May 6 Asian Marco Initial Thoughts Expect a mixed open but increased volumes


06 May

Asia
Australia Futures indicate market to open +10pts  and likely to test yesterday’s resistance at 7,120.  Banks in focus NAB as it releases 1H results and ANZ on Goldmans upgrade.  Oil Search and Woodside weak as oil price eased but miners firm as Gold rose +VE for Evolution and Resolute Japan 
Nikkei futures opened lower but now positive +17pts expect a lower open but for markets to work better.  BoJ minutes due pre open could have an impact
S Korea 
Expect markets to open lower after markets were weak yesterday and continued concerns about US inflation.
Taiwan 
Market to open flat with pressure on Tech.
China 
Market to re open lower as markets re-open concerns remain over International relations and PBoC tightening and potential defaults. Expect weakness in drug companies as WHO push to have a temporary waiver on IP protections gets US support.
HK 
ADR’s +99pts at 28,516 broadly +VE but Chinese Financial remain weak. Expect volumes to increase with all Asian markets open and connect flows resuming. We may see some initial bargain hunting as HK is about 2.5% lower from when China closed last Thursday. Drug makers weak
US Futures 
Opened flat after Dow closed at a new high; Dow -21pts, S&P and NDX -0.1%

IEA advises stockpiling of critical battery metals such as cobalt and lithium,
Nations must brace against new supply risks as the transition to green energy is reliant on an array of minerals that are produced by few countries

DOW +0.29%, NDX -0.37%, S&P +0.07%, Russel 2K -0.31% 
Markets opened higher, saw an initial dip as the ADP jobs report came but then worked better into lunch after good PMI and ISM Non Manufacturing data. PM saw the DOW and S&P trade sideways before dipping into the close. NDX trended lower saw some support at yesterday’s close but dipped into the red in the last hour with weakness in Amazon, Netflix and Facebook. Dow closed at a new high.
Commodity stocks jumped with the Energy Select Sector SPDR and the Materials Select Sector SPDR notching the biggest gains among sectors. Chevron and Dow were the two biggest gainers in the Dow Jones Industrial Average. ConocoPhillips popped more than 5% thanks in part to an upgrade to buy from Bank of America.
The Biden administration announced Wednesday that it supports waiving intellectual patent protections for Covid-19 vaccines, as countries struggle to manufacture the life-saving doses. Drug companies were weaker Moderna -6%
Earnings in focus General Motors +4% after earnings blew past expectations.
Activision Blizzard +3% after strong results.
Peloton -14.5% after announcing a recall of its treadmill product due to safety concerns.
Commodity stocks jumped with the Energy Select Sector SPDR and the Materials Select Sector SPDR notching the biggest gains among sectors. Chevron and Dow were the two biggest gainers in the Dow Jones Industrial Average. ConocoPhillips popped more than 5% thanks in part to an upgrade to buy from Bank of America.
Banks JPMorgan Chase +1.3%, Citigroup +1.9% Wells Fargo +0.4%, Amex +1.3%
Work from home names: Facebook -1.1%, Apple +0.2%, Amazon -1.3%, Netflix -1.4%,  Disney -1.5%, Zoom Video -2.4%, Alphabet +0.3% and Microsoft  -0.5%,
Tech 
NXP Semi -0.4%, Nvidia +0.8%, Micron +0.9%, AMD -1%, Skyworks +0.3%
Re-opening stocks  
Boeing -2.4%, Caterpillar +1.9%, Simon Property -0.4%, Kohl’s -0.7%, Nordstrom +1.2%, Gap -2.4%, United Airlines +0.9%, Carnival -0.6%, Wynn Resorts +2.8%, Chevron +2.7%, Exxon Mobil +3%,  
Lock down names 
Campbell Soup +1.2% General Mills unch, JM Smucker +1.8%
DATA
Total Vehicle Sales Apr 18.5m vs 17.7m Mar
MBA Mortgage Applications -0.9% vs -2.5% Prior
MBA 30 year Mortgage Rate 3.18% vs 3.17% Prior
ADP Employment Change Apr 742k vs 565k Mar revised (F/cast was 785k) Services PMI Final Apr 64.7 vs 60.4 Mar (F/cast was 63.1)
Composite PMI Final Apr 63.5 vs 59.7 Mar (F/cast was 62.2)
ISM Non Manufacturing Data
PMI Apr 62.7 vs 63.7 Mar (F/cast was 64.2)
Prices Apr 76.8 vs 74 Mar (F/cast was 75)
New Orders Apr 63.2 vs 67.2 Mar (F/cast was 68)
Employment Apr 58.8 vs 57.2 Mar (F/cast was 57.6)
EIA Oil crude Oil Stocks Change -7.99m vs -0.09m prior
EIA Oil Gasoline Oil Stocks Change +0.737m vs +0.092m prior
USD was little changed vs Yen & Euro. Bitcoin +4.5% @ 56,972,73, VIX -1.7% @ 19.15, US T10 @ 1.571%
OIL Brent -0.25%, WTI -0.58% despite falling inventories
Gold +0.6%, Silver +0.03%, Copper -0.08% Platinum -0.19%, Palladium -0.09%.
AHEAD Challenger Job Cuts, Unit Labour Costs, Nonfarm Productivity, Initial Claims, 4 week Average Claims, Continuing Claims, EIA Natural Gas Report,

