Jan 6 Asian Macro Initial Thoughts Asia cautious ahead of PMI data due today


06 Jan

Asian Futures Nikkei Futures -28pts,  HK ADR’s +64pts and Australia trending lower in early trades.  Expect initial caution as Services and Composite PMI data out today.
US Futures opened slight lower ahead of the Georgia runoff election results Dow -20pts , S&P -0.1% and NDX up marginally

Work Bank expects the global economy will experience a subdued recovery this year from the devastating pandemic, it predicted Tuesday, but it warned that the near-term outlook is highly uncertain and growth could be imperiled if coronavirus infections and delays in the rollout of vaccines continue.

DOW +0.55%, NDX +0.95%, S&P +0.71%, Russel 2K +1.71% markets opened flat but worked better through the day helped by good ISM Manufacturing data giving investors encouragement about the recovery.  Concerns over the Georgia Senate run off vote capping the upside along with the rising number fo covid cases.
Macy’s +1.5% announced 45 more store closures as part of its 3 year closure plan.
Banks JPMorgan Chase +0.5%, Citigroup +2.6% and Wells Fargo +2.8%, AMEX +0.6%
Work from home names: 
Facebook +0.8%, Apple +1.2%, Amazon +1%, Netflix -0.4%,  Disney +0.4%, Zoom Video +0.2%, Alphabet +0.8% and Microsoft +0.1%,
Tech 
NXP +2.2%, Nvidia +2.2%, Micron +4.3%, AMD +0.5%, Skyworks +3.7%
Re-opening stocks  
Boeing +4.4%, Caterpillar +0.8%, Simon Property +0.4%, Kohl’s +1.8%, Nordstrom +3.8%, Gap +2.8%, United Airlines +4.3%, Carnival +1%, Wynn Resorts +3.1%, Chevron +2.7%, Exxon Mobil +4.8%,  
Lock down names 
Campbell Soup +0.8% General Mills +0.1%, JM Smucker +1.3%
DATA
Redbook +0.5% MoM vs +0.4% prior (+5.5% YoY vs +8.9% prior)
ISM New York Index Dec 61.3 vs 44.2 Nov (F/cast was 48.5)
ISM Manufacturing Data
New Orders Dec 67.9 vs 65.1 Nov revised (F/cast was 56.8)
Prices Dec 77.6 vs 65.4 Nov (F/cast was 61.1)
Employment Dec 51.5 vs 48.4 Nov (F/cast was 48)
PMI Dec 60.7 vs 57.5 Nov (F/cast was 56.4)
After market API Crude Oil Stock Changes -1.663m vs -4.785m (Consensus was -1.5m)
Due 8am HK time Dec Total Vehicle Sales (Nov was 15.55m)
USD was weaker vs Yen & unchanged vs Euro. Bitcoin +5.8% @ 34,277.75.
VIX -6% @ 25.34, US T10 @ 0.955% rising ahead of Georgia Senate run off voting results.
OIL Brent +4.76%, WTI +4.58% as OPEC+ rejects Russian proposal for increased production and Saudi announces cuts
Gold +0.36%, Silver +1.2%, Copper +2.6%
AHEAD 
MBA Mortgage Applications and 30 yr Mortgage Rate, Services and Composite PMI, ADP Employment Change, Factory Orders, EIA Oil Report, FOMC Minutes.

