -80pts S&P and NDX -0.3%

DOW -0.48%, NDX -0.03%, S&P -0.29%, Russel 2K -0.78%
US markets opened around the day lows and worked better through the day.  Initial weakness on further signs of inflation in Europe.
Fed minutes hinted at considering tapering its asset purchase programs in upcoming meetings.  Bitcoin already under pressure from the PBOC warning (which may raise wider regulatory issues) and recent tweets from Musk sold down impacting Tesla, Coinbase, Microstrategy and others who are associated.
Banks JPMorgan Chase -0.8%, Citigroup -0.2% Wells Fargo -1.4%, AMEX -0.2%
Work from home names: Facebook +1.2%, Apple -0.1%, Amazon flat, Netflix +0.3%,  Disney -0.2%, Zoom Video -0.8%, Alphabet +0.4% and Microsoft +0.3%,
Tech NXP Semi +2%, Nvidia +0.4%, Micron +1.3%, AMD +2.4%, Skyworks +2.1%
Re-opening stocks  Boeing -1.4%, Caterpillar -1.1%, Simon Property -0.2%, Kohl’s -2.7%, Nordstrom -3.1%, Gap -3%, United Airlines -1%, Carnival -1.1%, Wynn Resorts +0.1%, Chevron -2.8%, Exxon Mobil -2.4%,  
Lock down names Campbell Soup -1% General Mills -0.5%,  JM Smucker +0.4%
After market
Cisco -5.5% on weak forward guidance
MBA Mortgage Applications +1.2% vs +2.1% prior
MBA 30 yr Mortgage Rate 3.15% vs 3.11%
EIA Crude Oil Stocks change +1.321m vs -0.427m prior (concensus was +1.623m)
EIA Gasoline Stocks change -1.963m vs +0.378m (consensus was -0.886m)
USD was slightly stronger vs Yen & Euro. Bitcoin -9.5% @ 39,042.62, VIX +3.9% @ 22.18, US T10 1.662% as minutes Fed show they may reconsider policy at next meeting.
OIL Brent -2.94%, WTI -3.5% on fears of rate rise
Gold -0.47%, Silver -1.1%, Copper -0.8% Platinum -0.6%, Palladium +0.01%
AHEAD Philadelphia Fed Manufacturing Index, Initial Claims, 4 week Average Claims, Continuing Claims, EIA Natural Gas Report,  CB Leading Index.
Earnings BJ’s Wholesale, Kohl’s, Petco, Ralph Lauren, Applied Materials, Ross Stores, Deckers Outdoor, Hormel Foods, Palo Alto Networks

DAX -1.77%, CAC -1.43%, FTSE -1.19%
Markets opened lower and trended lower until a late afternoon bounce.  UK inflation rose in line with expectations but PPI was slightly higher. Eurozone core inflation was slightly higher than F/cast. crypto currnecies under pressure
European earnings came from E.On -0.7%, Deutsche Boerse -1% Uniper -1.7%, Experian -3% and Premier Foods unch but off earlier highs.
John Laing strong after private equity firm KKR announced that it had agreed to buy the company for £2 billion ($2.84 billion).
Argenx fell more than 6% in morning trading, while Ferguson climbed higher after reporting a 65.4% leap in quarterly profits.

New Car Registrations Apr +218.6% YoY vs +87.3% Mar (F/cast was +200%)
ECB Financial Stability Review out
Core Inflation Rate Apr +0.7% YoY vs +0.9% Mar (F/cast was +0.8%)
Inflation Rate Apr +1.6% YoY vs +1.3% Mar (F/cast was +1.6%)
Inflation Rate Apr +0.6% MoM vs +0.9% Mar (F/cast was +0.6%)
Inflation Rate Apr +1.5% YoY vs +0.7% Mar (F/cast was +1.4%)
Inflation Rate Apr +0.6% MoM vs +0.3% Mar (F/cast was +0.6%)
Core Inflation Rate Apr +1.3% YoY vs +1.1% Mar (F/cast was +1.3%)
Core Inflation Rate Apr +0.3% MoM vs +0.4% Mar (F/cast was +0.3%)
PPI Core Output Apr +2.5% YoY vs +2% Mar revised (F/cast was +1.9%)
PPI Core Output Apr +0.5% MoM vs +0.7% Mar revised (F/cast was +0.3%)
Retail Price Index Apr +2.9% YoY vs +1.5% Mar (F/cast was +2.1%)
Retail Price Index Apr +1.4% MoM vs +0.3% Mar (F/cast was +0.6%)
PPI Output Apr +3.9% YoY vs +2.3% Mar revised (F/cast was +3.5%)
PPI Output Apr +0.4% Mom vs +0.8% Mar revised (F/cast was +0.4%)
PPI Input Apr +9.9% YoY vs +6.4% Mar revised (consensus was +9%)
PPI Input Apr +1.2% MoM vs +1.9% Mar revised (consensus was +1.1%)
Current Account, Construction Output
GERMANY No data due  
No data due
UK CBI Industrial Trends Orders