Earnings Regeneron, ViacomCBS, Kellogg, Moderna, Murphy Oil, Beyond Meat, Shake Shack, Square, Roku, Axon, Cushman and Wakefield, Tapestry, Neilsen, AIG, Anheuser-Busch, EOG Resources, Consolidated Edison, DropBox, Expedia, Roku, Peloton Interactive, Datadog, Cardinal Health, Ambac Financial



DAX +2.12%, CAC +1.4%, FTSE +1.68% 
Markets opened higher as pre market EU PMI data was strong and most individual PMI were up MoM even if slightly short of forecast. After the initially rally stocks now trading sideways.
Earnings is focus:
Stellantis strong after reporting Q1 revenues to 37 billion euros ($44.5 billion), but warned that the global semiconductor shortage could have a heavier impact on production in Q2
Deutsche Post DHL Group strong after raising its financial guidance after more than tripling its Q1 operating earnings
Rational strong after its earnings reportVestas also strong after it reaffirmed its guidance despite reporting a first-quarter operating loss.
Virgin Money U.K.weak after Q1 results
Data 
EUROZONE 
Services Final PMI Apr 50.5 vs 49.6 Mar (F/cast was 50.3)
Composite Final PMI Apr 53.8 vs 53.2 Mar (F/cast was 53.7)
PPI Mar +1.1% MoM vs +0.5% Feb (F/cast was +0.9%)
PPI Mar +4.3% YoY vs +1.5% Feb (F/cast was +4.1%)
GERMANY 
Services Final PMI Apr 49.9. vs 51.5 Mar (F/cast was 50.1)
Composite Final PMI Apr 55.8  vs 57.3 Mar (F/cast was 56)
FRANCE 

Services Final PMI Apr 50.3 vs 48.2 Mar (F/cast was 50.4)
Composite Final PMI Apr 51.6 vs 50 Mar (F/cast was 51.7)
UK 

New Car Registrations Apr 3176.6% vs 11.5% Mar (F/cast was 100%)
AHEAD
EUROZONE Construction PMI, Retail Sales
GERMANY Factory Orders, Construction PMI
FRANCE 
Construction PMI, Retail Sales,
UK Services and Composite PMI, BoE Interest Rate Decision, BoE Quantative Easing, Local Government Elections.

JAPAN 
Nikkei futures opened lower but turned positive currently +17pts but expect a lower open but for markets to work better. BoJ minutes due pre open could have an impact 
Yen currently 109.17
Data due pre market BoJ Monetary Policy Meeting Notes
Tokyo reported 621 new covid cases (vs 609 Tuesday) and Osaka 668 cases (vs 884 Tuesday)
The Japanese government is considering an extension of the state of emergency for Tokyo and other major urban areas that was scheduled to end on May 11, the Yomiuri Newspaper said on Wednesday. Japan had placed Tokyo, Osaka, Kyoto and Hyogo prefectures under a 17-day state of emergency on April 25 in an effort to reverse the surge in coronavirus infections.  A decision is expected Friday
Kirin Brewery Co. has increased its planned shipments of non-alcoholic beers and beerlike beverages in response to a surge in demand from eateries that are complying with local government requests to restrict alcohol sales in Tokyo and three prefectures under a state of emergency. +VE
The coastal town of Noto in Ishikawa Prefecture in the western part of the country has drawn ire on social media for using 25m yen of the coronavirus relief funds it was given by the government to build a statue of a giant squid in the hopes of boosting tourism.  -VE
Japan Airlines ground crew members were hard at work on Sunday, preparing pots of carnations for shipment at a flower farm in Sosa, Chiba Prefecture. Ten JAL employees based at Narita Airport in the prefecture were dispatched to help out temporarily at Uzawa Engei, with a team of six working every day through Thursday  +VE shows the adaptability of good staff.