DAX -0.55%, CAC -0.44%, FTSE +0.61%  Markets opened lower but initially ticked higher.  UK then traded sideways in the green ahead of going into Tier 4 lockdown. DAX and CAC then traded sideways in just below flat but then from mid morning trended lower. Germany expected to announce extending its lockdown measures today too. The rising number of covid cases worrying investors as well as US Georgia Senate run-off election.  Petrochems leading on talks of a compromise between Saudi and Russia.  Utilities are the laggards.
NEXT +8.4% on a good Christmas trading update.
Aveva +7% on UBS upgrade to Buy.
DATA
EUROZONE 
Loans to Households Nov +3.1% YoY vs +3.2% Oct revised (F/cast was 3%)
Loans to Companies Nov +6.9% YoY vs +6.8% Oct (F/cast was +6.5%)
M3 Money Supply Nov 11% YoY vs 10.5% Oct (F/cast was 10.6% )
GERMANY 
Retail Sales Nov +5.6% YoY vs +8.6% Oct revised (F/cast was +4.5%)
Retail Sales Nov +1.9% MoM vs +2.6% Oct (F/cast was -2%)
Unemployment Rate Dec +6.1% vs 6.8% Nov (F/cast was +6.5%)
AHEAD
EUROZONE Services and Composite, PPI
GERMANY Services and Composite PMI, Inflation Rate.
FRANCE Inflation Rate, Consumer Confidence, Services and Composite PMI.
UK Services and Composite PMI, New Car Sales.

JAPAN Nikkei futures currently -28pts I would expect a slightly lower open, with caution ahead of the PMI data.  Yen strengthened overnight; currently 102.73
Data due Services and Composite PMI, Consumer Confidence.
Covid case hit a record Tokyo announced 1,278 new cases and the national total hit 4,913 on Tuesday with the government expected to make a decision on announcing a State of Emergency on Thursday.  But many are saying it will be too little too late.  Many expect if imposed it will mean trillions of yen lost in private consumption. -VE
Honda halts UK car output on Tuesday and Wednesday due to global supply delays -VE
Seibu Ilebukuro announced that customers will be able to purchase items from its store using a smartphone app from the the fall. Slight +VE
A bluefin tuna fetched 20.84 million yen on Tuesday at the New Year's auction at Tokyo's Toyosu fish market, a price far lower than in previous years as the impact of the coronavirus pandemic weighs on the restaurant industry. -VE
Mitsubishi Corp has agreed to partner with Israel’s Aleph Farms Ltd to lay the groundwork for bringing lab-grown beef to Japan, where demand for meat is growing.

SOUTH KOREA Expect markets to open higher with Tech still driving the market.
Data out
Foreign Exchange Reserves Dec $443.1b vs 436.38b Nov (F/cast was 444b)
KDCA confirmed 715 new covid cases -- 672 locally transmitted and 43 imported -- on Monday, down 313 from Sunday. The cumulative number of official cases is 64,979. In the last seven days, the number of new cases averaged 915.3 per day.
Rumors that the country’s Hanmi Pharmaceutical is being weighed as a potential contract manufacturer of the Moderna vaccine for COVID-19.  GC Pharma and LG Chem offer a “fill and finish service,” which would involve bringing in the Moderna vaccine after it has already been produced. Binex, a professional CMO company, has the facilities to produce vaccines, but could not say anything about the Moderna vaccine, citing the sensitivity of the issue and fluctuations in its stock price.
South Korea’s chip exports are expected to grow 10.2% and surpass $100 billion this year, which would be the nation’s second-best performance since 2018, according to the Trade Ministry on Tuesday. +VE
South Korea’s monetary policy chief on Tuesday called for the nation to brace for potential risks stemming from the financial authorities’ decision last year to funnel massive liquidity into the market and extend loan forbearance periods, due to the COVID-19 pandemic. Slight -VE
South Korean mobile carriers are launching cheap payment plans to woo more 5G subscribers amid accelerating user migration to their high-speed 5G networks. LG Uplus Corp. said Tuesday it will release a new monthly data plan, offering 6 gigabytes of data at 5G speeds for 47,000 won ($43), following rival carrier KT Corp., which also launched late last year a monthly 5G plan at 45,000 won for 5 gigabytes of data.  -VE for shareholders as it hits margins.
NCSoft and entertainment giant CJ ENM said Tuesday they will establish a new entertainment joint venture this year.  According to the memorandum of understanding signed Tuesday, the joint venture will combine NCSoft’s advanced information technology and CJ ENM’s expertise in the entertainment business to create new content. +VE
South Koreans’ spending on drinks and cigarettes reached a record high during the third quarter of last year, the Bank of Korea said Tuesday. Households spent 4.3 trillion won ($3.96 billion) on liquor and cigarettes between July and September – a 6.2 percent increase from the same period a year prior, data from the country’s central bank revealed. +VE Retail and Beverage names.
Korean Air Lines said Tuesday it will change its articles of association to help finance its planned acquisition of smaller rival Asiana Airlines Inc. It will hold an extraordinary shareholders' meeting today to amend its articles of association ahead of its 2.5 trillion-won ($2.3 billion) rights issue plan for March to sell more stocks aimed at funding the acquisition. BUT the National Pension Service said Tuesday it would vote against Korean Air’s plan to issue new common shares, which is deemed pivotal to the planned takeover of debt-ridden rival Asiana Airlines.  -VE

