Nov 30 Asian Macro Initial Thoughts Asia opening mainly higher, US Futures +VE


02 Dec

Asian Futures Nikkei Futures +190pts,  HK ADR’s +40pts and Australia trading higher in early trades.   OIL weak as OPEC+ fails to reach agreement on extending production cuts;  S Korea pre market data weak -VE for sentiment.  China PMI data pre market will influence the market direction.

US Futures opened Dow +64pts, S&P +0.3% and NDX +0.7%. US seeing a surge in new covid cases after Thanksgiving

OVERVIEW
End of month window dressing and re-positioning for year end and I think 2021. Concerns remains over Trump’s exit strategy. Earning season over so expect covid and vaccine news to have more sway on the markets. Lots of countries reporting PMI data this week but the focus is likely to be the US Non Farm Payrolls on Friday and Powell’s testimony.

JAPAN Nikkei Futures indicate 26,820 (+190pts) vs 26,645 Fridays close. (CME Futures are 26,785) Yen currently 104.03 Pre market data will influence the market direction.
Data due
Pre Market Retail Sales and Industrial Production, later Housing Starts and Construction Orders.
Tokyo reported 418 new covid cases Sunday  (vs 561 Saturday (a new high) and 539 Friday), Nation-wide the total was 2,052; prompting calls for more cities to be excluded from the “Go Travel Campaign’. -VE Travel and Leisure
PM Suga is likely to push back an election for the lower house of parliament to some time after next summer as the country tackles a third wave of COVID-19 infections, the Nikkei reported on Friday.
AUTO’s +VE as Total global output by eight major Japanese automakers rose 2.7% YoY to 2.44 million vehicles in October,
The LDP Japan's ruling party will call on the government to promote environmental investment with a major decade-long spending programme for the country. As well as calling for deregulation and tax breaks, the proposal also urges the government to expand or create new state-backed loan and loan guarantee schemes to support firms hit by the COVID-19 pandemic. +VE Alternative Energy Plays and Airlines etc. But worth noting that Sony has warned about moving production out of Japan unless some renewable energy rules are relaxed. See FT Weekend Thoughts.
Mitsui Fudosan Co said on Friday it would pay $1.2 billion to buy ballpark operator Tokyo Dome Corp, a white-knight bid likely to help fend off prominent activist fund Oasis Management.
Blackstone and Chinese online retailer JD.com are among more than 10 parties to bid for CMC Holdings, the sole distributor of FANCL's skincare products in Asia outside Japan, people with direct knowledge of the matter said.
ANA Holdings said on Friday it will issue new shares to raise $3.2 billion, much of which will be used to fund its orders of fuel-efficient Boeing 787 Dreamliner jets. It also proposes to allow 8,000 flight attendants to live outside urban areas and find side jobs.

SOUTH KOREA Futures 352.65 indicate a slightly higher open; having closed Friday at an all time high. The KRW hit a 29 month high vs USD and continues to strengthen. Foreigners and Retail were net buyers. Pre market data missed weekend covid cases will be key to whether the rally continues.
Data out

Construction Output Oct -8.9% YoY vs 6.3% Sept (F/cast was +2.5%)
Manufacturing Production Oct -2.2YoY vs +8.3% Sept (F/cast was +7.5%)
Industrial Production Oct -2.2% YoY vs 8% Sept (F/cast was -2.8%)
Industrial Production Oct -1.2% MoM vs +5.5% Sept revised (F/cast was -1.2%)
Retail Sales Oct -0.2% YoY vs +4.4% Sept (F/cast was +3.5%)
Retail Sales Oct -0.9% MoM vs +1.7% Sept (F/cast was +1.1%)
Asymptomatic COVID-19 patients are driving a surge in new cases; frustrating efforts to control transmission. Government reported 450 new cases to midnight Saturday the third day of over 500; a level unseen in nearly nine months. Prompting the Govt to ban on year-end parties and some music lessons on Sunday and said public saunas and some cafes must also close. But the Govt has decided to stay at the currently level of social distancing.
S Korea is also fighting cases of bird flu and African Swine Fever. -VE sentiment
SK Hynix plant in China halted operations after a worker was found to have asymptomatic covid. -VE
The intelligence agency foiled North Korean attempts to hack into South Korean companies developing coronavirus vaccines, lawmakers said on Friday. +VE
Hyundai Motor Group said Sunday that it agreed to work with Naver to cooperate in three business areas: 1. media and platform content, 2. new mobility services and 3. new business models aiming to build relationships with small and midsized enterprises.
Hyundai and Kia must pay $137 million in fines and safety improvements because they moved too slowly to recall over 1 million vehicles with engines that can fail. The US National Highway Traffic Safety Administration announced the penalties on Friday. They resolve a three-year government probe into the companies' behavior involving recalls of multiple models dating to the 2011 model year. -VE
Renault Samsung Motors, the South Korean unit of Renault S.A., on Friday announced plans to halt operations at its Busan factory for four days next month in response to poor sales due to covid and a lack of new models -VE
Shinsegae Property, the real estate development company owned by Shinsegae Group, announced Friday that the company has opened official online stores for its shopping mall brand Starfield on both the group and Naver‘s online shopping platforms. +VE
SK Telecom said Friday it will merge its security subsidiaries by the end of the first quarter of next year, in its latest move to boost business synergy. +VE
LG Energy Solution, SK Innovation Rumours that the ITC suit will be delayed a third time. -VE

