Dec 3 Asian Macro Initial Thoughts Asia mixed, US Futures flat


04 Dec

Asian Futures Nikkei Futures opened higher but now are -70pts,  HK ADR’s +99pts and Australia higher in early trades.  I expect markets to struggle with many trading at highs and no new drivers and rising short term concerns on covid. China Caixin  PMI’s out just after the open likely to influence sentiment.

US Futures opened flat for Dow and S&P, the NDX futures were +0.1%; Initial claims will be closely watched tonight and the bond market in focus at the T10 flirts with 1%.

DOW +0.2%, NDX -0.05%, S&P +0.18%, Russel 2K +0.11% opened lower as Senate leader McConnell rejected the bipartisan $908bn stimulus package.  But worked better and spent most of the day trading around flat on news that Pelosi and Schumer were backing the stimulus plan as a basis for negotiations. Also concerns after Biden said he wouldn’t roll back tariffs but would review and build a consensus with allies for negotiating with China. ADP data was weaker than forecast from an upwardly revised Oct and the ISM New York missed too.  Energy and Financials lead the gainers.Salesforce -8.9%  confirmed earlier reports that it was buying Slack -2.6. Salesforce will pay over $27 billion in cash and stock for the messaging and workflow platform, or about $45.86 per share.
Banks JPMorgan Chase +1.9%, Citigroup +3.2% and Wells Fargo +2.9%, AMEX +2%
Work from home names: Facebook +0.3%, Apple +0.3%, Amazon -0.5%, Netflix -0.2%, Zoom Video +1.6%, Alphabet +1.7% and Microsoft -0.4%,
Nvidia +1.2%, Micron +3%, AMD +1.2%, Skyworks -0.4%
Re-opening stocks Boeing +5.1%, Caterpillar +0.4%, Simon Property +2.7%, Kohl’s +5.6%, Nordstrom +4.9%, Gap -3.5%, United Airlines +3.1%, Carnival +1.5%, Wynn Resorts +2.7%, Chevron +2.8%, Exxon Mobil +3.8%,
Lock down names Campbell Soup -2.4% General Mills -1.9%, JM Smucker -1.8%
DATA
MBA 30 Mortgage Rate 2.92% vs 2.92% prior & Applications -0.6% vs +3.9% prior
ADP Employment Change Nov +307k vs +404k Oct revised up from +307k (F/cast was +370k)
ISM New York Index Nov 44.2 vs 65.1 Oct (F/cast was 55)
EIA Crude Oil Stocks Change -0.679m vs -0.754m prior (Consensus was -2.358m)
EIA Gasoline Stocks Change +3.491m vs 2.18m prior (Consensus was 2.386m)
Beige Book points out need to lending programmes
USD was little changed vs Yen & Euro. Bitcoin +2.2% @ 19,196.50, VIX +1.9% @ ,21.17 US T10 @ 0.934%
OIL Brent +0.82%, WTI +0.58% rose more than 1% intraday on news UK had approved Pfizer/BioNTech vaccine.
Gold +0.85%, Silver +0.58%, Copper +0.35%
AHEAD Challenger Job Cuts, Initial Claims, 4 week Ave Claims, Continuing Claims, Services and Composite PMI. ISM Non Manufacturing Data (PMI, Employment, New Orders, Prices, Business Activity), EIA Natural Gas Report

