Dec 11Asian Macro Initial Thoughts Asian to open higher US Futures flat


11 Dec

Asian Futures Nikkei Futures +30pts,  HK ADR’s +156pts and Australia opened flat but falling in early trades.  No major data in Asia today but I would expect markets to open slightly higher and trade sideways ahead of the weekend

US Futures opened Dow +20pts , S&P flat and NDX slightly lower.  No stimulus deal remains a concern.  PPI and Michigan Consumer data due tonight.

DOW -0.23%, NDX +0.54%, S&P -0.13%, Russel 2K +1.1% Dow and S&P traded sideways, NDX saw a rally into the close. Stimulus said by Pelosi to be making progress but stuck over liability waiver for businesses. Democrats again endorsed the $908bn bipartisan deal but McConnell rejected it.  House passed a government funding extension to give time for a comprehensive bill.Initial claims rose again but had little impact.
FDA committee recommended the emergency authorisation of the Pfizer/BioNTech vaccine. The FDA final approval could come in the next couple of days. The vaccine has so far been authorised in the UK, Canada, Bahrain and Saudi Arabia. Comes as California covid deaths rise to 3,000 in a day and Virginia plans a curfew.
Commerce Street Capital CEO Dory Wiley believes caution is warranted for stock investors, noting that 90% of stocks on the NYSE trading above their 200-day moving average as an indication that valuations might be stretched.
Banks JPMorgan Chase -0.6%, Citigroup +2.6% and Wells Fargo +1.5%, AMEX unch
Work from home names: Facebook -0.3%, Apple +1.2%, Amazon -0.1%, Netflix +1.5%,  Disney  Zoom  +0.2% (but +3% after market), Alphabet -0.6% and Microsoft -0.6%,
Tech NXP +0.6%, Nvidia +0.3%, Micron -0.2%, AMD +2%, Skyworks -1.9%
Re-opening stocks  Boeing +1%, Caterpillar -0.8%, Simon Property -0.5%, Kohl’s -0.9%, Nordstrom -0.3%, Gap -0.8%, United Airlines +3.4%, Carnival -1.6%, Wynn Resorts +1.6%, Chevron +3.2%, Exxon Mobil +2.8%,  
Lock down names Campbell Soup +0.1% General Mills -0.8%, JM Smucker -1.9%
After Market Lululemon -1.3% (wa +1.5% in normal hours) quarterly results beat and in North America, net revenue +19%, boosted by its e-commerce business.
Oracle -1% despite beating on the top and bottom line in its quarterly report.
Costco +0.3% Q1 beat with overall online sales jumped +86% in the quarter.
Broadcom -2% despite its quarterly results beating. It also announced a new chief financial officer and a new chief operating officer.
DATA
Core Inflation Rate Nov +1.6% YoY vs 1.6% Oct (F/cast was +1.6%)
Core Inflation Rate Nov +0.2% vs 0% Oct (F/cast was +0.1%)
Inflation Rate Nov +1.2% YoY vs +1.2% Oct (F/cast was +1.2%)
Inflation Rate Nov +0.2 MoM vs 0% Oct (F/cast was +0.1%)
Initial Claims 853k vs 716k prior (revised) (F/cast 710k)
4 week Ave Claims 776 k vs 740.5k prior revised (F/cast was 739.25k)
Continuing Claims 5.757m vs 5.527m prior (F/cast was 5.11m)
EIA Natural Gas Report -91Bcf vs -1Bcf prior (Consensus was -83Bcf)
WASDE Report
Monthly Budget Statement Nov $-145b vs -284b Oct (F/cast was -210b)
USD was flat vs Yen & Euro. Bitcoin -0.7% @ 18,338.50, VIX +1.1% @ 22.5, US T10 @ 0.906% a small fall
OIL Brent +3.2% closed above $50 for the first time since March, WTI +3.2%
Gold +0.1% but was weaker in US time having failed to break $1850, Silver +0.6%, Copper +2%
AHEAD PPI, Core PPI, Michigan Consumer Prelim Data (Sentiment, Expectations, Current Conditions, Inflation Expectations, 5 year Inflation Expectations) Baker Hughes Total Oil Rig Count.
Fed Speaker Quarles

