Dec 4 Asian Macro Initial Thoughts Asian to struggle, US Futures flat ahead of jobs report

07 Dec

Asian Futures Nikkei Futures currently flat,  HK ADR’s -52pts and Australia up small in early trades.  

US Futures opened flat ahead of the US jobs report tonight Dow +20pts, S&P flat and NDX +0.1%.

DOW +0.29%, NDX +0.23%, S&P -0.06%, Russel 2K +0.58% Dow and NDX opened higher and traded sideways, S&P slightly lower and traded around flat all day.  Jobs data beat forecasts and news that stimulus talks were resuming helped support the market despite covid cases have now hospitalised over 100k Americans; with 2,800 deaths which is higher than during the first wave.All three sold down into the close as Pfizer -1.7% announce cutting the number of doses it can supply this year by 50% because raw materials in early production didn’t come up to standard. But it will still supply 1.3b doses in 2021 and the shortfall will be made up as production ramps up. Still it alerted investors to the fact that the vaccine roll out could still face issues.Warner Bros to stream all 2021 movie releases.
Banks JPMorgan Chase -0.7%, Citigroup -1.1% and Wells Fargo +1%, AMEX +0.6%
Work from home names: Facebook -2%, Apple -0.1%, Amazon -0.5%, Netflix -1.2%, Disney -0.2%, Zoom Video +0.2%, Alphabet -0.2% and Microsoft -0.5%,
Nvidia -1.1%, Micron +1.1%, AMD -1.5%, Skyworks +0.2%
Re-opening stocks Boeing +6% got first order for 737 Max from Ryanair, Caterpillar +0.4%, Simon Property +2.7%, Kohl’s +0.2%, Nordstrom +2.7%, Gap +1.4%, United Airlines +6.8%, Carnival +8.1%, Wynn Resorts +3.2%, Chevron unch, Exxon Mobil +0.7%,
Lock down names Campbell Soup +0.7% General Mills +0.4%, JM Smucker +1.4%
AFTER MARKET DocuSign +6% on better-than-expected results for its fiscal Q3 and upbeat full-year guidance.Ulta Beauty -5% for Q3 reported a net sales miss and same-store sales fell 8.9% in the quarter.
Cloudera +8% ons stronger-than-expected results as earnings and revenue beat
PagerDuty +14% As Q3 results beat
Challenger Job Cuts Nov 64.797k vs 80.66k Oct (F/cast was 79k)
Initial Claims 712k vs 778k prior revised (F/cast was 774k)
4 week Ave Claims 739.5 vs 750.75k prior revised from 748.5k (F/cast was 752.75k)
Continuing Claims 5.52m vs 6.089m prior revised from 6.071m (F/cast was 5.89m)
Services PMI Nov vs 56.9 Oct (F/cast was 57.7)
Composite PMI Nov vs 56.3 Oct (F/cast was 57.9)
ISM Non Manufacturing Data
Business Activity Nov 58.0 vs 61.2 Oct (F/cast was 59)
Prices Nov 66.1 vs 63.9 Oct (F/cast was 63)
New Orders Nov 57.2 vs 58.8 Oct (F/cast was 57)
Employment Nov 51.5 vs 50.1 Oct (F/cast was 50)
PMI Nov 55.9 vs 56.6 Oct (F/cast was 56)
EIA Natural Gas Report -1Bcf vs -18BCf (Consensus was -12 Bcf)
USD was weaker vs Yen & flat vs Euro. Bitcoin +1.2% @ 19,468.25, VIX +0.5% @ 21.28, US T10 @ 0.908%
OIL Brent +1.12%, WTI +0.93% as OPEC and allies agree to gradually increase production by 500k barrels a day starting January
Gold +0.78%, Silver +0.5%, Copper -0.2% on weaker dollar.
AHEAD Balance of Trade, Non Farm Payrolls,  Unemployment Rate, Ave Hourly Earnings, Ave Weekly Hours, Imports, Exports, Factory Orders, Baker Hughes Total Oil Rig Count.
Speeches by Fed’s Evans and Bowman

