May 27 Asian Macro Initial Thoughts Expect a weak open; caution ahead of US jobs and PCE data and the long weekends in US & UK


27 May

This and previous notes can be found at SubStack Asian Market Sense
Check out  ERI-C.com ; for your research
Asia
Watch for lighter international  volumes ahead of long weekends in the UK and US.
Australia Future indciate market to open +13pts with Oil higher but Gold lower. Ramsay Health Care in focus as it plans to acquire Spire Healthcare for approximately 1 billion pounds. Earnings from Fisher & Paykel Healthcare and data Private Capital Expenditure expected.
Japan Nikkei futures opened -28pts and have drifted lower, now -43pts expect market to see consolidation ahead of US Jobs and PCE data tonight.  Local sentiment weak on rising covid cases and increased calls to cancel the Olympics.
S Korea Expect markets to open lower with caution ahead of the BoK decision; no change expected but investors will be monitoring the comments they are also likely to be cautious ahead of tonights US PCE data (the US Feds preferred inflation indicator).
Taiwan Market to open lower, on Wednesday Tech saw further consolidation with interest focused on Steel and Shipping; which is increasingly popular with retail day traders and hence may be prone to a sell off.  Expect some bargain hunting in Tech as the NDX rebounded.
China Market to open lower with caution ahead of the Industrial profits data and key US data tonight.
HK ADR’s +95pts @ 29,261;  Chinese Financial weak but  E commerce and Petrochems +VE
US Futures
Opened flat Dow +20pts but have eased to -10pts S&P  & NDX flat ahead of Jobs and PCE data.

DOW +0.03%, NDX +0.59%, S&P +0.19%, Russel 2K +1.97%
Markets opened higher, Dow and S&P traded around flat all day. The  NDX   worked slightly better all day and inflation concerns were soothed by Fed speakers. Russell 2000 saw a strong open and then worked higher all day too. Re-opening plays seeing good interest as new covid cases dropped to below 25,000.  Some caution ahead of Thursdays jobs & PCE data  and ahead of the Memorial long weekend.
The United States is looking to convene an in-person meeting of its partners the Quad group of countries; Australia, India and Japan in the fall with a focus on infrastructure in the face of the challenge from China, President Joe Biden's policy coordinator for the Indo-Pacific said on Wednesday.
The Biden administration said on Wednesday that it wanted the issue of slavery on the high seas to be part of ongoing international negotiations aimed at curbing harmful fishing subsidies that contribute to the depletion of ocean stocks. “Forced labour harms the lives and well-being of fishers and workers around the world and it must be eliminated,” US Trade Representative Katherine Tai said in statement outlining the new US proposal.
After Hours 
Snowflake -3.2% (was +1.8% in normal hours) after the data-analytics software company reported widening losses.
Nvidia’s -0.7% (was +0.3% in normal hours)even after the chip giant’s earnings and sales for the first quarter both beat Wall Street expectations. Its revenue grew 88% compared to last year.
AMC Entertainment +2% in extended trading after a near 20% rally on Wednesday.
Williams-Sonoma +3.3% (was +2.2% in normal hours) after it reported better-than-expected earnings and revenue for the first quarter.
Workday -1.3% (was +0.2% in normal hours) despite beating expectations for its quarterly earnings and sales.
Normal hours
Banks  Executives were testifying to the Senate bank committee
JPMorgan Chase unch, Citigroup +0.3%, Wells Fargo +0.7%, Amex +0.4%
Work from home names: Facebook -0.04%, Apple -0.04%, Amazon +0.2%, Netflix +0.2%,  Disney +0.2%, Zoom Video +1.5%, Alphabet +0.7% and Microsoft -0.1%,
Tech NXP Semi +0.7%, Nvidia +0.3%, Micron +1.2%, AMD +0.6%, Skyworks -0.7%
Re-opening stocks  Boeing +0.3%, Caterpillar +0.2%, Simon Property +1.9%, Kohl’s +1.4%, Nordstrom -5.8% after earnings missed, Gap +4.1%, United Airlines +1.8%, Carnival +2.8%, Wynn Resorts +2.7%, Chevron +0.3% off initial high, Exxon Mobil +1.2% off initial lows as crucial board vote took place,  
Lock down names Campbell Soup -0.1% General Mills -0.03%,  JM Smucker -0.6%
DATA
MBA Mortgage Applications -4.2% vs+1.2% prior
MBA 30 yr Mortgage Rate 3.18% vs 3.15% prior
EIA Crude Oil Change -1.662m vs +1.321m prior (Consensus was -1.05m_
EIA Gasoline Oil Change -1.745m vs -1.963m prior (Consensus was -0.614m)
2 yr FRN Auction +0.03% vs +0.034% prior
5yr Note Auction +0.788% vs +0.849% prior
USD was stronger vs Yen & Euro. Bitcoin +3.9% @ 39,088.49 but had recovered $40k earlier, VIX -7.9% @ 17.4,
US T10 @ 1.581% as Fed speakers reassure over inflation concerns.
OIL Brent +0.17%, WTI +0.14%
Gold -0.06% to $1896.8, Silver -1.04%, Copper +0.37% Platinum -0.07%, Palladium -1.25%.
AHEAD Durable Goods Orders, GDP (Price Index & Growth Rate), Corporate Profits,Initial Claims, 4 week Average Claims, Continuing Claims, Core PCE Prices, PCE Prices, Pending Home Sales, EIA Natural Gas Report, Kansas Fed Manufacturing Index,
4 & 8 week Bill and 7year Note Auction,
Fed Speakers None
Earnings
: Best Buy, Salesforce.com, Costco, Dell Technologies, Box, Ulta Beauty, VMWare, Autodesk, Lions Gate, Canadian Imperial Bank, Toronto Dominion, Burlington Stores, Dollar General, Dollar Tree, Royal Bank of Canada, Medtronic

