Nov 17 Asian Macro Initial Thoughts ASIA to open higher US futures slightly higher


22 Nov

Asian Futures Nikkei Chicago Futures indicate +241pts,  HK ADR’s +174pts and Australia higher in early trades having been closed most of Monday due to a glitch.

US Futures opened slightly higher Dow, S&P +0.1% and NDX +0.6%

Covid. Interesting to note from Angus Geddes at Fat Prophets; that the Spanish flu in 1918 peaked in the autumn with a second wave, a similar pattern to the covid virus and then receded as quickly as it appeared. The Dow initially dropped when the Spanish flu first hit and then in the four years after rallied. He wonders if history will repeat itself.

DOW +1.6%, NDX +0.8%, S&P +1.16%, Russel 2K +2.37% DOW and S&P opened higher as the preliminary data from the Moderna +9.6% vaccine showed it to be 94% effective giving further encouragement that the virus can be treated; its vaccine cane stored at 2 - 8 degrees celsius. NDX opened flat. Markets then trended slightly higher and saw a rally into the close with DOW and S&P closing at new highs. Covid cases continues to log record highs and still overhang the market with a number fo States tightening social distancing restrictions.
Home Depot +0.8% has struck a deal to acquire its former subsidiary HD Supply for $9.1bn, increasing the US retailer’s presence in wholesale distribution 13 years after it disposed of the business. +VE Home Depot will report later today (Tuesday)
Casper Sleep -13.6% as Q3 results missed. JD.COM -7.4% despite Q3 beating on concerns about further China regulation and sanctions.
Walmart +1.3% on news it is selling down its stake in Seiyu in Japan reports Today (Tuesday)
Simon Property +5.7% on news it had the revised to deal to buy Taubman.
Banks JPMorgan Chase +2.8%, Citigroup +3.6% and Wells Fargo +3.5%, AMEX +3.2%
Work from home names: Facebook +0.7%, Apple +0.9%, Amazon +0.1%, Netflix -0.8%, Zoom Video -1.1%, Alphabet +0.1% and Microsoft +0.3%,
Nvidia +1.6%, Micron +6.8%, AMD +2.8%, Skyworks +1.4%
Re-opening stocks Boeing +8.2%, Caterpillar +0.9%, Kohl’s +7.8%, Nordstrom +10.9%, Gap +9.5%, United Airlines +5.2%, Carnival +9.7%, Wynn Resorts +2.8%, Chevron +7.1%, Exxon Mobil +5.8%,
Lock down names Campbell Soup +1.4% General Mills +0.4%, JM Smucker +0.9%
AFTER MARKET
TESLA +9.7% (was -0.1% in normal hours) on news its joining the S&P on 21 Dec 2020.
DATA
NY Empire State Manufacturing Index Nov 6.3 vs 10.5 Oct (F/cast was 15)
USD was stronger vs Yen & unch vs Euro. Bitcoin +5% @ 16,714.25 VIX -2.8% @ 22.45, US T10 @ 0.911%
OIL Brent +2.88%, WTI +3.39%
Gold +0.1%, Silver +0.36%, Copper +1.56%
AHEAD Retail Sales, Export & Import Prices, Redbook, Industrial Production, Manufacturing Production, Capacity Utilisation, Business Inventories, NAHB Housing Market Index, Foreign Bond Investment, Overall Net Capital Flows, Net Long Term TIC flows API Crude Oil Stock Change.
Speeches from Feds Bostic, Daly and Williams
Earnings: Walmart, Home Depot, Kohl’s, La-Z-Boy, Aramark

DAX +0.47%, CAC +1.7%, FTSE +1.66% Markets opened higher following Asia and were easing back in early trading but then rallied on the news that preliminary data for Moderna vaccine showed it was more than 94% effective. FTSE & CAC then traded sideways whilst the DAX trended lower into the close.
Spanish financial group BBVA traded +15% off initial highs on news it has agreed to sell its US business, BBVA USA Bancshares, to PNC Financial Services Group for $11.6 billion. Compatriot Banco de Sabadell +24%.
Travel and Leisure; IAG, Rolls Royce, Whitbread, InterContinental Hotels etc +VE on the vaccine news.
Commodities shares +VE as China Industrial Data that showed a faster than expected rise in factory output last month.
Vodafone +6.9% raised it’s full year guidance.
HelloFresh -4.6%, Ocado -0.4% (thanks to a late rally into the close) Just East Takeaway -3.3% as European investors rotate out of stay at home names.
DATA
GERMANY Bundesbank Monthly report.
AHEAD
EUROZONE No data due
GERMANY No data due
FRANCE No data due
UK No data due