DAX -0.45%, CAC -0.16%, FTSE +0.42%  markets opened lower; Dax and CAC effectively traded sideways all day, FTYSE worked higher in the afternoon.  PMI data was weak but generally better than F/cast. Caution ahead of US initial claims and watching for news on a new stimulus package. Initially Banks were weak and Tech was seeing +VE interests the day went on Chemicals and Healthcare turned weaker and Travel & Leisure rebounded.
A Brexit agreement now seems unlikely.
Rolls Royce +VE after Bloomberg reported that the company sees a chance to return to the narrow-body jet market.
Nemetschek and Norwegian hydrogen storage company Nel both fell by more than 4%.
Services PMI Nov 41.7 vs 46.9 Oct (F/cast was 41.3)
Composite PMI Nov 45.3 vs 50 Oct (F/cast was 45.1)
Retail Sales Oct +1.5% MoM vs -1.7% Sept revised (F/cast was +0.4%)
Retail Sales Oct +4.3% YoY vs +2.5% Sept revised (F/cast was +2.6%)
ECB General Council Meeting.
Services PMI Nov 46 vs 49.5 Oct (F/cast was 46.2)
Composite PMI Nov 51.7 vs 55 Oct (F/cast was 52)
Services PMI Nov 38.8 vs 46.5 Oct (F/cast was 39)
Composite PMI Nov 40.6 vs 47.5 Oct (F/cast was 39.9)
Retail Sales Oct +2.8% MoM vs -3.6% Sept revised (F/cast was +2%)
Retail Sales Oct +5.9% YoY vs +2.7% Sept (F/cast was +3.6%)
Services PMI Nov 47.6 vs 51.4 Oct (F/cast was 45.8)
Composite PMI Nov 49 vs 52.1 Oct (F/cast was 47.4)
EUROZONE Construction PMI
GERMANY Factory orders, Construction PMI
FRANCE Budget Balance, Construction PMI
UK Construction PMI, New Car Sales

JAPAN Expect Nikkei to open flat, but I would expect downside with rising covid cased and stronger Yen;  currently 103.86
No data due 
Tokyo metropolitan government on Thursday reported 533 new covid cases (+33 from Wednesday).  Nationwide, the number of infected cases was 2,483 as of 6:30 pm Thursday. Osaka raised its covid alert to red for the first time since the system was introduced as cases surged -VE for sentiment.
A trilateral summit between Japan, China and South Korea has been postponed until next year as the countries prioritize their COVID-19 response, Japan’s Nikkei newspaper reported on Thursday. But S Korean officials denied the report saying no decision has been made.
Government is set to extend the domestic travel subsidy programme until around June next year in order to try and boost the economy amid the coronavirus pandemic, sources familiar with the matter said Thursday.
Tokyo prosecutors have asked former Japanese PM Abe to appear for voluntary questioning about the dinner parties his political group held for supporters, Kyodo News and other local media reported on Thursday.
Japan may ban sales of new gasoline-engine cars by the mid-2030s in favour of hybrid or electric vehicles, public broadcaster NHK reported on Thursday, aligning it with other countries and regions that are imposing curbs on fossil fuel vehicles.
Kaneka Corp has entered into a deal to manufacture Inovio Pharmaceuticals Inc's COVID-19 vaccine candidate, the U.S.-based vaccine maker said on Thursday.NTT
Docomo Inc as expected said Thursday it will start offering a 20-gigabyte monthly plan called "ahamo" for 2,980 yen in March through online contracts, becoming the first of Japan's major wireless carriers to lower mobile phone fees following government pressure. The new plan from Japan's leading wireless carrier, including unlimited free calls of up to five minutes, is expected to intensify price competition in a market in which the company, KDDI Corp, operator of the "au" brand, and SoftBank Corp control roughly 90%-VE for shareholders.

SOUTH KOREA Expect markets to open lower after hitting a record high on Thursday  with Samsung hitting W70,000 intraday.
Data out Current Account Oct $11.66b vs 10.21b Sept  (F/cast was 8.5b)
Korea Disease Control and Prevention Agency (KDCA) reported  540 more COVID-19 cases, including 516 local infections, raising the total caseload to 35,703.  The capital city of Seoul accounted for 260 of the total. -VE
One in 4 companies in South Korea has implemented or is planning restructuring measures this year due to financial difficulties stemming from the prolonged COVID-19 pandemic, data showed Thursday.
South Korea has reached a deal with AstraZeneca PLC to purchase its coronavirus vaccine candidate as it seeks to secure supplies amid a resurgence of outbreaks, local media reported on Thursday.
Daewoong Pharma said on Thursday it had sought regulatory approval for Phase II trials of its anti-parasite niclosamide drug to treat COVID-19 patients, sending its shares up nearly 6% Thursday.
Renault Samsung Motors said Thursday its sports utility vehicle QM6 has climbed the sales chart to lead company’s performance this year.  According to the automaker, the QM6 model sold 4,323 units in October, up 35.6% MoM. +VE
Posco Group said Thursday its salt lake in Argentina contains 13.5 million metric tons of lithium reserves, more than six times greater than initial calculation of 2.2 million tons. Based on the massive reserves, which are enough for 370 million electric vehicles, the group aims to establish a robust value chain of EV battery raw materials.  Key here is that whilst lithium prices are recovery the is a big risk over supply again. Neutral
China has granted a license to a game made by a South Korean company for the first time in nearly four years, finally lifting an implicit ban on Korean games that has persisted since 2017. +VE
Daewoo Shipbuilding & Marine Engineering Co. said Thursday that it has won a 282 billion-won ($257 million) order to build three oil tankers from Abu Dhabi National Oil Co. (ADNOC).  +VE
Korea Shipbuilding & Offshore Engineering Co. said Thursday it has clinched a 100 billion won ($91 million) order to build two liquefied petroleum gas (LPG) carriers from a Liberian company.
LS Cable & System has recently released a series of new smart cables, including a long-distance Power over Ethernet cable and a hacker-proof optical fiber cable. +VE
LG Chem and SK Innovation are sparring over whether the U.S. International Trade Commission (ITC) should consider recent electric vehicle recalls in a trade secrets case.