DAX -0.52%, CAC +0.03%, FTSE +1.23%  Markets opened lower but worked higher, and traded around flat in the morning. PM saw the FTSE work higher whilst the DAX and CAC sold down before working back to around flat at the close.  Data was slightly better than expected but covid remains a concern despite the UK approving  Pfizer’s/BioNTech vaccine for emergency use. News that Biden will not roll back tariffs or phase 1 of the trade deal but look at a co-ordinated strategy with allies seem as -VE for China.
G4S +7.4% after Canada’s GardaWorld increased its takeover bid for the British security firm to £3.68 billion ($4.92 billion).
IWG -6.7% after launching a £300 million convertible bond offering.
Data 
EuroArea
Unemployment Rate Oct 8.4% vs 8.3% Sept (F/cast was 8.5%)
PPI Oct +0.4 vs +0.3 Sept (F/cast was +0.3)
PPI Oct -2 vs -2.4 Sept (F/cast was -2)
Germany
Retail Sales Oct +2.6% MoM vs -2.2% Sept revised (F/cast was +0.8%)
Retail Sales Oct +8.2% YoY vs +7% Sept revised (F/cast was +6%)
AHEAD
EUROZONE Services and Composite PMI, Retail Sales, ECB General Council Meeting.
GERMANY Services and Composite PMI
FRANCE Services and Composite PMI, Retail Sales
UK Services and Composite PMI

JAPAN Expect Nikkei to open lower (Nikkei Futures opend +70pts but now -70pts) but upside limited with PMI data expected to be weaker MoM and  concerns over rising covid cases.  Yen  currently 104.41
Data due Foreign Bond and Stock Purchases, PMI services and Composite Tokyo reports 500 new covid cases Wednesday (vs 128  Tuesday) and 2,417 nationwide.
Japan's government has lodged a protest after Russia's military deployed a number of its new S-300V4 missile defence systems for combat duty on a disputed chain of islands near Japan, Chief Cabinet Secretary Katsunobu Kato said on Wednesday.
Softbank will let its options on tech stocks expire after strategy questioned by investors; estimates to have lost the group $2.7bn
Nippon Telegraph and Telephone Corp (NTT) is considering bond offerings of up to $19 billion in Japan and overseas to refinance loans for the $40 billion acquisition of its wireless carrier business, the chief executive said.
NTT Docomo Inc plans to cut mobile phone fees across the board becoming the first of Japan's major carriers to do so following a government call for the industry to lower charges. It will hold a press conference today on new service plans Slight -VE as likely to trigger a price war.
Govt likely to grant points worth unto Yen 1m which can be used to buy home appliances etc for building or renovating properties into energy effect homes.
Toyota Union making adjustments to shelve its plan that Toyota raise the level of base pay across the board next year

SOUTH KOREA Expect markets to open higher extending recent gains but concerns over rising covid cases will limit the upside.
Data out Foreign Exchange Reserves Nov $436.38b vs 426.5b Oct (F/cast was 420.7b)
A total of 22,973 tests confirmed 511 more cases; 493 locally transmitted and 18 imported on Tuesday, according to the Korea Disease Control and Prevention Agency’s situation report Wednesday. The cumulative number of official cases is now 35,163. -VE for sentiment.
Finance Minister Hong Nam-ki said Wednesday that next year's budget will help South Korea's economy recover from the fallout of the coronavirus pandemic.  Shortly after the National Assembly passed a 558 trillion-won (US$506 billion) budget for 2021, a net increase of 2.2 trillion won to help virus-hit small merchants and secure vaccines.
Hyundai Motor Group said on Wednesday it will introduce an electric vehicle-only platform early next year that will use its own battery technology to cut production time and costs. +VE
Samsung Electronics Co. was the top global smartphone manufacturer in Q3 with 23.2% market share; TrendForce said Wednesday, as demand for its mobile devices increased in advanced markets amid the pandemic. Second and third were Chinese players Oppo 13.4% and Xiaomi 13.2%Samsung was also second in the African smartphone market with 20% market share, behind China’s Transsion with 44%.
CJ Group has hired Morgan Stanley to run the sale of Shanghai-based CJ Rokin Logistics Supply Chain. Bidders include JD.com, delivery company SF Group and Carlyle.
Hanwha Q Cells has become the world’s first solar module manufacturer to pass international product testing institute TUV Rheinland’s new Quality Controlled PV certification.
Homeplus said Wednesday the overall sales of IT home appliances jumped 46% YoY from March to November, with increased remote working and homeschooling amid the pandemic.
Korea International Trade Association Chairman Kim Young-ju said the organization foresaw export growth of more than 6%, and that the country’s trade volume will recover back above the $1 trillion mark next year. +VE