DAX -0.33%, CAC +0.05%, FTSE +0.54%  Markets traded sideways for the most part, they sold down heavily around 2pm as the US employment data came out but then rebound to their pervious levels. ECB left rates unchanged but said it would extend its monetary stimulus programme by 500b Euro’s and extending the Tim horizon to March 2022.  Banks -VE after the ECB left rates unchanged.
Petrochems bucked to trend to close +VE.
Sentiment cautious with the overhang of Brexit, concerns about further lockdowns in Europe in the run up to Christmas. The lack of a US stimulus deal also -VE for sentiment
Hellofresh +15% as it increased its full-year guidance.
Ocado -7% raised its forward guidance but noted that sales growth at a new joint retail venture had slowed.
DATA
EUROZONE 
ECB Interest Rate Decision everything was unchanged.
FRANCE 
Industrial Production Oct +1.6% MoM vs +1.6% Sept revised (F/cast was +0.6%)
UK 
Balance of Trade Oct GBP -1.7b vs +0.6b Sept (F/cast was +0.5b)
Construction Output Oct -7.5% YoY vs -10% Sept (F/cast was-7.6%)
Industrial Production Oct -5.5% YoY vs -6.3% Sept (F/cast was -6.8%)
Industrial Production Oct +1.3% MoM vs +0.5% Sept (F/cast was +0.2%)
Manufacturing Production Oct -7.1% YoY vs -7.9% Sept (F/cast was -8.2%)
Manufacturing Production Oct +1.7% MoM vs +0.2% Sept (F/cast was +0.3%)
GDP 3 mth Average Oct +10.2% vs +15.5% Sept (F/cast was +9.8%)
GDP Oct -8.2% YoY vs -8.4% Sept (F/cast was -8.2%)
Goods Trade Balance Oct GBP -12b vs -9.35b Sept (F/cast was -9.6b)
NIESR Monthly GDP Tracker Nov 1.5% vs 10.3% Oct revised from 10.2%(F/cast was 6.1%)
AHEAD
EUROZONE No data due
GERMANY Inflation Rate, Bundesbank Semi Annual ForecastsF
RANCE No data due
UK No data due

JAPAN Nikkei futures +30pts  expect the market to open higher;  Yen  currently 104.24.  Upside likely to be muted ahead of the weekend and Tankan data pre market Monday
No data due but Monday pre market Tankan Survey
Tokyo reported 602 new covid case a new high (vs 572 Wednesday) the nationwide total was 2,969.
Govt said it will begin carrying out vaccinations at facilities prepared by municipalities using reservation systems managed at the local level and that it will buy 10,500 deep freezers to store novel coronavirus vaccines as it prepares for the “extraordinary task” of protecting its people.  +VE Major Japanese manufactures of freezers include PHC, Nihon Freezer and Ebac. The government also plans to buy dry ice in bulk to maintain cold supply chains.
The bird flu outbreak in Japan worsened on Thursday with farms in two more prefectures slaughtering chicken in a record cull of poultry as the government ordered the disinfection of all chicken farms. -VE
Govt approved a tax reform package for fiscal 2021 on Thursday, with planned extensions of tax breaks for home and car purchases to underpin the coronavirus pandemic-hit economy.
Government will earmark ¥50 billion in the planned fiscal 2020 third supplementary budget to promote research and development on 6G advanced wireless communications services, Jiji Press learned Thursday.
Honda hopes to restart production at its British factory on Monday after halting output because of transport-related delays that caused a shortage of parts.  Britain's major container ports, such as Felixstowe, have been hit by the COVID-19 pandemic, which has disrupted global trade, leaving containers in the wrong place and goods stacked up.
Milo sales suspended for winter after demand surge causes shortage;  Nestle unable to meet demand, which seems to have risen 700% YoY, until March 2021