TAIWAN Expect market to open lower as the Pfizer news hurts recovery expectations.
Data due after market Foreign Exchange Reserves
The climate gauge for the nation’s manufacturing industry is expected to turn “green” next year from “yellow-blue,” as vaccines could help the world emerge from the COVID-19 pandemic, the Taiwan Institute of Economic Research (TIER) said on Wednesday. Electronics suppliers would continue to benefit from low-contract business opportunities, as it would take a while for most people to be vaccinated, the institute said.
Adata Technology yesterday said its revenue last month +8% to NT$3.12 billion from October, benefiting from a steady demand for memory products. On an annual basis, last month’s revenue rose 23.4% and hit the second-highest level this year, it said. In the first 11 months, Adata saw revenue total NT$29.28 billion, up 26.43% YoY
More than 500 exhibitors are showcasing their latest innovations at the Taiwan HealthCare Expo, which began at the Nangang Exhibition Center in Taipei yesterday. AU Optronics Corp  unveiled a high-resolution surgery display.
Continental Development Corp  yesterday sealed an agreement with Daiwa House Industry Co to develop two buildings in Kaohsiung’s central area, the first foray into the city’s property market for both firms. The joint venture consists of a hotel with 260 guestrooms under the Nikko Hotel brand and a residential building with 227 apartments, company officials said. +VE
The Taiwan Stock Exchange (TWSE) and the Taipei Exchange (TPEx) are to launch two new trading boards in July at the earliest to help local and foreign start-ups, as well as biotech companies with great potential, raise capital and gain public awareness, the Financial Supervisory Commission (FSC) said yesterday. +VE

CHINA Expect market to open lower as Trump confirms SMIC and CNOOC on its entity list.  Also news reports of more covid cases in China will raise concerns too. Traded may see some additional weakness into the close ahead of China Trade data on Monday.
No data due
The Trump administration on Thursday added China’s top chipmaker SMIC and oil giant CNOOC along with China Construction Technology Co Ltd and China International Engineering Consulting Corp. to a blacklist of alleged Chinese military companies.  It raises concerns that there could be more to follow before Trump leaves office.
The top US intelligence official stepped up the Trump administration’s harsh attacks on Beijing on Thursday by labeling China the biggest threat to democracy and freedom worldwide since World War Two and saying it was bent on global domination.
US administration has issued rules to restrict travel to the United States by members of China’s ruling Communist Party and their families to single entry and one month stay, in its latest move to push back against Chinese activity in the country.  Previously they could apply for up to 10 years duration.  It will be interesting to see if it impacts President Xi’s daughter who is currently living in the US.  China has lodged a protest against the action.
China, Russia and other countries are using espionage to glean secrets of Norway’s petroleum industry and plans by its government to cut or increase production, the Norwegian counterintelligence service PST said.
WeChat censored by removing a post by Australia’s prime minister who had written '“The post of a false image of an Australian soldier does not diminish our respect for and appreciation of the Chinese Australian community, nor will it diminish our friendship with the people of China,’’'  raising concerns about Beijing’s ability to export censorship overseas through technology groups. -VE

HONG KONG  ADR’s -52pts to open at 26,675 but likely to see more downside as covid cases remain a concern and Trump confirms CNOOC and SMIC on entity list. Next Digital’s executives criminally charged over violation of a lease clause (previously only a civil issue) will raise concerns over how the new National Security Law is being used and could have significant implications for businesses in HK. 
No data due

SHORT SELLING Thursday 17.8% vs 12.5% Wednesday 
Top Shorts NWD (17) 47%, Wharf REIC (1997) 45%,  Ping An (2318) 42%, Hang Seng Bank (11) 38%, Galaxy Ent (27) 33%, MTRC (66) 31%, HSBC (5) 31%, Country Garden (2007) 31%, Sinopec (386) 31%, Swire Pac (19) 31%, ICBC (1398) 28%, boć HK (2388) 28%, Bank of China (3988) 28%, HK & China gas (3) 26%.