TAIWAN Expect market to open higher but resistance seen as the market approaches 14,000.  TSMC was the driver Wednesday with old economy stocks seeing weakness. 
No data due 
The central bank would intervene in the market whenever necessary to help stabilize the New Taiwan dollar, central bank Governor Yang Chin-long said yesterday, adding that it is concerned Taiwan might be placed on the US watchlist for currency manipulation.
Qualcomm Inc expects global shipments of 5G smartphones to more than double to between 450 million and 550 million units next year from this year, driven by increasing 5G network deployment worldwide and broader adoption of 5G technology beyond smartphones, a company executive told a virtual news conference yesterday. +VE
Elan Microelectronics yesterday said that the Beijing Intellectual Property Court has accused China’s Goodix Technology Inc  and Beijing Xingyi Tongda Tech of infringing on one of Elan’s patents. The patent is for touch sensors used in touchpads, Elan said. It has asked the court to ban the Chinese chipmakers from producing and selling chips based on the patent. Elan also requested damages of 25 million yuan (US$3.81 million).  It reported NT$11.88 billion in cumulative revenue in the first 10 months of the year, 53% YoY as distance-learning and work-from-home trends increased demand for touchpad controllers and fingerprint sensors used in laptops.
Five industry associations and four industry-related nonprofit organizations yesterday signed a MOU to promote the localization of semiconductor equipment production. Currently 90% of the equipment is imported.
Real-estate transactions in special municipalities last month increased 25% YoY  (+13% MoM) helped by a large amount of liquidity in the market, data released by the Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung.
China Airlines Ltd took delivery yesterday of its first Boeing Co 777 cargo jet, and plans to more prominently display Taiwan-related symbols on the plane’s fuselage as part of government efforts to more clearly differentiate Taiwan from China. The aircraft is the first of six 777 jets ordered, the company said. The 777 is 20% more fuel efficient than the 747-400 freighters in operation and would allow the airline to be more competitive amid high fuel costs, it said. CAL has said that it plans to operate the 777 freighters mainly on its European and North American routes, while also replacing some older 747-400s.

CHINA Expect market to open lower with caution over US/China trade relations and ahead of Caixin PMI data which is due just after the market open.
Data due Caixin Services and Composite PMI
US and France and other countries are criticising China over its tweet with a fake picture; the US saying it was “another example of its unchecked use of disinformation and coercive diplomacy”.“This is a new low, even for the Chinese Communist Party,” Brown posted on his Twitter account on Wednesday morning. “Its hypocrisy is obvious to all. While it doctors images on @Twitter to attack other nations, the CCP prevents its own citizens from reading their posts.” -VE for diplomatic relations which could also heighten trade and investment tensions
In response to the US' legislation bill that may bar Chinese firms from going public on US exchange, Chinese Foreign Ministry spokesperson Hua Chuying stated that this is a political crackdown on Chinese firms, cited People's Daily. While Beijing opposes Washington's politicalisation of securities scrutiny, Hua called on Washington to provide a level and fair investment and business landscape for foreign enterprises.  A little hypocritical considering that Beijing doesn’t allow a level playing field within China for foreign enterprises.
Biden to keep China Tariffs in place plus the phase 1 deal and conduct a review before building an alliance of allies before negotiating with China -VE
China’s potential interest in joining Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is likely to be rebuffed says former US Negotiator although China’s negotiator says there is no reason it should not join.
The PBoC is in talks with Hong Kong parties over the framework solution of southbound trading of bonds, said China's Financial Times. The northbound trading of "Bond Connect" had commenced in July 2017.
GEELY Talks on a merger or alliance between Sweden’s Volvo Cars and Geely are likely to resume next year, Volvo Chief Executive Hakan Samuelsson said on Wednesday.  Efforts by Geely to seek a listing on Shanghai’s New Star Market currently prohibit the Chinese carmaker from making changes to its capital structure, delaying the talks into 2021, Samuelsson told the Financial Times Future of the Car Summit.
FT Reports that 'Chinese state-backed funds are still scouring the US for investments in critical technologies despite stiffer restrictions on such deals, prompting bipartisan concern in Washington over the national security implications.’  

