Dec 9 Asian Macro Initial Thoughts Asia to open higher, US Futures higher too


08 Dec

Asian Futures Nikkei Futures +35pts,  HK ADR’s +pts and Australia higher in early trades.  

US Futures opened slightly higher Dow +54pts, S&P +0.2% and NDX +0.16%

DOW +0.35%, NDX +0.5%, S&P +0.28%, Russel 2K +1.4% Markets opened lower on covid/ stimulus concerns but worked better through the day, with the S&P closing at a new high.  Pfizer +3.2% and  BioNTech, +1.9% as the UK starts vaccinations.Tesla +1.3 off initial lows on news of a further $5bn stock saleSenate Majority Leader McConnell said he wants to pass a relief bill with neither legal immunity for businesses nor aid for state and local governments, two key and contentious issues along with direct stimulus checks to individuals. Which makes the chance of an agreement look slim.
Banks JPMorgan Chase +0.1%, Citigroup +0.4% and Wells Fargo -1.4%, AMEX -0.3%
Work from home names: Facebook -0.8%, Apple +0.5%, Amazon +0.6%, Netflix -0.6%, Disney unch, Zoom Video +1%, Alphabet -0.3% and Microsoft +0.8%,
Tech Nvidia -1.9%  and Intel +1% as US lawmakers asked whether executives knew their chips would be used to support surveillance activities in China and if they took steps against human rights abuses. Micron +0.8%, AMD -1.2%, Skyworks +1.5%
Re-opening stocks  Boeing -0.7%, Caterpillar +0.1%, Simon Property +0.8%, Kohl’s +0.9%, Nordstrom +1.9%, Gap +1.1%, United Airlines -0.3%, Carnival +1.6%, Wynn Resorts unch, Chevron +0.9%, Exxon Mobil +3.3%,  
Lock down names Campbell Soup -0.1% General Mills +1.1%, JM Smucker +0.3%
DATA
NFIB Business Optimism Nov 101.4 vs 104 Oct (F/cast was 105)
Non Farm Productivity Q3 +4.6% QoQ vs +10.6% Q2 (F/cast was +5%)
Unit Labour Costs Q3 -6.6% QoQ vs +12.3% Q2 revised (F/cast was -8.9%)
Redbook 5 Dec -2.4% MoM vs +1.3% prior [+2.1% YoY vs +9.2% prior]
API Crude Oil Stock Change +1.141m vs 4.146m revised from 4.1m (Consensus was -1.514m)
USD was flat vs Yen & Euro. Bitcoin -2% @ 18,775.50, VIX -2.9% @20.68 , US T10 @ 0.921%
OIL Brent +0.08%, WTI -0.42% demand concerns remain
Gold +0.48%, Silver -0.32%, Copper -0.41%
AHEAD MBA 30 Year Rate & New Applications, Wholesale Inventories, JOLTs Job Openings, EIA Oil report.

DAX +0.06%, CAC -0.23%, FTSE +0.05% markets opened lower; saw gentle easing through the morning and then rebounding to close effectively flat.   Investors concerned about Brexit as talks enter a ‘last effort’ but encouraged by the UK rolling out covid vaccinations but the number of covid cases still a concern.  The lack of news on a new US stimulus deal also -VE
Ashtead +2.2% off initial highs, as FY results beat and raised FY guidance
Beijer Ref +7.3% after a private equity group EQT bought a stake
DATA
EUROZONE 
Employment Change Q3 -2.3% YoY vs -3.1% Q2 (F/cast was -2%)
Employment Change Q3 +1% QoQ vs -3% Q2 revised (F/cast was +0.9%)
GDP Growth Rate Q3 +-4.3% YoY vs -14.7% Q2 revised (F/cast was -4.4%)
GDP Growth Rate Q3 +12.5% QoQ vs -11.7% Q2 revised (F/cast was +12.6%)
ZEW Economic Sentiment Index Dec 54.4 vs 32.8 Nov (F/cast was 32)
GERMANY 
ZEW Economic Sentiment Index Dec 55.0 vs 39 Nov (F/cast was 40)
Current Conditions Dec -66.5 vs -64.3 Nov (F/cast was -68)
FRANCE
Non Farm Payrolls Q3 +1.6% QoQ vs -0.8% Q2 revised (F/cast was +1.5%)
Private Non Farm Payrolls Q3 +1.6% QoQ vs -0.8% Q2 revised (F/cast was +1.8%)
Balance of Trade Oct Euro -4.9b vs -5.6b Sept revised (F/cast was -4.7b)
Current Account Oct Euro -3.7b vs -5.6b Sept revised (F/cast was -2.8b)
AHEAD
EUROZONE No data due
GERMANY Balance of Trade, Exports, Imports, Current Account.
FRANCE No data due
UK BoE FPC Record & Financial Stability Report

