This and previous notes can be found at Substack ( Asian Market Sense )
Check out ERI-C.com for interesting research and trading analysis
Asia expects markets to see a cautious open after a weak close in the U and Europe. Deteriorating US/Sino relations a further cause for concerns. A shortened trading week for Japan as the Olympics get underway. Light for data, although a lot of PMI data due on friday
DOW -0.86%, NDX -0.8%, S&P -0.75%, Russel 2K -1.24%
Markets opened higher (Dow hit 35k) on good retail sales data but trended lower throughout the day, to close on the day lows. Inflation concerns overshadowing the strong retail sales data. Energy and Tech names saw weakness. Earnings will continue to dominate the markets this week
Intel Corp -1.5% is exploring a deal to acquire semiconductor manufacturer GlobalFoundries Inc, the Wall Street Journal reported, citing people familiar with the matter
Banks JPMorgan Chase -2.3%, Citigroup -2.3% Wells Fargo -1.6%, Amex -1.6%
Work from home names: Facebook -1%, Apple -1.4%, Amazon -1.6%, Netflix -2.3%, Disney -2.6%, Zoom Video +1.5%, Alphabet flat and Microsoft -0.1%,
Tech NXP Semi -2.2%, Nvidia -4.3%, Micron -2.5%, AMD -1.2%, Skyworks -1.2%
Re-opening stocks Boeing -2.3%, Caterpillar -1.6%, Simon Property +1.6%, Kohl’s -3.2%, Nordstrom -1.7%, Gap -4.7%, United Airlines -3.6%, Carnival -4.7%, Wynn Resorts -3.3%, Chevron -2.7%, Exxon Mobil -2.7%,
Lock down names Campbell Soup +1% General Mills +0.5%, JM Smucker +0.9%
Retail Sales Jun +0.6% MoM vs -1.7% May revised (F/cast was -0.5%)
Retail Sales Jun +18% YoY vs +27.6% May revised (F/cast was +14%)
Retail Sales Ex Auto Jun +1.3% MoM vs -0.9% May revised (F/cast was +0.2%)
Business Inventories May +0.5% vs +0.1% Apr revised (F/cast was +0.2%)
Michigan Data Preliminary
Inflation Expectations May 4.8% vs 4.2% Apr (F/cast was 4.3%)
Consumer Expectations May 78.4 vs 83.5 Apr (F/cast was 83)
Consumer Sentiment May 80.8 vs 85.5 Apr (F/cast was 86)
Current Conditions May 84.5 vs 88.6 Apr (F/cast was 88)
Baker Hughes Oil Rig Count 380 vs 378 prior
Baker Hughes Total Rig Count 484 vs 479 prior
Overall Net Capital Flows May $105.3b vs 100.1b Apr
Foreign Bond Investment May $93.4b vs 49.6b Apr
Net Long Term tic Flows May $-30.2b vs 100.7b Apr
USD was stronger vs Yen & Euro. Bitcoin +0.8% @ 32,113.90, VIX +8.47% @ 18.45, US T10 @ 1.3% as strong retail numbers outweighed weak Michigan data and growing inflation concerns.
OIL Brent +0.4%, WTI +0.54% but dropped post market ahead of OPEC+ starting Sunday inVienna; expected to revise production targets.
Gold -0.9%, Silver -2.6%, Copper -0.4% Platinum -3.2%, Palladium -3.8%.
DAX -0.57%, CAC -0.51%, FTSE -0.06%
Opened higher with FTSE and DAX working higher initially but CAC selling down. But all markets turned lower dipping in the PM session after weak US markets. Busy day for earnings. European inflation slowed. Covid cases surged.
Miners were weak; leading the markets lower.
Rio Tinto +0.4%
Ericsson -9.4% earnings missed largely due to a decline in sales in China.
Sinch +14.6% after a robust earnings; slight +VE Softbank who backed the company.
Burberry -5% gave an encouraging Q1 trading update
New Car Registrations Jun +10.4% YoY vs 53.4% May (F/cast was 22%)
Balance of Trade May €7.5B vs €10.9B Apr (F/cast was €16.4B)
Core Inflation Jun +0.9% YoY vs +1% May (F/cast was +0.9%)
Inflation Jun +1.9% YoY vs +2% May (F/cast was +1.9%)
Inflation Jun +0.3% MoM vs +0.3% May (F/cast was +0.3%)
EUROZONE Construction Output
GERMANY Bundesbank Monthly Report
FRANCE No data due
UK No data due BoE Haskel speech
Nikkei to open lower following the US in what will be a shortened trading week as the Olympic’s start.
