Jan 23 Things to know before trading Asia on Monday


23 Jan

A big week ahead for earnings with over 100 companies reporting and for the US we also get Q4 GDP and a Fed meeting (no change expected  but watch for comments on the new administration). We also get Durable goods and personal income and spending and the PCE deflator which the Fed watches closely.  Trump’s impeachment to start Monday likely a small distraction for most.

On Friday UK announced a new and more virulent mutant known as B.1.1.7 which has an unusually high number of mutations and was already associated with a more efficient and rapid transmission.  It has also been discovered in 44 countries, including the US.  It has been known about since Sept.  UK now considering closing all UK borders.

Worth also noting that The White House's new national security chief on Thursday held introductory calls with officials from France, Germany, the United Kingdom and Japan, according to a National Security Council spokeswoman's statement released on Friday.  China not on the list that is likely to cause China some concern.

DOW -0.57%, NDX +0.09%, S&P -0.3%, Russel 2K +1.28% Having opened lower markets worked their way back to around flat at lunchtime on good PMI data and Existing home sales beat too. and then traded sideways before  seeing a small dip into the close.  NDX closed at a new week.  Investors concerned by Republican opposition to Biden’s stimulus package -VE for sentiment on cyclicals like Energy, Financials and Materials.
IBM -9.9% as Q4 sales missed again.
Intel -9.3% having opened higher after better than expected earnings but early due to a hack. Concerns that Pat Gelsinger its new CEO was not keen on outsourcing some of the chipmakers business.
GameStop +51% as retail traders decide to squeeze Andrew Lyft of Citron Research who said he had placed a bet against the stock; saying it was in terminal decline. Raising questions about the use of websites like Reddit
Janet Yellen got Senate support for appointment as Treasury Secretary Banks JPMorgan Chase -0.8%, Citigroup -0.9% and Wells Fargo -0.3%, Amex -1.1%
Work from home names: 
Facebook +0.6%, Apple +1.6% ahead of results next week, Amazon -0.5%, Netflix -2.5%,  Disney +0.9%,  Zoom Video +0.2%, Alphabet +0.5% and Microsoft +0.4%,
Tech 
NXP -0.8%, Nvidia -1.1%, Micron -3.2%, AMD +1.4%, Skyworks -1.4%
Re-opening stocks  
Boeing -0.8%, Caterpillar -0.1%, Simon Property +1%, Kohl’s +0.9%, Nordstrom +3.1%, Gap -0.1%, United Airlines -1.1%, Carnival -2.5%, Wynn Resorts -1.6%, Chevron -0.3%, Exxon Mobil -1.4%,  
Lock down names 
Campbell Soup -0.1% General Mills +1.2%, JM Smucker +0.7%
DATA
PMI Flash
Manufacturing Jan 59.1 vs 57.1 Dec (F/cast was 56)
Services Jan 57.5 vs 54.8 Dec (F/cast was 54.3)
Composite Jan 58 vs 55.3Dec (F/cast was 55.9)
Existing Home Sales Dec +0.7% MoM vs -2.2% Nov revised (F/cast was -1%)
EIA Natural Gas Stocks Change -187Bcf vs -134Bcf prior (Consensus was -174Bcf)
EIA Crude Oil Stocks Change +4.351m vs -3.247m (Consensus was -1.167m)
EIA Gasoline Stocks Change -0.26m vs +4.395m (Consensus was +2.771m)
Baker Hughes Oil Rig count 289 vs 287 prior
Baker Hughes Total Rig count 378 vs 373 prior
USD was slightly stronger vs Yen & Euro. Bitcoin +0.2% @ 32,752.50, VIX +2.8% @ 21.9,
US T10 @ 1.086% slipped on stimulus and covid concerns
OIL Brent -1.1%, WTI -1.6%
Gold -0.56%, Silver -1.12%, Copper -0.77%
AHEAD 
Chicago Fed National Activity Index, Dallas Manufacturing Index
Earnings: Kimberly-Clark, Yamana Gold, Steel Dynamics

