July 27 Asian Macro Initial Thoughts; Expect higher but cautious initial trading and some margin calls in HK


This and previous notes can be found at Substack ( Asian Market Sense )
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Asia likely to see a cautious but higher open

Australia Futures show market to open +22pts; oil names expected  to open higher following oil prices overnight; Oil Search to release Q2 update. Gold eased but other resources firm.  No data but RBA’s Debelle speaks.  Covid concerns remain.
Japan Nikkei futures opened +38pts vs cash close, (Chicago Futures flat).  Focus remains on earnings but covid cases still a concern .  Olympics having little impact on PM Suga’s low ratings but some individual stock names benefitted.
S Korea Expect markets to open higher following the mildly +VE US markets and +VE pre market GDP data which was inline.
Taiwan Market to open higher following the US markets overnight.
China Market to open lower as investors react to the clamp down and remain cautious as to where the next clamp down may fall.   Industrial Profits data due on the open.
HK ADR’s -229pts at 25,963 but I doubt the downside will be that bad, however there is likely to be an amount of margin call selling.  Short selling was relatively light but some individual names may see squeezes.  
Europe focus remains on earnings
Data due
Eurozone 
Loans to Households, Loans to Companies, M3 Money Supply.
France Unemployment Benefit Claims, Jobseekers Total
UK  CBI Distributive Trades  
US Futures 
Opened Dow +7pts S&P and NDX flat. Earnings in focus.
Data due Durable Goods Orders, Redbook, Case Shiller Home Prices, House Price Index, Consumer Confidence, Richmond Fed Index. After Market API Crude Oil Stock Change. FOMC two day meeting starts.


DOW +0.24%, NDX +0.03%, S&P +0.24%, Russel 2K +0.33%
Markets opened slightly lower and traded sideways but still hit  new highs at the start of a week with some big tech earnings; Apple, Alphabet and Microsoft are all set to report on Tuesday. Google, Facebook, and Amazon will also report later in the week.

Banks JPMorgan Chase +0.7%, Citigroup +1% Wells Fargo +0.9%, Amex -0.3%
Work from home names: Facebook +0.7%, Apple +0.3%, Amazon +1.2%, Netflix +0.2%,  Disney +1.5%, Zoom Video +3.9%, Alphabet +0.8% and Microsoft -0.2%,
Tech NXP Semi +0.9%, Nvidia -1.4%, Micron +0.5%, AMD -0.4%, Skyworks +0.1%
Re-opening stocks  Boeing +2%, Caterpillar +0.7%, Simon Property +2.3%, Kohl’s +3.7%, Nordstrom +4.2%, Gap +3%, United Airlines +4%, Carnival +5.5%, Wynn Resorts +0.7%, Chevron +2.1%, Exxon Mobil +2.5%,  
Lock down names Campbell Soup -0.1% General Mills -0.1%, JM Smucker +0.2%
AFTER MARKET
Tesla +2% in extended trading after beating top and bottom line. Tesla reported more than $1 billion in quarterly net income and noted a $23 million impairment related to bitcoin.
F5 Networks +5% as Q3 earnigns beat.
Coinbase -1% after +9% in normal trading as Bitcoin rallied on talk Amazon might accept bitcoin; which the company denied.
DATA
New Home Sales Jun -6.6% vs -7.8% May revised  (F/cast was +1.4%)
Dallas Fed Manufacturing Index Jul +27.3 vs +31.1 Jun (F/cast was 32).
USD was weaker vs Yen & Euro. Bitcoin +9.1% @ 37,555.8, VIX +2.2% @ 17.6, US T10 @ 1.295%
OIL Brent +1%, WTI +0.17%
Gold -0.26%, Silver +0.05%, Copper +4.3% Platinum +0.4%, Palladium -0.03%.
AHEAD
Durable Goods Orders, Redbook, Case Shiller Home Prices, House Price Index, Consumer Confidence, Richmond Fed Index. After Market API Crude Oil Stock Change. FOMC two day meeting starts.