Yen closed 110.8
No data due
Tokyo reported1,410 new covid cases Saturday (+139 DoD) the highest since Jan 21. The nationwide number rising to 3,886. Covid cases linked to the Olympics rising-VE for sentiment ahead of the start of the games and probably -VE for PM Suga’s re-election chances.
BoA analysis of EPFR data shows flows into Japan the largest for four weeks. Slight +VE for sentiment
Honda Motor Co's (7267.T) new chief executive said on Friday the Japanese automaker was willing to form new alliances to make electrification profitable. Toshihiro Mibe, who took the top job in April, told a press briefing, when asked how he envisions global alliances on electrification. +VE
CIO of Government Pension Investment Fund; Hiromichi Mizuno's connections, span from the Japanese government to Harvard University, and have made him a guiding voice among climate-focused investors worldwide. Now those ties have placed his own conduct under scrutiny after an independent report focused on Mizuno's role in alleged collusion between the management of Toshiba Corp (6502.T) and Japan's trade ministry to block foreign investors from gaining board influence at the conglomerate. -VE for sentiment.
Expect markets to open lower following the weakness in the US. Earnings in focus and the high level of covid cases raising questions over the strength of the recovery.
No data due
KDCP reported 1,454 new covid cases Sunday (-1 DoD) still down from the 1,615 reported on Wednesday but raising questions about the recovery in Q3
The United States will have to work with China to make progress on North Korea, a senior State Department official said on Friday, ahead of a senior U.S. diplomat's visit to the region.
LG Electronics said Sunday that it will shift to renewable energy for 100 percent of its needs by 2050, doubling down on its previous pledge to go carbon neutral by 2030. +VE
SK Innovation will receive subsidies worth 90 million euros ($106.2 million) from the European Union for its second battery factory in Hungary, the firm said Sunday. +VE
Renault Samsung Motors Corp. will temporarily suspend production at its plant in the southeastern port city of Busan due to shortages of chips for vehicles, the company said Sunday. -VE
South Korean shipbuilders are forecast to report sluggish earnings in the second quarter of the year due to a sharp rise in prices of steel plates despite brisk orders, analysts said Sunday. POSCO, South Korea's leading steelmaker, has raised the prices of steel plates for ships to 1.15 million won ($1,007) per ton, up nearly two times from a year ago, they said. -VE for margins.
Kakao Pay, the financial technology arm of mobile giant Kakao, is likely to push back its initial public offering schedule as South Korea’s financial authority asked the company to make some corrections to its prospectus Friday. -VE
Expect market to open flat but watch for bargain hunting in TSMC; shipping stocks should remain firm on the strong US retail sales numbers.
No data due
CECC reported 15 new covid cases Sunday included 3 from ovrseas
Taiwan is stepping up its efforts to tap into the global aerospace market, with a focus on developing a specific kind of satellite, Minister of Science and Technology Wu Tsung-tsong said on July 6. The development of low Earth orbit (LEO) satellites are particularly worth pursuing for Taiwan, Wu said in an interview with the Central News Agency, referring to orbits with a maximum altitude of 2,000km.
“It is an opportunity Taiwan definitely cannot afford to miss,” Wu said.
TSMC shares Friday dropped the most in more than four months after its gross margin disappointed investors who had banked on the chipmaker benefiting from an ongoing chip shortage. The stock closed -4.1%. Gross margin for the second quarter was 50 percent, below the roughly 51 percent average predicted by analysts, in part because of the New Taiwan dollar’s appreciation. For this quarter, TSMC forecast gross margin of 49.5% to 51.5%. The disappointing margin overshadowed a raised sales projection based on its central role in alleviating a global chip crunch that is plaguing automakers and device manufacturers. I think we may see bargain hunting in the name because expectations were too high.
Hon Hai Precision Industry Co Friday said it is teaming up with CTBC Financial Holding Co to create a new fund targeting electric vehicle (EV) investments, the latest step in its quest to expand into the EV market. Fundraising is to start in the fourth quarter, with an eye to raising between NT$5 billion and NT$10 billion (US$178.5 million and US$357.1 million) from institutional investors and Taiwan’s National Development Fund (NDF), the companies said in a joint statement. +VE
Kaohsiung-based screw manufacturer Sheh Fung Screws Co Friday said it is positive about its business prospects, thanks to robust demand from home improvement projects and increased infrastructure spending abroad. Sheh Fung shed light on its prospects during a shareholders’ meeting, which approved the company’s proposal to distribute a stock dividend of 10 percent and a cash dividend of NT$1.97 per share based on last year’s net income of NT$152 million (US$5.42 million), or NT$3.71 per share. That would translate into a payout ratio of nearly 80 percent. +VE
Expect market to open lower with concerns over US/Sino relations.