DAX -0.24%, CAC -0.56%, FTSE -0.3%  Opened lower following the trend from Asia, PMI data mixed but mainly weak and UK Retail Sales weaker than forecast (-VE Retail names). Concerns about the new covid wave in China and more lockdowns in Europe as AstraZeneca warns of delays to covid vaccine deliveries.  Markets trending lower/sideways through the morning but then worked higher in the PM.  All sectors ended in the red with Travel and Leisure leading the declines as further travel restrictions are proposed in Europe; to identify covid hotspots -VE Airlines.
Hellofresh +3.2% on new travel restrictions
Siemens +7.2% and ProSiebenSat.1 +4.7% who both posted better-than-expected earnings before the opening bell.
Volkswagen +1.8% despite FY profit halving in 202o but beat forecasts
Tui -16% on covid concerns
Data 
EUROZONE 
PMI Flash
Manufacturing Jan 54.7 vs 55.2 Dec (F/cast was 54.5)
Services Jan 45 vs 46.4 Dec (F/cast was 44.3)
Composite Jan 47.5 vs 49.1 Dec (F/cast was 47.2)
GERMANY 

PMI Flash Manufacturing Jan 57 vs 58.3 Dec (F/cast was 57.5)Services Jan 46.8 vs 47 Dec (F/cast was 45.1)Composite Jan 50.8 vs 52 Dec (F/cast was 50.2)
FRANCE
PMI Flash 
Manufacturing Jan 51.5 vs 51.1 Dec (F/cast was 50.9)
Services Jan 46.5 vs 49.1 Dec (F/cast was 47.9)
Composite Jan 47 vs 49.5 Dec (F/cast was 48.4)
UK
Consumer Confidence Jan -28 vs -26 Dec (F/cast was -29)Retail Sales Dec +0.3% MoM vs -4.1% Nov revised (F/cast was +1.1%)Retail Sales Dec +2.9% YoY vs +2.1% Nov revised (F/cast was +3.8%)Retail Sales Ex Fuel Dec +0.4% MoM vs -3% Nov revised (F/cast was +0.5%)Retail Sales Ex Fuel Dec +6.4% YoY vs +5.3% Nov revised (F/cast was +6.2%)
Public Sector Net Borrowing Dec GBP -34.1b vs -26.1b Nov (F/cast was -30b)
PMI Flash
Manufacturing Jan 52.9 vs 57.5 Dec (F/cast was 52.8)
Services Jan 38.8 vs 49.4 Dec (F/cast was 45.1)
Composite Jan 40.6 vs 50.4 Dec (F/cast was 45.2)
AHEAD
EUROZONE No data Due
GERMANY Ifo Business Climate, Current Conditions and Expectations FRANCE No data due
UK No data due

JAPAN Expect Nikkei to open lower following the US.  Yen closed 103.77
No Data due but concerns about Friday’s CPI data which slumped in December at the fastest annual pace in a decade, a sign of intensifying deflationary pressures that sharpen the case for the central bank to come up with better ways to combat the deepening impact of the COVID-19 pandemic. Friday's weak data underscores the challenges policymakers face in preventing the spread of the virus without adding to the strain on an economy already suffering from a renewed state of emergency rolled out this month.
Tokyo confirmed 1,175 new COVID-19 cases on Friday, surpassing 1,000 new cases in a single day for the 10th consecutive day, according to the Tokyo metropolitan government. The number of infected people on the day dropped more than 800 from a week earlier, when the figure was 2,001.
Japan’s vaccine programme chief on Friday walked back on a goal to secure enough targeted supplies of COVID-19 vaccines by June, one month before the planned start of the Tokyo Olympics.  Comes as a domestic tourism campaign promoted by PM Suga may have contributed to a sharp increase in coronavirus infection cases in the country, a prominent adviser to the government’s pandemic response said.Govt also announced a girl in Tokyo was found positive for the coronavirus variant first detected in Britain, and the case could be a community-acquired infection, the Japanese Health Ministry said on Friday.  The girl, who is under 10 years old, has not travelled to the United Kingdom, and no contact with people from Britain has been confirmed, the ministry said.
Japan has no intention of joining a UN treaty banning nuclear weapons, PM Suga reiterated Friday, voicing doubts about the effectiveness of an agreement that is not supported by nuclear weapons states.
Toshiba will return to the top section of the Tokyo Stock Exchange next week, after more than three years in its second tier and under near constant pressure from activist shareholders.
Shiseido Co Ltd said on Friday it was in talks to sell its lower-priced skincare and shampoo brands to private equity firm CVC Capital Partners in a deal reported to be valued at more than $1.45 billion.
Nissan will source more batteries from Britain to avoid tariffs on electric cars after the UK's trade deal with the EU, which a senior executive told Reuters turned Brexit from a risk into an opportunity for its factory in northeast England.  COO Ashwani Gupta also said Brexit-related problems at ports since Jan 1 were "peanuts" for Nissan, which has had to handle COVID-19 and natural disasters.
Japan and the IOC stood firm on Friday on their commitment to host the Tokyo Olympics this year and denied a report of a possible cancellation, although the pledge looks unlikely to ease public concern about holding the event during a pandemic.

