8 Dec ASIAN MACRO INITIAL THOUGHTs Asia to open flat. US Futures lower


07 Dec

Asian Futures Nikkei Futures opened lower but now flat; expected a muted open with a lot of pre market date to digest,  HK ADR’s -5pts and Australia flat in early trades.  
US Futures opened lower Dow -67pts, S&P and NDX also lower

DOW -0.49%, NDX +0.45%, S&P -0.19%, Russel 2K -0.06% DOW and S&P opened lower and drifted lower through the day. NDX opened higher and traded sideways.  Covid cases continue to rise and still no sign of a stimulus package.Value names eased as Tech saw slight gains. Increased covid cases are leading to stricter social distancing and that is likely to impact the economic recovery.  Tesla +7.1% continued to see gains.  Eastman Kodak +60% after a government agency found no wrongdoing linked to a proposed loan to the Rochester company
Normal Hours 
Banks JPMorgan Chase -0.4%, Citigroup -0.8% and Wells Fargo -0.7%, AMEX -0.9%Work from home names: Facebook +2.1%, Apple +1.2%, Amazon -0.1%, Netflix +3.5%,  Disney -0.3%, Zoom Video -0.5%, Alphabet -0.4% and Microsoft unch,
Tech Nvidia +0.4%, Micron -1%, AMD unch, Skyworks +2.2%
Re-opening stocks  Boeing +2.4%, Caterpillar -1.9%, Simon Property -4.9%, Kohl’s -1.2%, Nordstrom -1.6%, Gap -0.9%, United Airlines -0.1%, Wynn Resorts -1.9%, Chevron -2.7%, Exxon Mobil -1.9%,  
Lock down names Campbell Soup -0.4% General Mills -1.1%, JM Smucker -0.2%
After market 
Toll Brothers after market 3.7% (was +2.8% in normal hours) having reported Q4 results that beat analyst forecasts.
FT reports Uber has abandoned efforts to develop its own self-driving car and will instead swap its operations for a minority stake in Aurora, a driverless vehicle start-up backed by Amazon and Sequoia, at a significantly marked-down valuation.
DATA
Consumer Credit Change Oct $7.23b vs 15.03b Sept (revised from 16.21b) (F/cast was 17b)
USD was slightly weaker vs Yen & Euro. Bitcoin -1.4% @ 19,085.25, VIX +2.5% @ 21.3, US T10 @ 0.924% eased as no new stimulus.
OIL Brent -1.24%, WTI -1.36% on concerns demand will be hit by rising covid cases.
Gold +1.46%, Silver +1.72%, Copper -0.5%
AHEAD  NFIB Business Optimism, Non Farm Productivity, Unit Labour Costs, Redbook, API Crude Oil Stock Change

DAX -0.21%, CAC -0.64%, FTSE +0.08%  UK opened higher but DAX and CAC opened lower; all initially trended lower. But FSTE reversed to flat and traded sideways around flat.  DAX reversed after initially selling and worked back to almost flat. CAC traded sideways after initial selling. Brexit still overhanging the market. Sterling was weaker, along with Banks and homebuilders. Investors watched the rising cases in Europe -VE and also watching the US with concerns about whether the US will agree a new stimulus package as covid cases there rise too.Paris AirShow 2021 cancelled -VE to Aircraft markers etc.Soc Gen -2.7% on plans to close 600 branches; it is good news but it will be over 5 years.
DATA
GERMANY 
Industrial Production Oct +3.2% MoM vs +2.3% Sept revised (F/cast was +1.2%)
UK 
Halifax House Price Index Nov +1.2% MoM vs +0.3% Oct (F/cast was +0.4%)
Halifax House Price Index Nov +7.6% YoY vs +7.5% Oct (F/cast was +7.1%)
AHEAD
EUROZONE Employment Change, GDP Growth Rate, ZEW Economic Sentiment Index
GERMANY ZEW Economic Sentiment Index and Current Conditions.
FRANCE No data due
UK No data due