TAIWAN Expect market to open higher after good GDP Growth data after market Friday.
No Data due but after market Friday

GDP Growth Rate Q3 +3.92% YoY vs -0.58% Q2 (F/cast was +3.33%)
The government’s business climate monitor last month flashed “green” for the third consecutive month, as all aspects of the Taiwanese economy improved, the National Development Council (NDC) said Friday. +VE
The European Parliament this week passed resolutions that support Taiwan’s bid to participate in the WHO and its intention to negotiate a trade pact with Taiwan.  +VE for sentiment although likely to annoy China.
Global Wafers reported to buy Siltronics +VE
Grape King Bio Ltd’s board of directors on Friday approved a private placement from Uni-President Enterprises Corp, giving it an 8% stake in the nutritional supplement firm. The deal is expected to further bolster their collaboration in the food and beverage, and health and wellness sectors, Grape King said. +VE
Genius Electronic Optical which supplies camera lenses for Apple Inc’s iPhones, expects “stronger demand” for its high-end camera products for the current quarter and next quarter on an annual basis. “In terms of demand, we’re seeing there’s a chance for the fourth quarter of this year and the first quarter of next year to outperform on an annual basis,” Genius Electronic Optical chairman Jones Chen told investors on a conference call. “The demand for high-end lenses is still very high.”
China Development Financial Holding Corp plans to acquire more of China Life Insurance Co via a public tender of NT$23.6 per share, which would boost its stake in the life insurer to 55.95 percent, it said yesterday. The per-share offer price would represent a premium of 17.2 percent compared with China Life’s average closing price of NT$20.14 over the past 20 days, he said, adding that the offer was based on an assessment by PricewaterhouseCoopers Taiwan.
CPC Corp, Taiwan and Formosa Petrochemical Corp yesterday announced that they would increase their gasoline and diesel prices by NT$0.2 per liter, effective today.

CHINA Expect market to open to be influenced by the PMI data due out pre market f/cast is to have eased slightly.
Data due 
Manufacturing PMI Nov (Oct was 51.4 and F/cat is 51) and Non Manufacturing PMI (Oct was 56.2 and F/cast was 55.7)
Sentiment remains cautious on the threat of more sanctions from Trump.
Media reports of more covid outbreaks in China -VE for sentiment with 11 new covid cases on Sunday vs 6 on Saturday. All new cases were said to be imported. It also reported 10 new asymptomatic cases
The European Union is seeking to forge a new alliance with the United States to bury the tensions of the Trump era and meet the challenges posed by China, the Financial Times reported on Sunday, citing a draft plan. The plan proposes rebuilding ties with common fronts on issues from digital regulation to tackling the COVID-19 pandemic, the FT said.
Chinese authorities said on Friday they were set to charge 12 people from Hong Kong with border violations after they were detained in China more than three months ago while trying to flee from the city by speedboat.
Tensions with Australia -VE for sentiment with the imposition of tariffs on Australian Wine. The effect embargo on other Australian products also likely to make investors wary. Australia has said it will seek WTO action over the current wine tariffs
How parent of BMW's China partner drove to the brink of bankruptcy. Reuters article; interesting read about poor management. Key will be investors doing better diligence on Chinese management as the Chinese bond markets are re-priced.
https://www.reuters.com/article/us-china-debt-huachen-insight/how-parent-of-bmws-china-partner-drove-to-the-brink-of-bankruptcy-idUSKBN2870CB

HONG KONG ADR’s +40pts to open at 26,934 Expect Property to be weak as covid concerns hurt the sector.
No data due 
but on Sunday Govt reported 114 new covid cases in HK and the Govt is considering increasing the mandatory fine for not wearing a mask. Saturday saw 84 new cases.