SOUTH KOREA Expect markets to open slightly higher with some bargain hunting.  Trading volumes were high on Thursday due to futures and options expiry, expect them to return to more normal levels.   Upside tempered by the covid cases and caution ahead fo the weekend.
No data due
Authorities scrambling to build hospital beds in shipping containers to ease strains on medical facilities stretched by the latest coronavirus wave, which shows little sign of abating with 682 new cases (vs 686 Wednesday)
Major Conglomerates -VE as what they call anti-business bills, which they say could threaten management controls and put pressure on them at a time of unseen hardships stemming from the pandemic.  The National Assembly passed on Wednesday, a revision to the Commercial Act regarding the “3 percent rule” has been met with the most criticism.  The amendment requires listed companies to elect at least one auditor from outside their boards and limits the voting rights of the largest shareholders to 3 percent for the auditor’s appointment.   It could lead to Samsung and Hyundai ownership families may have to offload massive shares in key subsidiaries but generally seen as +VE for reducing the control of chaebols and making them more accountable.
The Govt’s Key Industry Stabilization Fund will inject 32.1 billion won (US$29  million) into Jeju Air Co. to help it stay afloat it was revealed Thursday.  It will extend 25.7 billion won in loans to Jeju Air and invest 6.4 billion won in the carrier's convertible bonds, the state-run Korea Development Bank, which operates the fund, said in a statement.
Hyundai Motor unveiled Thursday its new “2025 Strategy” for innovative mobility solutions and core business strategies such as electric vehicles, urban air mobility, autonomous driving, fuel cells and the hydrogen ecosystem. It targets to invest W60tr by 2025 and aims to sell 560,000 EVs by 2025, 700,000 hydrogen fuel cells by 2030
Government data, shows the number of camping vehicles registered in South Korea reached 24,869 in 2019, marking a 20-fold increase from 1,300 in 2011. +VE for sales of Renault Samsung Motors’ Master and Hyundai Motor launched Porest, a camper car based on its small-sized truck, Porter 2.
LG Electronics CEO vowed Thursday to improve the company's mobile communications business next year amid the pandemic. He said it is "working hard" to create a turnaround in its struggling mobile business.  Which includes improving cost competitiveness.
Hyundai Heavy picked as preferred bidder for Doosan Heavy Industries & Construction's 35.4% stake of Doosan Infracore although no time frame was given for the transaction.
Samsung Electronics on Thursday unveiled the first MicroLED screen for home use, announcing its push for a whole new category of home entertainment.  It showcased a 110-inch MicroLED model, with a retail price tag of 170 million won ($156,612) for the domestic market. It refuses to call the new display a TV, preferring “screen” or “display solution,” it said.Samsung Electronics moved up to the third spot in the global smartwatch market in Q3r thanks to brisk sales of the Galaxy Watch3, a report from from Counterpoint Research showed Thursday.
GS Caltex said Thursday its biobutanol sales have jumped more than tenfold on-year in the first 11 months of this year, due to growing demand for eco-friendly raw materials. +VE
Convenience store CU said Thursday it will roll out a drive-thru order pickup service sometime this month, in the latest in a series of moves by the retail industry to reduce human-to-human contact amid the pandemic.
The US International Trade Commission (ITC) on Wednesday delayed a decision in a trade secrets case involving South Korean battery makers LG Chem and SK Innovation to Feb. 10. The decision had been expected on Thursday. -VE

TAIWAN Expect market to open higher following yesterday’s consolidation.
No data due 
S&P Global Ratings has raised Taiwan’s GDP growth forecast from 1% to 1.64% for this year, while trimming the pace from 3% to 2.9% for next year, amid the benefits of a stay-at-home economy and optimism that COVID-19 vaccines would reduce downside risks.
The Executive Yuan yesterday approved a series of measures aimed at reining in real-estate speculation, including a proposal to mandate public disclosure of the price and address of all properties sold in the nation.
The nation’s workforce -0.43% YoY to 7.96 million people in October, while average monthly pay increased 1.62% to NT$42,756 (US$1,500), the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The latest wage and employment data reflected a lingering, but milder impact from the COVID-19 pandemic, the statistics agency said.
Reuters a special report on China launching 'gray-zone' warfare to subdue Taiwan An irregular type of conflict, which stops short of an actual shooting war, the aim is to subdue the foe through exhaustion. Seen in conducting waves of threatening forays from the air while ratcheting up existing pressure tactics to erode Taiwan’s will to resist, say current and former senior Taiwanese and US military officers. The flights, they say, complement amphibious landing exercises, naval patrols, cyber attacks and diplomatic isolation.  
Key is international support for Taiwan as it remains the last of the three areas (Tibet, HK and Taiwan) that Beijing wishes to exert control over. Whilst the article looks at the military aspect the KEY is really access and control over TSMC, UMC and other key Tech companies.  That is the real goal, control of technology and the US is aware of that but many other western nations have for years tried to walk the tightrope between support for Taiwan and access to Chinese markets something that China has used to its advantage. With China under pressure from the US on tech & investment sanctions as it seeks to restart is wider economy further than just Electronics and covid linked exports  PLUS the questions being raised over Beijing’s ability to bail out the SOE’s; President Xi may see Taiwan as a useful target. 