EVERGRANDE (03333.HK) further increased 22.3285 million shares of EVERG VEHICLE (00708.HK) yesterday  (3 December) at an average price of $28.568 per share.

WATCHThe 12 shopping malls of SHK PPT (00016.HK) were projected to deliver promising  turnover elevation (+8% MoM) during Christmas in light of a series of promotion offers showered by the company mixed with all-rounded marketing strategy, said Sun Hung Kai Real Estate Agency General Manager (Leasing) Fiona Chung.  The 12 malls include East Point City, Landmark North, life@KCC, Mikiki and PopWalk.
Developers have applied for pre-sale consents for four residential projects including 1,224 homes on 1 Wetland Park Road in Tin Shui Wai developed by Sun Hung Kai Properties (0016). Four more pre-sales consents applications were received last month, totaling 2,213 units, an increase of 131% month-on-month, the Lands Department announced.  The applications included 603 units on 8 Ma Sik Road in Fanling of Henderson Land Development (0012), 302 units on 8 Liu To Road in Tsing Yi of Wang On (1222) and 66 units in Tai Wai of Far East Consortium International (0035).  Four pre-sales consents were approved last month, including 688 units at Montego Bay in Yau Tong, 479 units on Muk Tai Street in Kai Tak, 334 units in Mount Anderson in Kwun Tong and 399 units at Monaco in Kai Tak, the department said.The second batch sale of 32 units at Arbour in Tsim Sha Tsui opens today.
Mox will remove electronic direct debit authorization from Hongkong and Shanghai Bank Corporation, Hang Seng Bank (0011), and Dah Sing Bank starting tomorrow.  This came after the virtual banks blamed traditional banks for high transaction fees. -VE for HSBC whose fees were up to 2%
Hong Kong Airlines announced that it will resume the flight between Hong Kong and Tokyo on every Friday with effect from tomorrow (4 December), while also resuming that between Hong Kong and Osaka on every Thursday and Saturday with effect from 1 January 2021. Meanwhile, greater flexibility is offered by the airline for travel plans with unlimited changes without change fees for tickets purchased from 24 November 2020 onwards.  Slight +VE
The Census and Statistics Department released the statistics on vessels, port cargo and containers for the third quarter of 2020. In the Q3 2020, total port cargo throughput -5.7% YoY to 63.3 million tonnes.  Within this total, inward port cargo -1.8% YoY to 42.9m tonnes and outward port cargo -13% YoY to 20.4 million tonnes.  -VE SHIPPERS
NEXT DIGITAL (00282.HK) To resume trading Friday; announced that Lai Chee Ying, Chairman and Executive Director of the Company, Chow Tat Kuen, Royston, Executive Director of the Company and Wong Wai Keung, Administrative Director of the Group have on 2 December 2020 respectively been charged with the offence of fraud contrary to section 16A of the Theft Ordinance (Chapter 210 of the Laws of Hong Kong).  Also that the Charges are in respect of violation of the terms of a lease with Hong Kong Science and Technology Parks Corporation regarding the Company’s business premises at 8 Chun Ying Street, Tseung Kwan O Industrial Estate resulting in benefit to Apple Daily Printing Limited and/or Dico Consultants Limited. Key here is that this would normally be a civil offence resolved by the payment of a fee; not a criminal one; but the new security law is being used to make it a criminal one which should raise serious concerns for everyone.Based on information currently available, after a mention hearing in the morning of 3 December 2020, Mr. Lai was remanded in custody pending the next hearing on 16 April 2021. Mr. Chow and Mr. Wong were granted bail on terms. As the Group is operated by a team of management personnel, the Board does not expect the Charges to have an immediate material adverse impact on the daily operations of the Group.
EVERGRANDE (03333.HK) aggregate contracted sales amount of the Group’s properties for the first eleven months of 2020 amounted to RMB678.66 billion, +16.9% YoY. As at the end of November 2020, the Group outperformed the contracted sales target of RMB650.0 billion for the year with an achievement rate of 104.4%.
Note FT’s LEX China property/Evergrande: towers of debt. -VE says risk of default is rising even though a collapse in Chinese property prices in unlikely.
Centa Valuation Index (Major Banks) (CVI) last printed at 46.88, +2.47 pts from 44.40 in the previous week, posting the sharpest rally in nine weeks.After two weeks of the 4th Covid resurgence, CVI edged up 4.30 pts for two weeks without hitting the soft spot, said Centaline Property. Regarding mortgage, banks stayed positive instead of turning bearish. Under such case, Wong did not expect property prices to tumble steeply.

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