DAX -0.09%, CAC +0.02%, FTSE -0.04%
Markets opened slight higher but traded around flat with investors concerns over inflation being eased by Fed speakers overnight. Travel & Leisure leading but Banks the laggards
Earnings
Marks and Spencer +8.5% despite reporting an 88% slump in annual profit as lockdowns demolished clothing sales. “If this proves to be the year to kitchen sink the numbers, then M&S needs to continue its accelerated transformation to remain relevant. All things being equal, it is expecting to achieve profits of between £300 and £350 million this year, as some exceptional costs drop away and as revenues grow to exceed pre-pandemic levels.”
Softcat +7% after projecting full-year results ahead of expectations.
British Land -3.7% after it posted its third straight annual loss, with the pandemic hitting its office and retail portfolio valuations. “There is no mistaking the challenge British Land is facing. It’s not only being threatened by the rising tide of homeworking, but like a sandcastle, it faces fresh erosion from the heavy spade of e-commerce,”
Intertek -5%  despite projecting that it was on track to deliver on 2021 revenue targets.
Royal Dutch Shell +0.6% was ordered by a court to reduce emissions
DATA
FRANCE
Business Confidence May 107 vs 104 Apr (F/cast was 105)
Consumer Confidence May 97 vs 95 Apr revised (F/cast was 95)
Business Climate Indicator May 108 vs 96 Apr revised (F/cast was 97).
AHEAD
EUROZONE No data due, ECB’s Guindos, Elderson & Schnabel Speeches
GERMANY Gfk Consumer Confidence, Bundesbank Weidmann Speech
FRANCE 
Unemployment Benefit Claims, Jobseekers Total
UK Car Production, BoE’s Vlieghe Speech

