Jan 5 Asian Macro Initial Thoughts. Asia to open flat/lower US futures flat

05 Jan

Asian Futures Nikkei Futures +35 pts,  HK ADR’s -377pts and Australia lower in early trades.  
US Futures opened flat Dow -10pts, S&P and NDX flat.

DOW -1.25%, NDX -1.47%, S&P -1.48%, Russel 2K -1.47% Stocks opened higher but then sold down until mid day and then worked better in the PM.  Seemingly triggered by UK announcing going the Tier 4 lock down and the global covid numbers and as I wrote earlier; some caution ahead of the Georgia Senate runoff election on Tuesday that will determine the balance on power in the Senate; concerns are that the Democrats win which would raise concerns about corporate taxes and other possible anti business measures being push through the Sentate. Also concerns over Trump’s call to supporters to march in Washington on Tuesday and Wednesday as Congress certifies the electoral college results.  Adding to the worries was the weakness in interest rate sensitive Property names which lead the declines on the S&P as the US 10-year break-even rate, which is derived from prices of US inflation-protected government securities, breached 2% on Monday for the first time since late-2018.
Tesla +3.4% after good production numbers beating expectations although short of it own forecast
Chinese Teleco’s weak ahead of delisting.
Haven, the Amazon-Berkshire-JPMorgan venture to disrupt healthcare, is disbanding after 3 years.
Banks JPMorgan Chase -0.9%, Citigroup -2.5% and Wells Fargo +1.6%, AMEX -2.5%
Work from home names: 
Facebook -1.5%, Apple -2.5%, Amazon -2.2%, Netflix -3.3%,  Disney -1.9%, Zoom Video +6.7%, Alphabet +1.5% and Microsoft -2.1%,
NXP +1.9%, Nvidia +0.5%, Micron -1.5%, AMD +0.6%, Skyworks -1.4%
Re-opening stocks  
Boeing -5.3% broker downgrade, Caterpillar +0.1%, Simon Property -2.9%, Kohl’s -4.7%, Nordstrom -2.8%, Gap -4.8%, United Airlines -3.8%, Carnival -5.9%, Wynn Resorts -5.3%, Chevron +0.3%, Exxon Mobil +0.6%,  
Lock down names 
Campbell Soup +0.4% General Mills +0.3%, JM Smucker unch
Manufacturing PMI Dec 57.1 vs 56.7 Nov (F/cast was 56.5)
Construction Spending Nov +0.9% MoM vs +1.6% Oct revised (F/cast was +0.7%)
Total Vehicle Sales (due 8am HK time) Nov was 15.55m
USD was slightly weaker vs Yen & flat vs Euro. Bitcoin -4.3% @ 31,365. VIX +19% @ 26.97, US T10 @ 0.918%
OIL Brent -2.16%, WTI -2.41% after the OPEC + meeting to discuss Feb output production levels delays decision.
Gold +2.7%, Silver +3.68%, Copper +1.28%
AHEAD Redbook, ISM New York, ISM Manufacturing (New Orders, Prices, Employment, PMI), API Crude Oil Stock Changes.

DAX +0.06%, CAC +0.68%, FTSE +1.72%  Markets opened higher after a positive lead from the Asia and despite the first day of Brexit and the expectation of further lockdowns across Europe as covid cases spike.  FTSE opened higher an rallied. DAX opened higher sold down but rebounded and trading sideways.  CAC 40 -opened higher dipped but rebounded and move higher before trading sideways. All markets then sold down into the close as US markets sold off after a higher open.  Basic Resources the leader but most sectors in the green.
UK announced Tier 4 covid restrictions when PM Johnson addressed the nation at 8pm London time (after market). Despite covid vaccinations being rolled out.
Ladbrokes owner Entain +25% after the betting and gaming company confirmed a takeover offer from MGM Resorts International.
The shareholders of France’s PSA Group +1.7% and US-Italian rival Fiat Chrysler Automobiles NV +1.5% were yesterday expected to approve their merger, creating the world’s fourth-biggest automaker by volume, Stellantis. The outcome of the vote by PSA and Fiat shareholders was seen as a foregone conclusion, coming two weeks after the European Commission gave conditional approval to the mega merger announced in late 2019.
Manufacturing PMI Dec 55.2 vs 53.8 Nov (F/cast was 55.5)
Manufacturing PMI Dec 58.3 vs 57.8 Nov (F/cast was 58.6)
Manufacturing PMI Dec 51.1 vs 49.6Nov (F/cast was 51.1)
New Car Registrations Dec -11.8% vs -27 Nov (F/cast was -12.8%)
BoE Consumer Credit Nov GBP -1.539b vs -0.698b Oct (F/cast was -1.4b)
Mortgage Approvals Nov 105k vs 98.3k Oct revised (F/cast was 80.1k)
Mortgage Lending Nov GBP 5.7b vs 4.5b Oct revised (F/cast was 4.0b)
Manufacturing PMI Dec 57.5 vs 55.6 Nov (F/cast was 57.3)
Net Lending to individuals Nov GBP 4.1b MoM vs 3.8b Oct revised (F/cast was 3.6b)
EUROZONE Loans to Households and Companies, M3 Money Supply
GERMANY Retail Sales, Unemployment
FRANCE No data due
UK New Car Sales