JAPAN Nikkei futures opened -42pts but now flat.  Yen currently 104.07. 
Expect a muted open as investors review the pre market data and the rising number of covid cases and the weather get colder.
Data due 
Tankan Index, Household Spending, Average Cash Earnings, Current Account, GDP Growth (Rate, Annualised, External Demand, Private Consumption, Capital Expenditure), Bank Lending, EcoWatchers Current and Outlook.
Govt preparing to send Self Defence Force nurses to helping worst hit areas like Hokkaido as Tokyo reported 299 new cases Monday (vs 327 Sunday)
Bird Flu outbreak in a fifth prefecture -VE
Govt announced putting Aegis radars on warships after cancelling ground stations
Japanese companies including Toyota Motor Corp have established a new organisation, the Japan Hydrogen Association, to promote the creation of a hydrogen supply chain in the country, its board member companies said on Monday.
Mitsubishi Motors announced 654 workers to leave in early retirement by the end fo January
EU antitrust regulators approved on Monday DIC Corp's bid for German chemicals group BASF's pigments unit after the Japanese printing ink maker pledged to sell a U.S. facility to address competition concerns.
Dentsu will make almost 6,000 of its overseas employees redundant as it battles the fallout from the Covid-19 pandemic and the postponement of the Tokyo 2020 Summer Olympics.

SOUTH KOREA Expect markets to open flat with Tech in focus.  Markets closed at a new high Monday for the fifth successive day with Chip and Pharm leading
No data due
President Moon called on Monday for expanded coronavirus testing and more thorough tracing as the country reported 615 new covid cases to Midnight Sunday. 580 case being locally transmitted.
Samsung Electronics Co.'s share of the global foundry market is expected to decrease in the current quarter from the previous three months, a report showed Monday. Samsung's share in the global foundry business was estimated at 16.4% in the October-December period, down 1 percentage point from three months earlier, according to a report from industry tracker TrendForce.  TSMC still dominates.  The report noted "Samsung will increase its 5nm production in order to meet the growing demand for smartphone system-on-chips (SoCs) and high performance computing (HPC) chips, in addition to accelerating its extreme ultra violet deployment," TrendForce said. "Moreover, the development of smartphone SoCs manufactured with the 4nm process and the increase in 2.5D advanced packaging capacities will both propel Samsung's earnings performance further.”  Still overall +VE
Hanwha Total said Monday it has increased its annual plastic production capacity to 140,000 metric tons as demand has spiked for plastic, the raw material for separators, one of the key components of lithium-ion batteries along with cathodes, anodes and electrolytes.   The expansion, which cost 40 billion won ($36.9 million), will allow the South Korean petrochemical company to produce 140,000 tons of ultrahigh-molecular-weight polyethylene (UHMWPE) at its plant in Daesan, +VE
SK Holdings on Monday announced an investment of $200 million in a new subsidiary to be founded by Roivant Sciences that will use its targeted protein degradation technology.  This is a key step in SK Group’s pivot to biologics business, SK Holdings said, citing its focus on growing markets more than maturing ones, and a search for “disruptive tech” that could create synergy with SK Biopharmaceuticals and SK Pharmteco. +VE
SK hynix announced Monday that the chipmaker has finished development of its 176-layer 512-gigabit 4D NAND flash chips, the third generation product in its 4D NAND line-up. It is the second player, after US-based Micron to announce the industry’s highest-level NAND product, beating market leader Samsung Electronics. +VE
Daewoo Shipbuilding & Marine Engineering Co. said Monday it has signed an initial deal with a European company to build 10 very large crude carriers (VLCC).  The deal is expected to be concluded by the first quarter of next year, Daewoo Shipbuilding said in an emailed statement. +VE

TAIWAN Expect market to open higher after good export data after market Monday with good demand for tech continuing. 
Data due Wholesale Prices, Inflation Rate
After Market Monday
Balance of Trade Nov $5.27bn vs 7.46b Oct (F/cast was $5.7b),
Exports Nov +12% vs +11.2% Oct (Consensus was 8.4%),
Imports Nov +10% vs -1% Oct (F/cast was +0.3%)
United Microelectronics Co  is expected to overtake GlobalFoundries Inc as the world’s third-largest foundry this quarter, as strong demand for display driver and power management chips is estimated to help drive its revenue up 13 percent, market researcher TrendForce Corp said yesterday. +VE
Mytrex Health Technologies Inc said in a statement that it has signed an agreement to build a production line at a factory in the Philippines owned by Medtecs International Corp, a major supplier of healthcare products headquartered in Taipei. +VE