HONG KONG  ADR’s +99pts to open at  26,642 but Chinese Bank remain under pressure and the rising covid cases and increased social distancing measures -VE for sentiment.  
Data due Pre Market PMI (Oct was 49.8 F/cast is 49)

INTERNATIONAL RELATIONS  
Britain urged the Hong Kong and Beijing  to stop their campaigns to stifle opposition, issuing a statement on Wednesday as three Hong Kong activists including Joshua Wong began their prison sentences.
Former chief executive Tung Chee-hwa as a keynote address said that China had not ‘intruded in Hong Kong affairs for the past 22 years’.  He warned that the city has become one of the biggest sticking points, along with Xinjiang and Taiwan, preventing better relations between China and the US and other Western powers.  I think most people know that China has clearly intruded in HK affairs and that as a result of China’s actions international relations are strained.

SHORT SELLING Wednesday 12.5 vs 18.2% Tuesday 
Top Shorts   Hang Seng Bank (11) 45%, MTRC (66) 42%, Swire Pac (19) 41%, Bank of China (3988) 37%,  Ping An (2318) 36%, CCB 9939) 34%, NWD (17) 34%, Country Garden (2007) 31%, CLP (2) 31%, HK & China gas (3) 29%,  ICBC (1398) 29%, SHKP (16) 28%, Wharf REIC (1997) 26%.

BUYBACKS/INSIDER DEALING 
Li Ka-shing and Victor T K Li, through Li Ka Shing Foundation Limited, acquired a total of 787,500 shares in CK ASSET (01113.HK) at the average price of HK$43.1911, HK$43.4954, HK$43.1191 and HK$42.5455 per share on 26 November, 27 November, 30 November and 1 December 2020 respectively.
As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK Asset increased from 35.79% to 35.81%, and increased from 35.85% to 35.87%, respectively.

WATCH
China Overseas Land & Investment (0688) won a residential site at Kai Tak for HK$4.27 billion, nearly 4% higher than the estimate.  But there is an element of special purchaser considerations as it is its second site having acquired Kai Tak Area 4B Site 2 in December 2018. The smallest residential site in Kai Tak, Area 4E Site 1 has an area of 5,548 square meters. The minimum gross floor area is 18,309 sq m and the maximum gross floor area that may be attained is 30,514 sq m. China Overseas said it will develop a luxury project and estimates the total investment amount is about HK$6.5 billion.
MACAU The prospect China's central bank-backed cryptocurrency, the digital yuan, will be introduced to Macau is unnerving operators in the world's biggest casino hub. Though no formal plans have been announced, some junkets - businesses that act as middlemen for Chinese high rollers who make up half the city's gambling revenue - are exiting the industry or shifting resources elsewhere. They're saying that the imposition of a traceable, government-linked currency will be the death knell for an industry already hobbled by the virus's impact and stricter rules around high-stakes gambling over the past few years.
DAFA PPT (06111.HK)  announced that for the eleven months ended 30 November 2020, the aggregate contracted sales of the Group was approximately RMB26.303 billion.
CHINA AOYUAN (03883.HK)  announced that, in November 2020, the Group achieved unaudited property contracted sales of approximately RMB15.25 billion, +21% YoY.
RONSHINECHINA (03301.HK) announced that during the month ended November 2020, the total contracted sales amounted to RMB18.836 billion, up 10.09% yearly. For the eleven months ended 30 November 2020, the aggregate contracted sales amounted to RMB133.668 billion, up about 6% annually.
MODERN LAND (01107.HK)  November 2020, contracted sales amounted to RMB5.007 billion, up 42.29% yearly.
Henderson Land  (12 HK) Since the launch of the Royale project series on 1 August, a total of 959 units of Seacoast Royale (Phase I) and Starfront Royale (Phase II) were sold, involving over $4.6 billion, said Thomas Lam, General Manager of Sales Department.

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