SOUTH KOREA 
Expect markets to flat following the US markets with Tech still in focus to support the markets.  Markets closed Friday just off their recent highs, talk of valuation pressure as The Won fell vs the USD. 
No data due
KDCP reported 346 new cases Friday (314 domestically transmitted and 32 imported from overseas)  raising the accumulated total to 74,262.  Govt warns against complacency as risk factors remain high and so the Govt will keep social distancing in place in the run up too the Lunar New Year.
Samsung Electronics is pondering on spending over US$10 billion in the most-advanced logic chipmaking factory in the U.S., hoping to lure more American clients and catch up with sector leader TSMC, reported Bloomberg. Samsung is in talks to build a factory in Austin, Texas for fabricating 3-nanometer chips, according to sources. +VE
KT has chosen IDIS, a local security solutions provider, as a preferred bidder for a controlling stake in its radio systems subsidiary KT Powertel, the company announced Friday.  KT’s board of directors approved the disposal of its 44.85 percent stake in KT Powertel, worth 40.6 billion won in a meeting Friday. How much IDIS has offered to pay is not known.  Slight -VE
The future of LG Electronics’ next generation smartphone model with a rollable OLED display hangs in the air as the tech giant seeks to sell its money-losing mobile business unit.  The company said Friday that it was still developing the Rollable, but added that detailed plans for its launch had not been decided, and that the company was “open to every possibility.” -VE
Hyundai Engineering & Construction, said Friday it shifted to a net loss in the fourth quarter from a year earlier due to currency-related losses. For the three months that ended in December, Hyundai E&C swung to a net loss of 122 billion won ($110.6 million) from a net profit of 6.9 billion won in the same period of last year, the company said in a regulatory filing. The company said the US dollar's strength against the won mainly contributed to the loss.  Slight -VE
Korean Air Lines said Friday it will raise a higher than previously planned amount by selling stocks for its planned acquisition of smaller rival Asiana Airlines Inc.  It now plans to sell 3.3 trillion won ($3 billion) worth of new stocks,(vs 2.5 trillion won originally)  to finance the acquisition of debt-laden Asiana, due to its soaring stock price, the company said in a regulatory filing. +VE
South Korea's antitrust regulator said Friday it will seek to take punitive actions against unfair business activity by online platform operators in a bid to protect contractors and consumers.  It will submit a bill to the National Assembly next week.
South Korea said Friday it plans to deploy at least five vessels by the end of February to support exporters facing troubles from a hike in freight costs amid soaring demand. Under the plan, HMM Co., the country's leading shipper, will operate a ship with a capacity of 4,600 twenty-foot equivalent units (TEU) on the American route in January, according to the Ministry of Trade, Industry and Energy. +VE
Property +VE as the total volume of office investments in major districts of the Greater Seoul area hit yet another record in 2020 despite the pandemic, as high demand for offices in prime locations led the bullish market, data showed Friday.

TAIWAN 
Expect market to open flat on Monday with Tech still protecting the downside. Unemployment was +VE 
Data due After Market Industrial Production, Retail Sales, M2 Money Supply
After Market Friday Unemployment Dec 3.76% vs 3.77% Nov (F/cast was 3.8%)
Falling for the fifth straight month, as fewer people quit or lost their jobs due to business downsizing or closures +VE
Officials remain hopeful, realistic on US trade deal saying it is a high priority.  While US lawmakers support a deal, officials said they are also looking to join the CPTPP and forging a trade agreement with the UK.
GlobalWafers, the world’s No. 3 silicon wafer supplier, yesterday said that it has sweetened its takeover offer for Siltronic AG by 12% to 140 euros per share, a cash-only deal for all of the outstanding ordinary shares of the Germany-based company. +VE
Qisda Corp is extending its tender offer for Sysage Technology  by 50 days through March 18 as it awaits approval from the Fair Trade Commission (FTC) to proceed with the acquisition.  Qisda, which already owns 35% of Sysage Technology, on Dec. 9 last year announced that it would purchase up to 38 million additional shares, or a 20 percent stake, at NT$45 per share.
Huang Hsiang Construction Corp has acquired the building that houses the Sogo Department store’s Dunnan branch for NT$13 billion (US$458.05 million) through a share swap, government data showed.  The developer beat the other bidder, Urban Development Concept Holdings Ltd, after the seller, Jen Ai Co, reportedly demanded an all-cash payment, scaring away other prospective buyers.
Hon Hai Precision Industry Co developed an artificial intelligence (AI) program that has cut defect inspection labor by 50% on some production lines, the company said on Thursday.
The company has named the program Foxconn NxVAE, which stands for Foxconn Next Variational Autoencoder.  Variational autoencoders are artificial neural networks that can learn without supervision. +VE