DAX -0.32%, CAC +0.15%, FTSE -0.03%
Markets opened lower following the sell-off in much of Asia, with German Ifo data missing expectations and ahead of earnings.  But then worked better through the day.  Healthcare and Auto’s weak but Resources firm. Covid cases remain a concern
Earnings out from Ryanair +4.4%, Philips -4.2% and Faurecia -5.7% warned semiconductor shortages could hurt production.
Prosus -8.8% on China’s new measures against social media and gaming titan Tencent.
Credit Suisse +1.8% has agreed an out-of-court settlement with former wealth management boss Iqbal Khan over the spying scandal that led to the resignation of former CEO Tidjane Thiam.
DATA
German Data
 
Ifo Business Climate Jul 100.8 vs 101.7 Jun revised (F/cast was 102.5)
Ifo Current ConditionsJul 100.4 vs 99.7 Jun revised (F/cast was 101.5)
Ifo Expectations Jul 101.2 vs 103.7 Jun revised (F/cast was 103.6)
AHEAD
EUROZONE Loans to Households, Loans to Companies, M3 Money Supply.
GERMANY No data due
FRANCE Unemployment Benefit Claims, Jobseekers Total
UK  CBI Distributive Trades

JAPAN
Nikkei futures opened +38pts vs cash close, (Chicago Futures -30pts).  Focus remains on earnings but covid cases still a concern .  Olympics having little impact on PM Suga’s low ratings.
Yen currently 110.37
No data due
Earnings due Amano Corp. (6436 JP) 3 p.m.
Canon Marketing Japan Inc. (8060 JP) 3 p.m.
Cawachi Ltd. (2664 JP) 3 p.m.
Genky DrugStores Co. (9267 JP) 3 p.m.
Imperial Hotel Ltd. (9708 JP) 2 p.m.
Keihanshin Building Co. (8818 JP) 3 p.m.
Koa Corp. (6999 JP) 3 p.m.
Komeri Co. (8218 JP) 3 p.m.
Matsui Securities Co. (8628 JP)
Melco Holdings Inc. (6676 JP)
Mirai Industry Co. (7931 JP) 3 p.m.
Mitsubishi Motors Corp. (7211 JP) 3 p.m.
Nisshin Seifun Group Inc. (2002 JP) 3 p.m.
Shimano Inc. (7309 JP) 3 p.m.
Shin-Etsu Chemical Co. (4063 JP) 3 p.m.
Tokyo reported 1,429 new covid cases (-234 DoD) and nationwide the total was 4,692
Russia rejected what it called a hostile Japanese diplomatic protest following a visit by the Russian prime minister to a disputed island chain on Monday, saying he could go wherever on Russian territory he wanted.
Shares in Morito Co., which distributes skateboarding gear, surged 12% Monday after Nishiya’s victory in the Olympic women’s street skateboarding event; Mixi Inc and TSI Holdings also rallied on the news.

SOUTH KOREA
Expect markets to open higher following the mildly +VE US markets
and +VE pre market GDP data inline.
Data out
GDP Growth Rate adv Q2 +0.7% QoQ vs +1.7% Q1 (F/cast was +0.7%)
GDP Growth Rate adv Q2 +5.9% YoY vs +1.9% Q1 (F/cast was +6.1%)
Earnings in focus: SK Hynix, Samsung SDI, Samsung Biologics, Samsung Card, Shinhan Financial, Jeju Bank, JB Financial, Doosan Fuel Cell, S-Oil, Doosan Infracore, Doosan Bobcat, Hyundai Steel, Samsung SD.
KDCA announced 1,318 new covid cases the drop atributed to less testing over the weekend but noted more cases arising outside Seoul.
President Moon Jae-in on Monday touted last week’s bipartisan approval of a 34.9 trillion won ($30.2 billion) extra budget, pledging prompt execution of a new round of COVID-19 relief funds for people in urgent need.
Celltrion has submitted for global review the results of an animal study which it said suggested the efficacy of its COVID-19 treatment Regkirona against the delta variant, the firm said Monday.  It also added that its US partner tasked with developing an inhaled version of the monoclonal antibody treatment also known as CT-P59 or regdanvimab has secured a $7 million funding from the US Army Medical Research & Development Command.
SK said Monday it has joined Chinese food service company Joyvio Group to form a fund worth 100 billion won ($86.7 million) to make inroads into China’s fast growing alternative food market,.
Government will look to tighten a crackdown on tax evasion by cryptocurrency investors and high-income earners as it seeks fresh revenue to cover rising welfare costs, its finance ministry said on Monday.
Hyundai Motor union members will vote on wage deal which was tentatively agreed between company and union leaders
Cheil Worldwide 2Q Operating Profit Beats Estimates

