ASIAN MACRO INITIAL THOUGHTS Asian to open higher, US Futures +VE


14 Dec

Asian Futures Nikkei Futures opened +188pts but easing back,  HK ADR’s -242pts but that was before the FDA approved the Pfizer vaccine and the Brexit talk extension news.  Australia trading higher in early trades.  

US Futures opened higher Dow +150pts, S&P +0.6% and NDX +0.5% likely to ease but still +VE


Overview
US FDA approves Pfizers vaccine +VE as Sanofi and GlaxoSmithKline say their vaccines will be delayed. Suggests that the role of vaccines may not be as smooth initially hoped. Further, now that vaccines are available the question now is how many people will take them.
Comes as Asian countries see new spikes over the weekend; joining Europe and the US; with Germany set for hard lockdown as new covid cases surge. -VE for sentiment.
Europe agrees to extend Brexit talks but with no new deadline. Slight +VE
Protests in Washington as US Electoral College set to confirm the US Election results on Monday.
Last full week of trading before Christmas with focus on FOMC, BoE, BoJ and Taiwan's Central Bank all holding rate meetings.

JAPAN Nikkei futures opened +188pts on optimism over Brexit talks in Europe and FDA approval but easing back in early trades.  Expect a +VE open but a key driver will be the Tankan details.  Yen closed Friday slightly stronger at 104.01 Stock wise the rising number of local covid cases +VE for Nintendo etc.
Data due 
Tankan Q4 survey pre market Large Manufacturers Index Q3 was -27 F/cast is -17
Large All Industry Capex Q3 was +1.4% F/cast is -0.4%
Non Manufacturing Outlook Q3 was -44 F/cast is -38
Large Manufacturing Outlook Q3 was -11 F/cast is -8
Large Non Manufacturing Outlook Q3 was -17 F/cast is -12
Later we get Industrial Production, Capacity Utilisation and the Tertiary Industry Index.
Tokyo on Sunday reported 480 new covid cases vs 621 Saturday  with a national total of  2,388 vs 3,041 Saturday which was a new high.  The seven day rolling average broker above 500 cases to 503 on Sunday for the first time.  There was also a case of a man who died in quarantine after medical staff failed to check on him
Govt urges a ‘quiet’ year end but continues to promote the Go To Travel campaign although the decision on whether to extend to programme which is due to end next week was deferred on Friday. Tokyo and Nagoya may be excluded prior to that.
Bird Flu outbreak has now spread to about 20% of the prefectures; with mass callings being ordered; it is the worst outbreak since 2016 -VE for sentiment.
Govt to stipulate in law the target of zero greenhouse gas emissions by 2050
Hitachi Ltd plans to sell a 60% stake in its overseas home appliance business to Turkish consumer electronics maker Arcelik AS for about $300 million, and jointly operate the business, the Nikkei newspaper said on Sunday.
Honda said Sunday car production at its British factory will resume on Monday after transport-related parts delays halted output since Wednesday. "Honda of the UK Manufacturing has confirmed to employees that full production operations will resume in all areas on Monday 14 December," the firm said in a statement. +VE
Nippon Steel’s appeal over asset seizure rejected by S Korean Court; The Daegu District Court's Pohang branch said Friday that it decided not to accept the company's immediate appeal due to the "absence of grounds." The case will now move to a higher court for review.
SoftBank sells robot-maker Boston Dynamics in $1.1bn deal with Hyundai. +VE for Softbank as it sells down assets .

SOUTH KOREA Expect markets to open higher on Brexit and FDA approval for the Pfizer vaccine BUT upside limited on concerns about the US recovery without a stimulus package being agreed.
No data due
Govt reported over 1,030 cases to Midnight Saturday vs 689 new covid cases Friday.  It announced it will mobilise military forces in the capital Seoul to help frontline health workers deal with a surge and ramp up contact tracing. Govt is considering raising the social distancing measure to level 3 -VE for sentiment.
LG Chem’s cathode plant in Wuxi, China, to run 100% on reusable energy from 2021. The reusable energy to be provided by the local Leyou New Energy Materials.  +VE
Posco said Sunday it will expand hydrogen production capacity in the next three decades to meet growing demand for the clean energy source and foster new growth drivers.
Police are investigating a Tesla crash that killed one person and injured two others last week, to see if defects in the vehicle could have played a role.
Hyundai Motor Group said Friday its affiliates and its chairman will buy an 80% stake, worth up to 900 billion won ($828 million), in US robotics firm Boston Dynamics Inc. in the latest move to propel its future mobility business. The stake is being sold by Softbank
Celltrion announced Friday that the company’s adalimumab biosimilar candidate CT-P17 has received a positive opinion for marketing authorization from the Committee for the Medicinal Products for Human Use under the European Medicines Agency.  Celltrion’s CT-P17 is a biosimilar of Humira, a treatment for autoimmune and inflammatory diseases such as rheumatoid arthritis, ulcerative colitis and psoriasis.
Fidelity Management & Research sold common shares of Hyundai Marine & Fire Insurance worth 111.6 billion won ($102.2 million) on the local stock exchange since October, filings showed Friday.  Before the transactions, Fidelity was the third-largest shareholder of Hyundai Marine & Fire.
Woori Financial Group said Friday its Chairman Sohn Tae-seung recently bought back 5,000 company shares to show his confidence in the banking group’s future growth.  Sohn’s stock buyback marks the fifth time this year, following his earlier buying in January, March, April and August. He now holds 88,127 shares in Woori Financial.

