Jan 13 Asian Marco Initial Thoughts Expect another mixed day in Asia. China loans data mixed.


13 Jan

Asian Futures Nikkei Futures -15pts,  HK ADR’s +90pts and Australia ASX 200 flat in early trades.  CSI 300 closed at its highest since 2008 on Tuesday so could see conoslditaion.

US Futures opened flat Dow -20pts, S&P and NDX -0.1%

DOW +0.19%, NDX +0.28%, S&P +0.04%, Russel 2K +1.77% having opened slightly higher and traded sideways for most of the day.  Upside lead by Banks which are seen as beneficiaries of the vaccination roll out and Biden’s additional stimulus spending.  But Tech saw some weakness.Some are concerned that the additional spending will see a return to growth and of inflation.  That could make the serving of debt more expensive and hurt earnings.
The S&P 500′s forward price-to-earnings ratio was at 22.7, near its highest level since 2000. DoubleLine Capital CEO Jeffrey Gundlach pointed out on Monday that stock valuations are high relative to historical standards, and are being underpinned solely by stimulus measures from the Federal Reserve.
Other are more positive “At a minimum, even a USD 500bn fiscal package consisting of additional stimulus checks, extended unemployment benefits, and funding for healthcare and vaccine disbursement will be another boost to economic growth in 2021,” noted Jason Draho, UBS Global Wealth Management head of Americas asset allocation.
The U.S. counter-intelligence chief said on Tuesday he was worried about threats from China and Russia to disrupt the coronavirus vaccine supply chain in the United States. -VE for US/China relations.
Banks JPMorgan Chase +1.6%, Citigroup +0.4% and Wells Fargo +2.1%, AMEX +0.5%
Work from home names: Facebook -2.2%, Apple -0.1%, Amazon +0.2%, Netflix -1%, Disney -1.7%,  Zoom Video +5.7%, Alphabet -1.1% and Microsoft -1.2%,
Tech NXP +1.7% Nvidia -1%, Micron +1%, AMD -2%, Skyworks -2.4%
Re-opening stocks  Boeing -0.8%, Caterpillar +1.9%, Simon Property +2.8%, Kohl’s +6.7%, Nordstrom +7.2%, Gap +4.1%, United Airlines +3.2%, Carnival -0.05%, Wynn Resorts +1.8%, Chevron +1.9%, Exxon Mobil +2.2%,  
Lock down names Campbell Soup -1.2%, General Mills -2.1%, JM Smucker -2.5%
Las Vegas Sands +0.3% despite news that founder Sheldon Adelson had died
Earnings KB Homes +1.3% after earnings
Albertsons +2.1% after earn gins but off initial high.
DATA
NFIB Business Optimism Index Dec 95.9 vs 101.4 Nov (F/cast was 100.5)
Redbook +2.1% YoY vs 5.5% prior ( -2.6% MoM vs +0.5% prior)
JOLT’s Job Openings Nov 6.527m vs 6.632m Oct (revised from 6.652m) (F/cast was 6.3m)
IBD/TIPP Economic Optimism Jan 50.1 vs 49 Dec (F/cast was 47.5)
After mkt API Crude Oil Stock Change 8/Jan -5.821m vs -1.663m prior (Concensus was -2.720m)
USD was weaker vs Yen & Euro. Bitcoin -2.4% @ 33,610.25, VIX -3% @ 23.33, US T10 @ 1.129%
OIL Brent +2.01%, WTI +1.99% highest since Feb 2020 ahead of inventory data which came after market and showed a bigger than expected decline.
Gold +0.22%, Silver +1.4%, Copper +2.2%
AHEAD MBA Mortgage Applications and 30 year Mortgage Rate, Inflation Rate, Core Inflation Rate, EIA Oil Report, Monthly Budget Statement, Beige Book.
Earnings: IHS Markit, Infosys, Wipro
DAX -0.08%, CAC -0.2%, FTSE -0.65% Markets opened slight higher but the FTSE trended lower whilst the DAC and CAC traded sideways around flat.  Covid concerns remain and investors watched the US for more news on stimulus and Trump’s impeachment.  Travel & Leisure and Auto’s +VE but Utilities weak. Again no data due for Europe.
Zur Rose Group +14.9% after Bank of America initiated the stock at a “buy” recommendation.
Kingfisher climbed after saying it “continued to experience strong demand across its markets” with quarterly like-for-like sales to January up 17% +VE for Techtronics (669 HK)
Games Workshop -6.7% after weak first-half results
Temenos -4.5% after Credit Suisse downgraded the Swiss banking software firm’s stock to “underperform.”
AHEAD
EUROZONE Industrial Production
GERMANY Wholesale Prices
FRANCE  No data due
UK  No data due