JAPAN Chicago Futures 26,148 vs 25,907 Nikkei last close; Market to open +241pts with sentiment +VE on second virus vaccine.
Yen currently 104.58 Market continues to work higher, yesterday was lead by Marine transport, airlines and real estate. Yesterday’s gains were on an increase in volume of shares traded.
No data due
But Tokyo reported 180 new covid cases (vs 255 Sunday) with 923 nationwide. Sapporo residents asked to refrain from non-essential outings
Nissan Motor Co 7201.T plans to invest heavily in China's luxury auto segment, its chief operating officer told Reuters on Monday. Ashwani Gupta made the comment in an interview during the Reuters Auto Summit teleconference. He also said that while he was satisfied with the automaker’s business in the United States, it wasn’t enough. Slight +VE but its very competitive to break into.
International Olympic Committee chief Thomas Bach said Monday he is now "very, very confident" that spectators will be able to attend next year's Tokyo Olympics. The discovery of two vaccines make the event much more likely.
Panasonic continues to see interest after the management reshuffle announced Friday.

SOUTH KOREA Expect markets to open higher extending the nearly 3 year high on news of another covid vaccine and one that is easier to distribute. Monday saw high volumes with foreign buyers. The Won closed as its highest in 2 years.
No data due But Govt reported 223 new covid cases to Sunday midnight the 8th day of gains and highest since early Sept and warned of strengthening social distancing rules.
South Korea signing the Regional Comprehensive Economic Partnership is expected to benefit Korean companies, especially in steel, automobiles and electronics, through the elimination of tariffs across Asian countries. The pact will also help better protect Korean firms’ intellectual property rights in the region, experts said Monday.
Samsung Electronics Co. said Monday its research and development (R&D) spending for the first nine months of the year hit a record high of 15.89 trillion won ($14.3 billion) amid the novel coronavirus pandemic. It also launched a new monitor highlighting enhanced usability and connectivity amid the pandemic-driven stay-at-home trend. Samsung said its Smart Monitor is a "do-it-all screen" that meets consumers' needs in remote working, learning and at-home entertainment with better mobile and PC connectivity.
Amazon is partnering with Korean e-commerce platform 11st to avail purchase of its goods to Korean customers, 11st operator SK Telecom said Monday.
South Korea will have a mega carrier ranking as one of the world’s top 10 by fleet, following the country’s No. 1 carrier Korean Air’s decision to acquire its close rival Asiana Airlines on Monday. Korean Air and its holding company Hanjin KAL said it had decided to acquire Asiana Airlines, purchasing a 30.77 percent stake of Asiana Airlines by issuing new shares of 2.5 trillion won.
South Korea's Daewoo Shipbuilding & Marine Engineering Co. said Monday that its net losses narrowed in Q3 from a year earlier on the back of its strong operating profit.
LG Electronics said Monday it has ramped up the production of its organic light-emitting diode TVs in Mexico by more than 30% to respond to a surge in demand anticipated for the upcoming holidays.


TAIWAN Expect market to open higher in reaction to the Moderna vaccine news.
No data due
Taiwan will find its own way, despite not being a part of the Regional Comprehensive Economic Partnership (RCEP)
, Minister of Economic Affairs Wang Mei-hua said yesterday. Responding to media reports that Taiwan would be left “out in the cold” or “marginalized economically” after the signing of the RCEP, Wang said the effects of the deal would not be “overwhelming” or “immediate.”
“After going through the details it seems that the level of trade liberalization with the RCEP is relatively low,” Wang said. “We do not think it will have a large impact on Taiwanese businesses in the short term.”
Deputy Minister of Economic Affairs Chen Chern-chyi yesterday left for the US with a “small delegation” in preparation for Taiwan-US trade talks, the Ministry of Economic Affairs said.
Yulon Motor Co shares rallied 4% Monday on news that its subsidiary that distributes its own-brand Luxgen vehicles has started bankruptcy procedures in China, paving the way for its subsidiary Luxgen Motor Co to exit the world’s biggest auto market; where its sales have slumped. +VE
Cathay Life Insurance yesterday reported a recurring yield of 3.29% as of the end of September, down from 3.8% a year earlier , as it takes a more cautious investment strategy amid the COVID-19 pandemic. Compares with yields of between 3.47 and 3.8% during the January-to-September period over the past four years.
China Steel Corp yesterday posted a pretax profit of NT$1.35 billion for last month, +205% MoM from NT$443.75 million, as revenue hit the second-highest monthly level this year. Operating profit was NT$1.4 billion, +281% MoM from NT$367.02 million, CSC said in a statement. Consolidated revenue increased 4% to NT$27.09 billion from NT$26.13 billion in September, it said. The company attributed the growth to a recovery in orders, while shipments were 889,930 tonnes, up from 812,564 tonnes the previous month. CSC posted a pretax loss of NT$2.14 billion for the first 10 months of this year. +VE