TAIWAN
Expect market to open higher following the US markets overnight.
No data due
Taiwan Semiconductor Manufacturing Co (TSMC) is evaluating the feasibility of constructing a semiconductor fabrication plant in Germany as it continues to expand overseas, it said yesterday.   The company is looking to open various plants globally +VE
Yageo Corp a multilayer ceramic capacitor (MLCC) supplier, yesterday said that revenue would continue to grow sequentially this quarter, driven by resilient customer demand for premium passive components used in notebook computers, data centers and 5G-related devices. +VE

CHINA
Expect market to open lower as investors react to the clamp down as remain cautious as to where the next clamp down may fall.
Data due on the open Industrial Profits (YTD) Jun vs 83.4% May (F/cast was +65%)
China reported 76 new COVID-19 cases on July 25, the highest daily total since January amid a surge of local infections in the eastern city of Nanjing, which started a second round of mass testing and banned taxis from leaving to curb the outbreak.
Chinese Foreign Ministry spokesman Zhao Lijian was asked at a regular press conference about Beijing's comment on the Tianjin visit by U.S. Deputy Secretary of State Wendy Sherman, reported Beijing Daily.  Beijing demanded Washington to stop interfering in China's internal affairs immediately, stop harming China's interest, stop crossing the red line and playing with fire, and stop provoking group confrontations under the veil of their values, said Zhao.
President Xi Jinping made his first visit to the Tibet Autonomous Region as national leader this week, and urged people there to "follow the party", the official Xinhua news agency said on Friday.
Food delivery platforms in China are being pushed to guarantee their workers with income above minimum pay, insurance and a relaxation in delivery deadlines, under a set of reforms announced on Monday by China’s market regulator.
China is stepping up restrictions on financing to local government financing vehicles to mitigate risks from hidden debt, the official Securities Times reported yesterday. Several banks and insurers are connecting their systems with a platform of the Ministry of Finance that monitors liability and expenditure of LGFVs, the newspaper said, citing industry sources.

HONG KONG  ADR’s -229pts at 25,963 but I doubt the downside will be that bad, however there is likely to be an amount of margin call selling.  Short selling was relatively light but some individual names may see squeezes.  
No data due but after market Monday
Balance of Trade Jun HK$-40.5b vs -25.5b (F/cast was -14b)
Exports Jun +33% YoY vs +24% May
Imports Jun +31.9% YoY vs 26.5% May

Short Selling Monday 12.7% vs 15.8% Friday
Top Shorts  
Bud Apac (1876) 44%, Longfor (960) 40%, Sinopec (386) 38%, Ali Health (241) 38%, BankComm (3328) 36%, Hengan (1044) 36%, Ping An (2318) 33% (on -VE impact from Henan floods), Bank of China (3988) 33%, Country Garden (2007) 33%, Wharf REIC (1997) 31%, Mengniu Dairy (2319) 30%, Haidilao (6862) 29%, CK Asset (1113) 27%, NWD (17) 27%, Hang Seng Bank (11) 25%.

WATCH

CHINA GAS HOLD (00384.HK) announced that it repurchased 2.1708 million shares of the company 
on the Stock Exchange today (26th), involving $51.596 million. +VE

SINO BIOPHARM (01177.HK) announced that “Lenvatinib Mesilate Capsule” (Brand name: Fukaite), a liver cancer treatment drug developed by the group, has obtained drug registration certificate
granted by the National Medical Products Administration of the PRC. +VE

VENUS MEDTECH-B (02500.HK) Positive Profit Alert
announced that the total revenue approximated RMB239 million for the first half of 2021, up 134.6% year-on-year. +VEMOBI DEV (00947.HK) Profit Warning The unaudited consolidated net profit for the six months ended 30 June 2021 is expected to decrease by over 80% as compared to the same period of 2020, without excluding the possibility of loss. -VE

YANZHOU COAL (01171.HK) announced that for 1H21, the production volume of saleable coal -13.41% YoY to 50.97 million tonnes; while the sales volume of saleable coal -29.99% to 51.79 million tonnes -VE.

It is expected that S-ENJOY SERVICE (01755.HK)’s net profit for the six months ended 30 June 2021 will increase at least 45%
as compared with that for the six months ended 30 June 2020 (nearly RMB189 million). +VE

MEITUAN-W (03690.HK) announced that Meituan Takeaway will set up a disaster recovery fund worth of RMB80 million in a bid to achieve faster recovery after the heavy rainstorm raked across Henan Province. The company will help affected merchants to increase orders through discount offers, consumption coupons for work resumption, and so on.