SOUTH KOREA 
Expect markets to open lower after markets were weak yesterday and continued concerns about US inflation.
Data out
Foreign Exchange Reserves $452.31b vs 446.13b(F/cast was 450b)
KDCA reported 676 new covid cases Wednesday vs 541 Tuesday.  -VE
People who have been fully vaccinated against the novel coronavirus in South Korea are exempted from the mandatory 14-day isolation starting Wednesday when arriving here from overseas and when having close contact with virus patients.
Foreign Minister Chung Eui-yong on Wednesday met his Japanese counterpart, Toshimitsu Motegi, for the first time since taking office in February, as tensions still run high between the neighbors amid an ongoing trade and political feud. Slight +VE
One dose of COVID-19 vaccines from AstraZeneca Plc and Pfizer was 86.6% effective in preventing infections among people aged 60 and older, real world data released by South Korea showed on Wednesday. +VE
Despite its cautious tone on digital currencies, the Korean government has indirectly invested 50 billion won ($44.4 million) into cryptocurrency-related funds in the past four years, according to data provided by an opposition lawmaker.  
Financial authorities have asked banks to declare their cryptocurrency businesses to figure out the exact numbers of cryptocurrency exchanges operating in the country, as it tightens its grip over illegal activities in the industry, according to local media reports Wednesday. -VE
South Korean retail investors’ deposits for stock investments reached a record 77.9 trillion ($69.28 billion) as of Monday, according to the Korea Financial Investment Association Wednesday.   The outstanding deposits for stock investments marked some 77.9 trillion won, adding a whopping 19.49 trillion won from Friday. It also surpassed the previous record of 74.46 trillion won seen on Jan. 12.  Probably reflects the caution ahead of short selling resuming in S Korea.
The race to acquire South Korean food delivery platform Yogiyo has attracted retail giant Shinsegae, accommodation booking platform Yanolja and big private equity funds, according to industry sources on Wednesday.  Yogiyo’s German operator Delivery Hero and sale adviser Morgan Stanley received preliminary bids Tuesday for a 100 percent stake in Yogiyo up for sale. According to the sources, around eight parties have joined the acquisition race, including Shinsegae and Yanolja.   South Korean retail giants Lotte and GS Retail previously had shown interest in purchasing the food delivery platform but appeared to have not participated in the bidding, sources added.    
As competition is escalating among hydrogen automakers, Toyota Motor topped global fuel cell electric vehicle sales in the first quarter this year, beating Hyundai Motor, which had led the global FCEV market in 2020, research revealed Wednesday. Slight -VE
KT, faces a potential class action from gigabit internet service subscribers over allegations that the firm signed onto the plans even those living in areas unequipped with the infrastructure to accommodate the high-speed internet services.  Kim Jin-wook, an attorney at Seoul-based law firm Joowon, announced Wednesday that he is recruiting prospective plaintiffs through a class action platform Angry People.  -VE
Hanwha Total has completed the expansion of its petrochemicals plant in Daesan, South Chungcheong Province, to ramp up the production of polypropylene and ethylene, the company said Wednesday. +VE
Kia Corp said Wednesday its first all-electric model, the EV6, logged decent presale orders in Europe.  According to the automaker, presale orders for the EV have topped 7,000 in Britain, France, Germany and other major countries, with the number set to further rise. +VE

TAIWAN 
Expect market to open flat with pressure on Tech.
Data due after market  Wholesale Prices, Inflation Rate
The Ministry of Transportation and Communications should make it mandatory for pilots and flight attendants, as well as their family members, to be vaccinated in view of a cluster of COVID-19 cases at the Novotel Taipei Taoyuan International Airport hotel, lawmakers said at a meeting of the legislature’s Transportation Committee yesterday.  
Acer Inc yesterday reported a net profit of NT$2.74 billion (US$98 million) for last quarter, marking the PC brand’s highest quarterly earnings in a decade.  That represented growth of 391 percent from NT$558 million a year earlier. On a quarterly basis, net profit jumped about 37 percent from NT$1.99 billion in the fourth quarter of last year. +VE
Hon Hai Precision Industry Co and Yageo Corp yesterday signed an agreement to form a joint venture called XSemi Corp  to develop” small ICs” priced under US$2 per unit, marking the latest effort by Hon Hai to bolster its foothold in the semiconductor market. +VE
Realtek Semiconductor Corp yesterday said it is positive about market demand for the rest of this year, but an industrywide supply chain capacity shortages could cap shipments.  Demand for the company’s chips, which are used in Ethernet routers, Wi-Fi, Bluetooth and switches, has shown strong growth momentum, RealTek said. Those networking chips are used in PCs, access point routers, broadband, wireless earbuds and other applications, as work-from-home and distance-learning trends due to the COVID-19 pandemic are stimulating a broadband infrastructure upgrade, Huang said.  +VE