JAPAN Nikkei futures opened Flat -15pts.  Yen currently 103.78.  Expect market to further consolidate.
Data due at 2pm HK time Dec Machine Tool Orders  (Nov was +8% F/cast is +12.5%)
Tokyo reported 970 new covid cases on Tuesday (below 1,000 for the first time since Jan 4) with 4,535 cases nationwide.
Government is expected to extend the nation’s second state of emergency Wednesday to cover Osaka, Kyoto and Hyogo prefectures in the Kansai region, as well as Aichi and Gifu prefectures.  Media reports also said Tochigi and Fukuoka prefectures would be brought under the declaration, too, after they called on the central government Tuesday to expand the state of emergency there.
The government said Tuesday it will pay up to 400,000 yen to suppliers hit by plunging sales due to client restaurants and bars cutting opening hours under the fresh round of coronavirus emergency declared in Tokyo and its vicinity.
Toyota suspends production in China owing to chip shortage, Bloomberg cited Toyota's spokesperson. The Japanese automaker expected the suspension to last for four days, adding its production JV with China will shrink 30% output at most in January, subject to the duration of halt.
KDDI Corp has decided to charge 2,480 yen a month for 20-gigabyte data usage, the cheapest option among major Japanese wireless carriers, sources with knowledge of the plan said Tuesday, as they scramble to cut fees amid mounting government pressure. -VE for the sector
Sony Corp. unveiled its Airpeak drone at CES, the world’s largest consumer electronics and information technology show, which opened over the internet Monday. Airpeak marks Sony’s entry into the drone business. It can wield Sony’s Alpha mirrorless cameras and is expected to allow creators to shoot high-definition aerial videos. +VE
Nidec Corp., the world’s top supplier of motors for everything from hard drives to power plants, is betting it can make a key component for Tesla Inc.’s electric vehicles (EVs) cheaper and better than anyone else +VE but a -VE cross read to Bosch Corp., ZF Friedrichshafen AG, Dana Inc. and other competitors.
Tokyo Disneyland and Tokyo DisneySea have respectively curbed their park capacity at 5,000 between 12 January and 7 February, stepping up previous restrictions further, Kyodo citing Chiba Nippo Press.  The opening hours of the parks have been shortened to 7pm as well.
Japan sees surge in exports to China of base paper for cardboard as the Chinese government has restricted the entry of used paper, a key raw material for corrugated cardboard, as a measure against environmental pollution. +VE Nippon Paper Industries, Oji Holdings, Rengo and other but with nine Dragons moving production to Malaysia there could be fierce competition.
The Metropolitan Police Department on Tuesday arrested a former engineer of SoftBank Corp. on suspicion of violating the Unfair Competition Prevention Law by illegally divulging trade secrets regarding the 5G fifth-generation telecommunications standard, the MPD said. Kuniaki Aiba, 45, of Yokohama quit SoftBank and started working for Rakuten Mobile, Inc., one of its rival companies, last year.

SOUTH KOREA Expect markets to open flat with institutional activity remaining light ahead of option exposure and with unemployment worse than forecast.
Data due Unemployment Rate Dec 4.6% vs 4.1% Nov (F/cast was 4.1%)
KDCA reported 508 locally transmitted and 29 imported cases of COVID-19, down from the recent peak of over 1,000 cases daily.
Concerns over the government‘s announcement that it would end a temporary ban on short-selling rose among retail investors Tuesday, as they claim that the reactivation of such trading practice could create market disruptions. It is due to expire on March 15. With markets trading around highs there can be little justification for maintaining the ban in my view.
Samsung Electronics on Tuesday unveiled its new mobile application processor Exynos 2100 through an online event ahead of the Samsung Galaxy S21 Unpacked event this week.   The Exynos 2100, which is expected to power the upcoming Galaxy S21 series, is Samsung’s first mobile application processor integrated with a 5G modem. +VE
General Motors Korea pulled off a strong performance last year in overseas markets, the automaker said Tuesday.   The company shipped 285,499 vehicles overseas last year, ranking top among foreign-invested car brands here in terms of export volume, the company said. +VE
Kolon Industries, a South Korean industrial materials company, said Tuesday it will expand its tire cord plant in Vietnam to increase exports of the product from the Southeast Asian country.  Kolon Industries will invest 68 billion won ($62 million) in its wholly owned Kolon Industries Binh Duong Company Ltd. to help the Vietnamese subsidiary expand the plant by September next year. +VE
Policy lender Korea Development Bank Chairman Lee Dong-gull said Tuesday that SsangYong Motor’s fate on getting financial assistance depends on its promise of stopping labor disputes until the cash-strapped company marks a turnaround.