TAIWAN Expect market to open lower after the weakness in the US but expect bargain hunting in Tech names if we see significant weakness.
No data due 
Ministry of Foreign Affairs yesterday welcomed an announcement by Singapore that it is to lift border restrictions for travelers from Taiwan from Friday next week, saying that it would help promote potential “travel bubbles” between the two nations. +VE Airlines and Tourist related names.
Wistron Corp in India, reported a criminal rioting incident, as the factory was targeted by criminals.  It is unclear over the true reason for the incident some reports of it being over disputed wages other over managers trying to extort the company. -VE
Hon Hai Precision has been shifting its focus toward developing quantum technology, which it sees as vital to creating Taiwan’s next miracle in the semiconductor industry, the company said on Saturday. +VE
Govt announced buying the US Field Information Communications System is as significant as other, more high-profile weapons Washington has sold to Taipei, analyst says, as it could help counter a Chinese cyber attack. Likely to annoy China and shows increased US support
The Financial Supervisory Commission (FSC) would not tolerate a protracted price war by the three Web-only banks to undercut the competition, as it would disrupt the market.  The commission hopes that the digital banks would offer innovative services or products instead of setting unreasonably low prices to attract customers to ensure solid and sustainable development, the FSC Chairman Thomas Huang said Friday. +VE for Existing Banks in the short term.
Nan Shan Life Insurance Co, Shin Kong Life Insurance Co and Taiwan Life Insurance Co reported losses last month due to foreign exchange losses, the companies’ data showed. -VE CPC Corp, Taiwan  and Formosa Petrochemical Corp  announced that they would increase their gasoline and diesel prices for a third straight week, effective Sunday. Slight +VE for the companies
China Steel Corp Friday raised domestic steel prices for delivery next quarter by an average of 6.1% , the steepest increase in more than three years, as global economic recovery boosts demand.  Prices are to increase across the board by NT$1,200 (US$42.19) or NT$1,500 per tonne, depending on the product, from this quarter, the company said in a statement, adding that it expects the uptrend to continue in the near term, given severe supply constraints worldwide. +VE
Listed firms’ Chinese investment gains hit a new high. But local firms trimmed their investments in China by NT$8.3 billion, falling for a second straight quarter.  “Listed companies’ performance in China seemed mixed, as some industries seized more opportunities and continued expanding their investments, such as the computer sector and the electronic components sector, while other opted to leave,” Kuo said.