SHORT SELLING Friday 20.5% vs 22.1% Thursday
Top Shorts 
Ping An (2318) 58%, Swire Pac (19) 51%, Hengan (1044) 45%, Galaxy Ent (27) 42%, Petrochina (857) 40%, Bank of China (3988) 40%, Wharf REIC (1997) 40%, CLP (2) 38%, MTRC (66) 35%, HSBC (5) 33%, Country Garden (2007) 32%, Sinopec (386) 29%, Hong Lung Property (101) 27%, Shenzhou Int 27%.

National Security Law. Carrie Lam says she receives her salary in cash as she has no bank account since being sanctioned by the US

WATCH
HSBC (5) reportedly considering exiting from the US retail banking; slight +VE
CHINA GAS HOLD (00384.HK) Chairman, Managing Director and President, revealed at the results conference that the group still managed to manifest a total gas sales of 12.83 billion cubic meters 
(+8.4% YoY) in 1HFY2020/21 in spite of pandemic. For full FY2020/21, the company was confident of meeting the 15% growth target in gas sales given traditional peak season for gas supply. While the group has recently been the cornerstone investor of EVERG SERVICES (06666.HK)’s. IPO, Liu said it has also stroke a comprehensive strategic cooperation with Evergrande, under which the group will provide gas services to Evergrande's property projects etc.. The Chairman envisaged the cooperation with the bellwether of Chinese property industry to shore up the business of the company.
JD HEALTH (06618.HK) registered margin of almost $110 billion from local brokers as at around 6 pm on 27 November. Based on the fundraising amount of approximately $1.347 billion from the public offering, the margin was oversubscribed by approximately 80.5 times. The stock initiated public offering in Hong Kong for the second day.
The residential site Kai Tak Area 4E Site 1, whose tender has closed at noon, has received at least ten tenders as of 12:00 pm Friday, according to on-site witness. The tenderers include WING TAI PPT (00369.HK), CHINA OVERSEAS (00688.HK), CK ASSET (01113.HK), SHK PPT (00016.HK), SINO LAND (00083.HK) and K. WAH INT'L (00173.HK) and a consortium formed by Chinachem, Empire Group and K&K Property.
CMC Holdings, the Asian exclusive agent of FANCL outside Japan, intended to dispose the unit, Reuters cited people familiar with the matter. More than ten companies and institutions vied for the deal, including JD-SW (09618.HK), Blackstone, Carlyle Group, Bain Capital and MBK Partners. The transaction was expected to value at nearly US$1 billion. Some private equities are seeking strategic partnership, sources said, adding BABA-SW (09988.HK) and TENCENT (00700.HK) have expressed interest and may line up for the bid afterwards.
TSUI WAH HLDG (01314.HK) interim result ended September 2020. The loss widened to HK$77.645 million from HK$44.502 million in the corresponding period of the previous year. LPS was HK5.63 cents. No dividend was declared.
FDG KINETIC (00378.HK) interim result ended September 2020. The loss narrowed from HK$65.232 million in the corresponding period of previous year to HK$59.907 million. LPS was HK0.89 cents. No dividend was declared.
CHUANG'S INT'L (00367.HK) interim result ended September 2020. The net profit amounted to HK$49.237 million, up 54% yearly. EPS. was HK2.94 cents. An interim dividend of HK1.5 cents was declared, flattish yearly.
BABA-SW (09988.HK) and TENCENT (00700.HK) purportedly halted talks on acquiring iQIYI (IQ.US) shares held by Baidu (BIDU.US), while ByteDance was evaluating the possibility of buying iQIYI shares based on internal evaluation, as Chinese media cited sources. ByteDance replied that the news is untrue and the rumored acquisition does not exist, reported The Paper. On the news, iQIYI dived over 6% pre-trading.
BAUHAUS INT'L (00483.HK) interim result ended September 2020. The loss narrowed to HK$37.573 million from HK$95.196 million in the corresponding period of last year. LPS was HK10.2 cents. Dividends totaled HK14.5 cents, including an interim dividend of HK2.5 cents and a special dividend of HK12 cents, against no dividend in the year-ago period.
CHINA GAS HOLD (00384.HK) interim result ended September 2020. The net profit amounted to HK$5.09 billion, up 3.7% yearly. EPS. was HK97.53 cents. An interim dividend of HK10 cents was declared, flattish year-on-year.
For 10M20, the automobile manufacturing industry of China yielded a total profit of RMB421.15 billion, up 6.6% yearly, as revealed by China Association of Automobile Manufacturers (CAAM).
Centa-City Leading Index (CCL) last posted at 175.68, down 1.07% weekly.
CCL Mass plunged 1.35% weekly to 178.88,
CCL (small-and-medium units) sagged 1.27% weekly to 176.40.
The seven key CCL indices hit the soft spot altogether this week, reflecting the weekly condition after HKMC had announced the extension of the Fixed-Rate Mortgage Pilot Scheme for one year, said Centaline Property.