No data due
China rebukes the US sanctions on 7 Chinese Officials and business advisory on Hong Kong. Claiming that it was unfounded, slanderous and no more than "a waste paper" which will not stop China from growing. But the breakdown in relations may have a long term -VE impact.
China's holdings in U.S. Treasury securities decreased by USD17.7 billion MoM to USD1.078 trillion, down for three consecutive months, according to U.S. Department of the Treasury.
The United States is in talks with China over U.S. Deputy Secretary of State Wendy Sherman's potential visit to China at the end of her upcoming Asia trip if all arrangements come together, a senior State Department official said on Friday. The State Department on Thursday announced that Sherman will visit Japan, South Korea and Mongolia next week but did not mention a stop in China that had been anticipated in foreign policy circles and reported in some media. If it were to happen it would be +VE
Chinese financial regulators set the deadline at the end of 2022 for the reform of individual credit reporting business which involves Ant Group, 13 online platforms and potentially all big data risk management companies, reported Caixin, citing people familiar with the matter.
The World Health Organization on Friday proposed a second phase of studies into the origins of the coronavirus in China, including audits of laboratories and markets in Wuhan, calling for transparency from authorities.
ADR’s -194pts at 27,810 with broadbased weakness following the US sanctions and business advisory.
No data due but after market Friday
Business Confidence Q3 6 vs 0 Q2 (F/cast was 2) slight +VE
Short Selling Friday 16% vs 20.1% Thursday
Top Shorts Hengan (1044) 41%, Bud Apac (1876) 39%, Ping An (2318) 32%, Ali Health (241) 31%, Country Garden (2007) 31%, Bank of China (3988) 26%, Baba (9988) 25%,
XIAOMI-W (01810.HK) announced that the Company has been notified by Lei Jun, Chairman and Executive Director, that he recently donated approximately 616 million class B shares of the Company to two charitable organizations, where half of the shares went to Xiaomi Foundation and the other half went to Lei Jun Foundation. Both entities will use the proceeds for charitable purposes.
CHALCO (02600.HK) Positive Profit Alert expected to record a net profit amounting to approximately RMB3 billion for the first half of 2021, representing a year-on-year increase of approximately 83 times.
GIORDANO INT'L (00709.HK) Positive Profit Alert, announcing that the group expects to record a net profit attributable to shareholders of not less than HKD50 million for the six months ended June 30, 2021, as compared with the net loss of HKD175 million for the corresponding period in 2020.
CC SECURITIES (01375.HK) Positive Profit Alert, forecasting the net profit of the company for the first half of 2021 to increase by RMB180 million-RMB220 million, or 583%-713%, as compared with the corresponding period last year.
YUE DA INTL (00629.HK) Positive Profit Alert, expecting the interim results of the group for the six months ended 30 June 2021 to record a consolidated net profit, which shows a significant increase of over 400% as compared to that for the corresponding period in 2020.
China Banking and Insurance Regulatory Commission (CBIRC) launched an investigation on the operations of shadow banking system and cross-financial business of MINSHENG BANK (01988.HK), Shanghai Pudong Development Bank and BANKCOMM (03328.HK) and designated according administrative penalties in respect of improper behavior that violated regulations. As a result, MINSHENG BANK was fined for RMB115 million; Shanghai Pudong Development Bank for RMB69.2 million and BANKCOMM for RMB41 million. The Securities and Futures Commission (SFC) announced that it is aware that Binance has offered trading services in stock tokens (Stock Tokens) in a number of jurisdictions and is concerned that these services may also be offered to Hong Kong investors. The SFC added that it wishes to make it clear that no entity in the Binance group is licensed or registered to conduct “regulated activity” in Hong Kong.
Xiaomi's auto unit will grant employees with independent share options under an equity incentive plan, which will be distributed by phases within five years, reported Chinese media.
Specifically, all mature options could be monetized should the firm's annual auto sales reach 1 million units under healthy operation.
ByteDance has suspended the registration of new users and content creators on its "Toutiao" since September last year, reported Reuters, citing sources. "Toutiao" application is still available for download and existing users can still use the app.
CCL last printed at 187.87, up 0.63% weekly.
CCL Mass climbed 0.5% weekly to 190.58.
CCL (small-to-medium flats) gained 0.64% weekly to 188.32.
CCL (large units) added 0.57% weekly to 185.48.
The research department of Centaline Property, expected home prices to keep struggling briefly before shattering peak.