CHINA Expect market to open flat with concerns over US/China relations still dominating investor concerns.  
No data due but Monday House Price Index.
China’s economic rebound is being blunted by a global shortage of shipping containers, sending cargo costs to record highs and hampering manufacturers in filling fast-recovering global goods orders.  China exports 3 containers fro every one imported. Slight -VE
US Federal Communications Commission (FCC) said on Thursday it begun the process of revoking China Telecom’s authorization to operate in the United States as it took further steps to crack down on China’s role in U.S. telecommunications.
The appointment of Katherine Tai as the US Trade Rep likely to put more pressure on Beijing; she speaks Mandarin and formerly had responsibility for litigation in US disputes against China at the World Trade Organization. Combine that with Biden’s aim of negotiation in alliance with other countries is likely to put Beijing under pressure to make more concessions and why it is saying that Vice Premier Lui He will lead phase 2 talks for China, trying to intimidate but unlikely to be effective China debt: local government default risk grows as authorities struggle to repay credit.  The debt owned by local government financing entities  has increased substantially this year as regions borrow money to offset the economic impact of the coronavirus. Key areas of risk are off-balance sheet local authority borrowing and LGFV's
National Health Commission, National Healthcare Security Administration and National Administration of Traditional Chinese Medicine issued a notice on deep promotion of service actions - "Internet + Medical Health" and "Five Ones".   The notice stated that China should foster "One Body" co-sharing services to improve the level of convenient, intelligent and humanized service; nudge "One Code" integrated service to break down the barriers of coexistence of multiple codes that are not universal; encourage "One Stop" settlement service to perfect the "Internet+" medical online payment; promote "One Internet Office" to address difficult and complicated administrative cases; and push forward "One Chess Game" to enhance anti-epidemic IT support.
Australia is seeking to boost her cotton supply to countries like Vietnam as her tension with China is leaving Canberra with large stockpilessources familiar with the plan were quoted as saying by Reuters.
China is to start collecting extra duties on Australian wine today, further ratcheting up tensions with Canberra and handing another blow to an industry already hit by tariffs last month.
Total mobile phone shipments in China fell 15.1% YoY to 29.584 million units last month, the China Academy of Information and Communications Technology announced.
HNA Group will sell Ingram Micro for about US$7.2 billion (HK$56.16 billion), to US private equity firm Platinum Equity said a statement that confirmed an earlier Bloomberg report.

HONG KONG  ADR’s +156pts to open at 26,566 a broad based rebound but Telco names weak on news of US action against China Telecom. US operations.  HSBC and STANDARD CHART +VE as UK regulator give green light to resume dividend payments.  Petrochems +VE as Brent closed about US$50 for the first time since March. 
No data due

IPO  
POP MART (09992.HK),  debut, opened at $70 in grey market, up around 82% against the listing price $38.5, and last stood at $70, on volume. of 600,000 shares, PhillipMart data showed.
DATANG GROUP (02117.HK), debut  opened at $4.51 in grey market, down 1.1% against the listing price of $4.56, and last stood at $4.53, down nearly 0.7% against the listing price, on volume of 52,000 shares, PhillipMart data showed.
SHORT SELLING Thursday 14%  vs 14.2% Wednesday 
Top Shorts  Ping An (2318) 42%, AAC Tech (2018) 33%, Anta Sports (2020) 28%, Hang Seng Bank (11) 27%, BankComm (3328) 26%, CKI (1038) 24%
BUYBACKS/INSIDER DEALING

S HARBOURHOLD (01663.HK) announced that the Company’s chairman and substantial shareholder, Wong Lam Ping, continued to acquired shares and bought an aggregate of 900,000 ordinary shares of the Company in the open market at an average price of approximately HK$0.14 per share on 10 December 2020.
WATCH
Q Technology's (1478) camera modules sales -6.3% MoM and 16.8% YoY to 34.95 million units in November, due to the Covid-19 pandemic and a shortage in the supply of key parts in the smartphone supply chain.
The Urban Renewal Authority (URA) will conduct a random assignment of priority numbers (random assignment) tomorrow (11 December) for the 4,909 applications for the 43 remaining “Starter Homes” units in its eResidence project. Upon completion of the random assignment, the list of assigned priority numbers and the video will be uploaded to the eResidence’s website (www.eresidence.hk) later on the same day.
Business receipts in value terms of many major service industries showed decreases of different magnitudes in Q3 2020 when compared with Q3 2019, according to the provisional figures released today (Dec 10) by the Census and Statistics Department. Double-digit decreases were recorded in business receipts of the accommodation services (-50.8%), food services (-35.3%), administrative and support services (-27.5%), transportation (-23.7%), retail (-16.7%) and banking (-13.8%) industries.
SMIC(00981.HK) : Chip Capacity Tight on Faster-than-expected Demand Growth, According to Qualcomm's forecast, the global 5G handset shipment will reach 200 million units this year and 550 million units next year.  PLUS SMIC found it hard to catch up with the demand growth with production expansion. The schedule of output expansion has been pushed back amid the pandemic.
The Financial Reporting Council (FRC) has for the first time gained access to the audit papers of Chinese companies listed in Hong Kong in a breakthrough which may serve as a model for cooperation between the financial watchdogs of the US and China, SCMP reported. The Chinese finance regulator has passed the auditor document of seven companies to the FRC and will soon hand over the papers of another four companies, which are regarded as “state secrets”, said the report.
Centa Valuation Index (Major Banks) (CVI) last printed at 38.15, down 8.73 pts weekly to the trough since early September, said Centaline Property. Banks turned conservative on mortgage loans for the week when anti-plague measures had been tightened. This lead CVI to drop below 40, the lower limit of the critical range.

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