JAPAN 
Nikkei futures opened  -28pts and have drifted lower, now -43pts expect market to see consolidation ahead of US Jobs and PCE data tonight.   Local sentiment weak on rising covid cases and increased calls to cancel the Olympics.
Yen currently 109.11
Data due 
Foreigner Stock and Bond Investment
Tokyo reported 743 new covid cases Wednesday  (+201 DoD) the national total rose to 4,536 -VE for sentiment
Japanese newspaper publisher Asahi Shimbun, an official partner of the Tokyo 2020 Olympics, called for the Summer Games to be cancelled in an editorial on Wednesday, citing risks to public safety and strains on the medical system from the COVID-19 pandemic.
AstraZeneca Plc and Nipro Corp signed an agreement to supply the British-Swedish company’s COVID-19 vaccine in Japan, Nipro said on Wednesday. Nipro said the contract was for filling the shot into vials and packaging it, due to start next month. Japan’s government has agreed to acquire 120 million doses of AstraZeneca’s vaccine, enough for 60 million people.
Japan's corporate service prices rose for the second straight month in April due to a rebound in advertising and freight fees, data showed on Wednesday, a sign the economy was gradually emerging from the COVID-19 pandemic's initial hit.  But the gain was driven mostly by fuel costs and the base effect of the previous year's sharp drop, suggesting higher commodities and transportation prices could pinch corporate bottom lines.
The government on Wednesday downgraded its key assessment of Japan’s economy for the first time in three months as consumption was further dampened under the extended state of emergency over the coronavirus pandemic.  The Japanese economy shows “further” weakness in some components and remains in a severe situation due to the coronavirus pandemic, the Cabinet Office said in its monthly report for May describing the overall situation for the Japanese economy, but added there are continued signs that it is picking up momentum.
Rumoured that Japanese government wishes TSMC and Sony to invest JPY1 trillion (USD9.2 billion) to build the very first 20 nanometer chip production factory in Japan, reported by the Nikkan Kogyo newspaper. The potential location for the chip plant is rumored to be in southwest Japan, near Sony's image sensor factory, the source suggested. The Japanese government, however, deemed the report to be false and provided no further explanation.
In a sign of the shifting US position on Taiwan, Tokyo-based envoys from the two states have broken bread at Taipei’s de facto embassy in  the Japanese capital; the first time ambassador-level diplomats have  met there since 1979.  The move is in line with what some observers  have heralded as a new standard for U.S. officials’ interactions with  self-ruled Taiwan amid the United States’ growing rivalry with China.
The government will provide financial support for companies and municipalities to establish data centers in about five regional cities in a bid to develop the infrastructure for a digital society, as well as to decentralize the computer server and data storage facilities that are currently concentrated in large cities, The Yomiuri Shimbun reported.

SOUTH KOREA 
Expect markets to open lower with caution ahead of the BoK decision; no change expected but investors will be monitoring the comments they are also likely to be cautious ahead of tonights US PCE data (the US Feds preferred inflation indicator).
Data due 
BoK interest rate decision
KDCA reported 707 more COVID-19 cases, including 684 local infections on Wednesday -VE
The Ministry of Health and Welfare said Wednesday that two weeks after receiving a first dose of either one of the vaccines offered in the country from AstraZeneca or Pfizer people will be able to relax on social distancing and face mask-wearing. Both AstraZeneca and Pfizer vaccines require two doses for maximum protection.
South Korea’s battery makers are aggressively adding momentum to their global investments and are seeking production capacities in the US and EU markets, data showed Wednesday.  LG Energy Solutions is looking at plants in the US; Ohio with GM but it is also seeking to invest an additional 5 trillion won by 2025 to build multiple  manufacturing plants. The precise locations remain undisclosed.  Plus its current plants in Poland and China are currently undergoing expansion  for 6.7 trillion won and 2.3 trillion won, respectively.   Samsung is expanding its facilities. SK Innovation is building 2 US plants  +VE
SKC is considering a plan to expand its production of copper foil to  250,000 metric tons with a goal of becoming the world’s largest provider  by 2025, the SK Group affiliate said Wednesday.  +VE
Posco broke ground on a 760 billion-won plant for lithium hydroxide, a key material for electric vehicle batteries, in Gwangyang, South Jeolla Province, the company said Wednesday. +VE
Doosan Infracore Co. said Wednesday that it has signed a deal to provide 75 excavators to Saudi Arabian builders.  The deal consists of 70 22-ton excavators and five 50-ton excavators, the company said in an emailed statement. But it did not reveal the value of the deal +VE
FSC chief urges crypto investors to use real-name accounts for protection; “Only crypto exchanges that have adopted real-name bank accounts and   granted Information Security Management System certification from the   Korea Internet & Security Agency will qualify for the application,” he added.