CHINA Expect market to open slightly lower with continued worries about more action from Trump in his final days in power. Renewable Energy names +VE on President Xi’s comments to cut carbon emissions
Data due China House Price Index Nov (Oct was +4.3% F/cast is +4.1%) and may get FDI data.
There are 24 new covid cases Sunday vs 13 on Saturday. With authorities were monitoring possible contacts in the domestic tourism hotspot of Hainan. Dongning and Suifenhe, two cities in northeastern Heilongjiang province in China, have launched citywide nucleic acid testing as a result of new cases on Friday which are to be completed in three days.  Slight -VE with many experts wondering how contained covid is in China.
President Xi on Saturday targeted a steeper cut in rates of carbon emissions relative to economic activity by 2030 and set new goals for growth in renewable energy and forest stock, as the country looks to reach the peak of its emissions before the end of the decade.  +VE for Renewable Energy Names as it will boost its installed capacity of wind and solar power to more than 1,200 gigawatts (GW) by 2030, and increase the share of non-fossil fuels in primary energy consumption to around 25% during the same period, up from a previous commitment of 20%. As of 2019, China had combined accumulative installed solar and wind capacity of around 414 GW. China’s state planner is aiming to have 240 GW of wind and the same amount of solar capacity installed by the end of this year. +VE Renewables with some asking whether China is actually moving fast enough and saying there is more it can do.  In making the announcement President Xi added “China always honours its commitments.”
Bahrain’s National Health Regulatory Authority said on Sunday it had approved the registration of a coronavirus vaccine developed by China National Pharmaceutical Group (Sinopharm).  The statement did not specify which vaccine among the two being developed by Sinopharm, but cited data from Phase III clinical trials that showed an 86% efficacy rate and said Bahrain had participated in those trials.
China’s Politburo said on Friday that the country should do more to tackle monopolies and prevent “disordered expansion of capital”, according to a report by state news agency Xinhua.  Along with efforts to improve oversight and regulation, the country will implement a broad strategy of keeping economic growth “within a reasonable range” for 2021 (the year the ruling Communist Party celebrates its centenary) while expanding domestic demand and strengthening China’s strategic technology.  The meeting of the supreme policy-making body chaired by President Xi Jinping also decided that China must prevent any “scaled rebound or imports” of the coronavirus in this winter, signalling that China will continue to be strict in its border controls.  -VE for Ecommerce
PBOC vowed to improve its oversight of the nation's bond credit rating industry following a series of defaults by state-backed firms.  Deputy governor Pan Gongsheng said problems in the industry included inflated credit ratings, according to a statement on the PBOC's website dated yesterday. Ratings companies should work hard to improve their capabilities and quality of work, he said. Slight +VE
Resetting relations with the US. and strengthening strategic ties with Russia will be among the top priorities for China next year, Foreign Minister Wang Yi said on Friday as he outlined the country’s diplomatic agenda for 2021. Observers said the focus on ties with Russia could reflect concerns in Beijing about its worsening feud with the West.  He also said China’s top foreign policy priority would be to support the world’s post-pandemic  economic recovery.
President Xi told a meeting of the Politburo, “We must prevent and resolve national security risks, increase the capability to foresee and predict risks, and try to discover and nip in the bud the hidden risks with potential significant security implications. “The importance of national security is defined by our location in the course of history and the current situation our country is facing.”
The head of the powerful U.S. House of Representatives Ways and Means Committee on Friday slammed what he called President Donald Trump’s “unsophisticated response” to China’s ambitions and called for a major recalibration of U.S. policies.  He urged Biden to formulate a package of programs and investment to counterbalance China, including through re-energized cooperation with European allies.  Slight -VE for sentiment as it makes it likely that China will face tougher negotiation on the phase II US Trade deal.
Chinese authorities have detained a Chinese national working for the Bloomberg News bureau in Beijing on suspicion of endangering national security, the news agency and China’s foreign ministry said on Friday.
China’s vehicle sales are likely to hit 25.3 million units this year, the CAAM said on Friday, as the world’s biggest vehicle market continued to lead the global auto industry recovery from lows hit during the COVID-19 pandemic.+VE for Auots
The China Iron & Steel Association (CISA) says it had a ‘candid exchange of views’ with BHP on soaring iron ore prices on Thursday.   A spike in costs threatens the profitability of Chinese steel plants, which are on track to set a record for crude steel production this year. -VE for Steel Makers.
FT article 'China pulls back from the world: rethinking Xi’s ‘project of the century’’.  Suggests that China could face a debt crisis -VE.
China’s International Commercial Court appoints four Africans to legal team for handling belt and road disputes.  Specialists from Uganda, Nigeria, Algeria and Egypt named among 24 members of the Expert Committee of the China International Commercial Court.
Beijing has signed an MOU with Port Moresby to build a seafood processing complex on an island about 200km from the Australian mainland.  Could further raise tensions in the already strained diplomatic relations.

HONG KONG  ADR’s -242pts at 26,263 but downside limited by Brexit news and FDA approval for the Pfizer drug.  ADR’s showed weakness across all sectors only Petrochina’s ADR closed in the green.  Govt says its employees will WFM until Dec 23 and urges employers to allow their staff to do the same. On Sunday the Govt reported 95 new covid cases (vs 69 Saturday)  42 with unknown sources.  Brexit talks to be extended +VE HSBC and StandChart.  Also expect Renewable names +VE on President Xi’s comments on carbon emissions. 
Data due after market Industrial Production

SHORT SELLING Friday 12.9% vs 14% Thursday T
op Shorts  Country Garden (2007) 46%, NWD (17) 41%, Bank of China (3988) 34%, Hang Seng Bank (11) 33%, Anta Sports (2020) 28%, Ping An (2318) 29%, Wharf REIC (1997) 28%, Sunny Optical (2382) 27%, CKI (1038) 27%, HSBC (5) 26%.