JAPAN Nikkei Futures to open flat +2pts and currently +35pts, so a flat open.  Yen currently 103.09, although it did drop the 103 intraday Monday; -VE for Exporters.
No data due.
Tokyo said Monday that there were 884 new covid cases (with 3,295 nationally) and added that there were 108 seriously ill patients, up by seven from the previous day and the highest ever.
Government said on Monday it was considering declaring a state of emergency in and around Tokyo as coronavirus cases climb; possibly from Thursday. Casting fresh doubt over whether it can push ahead with the summer Olympics and keep economic damage to a minimum. Retail expected to be hurt especially.  It is also likely to hurt PM Suga’s ratings too.
Tokyo Metropolitan Government on Monday asked residents to refrain from non-urgent, non-essential outings after 8 p.m. as the coronavirus infection rate continues to grow in the Japanese capital. The municipal government said restaurants would have to close by 8 p.m. from Friday until at least the end of the month.
Kirin Holdings will invest $30 million in New Delhi-based B9 Beverages, the companies said on Monday, as it seeks to secure a spot in India's growing craft beer market amid falling sales at home.

SOUTH KOREA Expect markets to open lower following the US having closed at new highs on Monday. Tech names likely to outperform.
No data due
Govt on Monday announced 1,020 new COVID-19 cases reported the previous day -- 985 locally transmitted and 35 imported from overseas (vs 657 Sunday and 824 cases Saturday). -VE for sentiment
Samsung Electronics will introduce its new flagship smartphone Galaxy S21 on Jan. 15, the company announced Monday.  The first launch from the global smartphone giant this year, the Galaxy S21 series comprises a 6.2-inch S21, 6.7-inch S21 Plus and 6.8-inch S21 Ultra, which have been drawing expectations for their upgraded specs and designs.
Auto Makers  Dec sales -5% YoY as the COVID-19 pandemic continued to weigh on demand, industry data showed Monday. The five carmakers: Hyundai Motor, Kia Motors, GM Korea, Renault Samsung Motors and SsangYong Motor, sold a combined 658,550 vehicles in December, vs 694,988 units a year ago, according to data from the companies. Slight -VE
Hyundai Motor Co and affiliate Kia Motors Corp on Monday forecast combined global vehicle sales will rise 11.5% in 2021 after sliding for two consecutive years. Their target of 7.08 million vehicles comes after the coronavirus pandemic sent sales last year tumbling 12% to a decade low of 6.35 million vehicles. That result is also more than 20% off a peak reached in 2015. While the automakers have missed their sales predictions for the past six years, analysts described this year’s target as realistic. Shares in Hyundai Motor also finished 8% higher on Monday, bolstered by investor hopes for strong electric car sales this year.
Hyundai Motor said Monday it has selected Samsung SDI as one of the final candidates to supply batteries for its electric vehicles to be rolled out in 2023.
South Korea aims to cut some 30% of carbon emissions from railway travel by replacing all diesel passenger locomotives with a new bullet train by 2029, President Moon Jae-in said on Monday.
Korea Western Power said Monday it will invest 250 billion won ($231.3 million) to construct three fuel cell-based electricity generation facilities.
Builders' business sentiment December 84.6 vs 85.3 Nov a poll by the Construction and Economy Research Institute of Korea showed Monday Slight -VE but the sector has been under pressure as the Govt tried to control price rises.
Iran’s Revolutionary Guards Corps seized a South Korean-flagged tanker in Gulf waters and detained its crew, Iranian media said on Monday, amid tensions between Tehran and Seoul over Iranian funds frozen in South Korean banks due to U.S. sanctions.
Hyundai Heavy Industries Holdings Co. (HHIH) will be able to complete the acquisition of smaller local rival Daewoo Shipbuilding & Marine Engineering Co. (DSME) within the first half of this year, the company's chairman said Monday.