TAIWAN 
Expect market to open lower, on Wednesday Tech saw further consolidation with interest focused on Steel and Shipping; which is increasingly popular with retail day traders and hence may be prone to a sell off.  Expect some bargain hunting in Tech as the NDX rebounded.
No data due
CECC reported 633 domestic COVID-19 cases,
two imported ones and 11 deaths.  Of the domestic cases, 302 were newly confirmed cases and 331 were from a backlog of confirmed test results over the last several days.
Tokyo-based envoys from the US and Taiwan have broken bread at Taipei’s de facto embassy in the Japanese capital; the first time ambassador-level diplomats have  met there since 1979.  The move is in line with what some observers  have heralded as a new standard for U.S. officials’ interactions with self-ruled Taiwan amid the United States’ growing rivalry with China. +VE
U-Ming Marine Transport Corp  a bulk shipper and member of Far Eastern Group, is upbeat about the bulk shipping business in the coming quarters on expectations of a recovery in the global economy, a rise in iron ore production and an expansion of grain exports from the US, the company said yesterday.  It reported net profit of NT$345.81 million (US$12.43 million) for Q1; with earnings per share of NT$0.41, compared with a net loss of NT$384 million in the same period of last year.  Revenue increased 47 percent year-on-year to NT$3.6 billion for the first four months of the year, company data showed.  +VE
Taishin Financial Holding Co Ltd has briefed the Financial Supervisory Commission (FSC) on a tentative plan to sell new shares to raise funds for the acquisition of Prudential Life Insurance Co of Taiwan .  While the company has yet to formally apply for FSC approval of the share sale plan, the share sale seems to have a few advantages over previous plans, Banking Bureau Chief Secretary Phil Tong told a videoconference on Tuesday. Slight +VE
Yulon Nissan Motor, yesterday said that a spike in COVID-19 infections  would dent local automobile sales this quarter as people are opting to stay at home amid restrictions on public movement. “We expect the pandemic to impact car sales in May, June and  July. At this stage, it is premature to say how big the impact will be,”  Yulon Nissan spokesman Joseph Hsiung   told an online investors’  meeting. “It will hinge on whether the government will impose more  stringent measures to curb the infections.”  Slight -VE
Bosch Taiwan,  yesterday said that its consolidated revenue last year rose 22 percent to NT$23.7 billion (US$851.9 million), a fourth straight year of double-digit percentage growth, on the back of strong demand for mobility solutions and consumer goods.
CTBC Taiwan ESG Leading Semiconductor exchange-traded fund (ETF) beneficiary certificates are to debut on the main board tomorrow, the Taiwan Stock Exchange said yesterday. The new ETF is issued by CTBC Investments Co and its underlying index is the ICE Factset Taiwan ESG Leading Semiconductor Index, the exchange said in a news release.
Chipmaker SigmaStar is seeking to raise at least 5 billion yuan (US$782.4 million) in an initial public offering in Shanghai, people familiar with the matter said. The start-up is working with advisers toward a share sale on the NASDAQ-style STAR board as soon as this year, the people said. The company is targeting a valuation of 30 billion yuan to 50 billion yuan, one of the people said.

CHINA 
Expect market to open lower with caution ahead of the Industrial profits data and key US data tonight.  
Data due
Industrial Profits on the open March was 137% F/cast is +52%
Guangdong province diagnosed three new local confirmed coronavirus disease infections, from Tuesday to 6:00 a.m. on Wednesday, according to the provincial health commission.
All three infected locals were found in the provincial capital Guangzhou.
China Banking and Insurance Regulatory Commission (CBIRC) has asked banks to stop offering investment goods tied to commodity futures to mom-and-pop players, aiming to shrink losses amid bumpy commodity prices, Reuters citing insiders. The watchdog hopes to prevent incidents like BANK OF CHINA (03988.HK)'s "Yuan You Bao" saga, the people added.
President Joe Biden on Wednesday asked U.S. intelligence officials to “redouble” their efforts to investigate the origins of the COVID-19 pandemic, including any possibility the trail might lead to a Chinese lab. After months of minimizing that possibility as a fringe theory, the Biden administration is responding to both U.S. and world pressure for China to be more open about the outbreak.
Taiwan directly accused China for the first time on Wednesday of blocking a deal with Germany’s BioNTech SE for COVID-19 vaccines, in an escalating war of words after Beijing offered the shots to the island via a Chinese company.
China will provide 1 million doses of a COVID-19 vaccine to Nepal, its ambassador said on Wednesday, as authorities in the Himalayan country scramble to secure shots amid a surge in infections that has overwhelmed its rickety health system.
SCMP reports that as China’s working population falls, factories turn to machines to pick up the slack  +VE Robotics 
Shenzhen aims to make it harder for people from out-of-town to settle in  a rare tightening of residency rules, as its population balloons and   resources and services come under pressure. While the southern boomtown is far from being China’s most populous city, its population grew by 7.1 million in the past decade to 17.56 million in 2020, with the jump surpassing increases in entire provinces such as Jiangsu and Shandong over the same period.
The number overshot a 14.8 million target set in 2016 for 2020. The city’s population growth is being propelled by its thriving tech industry, loose urban residency curbs and generous home purchase subsidies.
China is bracing for a heavy flood season with 71 rivers already exceeding warning levels, the official Xinhua news agency reported on Tuesday, as meteorological authorities warned that global warming is fuelling more extreme weather.