CHINA Expect market to open lower; sentiment weak on the threat of more action from Trump before he leaves office.
No data due
China's National Health Commission said Monday that it received reports of 15 newly confirmed coronavirus patients in the Chinese mainland Sunday, three of whom are were locally-infected in Inner Mongolia, the state media Xinhua reports.  Twelve were imported and in Shanghai, Guangdong, Zhejiang, Fujian and Yunnan, the commission said in its daily report. Two new suspected patients from outside the mainland were reported in Shanghai.
China threatens to retaliate if US sanctions the officials responsible for banning Hong Kong opposition legislators.  Follows reports that Washington will sanction 14 officials; including officials from the National People’s Congress (NPC), the top legislative body, and senior members of the Communist Party – with measures such as asset freezes and financial penalties.
Hua Chunying, China’s foreign ministry spokeswoman, accused the UK of interfering with political affairs in China and Hong Kong; comes as the The UK has issued more passports to Hong Kong residents than in any year since 1997, when it handed the country back to China.
FT Reports Sharp cut in Beijing’s overseas lending fits with rethink of Xi’s Belt and Road.  A drastic cut in funding which may suggest more pressure on the Govt and focus on more domestic projects for the local economy.
Huawei has started investing in emerging Chinese chip companies via its investment in Hubble Tech Investment; as the telecoms group accelerates efforts to become self-reliant in semiconductor technologies in the face of US sanctions.

HONG KONG  ADR’s -5pts @ 26,501 with weakness in Financials and E Commerce names.  Investors wary about the threat of more sanctions from Trump and concerns about the Chinese banks debt and default issues.
No data due
IPO JD HEALTH (06618.HK), debut;  closed Monday at $89.85 in gray market, up $19.27 or 27.3% against the listing price of $70.58, on volume of 6.42 million shares and turnover of $577 million, PhillipMart data showed. Excluding the handling fees, a book gain of $963.5 was reported per board lot of 50 shares.
SHORT SELLING Monday 16% vs 14.9% Friday 
Top Shorts  NWD (17) 38%, Ping An (2318) 37%, Hang Seng Bank (11) 34%, AAC Tech (2018) 29%, Bank of China (3988) 29%, Alibaba (9988) 28%, BOC HK (2388) 25%

WATCH
Financial Secretary Paul Chan Mo-po said there is no room to relax housing curbs, as market demand and low interest rate environment support a high property price. -VE Developers
S HARBOURHOLD (01663.HK) was informed by the Company’s chairman and substantial shareholder, Wong Lam Ping, that he acquired an aggregate of 928,000 ordinary shares of the Company in the open market at an average price of approximately $0.135 per share on 7 December 2020.
XIAOMI-W (01810.HK) Chairman Lei Jun disposed of and subscribed for 1 billion shares at the same price, according to its latest shareholding disclosure at the Stock Exchange. Lei's action involved no personal stake increase or decrease, said insiders. Instead, such shareholding adjustment was made in-line with the group's additional issuance.
CHINA LIFE (02628.HK) will host the 2020 Corporate Day today. After boosting its intelligent operation, the insurer's paperless application rate hit 99.85% for the first three quarters of 2020, according to filings.  The Company reorganized the sales team during business reform. As of end-June 2020, the number of productive agents had risen by 37.1%.
GREATWALL MOTOR (02333.HK) auto production volume reached 146,200 units for the month of November 2020, +23.15% yearly.  Sales volume +26.12% YoY to 145,200 units.
GEELY AUTO (00175.HK) total sales volume of the Group in the first eleven months of 2020 was 1.166 million units, -5%YoY, and achieving 88% of the Group’s revised full year sales volume target of 1.32 million units in 2020.  The total sales volume for the month of November 2020 was 150,500 units, +5% YoY and +7% MoM.
MIDEA REAL EST (03990.HK) contracted sales approximated RMB110.28 bn +21.3% yearly, in January-November 2020.
Henderson Land Development (0012) will launch sales of 12 units in Arbour in Jordan this Friday with the cheapest flat priced at HK$6.66 million.
The Digital Currency Research Institute (DCRI) of the People's Bank of China (PBoC) has recently signed a strategic cooperation deal with China UnionPay Merchant Services Co., Ltd. (China UMS). Accordingly, both sides will explore the innovative e-RMB application in both online and offline payment scenarios under pilot testing.
The creditors of Huachen Automotive Group Holdings are required to report their claims to the managers on behalf of the liquidation team before 24 February 2021, as the group cited the related announcement of the court. The creditors are forbidden to exercise such claiming right during the restructuring if they fails to report so according to law.   Dagong Global Credit Rating separately announced that it decided to downgrade the sovereignty credit rating of Huachen Automotive Group and the related bond rating by Dagong to C as the group could not settle the principal and interest due to bankruptcy restructuring.

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