Nikkei futures opened lower expect a cautious start as investors watch the pre market data.  
Yen currently 109.20
Data due 
Tankan Index, Balance of Trade, Export, Imports, Machinery Orders, Foreign Stock and Bond Investment
Tokyo reported 766 new covid cases Wednesday 
(+34 DoD) nation wide the total was 5,814.
Japan's health ministry is looking into allowing pharmacists to administer novel coronavirus vaccines
, a government spokesman said on Wednesday  +VE
BlackRock raised its stake in Japan’s SoftBank Group Corp to 5.2%, a filing showed on Wednesday.  +VE
The International Olympic Committee (IOC) reassured an anxious Japan on Wednesday that the Tokyo Olympics would be safe for athletes as well as the host community.
Line Corp was ordered by a Japanese court on Wednesday to pay around 14 million yen ($128,500) to a technology company for patent infringement related to a feature that enabled users to quickly exchange account details -VE
Lexus announced Tuesday that the luxury brand eclipsed the milestone of 2  million global sales of electrified vehicles at the end of April. +VE
Japan Airlines Co. is planning a yen bond sale next month, people familiar with the matter said, in what would be its first debt sale since March last year as its yield premiums fall. +VE

Markets reopens, expect a lower open on inflation concerns after the US FOMC minutes.
No data due
KDCA reported 646 new covid cases (619 local infections)  
vs 654 Wednesday and 528 Tuesday.  South Korea will adjust social distancing rules on Friday, but the current rules are likely to be extended.
Ford Motor, SK Innovation to announce EV battery joint venture expected be announced  on Thursday. 
The deal may eventually include a jointly owned plant to make battery  cells for use in rechargeable EV batteries, the Reuters sources said.
Netflix users in South Korea recorded a decline in the past three months, data showed Thursday, as the platform faces a slowdown in global subscriber growth and increasing competition from local players. -VE
Samsung Electronics Co. said Thursday that it will team up with Google LLC to deliver a new smartwatch operating system (OS), as they seek to better compete with Apple Inc. in the wearables market. +VE
Hyundai Pressed by the prolonged semiconductor shortage and the rapidly diminishing state subsidy balance, is pushing to expedite the release of its new all-electric vehicle Ioniq 5 at all costs.  It  is now suggesting that purchasers compromise some of the options on models in order to speed up their order.

Expect market to open lower following the sell off in the US overnight
Data due after market Export Orders, Current Account.
Taiwan Wednesday reported 266 new covid cases,
including 129 reported in New Taipei, 70 in  Taipei, 28 in Changhua County, 16 in Taoyuan, and seven in Kaohsiung.
Taiwan Power Co has enlisted independent power producers (IPPs) to help raise its reserve capacity to more than 6 percent, as the state-owned utility tries to avoid yet another round of blackouts across the nation. +VE
Siliconware Precision Industries Co (SPIL) yesterday said it plans to invest NT$80 billion (US$2.86 billion) to build a new plant in Changhua County’s Erlin Township. SPIL is investing in new capacity as 5G-related applications and an expanding stay-at-home economy have boosted demand for chip testing and packaging services, and to ease persistent constraints in the semiconductor supply chain. It said in a statement that the first phase of the construction would be completed next year.
E Ink Holdings the world’s sole supplier of e-paper displays, yesterday said it was optimistic about revenue growth this year, but tight supplies of display driver ICs and flat-panel displays might cap its sales. “For the whole of this year, we are positive about the business outlook. However, it will largely hinge on how much key components we can secure,” E Ink chairman Johnson Lee told investors via a teleconference in Taipei. “So far, it looks like this year will be better than last year,” Lee said. “The second quarter [performance] will be very similar to the first quarter.”