TAIWAN Expect market to open flat following the US.  Tech may see some weakness but Telco’s +VE after Chunghwa’s first annual growth.
No data due.
Striving for a bilateral trade agreement with the US remains key to the government’s diplomatic work, the Ministry of Foreign Affairs said yesterday, after outgoing US Trade Representative (USTR) Robert Lighthizer said that trade disputes with Taiwan have not been resolved.
Chunghwa Telecom, on Monday reported that net profit last year increased 1.9% following the debut of 5G services, its first annual growth since 2015. +VE
Eclat Textile on Monday reported better-than-expected revenue of NT$3.7 billion (US$129.9 million) for last month, up 48.4 percent month-on-month and 35.6 percent year-on-year, as the work-from-home trend and people exercising more amid the COVID-19 pandemic spurred sales of casual clothing and leisure wear. Driven by restocking demand, revenue increased for a fourth straight month last month and hit a new high, analysts said. +VE
The local machine tool industry is forecast to see a recovery this year, with annual production value likely to increase 15 to 20 percent, the Taiwan Machine Tool & Accessory Builders’ Association said yesterday. “A survey of our members showed that they are cautiously optimistic about 2021,” association chairman Habor Hsu  told a news conference in Taipei. +VE

CHINA Expect market to open lower with continued concerns over US/China relations, the mixed New Loans data out after market Tuesday and rising covid concerns.  With Balance of Trade data due Thursday.  But do not under estimate the presence of Team China to limit the downside or even drive the market higher. CSI 300 closed at its highest since 2008 on Tuesday.
No data due but out after market Tuesday 
New Yuan Loans Dec CNY 1260b vs 1430b Nov (F/cast was 1120b)
Outstanding Loan Growth Dec +12.8% YoY vs 12.8% Nov (F/cast was 12.7%)
Total Social Financing Dec CNY 1720b vs 2130b Nov (F/cast was 2210b)
M2 Money Supply Dec +10.1% YoY vs 10.7% Nov (F/cast was 10.6%)
New loans beat forecasts but the Total Social Financing missed which suggests that the tightening measures taken by the PBoC during last year are still having a impact.
China has banned weddings and funerals in rural China to help stop the resurgence in covid cases in Hebei province. The new coronavirus outbreak in the locked-down Wangkui county, northeast China's Heilongjiang province, continued to spread as two neighboring cities on Tuesday detected eight new patients who are not showing symptoms of infection.The city of Qiqihar reported seven new infected people, including three who have been to Wangkui county. Yichun also found one positive patients after testing all recent returnees from the county, the state media Global Times reports.   As of Tuesday, the outbreak in Wangkui has spread to three places.  -VE for sentiment
Chinese Foreign Ministry Spokesperson Zhao Lijian, addressing the NYSE's delisting of three major Chinese telcos, said the US crackdown imposes very limited direct impact on the related companies, but will erode Americans' interest, image and global capital market position ultimately.
Wilson Bayly Holmes-Ovcon Ltd (WBHO), South Africa's largest construction and engineering firm, said the sale of a 88% stake in Australian construction company Probuild had been rejected by Australia's Foreign Investment Review Board (FIRB) on national security grounds. While WBHO did not reveal the buyer's identity, Australian media reported that China State Construction Engineering initially planned to buy the above shares at AUD300 million.
Rescuers try to reach 22 trapped after Chinese gold mine blast at the Hushan mine. Which is owned by Shandong Wucailong Investment Co Ltd. That company is named by China’s fourth-biggest gold miner, Zhaojin Mining, as a “subsidiary of an associate” in its 2019 annual report. Slight -VE
China’s Sinovac showed “general efficacy” of 50.4% in a late-stage trial in Brazil, the company’s local partners said on Tuesday, revealing a more modest figure after pressure for more transparency. On Thursday, the Brazilian researchers had celebrated results showing 78% efficacy against mild COVID-19 cases, a rate they have since described as “clinical efficacy.”
SINOPEC slight -VE after a rubber production plant in Nanjing, east China's Jiangsu province, suffered a blast after its butylbenzene equipment exploded on Tuesday afternoon, according to Xinhua News Agency. The incident happened at 5:06 pm at the Sinopec Yangzi Petrochemical Rubber Company, which is in the Nanjing Chemical Industrial Park. The local fire station dispatched firefighters to the scene, it said. -VE