CHINA 
Expect market to re open lower as markets re-open concerns remain over International relations and PBoC tightening and potential defaults.  Expect weakness in drug companies as WHO push to have a temporary waiver on IP protections gets US support.
No data due
China has drawn up plans to upgrade an airstrip and bridge on one of Kiribati’s remote islands about 3,000km southwest of Hawaii, lawmakers told Reuters, in a bid to revive a site that hosted military aircraft during World War Two.
US Trade Representative Katherine Tai says she expects to meet Chinese counterpart Liu He ‘in the near term’. Tai’s comments are a change from five weeks ago, when she said talks would take place ‘when the time is right. Slight +VE
The Group of Seven scolded both China and Russia on Wednesday, casting the Kremlin as malicious and Beijing as a bully, but beyond words there were few concrete steps aside from expressing support for Taiwan and Ukraine. -VE for sentiment
New Zealand's parliament unanimously declared on Wednesday that severe human rights abuses were taking place against Uyghur people in China's Xinjiang region, spurring the Chinese embassy to decry the move as interference in internal affairs. All parties discussed and supported a motion by New Zealand's smaller ACT Party, but only after it was revised to drop the word "genocide" from the text. -VE for sentiment
The Philippines has rejected an annual summer fishing ban imposed by China in the disputed South China Sea and encouraged its boats to keep fishing in the country’s territorial waters.  The fishing moratorium imposed by China since 1999 runs from May 1 to Aug. 16 and covers areas of the South China Sea as well as other waters off China.“This fishing ban does not apply to our fishermen,” the Philippines’ South China Sea taskforce said in a statement late on Tuesday.  -VE for sentiment
The European Union took steps on Wednesday to guard against economic competition from China that it deems unfair, a sign of growing distrust after Western sanctions over rights abuses and Chinese retaliation.  It unveiled plans to cut dependency on Chinese and other foreign suppliers in six strategic areas, and to limit the ability of companies supported by foreign subsidies to buy EU businesses or take part in public tenders.  -VEBut the EU was again forced to drops plans for measures related to China’s Hong Kong actions after failing to gain the endorsement of all 27 member states.  Hungary blocked the motion last month.
FT reports Beijing loses US-China conference to Singapore. Michael Bloomberg, Henry Kissinger and Hank Paulson have picked Singapore over Beijing for their next annual conference on US-China relations. Bloomberg, the former New York mayor and owner of the eponymous financial information group, told the Financial Times that “logistics”, including Singapore’s Covid-19 safety record and the “very concerning” conditions in China for journalists, had persuaded them to hold the New Economy Forum in the city-state in November.
Hugo Boss expects sales in mainland China to keep growing fast despite calls for a boycott of Western brands by Chinese consumers launched in late March over Western accusations of forced labour in Xinjiang. It saw first-quarter sales almost double in mainland China and it expects that momentum to continue unchanged despite the boycott calls, acting Chief Executive Yves Mueller told journalists.
Drugmaker Mundipharma International Ltd,owned by the billionaire American Sackler family, has kicked off the sale of its China unit in a deal that could fetch more than $1 billion, people familiar with the situation told Reuters.  Mundipharma has invited a select group of potential buyers, including private equity firms and local and international pharmaceutical companies, to bid for the asset, said the people.

HONG KONG  
ADR’s +99pts  at 28,516 broadly +VE but Chinese Financial remain weak.  Expect volumes to increase with all Asian markets open and connect flows resuming.  We may see some initial bargain hunting as HK is about 2.5% lower from when China closed last Thursday.  Drug makers weak 
No data due
Short Selling Wednesday 15.2 vs 16.4% Tuesday
Top Shorts
Bud Apac (1876) 47% (due to report today 5 May), Ali Health (241) 43%, Mengniu Dairy (2319) 43%, Sunny Optical (2382) 37%,  Bank Of China (3988) 35%, Galaxy Ent (27) 35%, BoC HK (2388) 34%, BOCOM (3328) 34%,  Country Garden (2007) 33%, HKEX (388) 33%,  China Res Land (1109) 30%, SinoBioPharm (1177) 28%, NWD (17) 28%, HSBC (5) 25%, Hang Lung Property (101) 25%
BUYBACKS/INSIDER DEALING 
RAZER (01337.HK) on 5 May, it repurchased at the Stock Exchange 4.5 million shares, involving roughly $12.4617 million.