Expect market to open lower following the US, investors remain concerned about PBOC tightening, local defaults and international relations.
Data due Loan Prime Rate 1 and 5 year. 
no change expected
China has tapped the U.S. for more than a third of next season’s expected corn imports, accelerating its pace of buying from the world’s top supplier to fill its growing grain needs, Bloomberg reports.  China bought about 9.5 million metric tons of U.S. corn from the 2021-22 season so far this month, according to U.S. Department of Agriculture figures. The agency expects China to import around 26 million tons from worldwide suppliers for the period that begins in September.
The country’s purchases from the U.S., the world’s top corn supplier, is happening as dry
Samoa’s expected new prime minister has pledged to shelve a $100 million Beijing-backed port development, calling the project excessive for the small Pacific island that is already heavily indebted to China. Inc's first-quarter revenue beat Wall Street estimates on  Wednesday, as growth remained robust in the domestic e-commerce sector  following the COVID-19 pandemic.

Re-opens ADR’s -97pts at 28,497 with broad weakness.
Data due Unemployment Rate

Short Selling Tuesday 15.5% vs 16.5% Monday
Top Shorts  
Shenzhou Int (2313) 36%, Bud Apac(1876) 35%, Bank Comm (3328) 35%, ICBC (1398) 32%, Bank of China (3988) 31%, Country Garden (2007) 30%, Sands China (1928) 26%, Hang  Seng Bank (11) 25%, Sinopec (386) 25%.

National Security
Secretary for Security John Lee Ka-chui warned fugitives who fled overseas that they may become “disposable” when they have no political value, 
and authorities will pursue them for the rest of their lives he said in an interview. When asked about how the government will make use of that HK$8 million provided in the budget for national security , Lee said “These are essential information that are on par with intelligence during war,”

News since market closed Tuesday
CHONG HING BANK (01111.HK)  announced that Yue Xiu Enterprises proposed to privatize the company by way of a Scheme of Arrangement at a cash offer price of $20.8 per share, a 51.16% premium over the price before trading halt,
involving almost $5.1 billion.   The company applied for a trading resumption with effect from this morning (20 May). 
Liu Guangyuan has been named the commissioner of the Ministry of Foreign Affairs in Hong Kong,
replacing Xie Feng, state media Xinhua announced Wednesday. He previously served in Poland and before that was director general of the department of external security affairs between 2014 -2018
NCI (01336.HK)’s shareholder Swiss ReDirect Investments placed about 77.9 million shares of the company 
at a price of $28.8-29.1 per share, a discount of about 4.9-5.9% to today's closing price of $30.6, according to relevant document. Morgan Stanley is one of the placing agents.
BIDU-SW 1Q21 Non-GAAP NP Adds 39.4% YoY
to RMB4.297B
The Financial Services Development Council (FSDC) published the market study report on REITs. Although Hong Kong is one of the earlier markets to have rolled out its REITs regime in 2003, it is still falling behind other markets so far. FSDC proposed the authorities to refine the REITs value proposition and regulatory system, hence attracting REITs from across the globe to list in Hong Kong. Equally, it proposed to include REITs as eligible securities under the Stock Connect schemes, thereby allowing two-way REITs investment.
NTES-S (09999.HK) announced its financial results for the first quarter ended March 31, 2021. Net income was RMB4.439 billion, up 25% yearly. Diluted net income per share equaled RMB1.31. A dividend of US$0.06 per share (US$0.3 per ADS) was declared.
CHINA TAIPING (00966.HK) announced that the gross premium income of Taiping Life Insurance, Taiping General Insurance and Taiping Pension for the first four months of 2021 aggregated RMB80.751 billion, up 3.53% yearly.
The Chinese government is in initial stages of rectifying CHINA HUARONG (02799.HK), who has more than US$40 billion of debt inside and outside China, The New York Times citing two insiders. In other words, both domestic and foreign bondholders could be subject to significant investment losses.
The Hong Kong Tourism Board (HKTB) announced that the provisional visitor arrivals for April were 5,706, a 38.3% increase on the same month in 2020.
ZIJIN MINIG (02899.HK)'s gold mine in Buritica, Colombia is exposed to output loss due to illegal mining, said Reuters. Losses amounted to 20% of the total production, a local executive told the press.

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