HONG KONG  ADR’s +90pts at 28,366 with continued weakness in Chinese Financials and E Commerce names. But expect some initial short covering.
No data due but after market Tuesday 
HK C&SD Monthly Survey on Business Situation of Small and Medium-sized Enterprises (SMEs) for December 2020.
The current diffusion index (DI) on business receipts Dec 35.6 vs 43 in November 2020 But the one-month's ahead (Jan 2021) outlook DI on business receipts was 39.7.
A government spokesman said that business sentiment among SMEs worsened further in December 2020 amid the fourth wave of the local epidemic, with the sub-indices for all sectors falling by varying degrees. In particular, the sub-index for restaurants dipped to the lowest level since July 2020 amid the further tightening of social distancing measures.
SHORT SELLING Tuesday 12.1% vs 11.1% Monday 
Top Shorts: MTRC (66) 54%, Ping An (2318) 46%, Wharf REIC (1997) 38%, Hengan (1044) 36%,  Galaxy Ent (27) 33%,  Bud APAC (1876) 33%, AAC Tech (2018) 32%, Hang Seng Bank (11) 31%,  AIA (1299) 25%.
National Security Law. 
On Tuesday Secretary for Commerce and Economic Development Edward Yau told Reuters that international companies in Hong Kong look law and order one very important thing in their investment, and in fact there is more money flowing to the city than leaving, proving market confidence in the global financial hub.  On closer inspection it appears that a lot of that money is coming from the mainland rather than international investors which rather undermines the statement.
Further changes to Legco Elections possible.  While stressing that plans are not finalized, two people who represent mainland interests here said it is possible that Legislative Council elections - already postponed until September on coronavirus grounds - could face reforms aimed at further reducing democratic ideas.   The key being that Beijing remains concerned democrats could still muster a majority in the legislature should the polls go ahead, he said, given a lingering groundswell of public support.
WATCH
ALIBABA -VE as images of a Chinese courier setting himself on fire in protest over unpaid Alibaba wages goes viral.  -VE cross read for the sector.
Lenovo Group said it will issue Chinese Depository Receipts  representing up to 10 percent of the total number of shares for listing on the Science and Technology Innovation Board of the Shanghai Stock Exchange. The proceeds will be used for the company’s research and development of new technologies, products and solutions, strategic investments in related sectors, and replenishment of its working capital, Lenovo said. +VE
TRACKER FUND (02800.HK) had earlier said it will not make new investment in sanctioned equities. Joseph Yam, a Non-official Executive Councillor and former HKMA Chief Executive, said if the HSI-tracking TRACKER FUND is unable to deal with certain stocks within the HSI so that the Fund cannot trace the overall price trend of HSI constituents fully, TRACKER FUND is not right for the job. Especially surprising that the Tecker should make such as declaration as it is not a US linked entity.
JD HEALTH (06618.HK) will be admitted to the list of Designated Securities for short selling with effect from next Tuesday (19 January).
PROPERTY slight -VE as Stamp duty collected from property transactions in 2020 -38%  to a record low of HK$13 billion from a year before, data from the Inland Revenue Department showed, as Hong Kong's property market has been reeling from the Covid-19 outbreak and Sino-US tensions. The amount of buyer's stamp duty collected fell 49.3 percent year-on-year to HK$2.77 billion last year. In December, stamp duty collected from property transactions slumped 62.7 percent month-on-month to about HK$717 million.
Obituary Melvis, Hong Kong’s long standing Elvis impersonator has died.

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