CHINA 
Expect market to open lower with caution over the rising covid cases and the potential impact on the recovery along with concerns over the US/China relations.
No data due
China on Saturday reported 107 new covid cases (vs 103 Friday) with 90 local infections; as it marks the anniversary of the world’s first coronavirus lockdown, in the city of Wuhan where the disease emerged in late 2019. Heilongjiang recorded 56 new cases and neighbouring Jilin province had 13. Both Beijing and Shanghai recorded three new cases each (including the strain found in the UK), and the province of Hebei, which surrounds Beijing, recorded 15 new cases. Beijing launched mass testing Friday and Shanghai was testing all hospital taff -VE for sentiment and already been seen in downward pressure on oil prices.
China reported its first cluster of COVID-19 cases among workers in a meat processing plant, raising fears among local consumers who have until now mainly worried about the safety of imported foods. Ten confirmed cases were found in a factory which slaughters 50 million chickens a year in the northeastern city of Harbin and is owned by Thai conglomerate Charoen Pokphand (-VE for the stock)  one of the world’s top poultry producers.
China passed a law on Friday that for the first time explicitly allows its coast guard to fire on foreign vessels, a move that could make the contested waters around China more fraught. The National People’s Congress standing committee, passed the Coast Guard Law on Friday, according to state media reports. -VE
China grants Canada’s Michael Kovrig online consular access a sign of a change in attitude from China with the change of administration in the US
A new form of African swine fever identified in Chinese pig farms is most likely caused by illicit vaccines, industry insiders say, a fresh blow to the world’s largest pork producer, still recovering from a devastating epidemic of the virus. -VE for sentiment and WH Group which has seen recent shorting.  Could also impact Chinese food inflation in the run up to Chinese New Year.
China to boost PLA forces pay another sign of changes taking place in armed forces.

HONG KONG  
ADR’s +105pts at 29,552 with Ecommerce names +VE and a rebound in CNOOC BUT with HK Govt imposing a 48 hour lockdown on an area in Jordon and compulsory covid testing; sentiment is likely to be weaker.  The mainland type of arrangement likely to raise wider concerns about Govt control.
No data due but Hong Kong reported 61 new covid cases (vs 61 cases Friday) with 26 from unknown sources.
SHORT SELLING Friday 16.3% vs 18.1% Thursday
Top Shorts: Wharf REIC (1997) 52%,  Hang Seng Bank (11) 41%, Country Garden (2007) 40%, Henderson Land (12) 38%, Ping An (2318) 37%, Bud Apac (1876) 36%,  CLP (2) 34%, Hengan (1044) 31%, CITIC (267) 31%, Galaxy Ent (27) 29%, MTRC (66) 27%,  Link REIT (823) 27%, Sands China (1928) 26%, SHKP (16) 24%.

POLITICS/VACCINE FT reports that  'A group of more than 200 pro-Beijing politicians in Hong Kong is set to be vaccinated against Covid-19 in mainland China, ahead of the rest of the city’s population, in order to attend the Chinese Communist party’s premier political event this March.’  Likely to spark resentment against Beijing.