DOW +0.13%, NDX +0.92%, S&P +0.24%, Russel 2K +0.56% Markets opened higher but DOW traded lower initially S&P traded sideways but the NDX worked slightly higher. Light volumes on shortened trading and with talk of day traders driving the NDX. Some retail names seeing interest as black Friday kicks off the Christmas Shopping season; Etsy +10.7%, Gamestop +9% and Shopify +1.5%. Key being the rise in online sales. Russell index has seen a strong performance as investors rotate into the names as post pandemic recovery plays.
Key themes being rotation into post pandemic plays with SME’s in focus and the ’scarring’ that has been inflicted on the US economy by the pandemic and the failure agree another stimulus package. With rising initial claims and concerns about business failures ahead.
Amazon +0.3%, but news that Unions representing tens of thousands of Amazon.com Inc employees are planning walkouts and other action as the year’s busiest shopping season begins, in protest at the e-commerce giant’s handling of everything from sick pay and COVID-19 precautions to user privacy. -VE
Sentiment +VE as Trump said he would hand over power if the Electoral College voted Biden the winner of the election.
Banks JPMorgan Chase -0.7%, Citigroup -0.7% and Wells Fargo -0.5%, AMEX unch
Work from home names: Facebook +0.8%, Apple +0.5%, Netflix +1.3%, Zoom Video +6.3% (late rally), Alphabet +1.3% and Microsoft +0.6%,
Nvidia +0.2%, Micron +1.3%, AMD +0.6%, Skyworks +0.2%
Re-opening stocks Boeing -0.5%, Caterpillar +0.3%, Simon Property -1.9%, Kohl’s +0.2%, Nordstrom -2.5%, Gap +0.7%, United Airlines -0.7%, Carnival +4.5%, Wynn Resorts +0.8%, Chevron -0.9%, Exxon Mobil -1.5%,
Lock down names Campbell Soup +0.1% (off initial highs) General Mills +0.2%, JM Smucker -1.3%
DATA
USD was weaker vs Yen & Euro. Bitcoin +0.38% @ 17,159.50, VIX -1.9% @ 20.84, US T10 @ 0.842%
OIL Brent +0.4%, WTI +0.9% a weekly gain ahead the OPEC+ meeting on Saturday but turned -VE in after market trading.
Gold -1.1%, Silver -2.9%, Copper +2.9%
AHEAD Chicago PMI, Pending Home Sales, Dallas Fed Manufacturing.

DAX +0.37%, CAC +0.56%, FTSE +0.1%
FTSE opened lower, dipped in early trades and then worked better through the day to close just in the green. CAC and DAX open higher, CAC worked higher DAX traded sideways all on light volumes. Investors encouraged by the China Industrial data and later in the session the +VE start to Black Friday in the US.AstraZeneca weak after questions about their trial results. Banco Sabadell weak on news it called off merger talks with BBVAPress reports Arcadia Group (TopShop, Burton and Dorothy Perkins) likely to appoint administrators this week; putting 13,000 UK jobs at risk.
Data 
EUROZONE Economic Sentiment
Consumer Confidence Nov -17.6 vs -15.5 Oct (F/cast was -17.6)
Consumer Inflation Expectations Nov +15.4 vs 13.3 Oct (F/cast was 13.6)
Industrial Sentiment Nov -10.1 vs -9.2 Oct revised (F/cast was -10.8)
Services Sentiment Nov -17.3 vs -12.1 Oct revised (F/cast was -14.2)
GERMANY
Import Prices Oct -3.9% YoY vs -4.3% Sept (Consensus was -4.1%)
Import Prices Oct -0.3% MoM vs +0.3% Sept
FRANCE
Inflation Rate Prelim Nov +0.2% YoY vs unch Oct (F/cast was +0.1%)
Inflation Rate Prelim Nov +0.2% MoM vs unch Oct (F/cast was +0.1%)
GDP Growth Rate Q3 +18.7% QoQ vs -13.8% Q2 revised (F/cast was +18.2%)
Household Consumption Oct +3.7% MoM vs -4.4% Sept revised (F/cast was -2%)
PPI Oct +0.1% MoM vs +0.3% Sept revised (F/cast was +0.1%)
AHEAD
EUROZONE No Data Due Speeches by Lagarde and Hakkarainen
GERMANY Inflation Rate, Speech by Bundesbank’s Balz
FRANCE No data due
UK BoE Consumer Credit, Mortgage Approvals, Mortgage Lending, Net Lending to Individuals Speech by BoE’s Tenreyo

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