TAIWAN Expect market to open higher but having closed at 15,000 yesterday it may see some initial weakness. 
Data due after market Foreign Exchange Reserves
Taiwan manufacturing PMI last month climbed to a decade-high of 59.4 as firms reported a sharp increase in new business and output amid soaring input costs and worsening supply delays. +VE for sentiment.
TSMC is planning to set up a joint advanced IC packaging and testing plant in Japan at the invitation of the Japanese Ministry of Economy, Trade and Industry (METI), the Chinese-language United Daily News reported yesterday. +VE
Hon Hai Precision announced revenue of TWD713.78 billion for December 2020, up by 32.3% YoY.  Annual revenue totaled TWD5.36 trillion, up by 0.31% from the previous year.
Chunghwa Precision Test Technology yesterday said that it plans to spend NT$559 million (US$19.68 million) on acquiring land for a new fab, as it expands capacity to cope with growing demand for its vertical probe cards (VPCs). The investment is also part of the wafer probing services provider’s efforts to diversify into smart manufacturing, CHPT said in a statement, after its board of directors approved the plan.
Largan Precision yesterday reported that its revenue last month dropped 3.7% MoM, falling short of the company’s expectations.  It had expected revenue to be flat last month compared with November.  It attributed the lower revenue to weaker customer demand due to supply constraints of key components.  -VE cross read to Sunny Optical (2382 HK)
Employers are more optimistic about the economy’s prospects than in the past few months, and 55.6 percent are planning to give their employees pay raises in the first quarter, a survey released on Monday by online job bank yes123 found. +VE for sentiment.
Developers +VE as Taiwan’s housing prices might rise another 10% this year in locations with noticeable land supply and amid planned high-tech plants, as record-low interest rates would continue to motivate potential buyers, Cushman & Wakefield Taiwan said yesterday.
PLA warplanes made a record 380 incursions into Taiwan’s airspace in 2020, according to Taipei-based think tank.  Analysts say strategy is more about sending a message to the US and the world than an attempt to wear down Taiwanese military and public -VE

CHINA Expect market to open lower ahead of the Caixin data and on news that Hebei has entered wartime mode to contain the lates outbreak of covid. Shanghai closed at its highest level since 2008 on Tuesday.
Data due Caixin Services and Composite PMI.
China’s Hebei has entered “wartime mode”, official media reported on Tuesday, after the province surrounding capital Beijing saw its first locally transmitted COVID-19 cases in more than six months.  Hebei reported 19 local infections and 40 asymptomatic cases between Jan. 2 and Jan. 4, according to data from the Chinese health authorities. The last time the province recorded locally transmitted infections was in June 2020.
The head of the World Health Organization said on Tuesday he was “very disappointed” that China has still not authorised the entry of a team of international experts to examine the origins of the coronavirus.
The dollar fell against a basket of major currencies on Tuesday, on the heels of China’s decision to lift its official yuan exchange rate by its highest margin since it abandoned a dollar peg in 2005.  The currencies strength could be a slight -VE for exporters.
China’s scrap-steel imports ‘symbolic’ after two-year ban lifted, and will not reduce need for iron ore in steelmaking.  The ban was lifted at the start of January after it had been blocked since 2018 to prevent global dumping of low-grade scrap ‘waste’.Baowu Steel Group and Zhejiang Judong are reported to have agreed to deals last week to buy scrap steel from Japan, although at rates significantly above current market prices
Chinese Communist Party introduces new rules on what members can say as it ‘boosts internal democracy’  The revised rule book says cadres can make complaints about their superiors but are prohibited from airing them in public.  They are also banned from expressing opinions that are ‘not consistent’ with the decisions of the central leadership.