TAIWAN Expect market to open flat with Tech names continuing to see interest but old economy names and some exporters under pressure.
No data due.
Taiwan needs more high-end companies than just Taiwan Semiconductor Manufacturing Co to remain competitive, but it must also tackle its low birthrate, Terry Gou, founder of Apple Inc supplier Hon Hai Precision Industry Co, said yesterday. Speaking at a ceremony to mark the founding of the Hon Hai Research Institute, Gou said he hoped that his company, also known as Foxconn Technology Group would one day be on par with the TSMC, the world’s largest contract chipmaker.  TSMC has been dubbed by foreign experts as Taiwan’s “silicon shield” and one of the reasons why the West needs to help defend the country in the event of a conflict with China.
New vehicle sales last +4% pa to the highest in 15 years, thanks to strong demand for new models ahead of the expiration of government tax incentives, data compiled by U-Car.com showed yesterday.  +VE Yulon, Hotai Motor and Yulon Nissan Motor, Honda Taiwan, Ford Lio Ho Motor and China Motor Corp.
Continental Development Corp yesterday started selling small apartments in the heart of San Francisco, California, as the Taipei-based company seeks to expand at home and abroad. +VE
Epistar Corp (LED epitaxial wafers and chips), yesterday said its board of directors has approved a plan to book asset impairment of about NT$3.96 billion (US$139.3 million), before the formation of a holding company with Lextar Electronics Corp tomorrow. The asset impairment would have no significant effect on its operations and cash position, Epistar said. The company’s balance sheet is healthy, with cash and cash equivalents of NT$6.51 billion, and its debt ratio was 26.3 percent at the end of September, a regulatory filing showed.

CHINA Expect market to open lower following the US with Exporters under pressure.  Investors still cautious about the potential for more -VE action from Trump.  Exporters also under pressure as the RMB continues to rise vs US dollar; it has now erased all the losses from when the US/China trade war started.
No data due
Super spreaders of the coronavirus have emerged in Shenyang and Dalian, experts said, warning the public to remain alert,the state media reported.  Among the 41 "medium-risk areas," there are 13 in Shenyang and 16 in Dalian, two key cities in Northeastern Liaoning province, according to health authorities on Sunday.
China-EU investment pact is signed but not yet a done deal, analysts warn. There are still big uncertainties for Chinese investors, ‘from security reviews to the departure of Angela Merkel’.  Promised market access for European firms is not guaranteed, Berlin think tank chief says.  Comes as Biden’s team says its wants to end Trump’s multi-front Trade disputes; settle differences with EU and then take on China. -VE for China
Advaccine Biopharmaceuticals Suzhou Co Ltd will manufacture and sell Inovio Pharmaceuticals Inc’s COVID-19 vaccine candidate in China, the companies said on Monday. +VE
R&F pledges stakes with US$10 billion in assets under Guangzhou authority’s ward to avoid falling foul of ‘three red lines’ on debt.  It  pledged shares in three companies with US$10 billion in combined assets to state-owned Guangzhou City Construction Investment Group, Fang.com reported.  The pledges comprise 25% of Sheungjin Real Estate Development, which owns the six-year-old office project Yingkai Square in Tianhe district; 50% of Guangzhou Fujing Jishan Real Estate Development with a 20.6 billion yuan (US$3.18 billion) project at Jishan Village in Tianhe, and 100% of Tianli Construction.  Overall likely to be +VE for the country.
Revitalising China’s rural regions is Xi Jinping’s next priority; a widening urban-rural divide is not helping the Chinese dream of national rejuvenation.  With Beijing having declared victory in its battle of ending extreme poverty, Xi is now replacing it with a grander project of “comprehensive rural revitalisation”.
Former head of China’s aircraft carrier programme expelled from Communist Party over corruption claims.  Hu Wenming, former chairman of the China Shipbuilding Industry Corporation, is accused of taking bribes and abusing his positio.  Investigation into Hu began in May after a manager at the corporation, who was suspected of passing information to the US, was jailed.
Chinese authorities may strip two Chinese citizens’ lawyers of their practicing license following their involvement in the politically sensitive case of the “Hong Kong 12.”  It will raise further international concerns about human rights abuses in China.
FT article 'PBoC faces tricky balance to support liquidity as interbank rates stay elevated’ Looks at the issues around returning the system to more ’normal’ conditions.