HONG KONG  
ADR’s +95pts @ 29,261;  Chinese Financial weak but  E commerce and Petrochems +VE
Data due 
after market; Balance of Trade, Exports and Imports.Earning due Thursday include: Boyaa Interactive (434), Lees Pharma (950), Lenovo (992),

Short Selling Wednesday 18.8% vs 16.8% Tuesday
Top Shorts 
Bank Comm (3328) 51%, Hengan (1044) 45%, Petrochina (857) 35%, AIA (1299) 33%, Ping An (2318) 32%, Shenzhou Int (2313) 29%, Bank of China (3988) 28%, Hang Seng Bank (11) 28%, Sands China (1928) 28%, Techtronics (669) 27%, CITIC (267) 27%, Mengniu Dairy (2319) 25%, HSBC (5) 25%, Bud Apac (1876) 25%.  

AIR TRAVEL BUBBLE
The air travel bubble (ATB) to allow for quarantine-free travel  between Singapore and Hong Kong will be delayed again, after a spike in  COVID-19 cases in Singapore. Both cities had said the air travel  bubble; which had been due to start on May 26,  would be suspended when the seven-day moving average of unlinked community cases in either  Singapore or Hong Kong increases to more than five. 
WATCH
XIAOMI-W (01810.HK) unveiled the results announcement for the three months ended March 31, 2021.
The adjusted net profit for the period was RMB6.069 billion on the non-IFRS measure, an increase of 163.8% year-over-year, topping street consensus. Profit for the period was RMB7.79 billion, up 2.6 times yearly, also topping market forecast.
CHINA GAS HOLD (00384.HK) announced today (26th) that it repurchased 1.8056 million shares
through the Stock Exchange at a repurchase price of $28.4-28.7 per share, involving $51.6 million.
COUNTRY GARDEN (02007.HK) placed 98 million E-HOUSE ENT (02048.HK) shares at a price ranging from $8 to $8.18 per share, representing a discount of 11.5% to 13.4% from the closing price 
of the shares today (26th) of $9.24, raising up to $800 million, as Bloomberg quoted transaction documents.
NTES-S (09999.HK) announced that the Company intends to spin-off Cloud Village by way of a separate listing of the Cloud Village Shares on the Main Board of the Hong Kong Stock Exchange. The Company submitted a spin-off proposal to the Stock Exchange in relation to the Proposed Spin-off and the Stock Exchange has confirmed that the Company may proceed with the Proposed Spin-off. Cloud Village was incorporated in the Cayman Islands on 2 Feb 2016, and NetEase Cloud Music, the Company’s music streaming platform, has been operating on a stand-alone basis by Cloud Village since October 2016.
Spot USD/CNY closed at 6.3930, up 148 bps, setting a new high in nearly three years.
As at 16:48, USD/CNY gained 144 bps in the night session. USD/CNH stood at 6.3892, up 220 bps.
ALI HEALTH (00241.HK) will continue to work with local medical institutions, being confident in shaping its "Medical Deer" (also known as "Dr. Deer") app into an internet hospital 
with rapid active user increment, said the group's management in a conference call. On another note, ALI HEALTH Chairman and CEO Zhu Shunyan saw ample room for internet hospital growth.
Raymond CH'IEN Kuo Fung, chairman of HANG SENG BANK (00011.HK) who is scheduled to retire, stated during the shareholder meeting 
that as the pandemic of COVID-19 subsides, there is possibility for economic rebound in Hong Kong. However, it may take a substantial period of time to return to the level prior to the pandemic. The acting CEO Margaret KWAN Wing Han expressed that as the low interest rate environment proves to be beneficial to the loan services, the company will endeavor to expand their loan balance to offset the negative effects induced by lowered interest margin.
Four failed bids for Kwu Tung site exceeded $6b the upper limit of market estimates, according to the Lands Department.  Sun Hung Kai Properties (0016) won the tender last month for the first residential site in Kwu Tung North which had been sold by government tender for HK$8.61 billion, or HK$7,183 per buildable square foot - 44 percent higher than the market estimate. Surveyors valued the plot at HK$4.8 billion to HK$6 billion.  Reflects increasing confidence amongst the developers

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