CONNECT 
Beijing is expected to loosen capital controls further to give mainland investors a new outbound channel to buy bonds in Hong Kong, providing investment alternatives for Chinese households and companies while boosting liquidity in the city and cementing its status as a global financial hub, analysts said.
The so-called southbound link of China’s Bond Connect scheme is likely to be implemented in the second half of the year, Hong Kong’s financial secretary Paul Chan Mo-po was quoted as saying by the Hong Kong Economic Journal on Monday. Details of the bond investment framework are expected this month, with trading beginning as early as July 2, a gift from Beijing to Hong Kong to celebrate the 24th anniversary of the city’s return to Chinese rule, the report said.

SECURITY LAW
In a move criticized as inhumane, prison officials have refused to allow the Democratic Party's former chairman, Wu Chi-wai, to attend his father's funeral. Instead, the Correctional Services Department offered to allow Wu to watch the funeral online via video call. But the proposal was rejected by his family, saying it was disrespectful to the deceased.At present he should be deemed innocent as his trial has not even started.  Likely to raise resentment against the administration.

WATCH
Expect weakness in drug companies as WHO push to have a temporary waiver on IP protections gets US support.
Sporting goods maker Adidas (ADSGn.DE) has launched the sale of its Reebok brand in an auction which risks being affected by a political row over possible forced labour in China's western Xinjiang region, three sources told Reuters. It has asked for first round bids to be submitted next week and is expecting China's Anta Sports (2020.HK) and Li Ning (2331.HK) to hand in offers, with Korea's Fila (081660.KS) and U.S.-based Wolverine (WWW.N) also seen as possible bidders, the sources, who are all familiar with the situation, said.  Financial investors including TPG, Sycamore, Cerberus and Apollo are also likely to join the fray, lured by the turnaround potential of Reebok which is expected to make a loss in 2021 and post only "slightly positive" core earnings next year, they added.   Also likely to impact Yue Yuen and Pou Chen
SHIPPING +VE as Denmark’s Maersk said on Wednesday it expected its “exceptionally strong” performance in the first quarter to continue for the rest of the year, driven by high demand for shipping containers from China to the United States.  Maersk, which handles about one in five containers shipped worldwide, said there were not enough ships available in the world to meet a surge in consumer demand, resulting in record-high freight rates. “The situation today is that our customers are trying to meet a very, very high underlying demand, while at the same time rebuilding stock,” chief executive Soren Skou said. +VE
TELECOM DIGIT (06033.HK) issued a positive profit alert. It is expected to record an increase of not less than 55% in the profit for the year ended 31 March 2021 as compared to HK$80.20 million for the year ended 31 March 2020.   The expected increase is primarily due to cost savings in general expenses; and receipt of government grants in respect of COVID-19 related subsidies.
TRULY INT'L (00732.HK)announced that the unaudited net consolidated turnover of the Group was approximately HK$1.942 billion for April 2021, up 6.4% yearly; and its unaudited net accumulative consolidated turnover for the four months ended 30 April 2021 amounted to approximately HK$7.268 billion, up about 11.6% yearly.
SF Real Estate Investment Trust, a spinoff of China's courier giant SF Holdings, was met with a lukewarm response upon its Hong Kong initial public offering.  Retail investors placed HK$407 million worth of orders through margin financing, meaning its retail portion was oversubscribed only 0.52 times, data from 11 local brokers showed.
Macao's Economic and Technological Development Bureau, Monetary Authority of Macao, and Social Welfare Bureau jointly announced that the consumer e-voucher scheme will be open for online application from Friday (7 May) until 10 December.  Upon successful registration and verification, each person with a valid/ renewable Macao permanent/ non-permanent identity card will be given an initial sum of MOP5,000, plus MOP3,000 in additional discounts.  The e-vouchers will be available as soon as 24 May.
Dairy Farm and CLPe Solutions announce their partnership to co-develop a solar panel system on the rooftop of the Wellcome Fresh Food Centre.  Based on the estimated generation capacity and upon its completion in the second quarter of 2022, the solar panel system will become the largest in Hong Kong’s retail sector, under CLP Power’s Renewable Energy Feed-in Tariff (FiT) scheme.
Centa-Salesman Index (CSI) last stood at 71.23, up 0.91 pts from the previous week.   CSI had been struggling around 70 for the 8th straight week, failing to surpass 80 in one breath, said the research department of Centaline Property. This indicated that front-line agents had stayed upbeat and optimistic over the long term without getting too excited. Home prices will continue to inch up slowly, they predicted.

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