WATCH
AUSTAR (06118.HK) Positive Profit Alert  expecting to record a profit in the range of RMB30 million to RMB40 million for the year ended 31 December 2020, as compared to the profit of RMB8.1 million for the year ended 31 December 2019, up approximately 270%-394%.
KOOLEARN (01797.HK)  announced interim result ended November 2020. The revenue rose 19.2% year on year to RMB677 million. The loss widened to RMB674 million from RMB71.282 million in the corresponding period of the previous year. LPS was RMB0.72. No dividend was declared.
SINO LAND (00083.HK) has just uploaded the first price list for SILVERSANDS, a property in Ma On Shan, involving 50 flats. Based on the maximum discount of 18.5%, the selling prices range $5.8631-10.3994 million.
CITIC BANK (00998.HK) released the preliminary annual results. Friday for 2020, operating income added 3.81% yearly to RMB194.731 billion. Net profit rose 2.01% yearly to RMB48.98 billion. Basic EPS equaled RMB0.94.
Baidu (BIDU.US) has officially filed a secondary listing application at HKEX (00388.HK), with Goldman Sachs and CITIC in the sponsor team, according to Chinese media.
HKEX (00388.HK) announced the inclusion of eligible A-shares listed on the Shanghai Stock Exchange’s (SSE) Sci-Tech Innovation Board (STAR Market) into Stock Connect, effective from 1 February 2021. As previously agreed by HKEX, SSE and Shenzhen Stock Exchange (SZSE), STAR Market-listed shares that are constituent stocks of the SSE 180 Index and SSE 380 Index, or have corresponding H-shares listed in Hong Kong for A+H companies, will be eligible for Northbound trading under. Shanghai-Hong Kong Stock Connect. following the existing inclusion arrangements. Their corresponding H-shares will be included in Southbound trading of Stock Connect when the Northbound arrangements take effect.
FTSE Russell announced deletion of CNOOC (00883.HK) from global and China A50 indexes, effective 27 January, due to U.S. investment ban.
SINOPEC SSC (01033.HK)  Profit Warning expecting the net profit attributable to equity shareholders to approximate RMB80 million for the year ended 31 December 2020, representing a decrease of 91.2% over the corresponding period of the previous year.
CHINA RES BEER (00291.HK) Positive Profit Alert expecting the Group’s net profit for the year ended 31 December 2020 to significantly increase by not less than 50% as compared with that of the year ended 31 December 2019. The increase was mainly attributable to the decrease in compensation and settlement expenses related to capacity optimisation and organisational restructuring; and the increase in bottles usage income and profit on disposal of fixed assets in other income.
CSC (06066.HK) Positive Profit Alert expects net profit to increase by 72.85% yearly to around RMB9.509 billion for the year ended December 31, 2020. The estimated EPS equaled RMB1.2.
The PBoC has issued a deposit reservation management guidance on non-banking payment service providers, effective 1 March, and annulled the prior deposit reservation management guidance thereon. Under the new guidance, payment institutes shall cooperate only in compliance with relevant rules from the Chinese central bank. Meanwhile, the guidance stipulated that no inter-institute direct payment access shall be allowed and that such institutes shall not open payment accounts for each other or transfer deposit reservation for clients thereby.
CROCODILE (00122.HK)  announced that with effect from 22 January 2021, Deputy Chief Executive Officer Lam Wai Shan, Vanessa has been appointed as the Chairman and Chief Executive Officer.
Secretary for Food and Health Sophia Chan said cabin crews, originally entitled to exemption, will be subject to 14-day quarantine at designated hotels upon arrival in Hong Kong. CATHAY PAC AIR (00293.HK) replied that it is aware of the Government's intention to tighten isolation rules for aircrews. The carrier is asking the authority for details to make plans in advance.
CGN POWER (01816.HK) announced that from March 26, 2020 to January 22, 2021, its controlling shareholder CGN had increased shareholding by acquiring over 194 million H shares through the Shenzhen-Hong Kong Stock Connect system of the Shenzhen Stock Exchange, representing approximately 1.74% of the total number of issued H shares and approximately 0.38% of the total number of the issued shares.
China Banking and Insurance Regulatory Commission (CBIRC)'s financial management unit has met with Ant Group and some other internet platform firms over anti-monopoly issues, as Chinese media cited CBIRC vice chairman Liang Tao. The meeting would not affect the normal business development of these companies, he underscored.
CANSINOBIO-B (06185.HK) will supply 20 million doses of coronavirus vaccines to Pakistan, where phase III clinical trials have been completed locally, Bloomberg reported. The FT reported that the doses will be supplied free.
CCL last printed at 176.16, down 0.21% weekly. CCL Mass dipped 0.22% weekly to 178.61, CCL (small-to-medium flats) sagged 0.16% weekly to 176.19. The three key indices declined on a notably smaller magnitude for two weeks.  Under a livelier home market and rising second-hand deals, the research department of Centaline Property, foresaw a more significant  CCL rally in the February data.

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