HONG KONG  ADR’s -377pts to open at 27,095
No data due but after market Monday 
Retail Sales Nov -4.7% vs -9.2% Oct revised (F/cast was -9%)
The smallest decline since May of 2019, primarily due to +22.3% in sales of consumer durable goods. Still, it is the 22nd straight month of falling retail sales as first social unrest and then the coronavirus pandemic kept tourists away. From January to November, retail sales -26.6% . Outlook poor with no inbound tourism remains and the fourth wave of the local epidemic impacting since November.
Hong Kong Retail Management Association (HKRMA), said the overall December's retail performance was not up to expectation owing to the gathering ban tightening in early December 2020, despite traditional peak season for the month. HKRMA's members are under pressure now, she said. 44% of interviewed members voiced that they will shut down their business to stop loss even with effective leasing contracts. The Chairman forecast there will be 60% members considering shutdown upon the end of leases in 1Q21. -VE PROPERTY; especially single unit owners.
SHORT SELLING Monday 14.4% vs 14.9% Thursday 
Top Shorts: Country Garden (2007) 40%, BUD APAC (1876) 36%, Bank of China (3988) 36%, Wharf REIC (1997) 35%, Ping An (2318) 31%, Hang Kung Ppty (101) 31%, Anta Sports (2020) 30%, Mengniu Dairy (2319) 29%, Henderson Land (12) 25%, Galaxy Ent (27) 25%, Hang Seng Bank (11) 25%, Wuxi Bio (2269) 25%
Wuxi Biologics (Cayman) (2269), WuXi Biologics Holdings controlling shareholder placed 82 million shares to cash out HK$7.79 billion to HK$7.954 billion, Bloomberg reported. The share placement price was between HK$95 and HK$97, a discount of 6.01 percent to 7.95 percent compared to the Monday's closed price of HK$103.2.
CK Asset (1113) expects to launch sales of The first phase of 21 Borrett Road which offers 115 units measuring between 2,075 square feet to 3,378 sq ft.  The developer had delayed sales in August 2019 amid social unrest.
Nan Fung Group has won pre-sale consent for LP10 at Lohas Park, and expects to release the first price list for the project this month.
YIDU TECH (02158.HK) has traced over $136.3 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 330 times.  YIDU TECH, to be listed on 15 January, had started IPO from last Thursday through 7 January. Entry fee is $2,656.5 per board lot of 100 shares. It has eight cornerstone investors, including TENCENT (00700.HK)
YTO EXP INTL (06123.HK) POSITIVE PROFIT ALERT  The net profit of the Group for the year ending 31 December 2020 is expected to increase by not less than 600% as compared to the net profit for the corresponding year in 2019.
NONGFU SPRING (09633.HK) +10.38% surge at close to HK$60.6, hitting a new high since debut. The total turnover of the stock was HK$774 million, shoring up the market cap to HK$305.101 billion.  Chairman Zhong Shanshan had a worth of US$86.5 billion, up 10.07%, ranking the eighth on Global Forbes Billionaire, only a notch lower than Warren Buffet, according to Forbes' real-time billionaire list.
KWG GROUP (01813.HK)  announced that for December 2020, the pre-sales value of the Group amounted to RMB12.897 billion, +40.2% YoY.
Foxconn is looking at investing US$200 million in Byton, a Chinese EV startup, in a bid to help the mass production of the latter's M-Byte car model in 1Q22, Bloomberg cited people with the knowledge of the matter.  Both parties are now at negotiation stage. Rumor also said Foxconn is also in talks with other Chinese EV makers for cooperation.
Spot USD/CNY closed at 6.4628, up 770 bps, notching an over-30-month high. USD/CNH also crossed 6.45 today, also logging an over-30-month high.  As at 16:46, USD/CNY surged 732 bps in the night session. USD/CNH stood at 6.4444, up 544 bps.
ALI HEALTH (00241.HK) will add on-site nucleic acid testing (NAT) services on top of the online reservation services for coronavirus testing, jointly with professional institutions, according to Chinese media.  At the initial stage, the services will cover nine Chinese cities, namely Beijing, Shanghai, Tianjin, Nanjing, Hangzhou, Chengdu, Shijiazhuang, Baoding and Yiwu.
Kevin Yeung: Halts Face-to-face Classes in Kindergartens, Primary & Secondary Schools Till CNY Holiday.  But Schools May Arrange 1/6 Pupils to Attend Half-day Face-to-face Class/ Exam
Sophia Chan said administration Unlikely to Relax Social Distancing before Chinese New Yr; Although the recent number of COVID-19 diagnoses and real-time reproduction rate ebbed, the downfall came slower than that in the last spike of plague. Hence, the government will put the nighttime dine-in service ban and two-people gathering ban etc. on hold for two more weeks till 20 January.  She believed it is unlikely for the authority to relax the prevailing social distancing before Chinese New Year, warning the measures may get sourer if the epidemic bounces back or deteriorates.

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