BUYBACKS/INSIDER DEALING 
SINO BIOPHARM (01177.HK)  announced that Senior Vice Chairman Tse Ping had today acquired 15 million shares of the company, involving roughly $100 million.
S HARBOURHOLD (01663.HK) announced that the chairman and substantial shareholder, Wong Lam Ping, acquired an aggregate of 850,000 shares, involving $119,000.

HK VACCINATION
The government will roll out a vaccination program as soon as the vaccines arrived in Hong Kong, but citizens will not be able to choose which manufacturer’s vaccine they wish to receive, said Chief Executive Carrie Lam Cheng Yuet-ngor.German biotech company BioNTech will be supplying Covid-19 vaccines to Hong Kong from Europe in collaboration with mainland firm Fosun Pharma, instead of US-Swiss giant Pfizer.

National Security 
Civil servants will be given instructions on how to make declarations pledging allegiance to the Basic Law and the SAR by the end of this month,Sec for Civil Service emphasized that upholding the Basic Law and pledging their allegiance to the SAR is a basic obligation of civil servants since the day they joined the government, and the declaration is a confirmation and a promise.
BANKS +VE as US government said it had not identified any global banks that “knowingly” did business with several officials on a US sanctions list over the Chinese government’s enactment of the national security law for Hong Kong.
WATCH
New World Development Units at it’s grade A commercial building in Cheung Sha Wan have hit HK$600 million in sales in merely an hour, breaking transaction records on non-residential property press reported Saturday. The sales launch this morning was the first commercial property to go on sale following the elimination of the double stamp duty on non-residential property transactions.
Centaline Property Agency recorded 22 secondary market transactions at 10 blue-chip housing estates over the weekend, +16% WoW and hitting a seven-week high as developers slowed down sales at new projects amid stricter social distancing measures.
Henderson Land Development (0012) released 18 units in the fourth price list of Arbour in Jordan on Saturday, at an average price of HK$27,808 per sq ft after discounts, about 16 percent higher than the first price list. The developer has collected HK$1.04 billion after selling 106 units at the project.
SMIC (00981.HK), CHINA COMM CONS (01800.HK) , CHINA RAIL CONS (01186.HK)  and CRRC (01766.HK) weak on news that the Nasdaq will remove them, effective 21 December.  The related companies were blacklisted by the US for alleged linkage with Chinese military. -VE
DONGFENG GROUP (00489.HK) announced that the application for A Share Offering and Listing of the Company has been reviewed and approved by the GEM Listing Committee of the Shenzhen Stock Exchange. A Share Offering and Listing is subject to approvals from the China Securities Regulatory Commission and other relevant regulatory authorities and may or may not proceed.
DA MING INT'L (01090.HK) positive profit alert. For the eleven months ended 30 November 2020, the Group is expected to record an increase in net profit of over 40% as compared with that of the same period in 2019.
CPIC (02601.HK)  announced that the primary insurance premiums of China Pacific Life Insurance and China Pacific Property Insurance, both of which are the subsidiaries of the Company, for the first eleven months of 2020 amounted to RMB202.6 billion and RMB136.026 billion, down 1.9% YoY and up 12.8% YoY, respectively.
CHINA LIFE (02628.HK) accumulated premium income of the Company for the first eleven months of 2020 was about RMB586.2 billion, up 8.29% yearly.
NCI (01336.HK) announced that the accumulated gross premium income for the period between 1 January 2020 and 30 November 2020 was RMB152.57 billion, up 17.2% yearly.
HUANXI MEDIA (01003.HK)  announces that its “huanxi.com” has entered into a strategic cooperation agreement with Huawei and a cooperation agreement with XIAOMI-W (01810.HK) respectively and formally effected the cooperation in respect of the video broadcasting business.
Centa-City Leading Index (CCL) last posted at 177.75, up 1.26% weekly to a nine-week high. Centaline Property, analyzed that the index level pointed to an overall passionate sales of new properties with brief price spike, but did not imply an upturn. As the reading this week has not factored in the Policy Address and the fourth wave of plague, housing prices were expected to keep juggling.
CCL (large units) last printed at 171.98, up 0.33% weekly;
CCL Mass last stood at 181.42, up 1.43% weekly;
CCL (small-and-medium units) last reported at 178.84, up 1.42% weekly.