CHINA Expect market to open higher but concerns remain over tougher regulation of E Commerce and the threat of more US sanctions from Trump.
No data due
China declares early victory in 2020 job creation goal, but questions linger over data
as the unemployment data it does not include migrant workers. Others expressed concerns over Monday’s data saying that the the economic recovery was being driven by exports and government investment but domestic consumption and retail see continued weakness as citizens are concerned about the outlook for wages and employment.
Didi Chuxing is to begin rolling out an electric vehicle developed with BYD Co to its drivers, aiming to reduce costs in the world’s largest ride-hailing network. The D1, the first model to have been built with ride-hailing in mind, is to ship to the start-up’s leasing partners across several Chinese cities, Didi Chuxing said.
Henry Paulson calls for ’targeted reciprocity’ in US China trade; saying tariffs should only be lifted if the US is getting something in return.
Reuters reports China state enterprises facing debt problems mentioning; Yongcheng Coal & Electricity, Huachen Automotive Group (parent Brilliance China) and Tsinghua Unigroup (digital infrastructure)


HONG KONG ADR’s +175pts to open at 26,556 most ADR’s higher but weakness still in the E Commerce names on concerns of more government regulation. Having rallied 225pts Monday upside further upside may be limited
Data due after market 
Unemployment.

SHORT SELLING Monday 17% vs 15.3% Friday 
Top Shorts Ping An (2318) 42%, Country Garden (2007) 40%, Swire Pac A (19) 40%, BoC (3988) 38%, CCB (939) 38%, BankComm (3328) 38%, Mengniu Dairy (2319) 34%, CITIC (267) 33%, CNOOC (883) 30%, BoC HK (2388) 29%, ICBC (1398) 29%, Hang Seng Bank (11) 27%, Galaxy Ent (27) 26%, AAC Tech (2018) 26%, Henderson Land (12) 25%.

BUYBACKS/INSIDER DEALING
Li Ka-shing and Victor T K Li, through Li Ka Shing Foundation Limited, acquired a total of 410,000 shares in CK ASSET 
(01113.HK) at the average price of HK$40.3542, HK$42.3600, HK$41.8909 and HK$41.2700 per share on 10 November, 11 November, 12 November and 13 November 2020 respectively.  As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK Asset increased from 35.74% to 35.75%, and increased from 35.81% to 35.82%, respectively.

WATCH
JD-SW (09618.HK) announced the 3Q20 results. Net income was RMB7.6 billion, compared to RMB600 million
for the same period last year. Non-GAAP net income increased by 80.1% for the same period last year to RMB5.6 billion, above the street consensus of RMB4.22 billion. Non-GAAP income from operations was RMB5.3 billion,+76.7% yearly, with a non-GAAP operating margin of 3.0%, as compared to 2.2% over a year ago. Stock closed lower in US trading
Macau Chief Executive Ho Iat Seng, delivering his Policy Address for 2021, stated that the backbone industry of the city - gaming, should be maintained in shape, stressing economic diversification would not come even after gaming is knocked off, TMD (Radio Macau) reported. The CE opined that the gaming industry should be kept on healthy growth, while also expressing hope that other functions could be added on top of the basic structure. As to the rebidding of casino licenses, Ho said there is prevailing mechanism to address the issue, refusing to respond to the speculative question.
HKTB: HK Oct Preliminary Visitor Arrivals -99.8% YoY to 7,800 Actively gearing up the "Air Travel Bubble", Hong Kong will shower the first batch of Singaporean travelers arriving on Sunday (22nd) with gifts and over a thousand promotions.
HKGB IBOND 2311 (04239.HK) closed at $103.25 in gray market, up $3.25 or 3.25% against the issue price of $100, according to Phillip Securities. A book gain of $325 was reported per board lot. The Government announced that a total of 456,400 valid iBond applications were received. The principal amount of the iBond applied totaled $38.362 billion.
CATHAY PAC AIR (00293.HK)'s HK Express is going to tell its staff to sign new contracts, whereby pilots will have their pay cut by up to 40% and non-flying workers have to take 20 days of unpaid leave during the first half of 2021, after the flagship airline group had earlier winded up Cathay Dragon and slashed over 5,000 positions, South China Morning Post reported. At this moment, the budget carrier has around 200 pilots, and more than 1,000 employees in aggregate.

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