HONG KONG  ADR’s +64pts at  27,713 with just Telcos and some Financials in the red.
Data due pre market Dec PMI (Nov was 50.1 F/cast is 50)

SHORT SELLING Tuesday 13.2% vs 14.4% Monday 
Top Shorts: Country Garden (2007) 46%, Sands China (1928) 43%, Wharf REIC (1997) 43%, Anta Sports (2020) 39%, Henderson Land (12) 33%, BUD APAC (1876) 31%, AIA (1299) 30%, Galaxy Ent (27) 29%, Hengan (1044) 29%, Sinopec (386) 28%, NWD (17) 27%, Hang Lung Property (101) 27%, MTRC (66) 26%,  Hang Seng Bank (11) 25%, China Life (2628) 25%, Ping An (2318) 25%
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HK LAW Hong Kong's outgoing top judge made a plea today to maintain judicial independence as China state media and pro-Beijing figures demand judicial reforms in the city.  Hong Kong's chief justice Geoffrey Ma Tao-li said he did not object to a judicial reform but stressed that people must make a good case for such changes.  “It's not particularly satisfactory – there's a call for reform simply on the basis of a result that one doesn't like," the chief justice said. "It's certainly not a good starting point, or acceptable, to say, 'I want reforms to ensure that I will always get the result which I want.'"

WATCH
Xiaomi (1810) is expected to replace Huawei as the third largest smartphone producer in the world this year, behind Samsung and Apple, according to research company TrendForce. In 2020, global smartphone production dropped 11 percent year-over-year to 1.25 billion units. The top six smartphone brands in order of production volume were Samsung, Apple, Huawei, Xiaomi, OPPO and Vivo last year.
YIDU TECH (02158.HK) has attracted  approximately $176.4 billion margin subscription as at around 6 pm today, according to local brokers. Based on the fundraising amount of approximately $411 million for public offering, the stock was over-subscribed by around 428 times.
NONGFU SPRING (09633.HK)  was +6.5% further today to close at HK$64.55. Thanks to share upsurge, the company's chairman Zhong Shanshan had wealth of US$91.9 billion, with ranking jumping to the sixth on the World's Billionaires List of Forbes, crossing Warren Buffet and Oracle chairman Larry Ellison.
Spokesperson of the Chinese Ministry of Foreign Affairs, said the US crackdown on Chinese companies poses very limited direct impact on the related companies, but its action is eroding its own national interest and image while jeopardizing the global position of the US in capital market.  China hopes the US would respect rule of law and free market, and protect global financial market order and investors' legal rights, the Spokesperson added.
OPEC+ is studying three scenarios of the February oil production plan, namely an output chop of 500,000 barrels per day, a solid production, or an output boost of 500,000 bpd, Reuters citing filings.
CHINA HUARONG (02799.HK) ex-chairman Lai Xiaomin has been sentenced to death for accepting bribes, corruption and committing bigamy, reported People's Daily.   Lai will be deprived of political rights for the rest of his life, with all individual wealth confiscated.
EVERGRANDE (03333.HK)  announced that in 2020, the Group achieved contracted sales of properties of RMB723.25 billion, representing an increase of 20.3% from the same period last year and achieving the full year sale target by 111%. The Group’s contracted sales target for 2021 has been set at RMB750 billion and target of reducing interest-bearing indebtedness by a further RMB150 billion.
DONGFENG GROUP (00489.HK) announced that for 2020, the group's production and sales volume sagged 3.47% and 2.17% yearly to 2.8351 million units and 2.8683 million units.
BYD COMPANY (01211.HK) announced that the total sales volume of the Company for the month of December 2020 +30.44% yearly to 56,322 units. Among which, new energy vehicles recorded sales of 28,841 units, an increase of 1.2 times year-on-year.  For the full year of 2020, the total sales volume -7.46% yearly to 427,000 units.

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