Friday’s Closing.
DOW +0.16%, NDX -0.23%, S&P -0.13%, Russel 2K -0.57% Opened lower were weak through the morning but worked higher through the afternoon and into the close. Concerns remain over the lack of agreement for a new stimulus package especially in the face of rising unemployment claims. Retail and Consumer names saw selling pressure.Reported that the White House threatened to fire the head of the FDA unless Pfizer’s covid vaccine was approved by Friday.   Qualcomm weak on news Apple was working on its own cellular modem.
Banks JPMorgan Chase -0.6%, Citigroup -2.6% and Wells Fargo -1.4%, AMEX -1.3%
Work from home names: Facebook -1.3%, Apple -0.7%, Amazon +0.5%, Netflix +0.4%,  Disney +13.6% (more than tripled its subscriber guidance) Zoom Video -0.2%, Alphabet +0.4% and Microsoft +1.3%,
Tech NXP -0.7%, Nvidia +0.3%, Micron -1.1%, AMD unch, Skyworks -4.3%
Re-opening stocks  Boeing -1.8%, Caterpillar +0.3%, Simon Property -2.8%, Kohl’s -2.8%, Nordstrom -3%, Gap -3.6%, United Airlines -2.6%, Carnival -4.5%, Wynn Resorts -1.7%, Chevron -1%, Exxon Mobil -0.5%,  
Lock down names Campbell Soup -0.2% General Mills +0.8%, JM Smucker -0.6%
After MarketSupreme Court rejected the Texas lawsuit challenging Biden’s win in 4 key States.  Trump signed the one week government funding bill giving congress more time to agree a stimulus package.
DATA
PPI Nov +0.1% MoM vs +0.3% Oct (F/cast was +0.2%)
PPI Nov +0.8% YoY vs +0.5% Oct (F/cast was +0.8%)
Core PPI Nov +0.1% MoM vs +0.1% Oct (F/cast was +0.2%)
Core PPI Nov+1.4% YoY vs +1.1% Oct (F/cast was +1.6%)
Michigan Consumer Prelim Data
Current Conditions Dec 91.8 vs 87.0 Nov (F/cast was 86)
Inflation Expectations Dec +2.3% vs +2.8% Nov (F/cast was +2.8%)
5 year Inflation Expectations Dec +2.5% vs +2.5% Nov revised (F/cast was +2.7%)
Sentiment Dec 81.4 vs 76.9 Nov (F/cast was 76)
Expectations Dec 74.7 vs 70.5 Nov (F/cast was 72)
Baker Hughes Total Oil Rig Count 338 vs 323 prior
USD was slightly weaker vs Yen but stronger vs Euro. Bitcoin -0.3% @ 18,059, VIX +3.5% @ 23.31, US T10 @ 0.896% falls as Congress cannot agree stimulus package.
OIL Brent -0.36%, WTI -0.47% weaker on covid impact concerns.
Gold +0.33%, Silver -0.1%, Copper -1.16%
AHEAD Consuner Inflation Expectations

DAX -1.36%, CAC -0.76%, FTSE -0.8% Markets opened lower on the prospect that there will be No Brexit deal before Sunday’s deadline and no US Stimulus deal.. They sold down through the morning.  But then rebounded from Midday into the close.  EU gets approval to raise Euro 750bn from public markets to support the bloc’s economic recovery efforts as Hungary and Poland dropped their veto’s regarding the disbursement of funds.  This is in addition to the 1.074 trillion euros ($1.3 trillion) to be spent between 2021 and 2027.
Telco’s lead the declines but UK Banks were also under pressure as most sectors closed in the red.
Resources saw some interest as Iron Ore futures on China’s Dalian Commodity Exchange were +10% on Friday to an all-time high, crossing the 1,000 yuan ($152.95) per ton mark for the first time on the back of supply concerns; as storms hit Western Australian production.
Sanofi and GlaxoSmithKline weak said clinical trials of their covid vaccine showed an insufficient immune response in older people, delaying its launch to late next year. Came as Australia axed a domestic vaccine project. -VE
Hellofresh +6% on broker upgrade.
Rolls Royce -8% after it downgraded its cashflow forecast and warned of a challenging outlook.
Ericsson -4% on news it filed a lawsuit against Samsung in the US over royalty payments and patent licences.
DATA
Germany
Inflation Rate Final Nov -0.3% YoY vs -0.2% Oct (F/cast was -0.3%)
Inflation Rate Final Nov -0.8% MoM vs +0.1% Oct (F/cast was -0.8%)
AHEAD
EUROZONE Industrial Production
GERMANY Wholesale Prices, Bundesbank Monthly report
FRANCE No data due
UK No data due

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