JAPAN Nikkei Futures +35pts, down slightly from the opening level  but expect Nikkei 225 to open higher after yesterday’s consolidation.  News of a new Govt economic package +VE.  Yen  currently 104.16
Data due pre market Machinery Orders (F/cast -10% YoY / +2.5% MoM)Later Machine Tool Orders
Tokyo Tuesday reported 352 new covid cases as of 6.30pm vs 299 Monday. With the National total 2,054; with Osaka and Hokkaido still seeing a surge in cases.
Researchers found a higher incidence of COVID-19 symptoms among people who have participated in a domestic travel campaign promoted by the government, suggesting that it is contributing to a spread in the virus.  Slight -VE for PM Suga although he has said that he promoting it to keep business going and recommending the old do not participate.
Japan's Cabinet approved the additional economic package approx JPY73.6 trillion, comprising of extensions of subsidy programs aimed at promoting domestic travel, boosting consumption and helping companies maintain employment, as well as incentives for digitalization and carbon reduction.
Honda said on Tuesday potential parts shortages might result in the Japanese automaker needing to temporarily halt production at its British factory, where it builds the Civic car, due to transport-related delays. -VE
AnGes Inc said Tuesday it had initiated a phase 2/3 clinical trial of its DNA-based COVID-19 vaccine candidate. The study is taking place at eight facilities in eastern and western Japan involving 500 test subjects, the company said in a statement.
Japan’s greenhouse gas emissions -2.7% to a record low in 2019 financial year that ended March 2020, government figures showed on Tuesday, thanks to growing use of renewable energy and lower energy consumption by manufacturers. The sixth straight annual drop comes against a surge in global greenhouse emissions to a new record last year.

SOUTH KOREA Expect markets to open higher following the US.But expect some caution ahead of Futures and options expiry on Thursday and concerns about the tougher social distancing due to the covid outbreak. 
No data due
Govt reported 594 new covid cases to midnight Monday (vs 615 to midnight Sunday)Govt said on Tuesday it had signed deals to provide coronavirus vaccines for 44 million people next year but it would not hurry inoculation to allow more time to observe potential side effects.
Govt will consider joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership as part of its drive to expand the country’s free trade partners.
Posco International said Tuesday that it has invested in local laser cutting applications developer Innovated Technology.  The two firms partnered through an acquisition of shares in Innovated Technology by Posco International. The details were not disclosed. +VE
KB Securities teamed up with New York-based investment bank Jefferies Group to establish a co-brand alliance for equity research, sales and trading.
Under the terms, Jefferies will distribute equity research on listed companies in Korea produced by KB Securities on a co-branded basis to Jefferies’ global institutional client base. KB Securities will also offer Korean equity brokerage services to Jefferies and its international clients. Slight +VE
The 2020 Korea Electronics Show will kick off Wednesday for a three-day run amid caution due to an ongoing wave of coronavirus cases in Seoul and nearby areas.  According to the event’s organizer, around 200 companies in the fields of semiconductors, consumer electronics, smart home technologies and future mobility will take part in the biggest IT trade show in South Korea. +VE
Authorities are on alert as the highly contagious bird flu quickly spreads across South Korea amid bird migration season.  The Ministry of Agriculture, Food and Rural Affairs said Tuesday that a H5N8 strain of highly pathogenic bird flu was found at a chicken egg farm in Yeoju, Gyeonggi Province, late Monday. -VE

TAIWAN Expect market to open higher following the US, TSMC closed at a new record high as the outlook for remains +VE. Financial and Property remain weak as Govt tries to curb property market speculation.  NT$closed at its highest since 1997.
No data due but after market Tuesday 
Wholesale Prices Nov -6.33% YoY vs -7.37% Oct (F/cast was -5.1%)
Inflation Rate Nov +0.09% YoY vs -0.24% Oct (F/cast was 0%)
Inflation Rate Nov +0.35% MoM vs -0.08% Oct (F/cast was +0.2%)
Wholesale prices saw the softest decrease since Feb and on a monthly basis were +0.5%.Inflation pressure from food, rent, clothing and health. But deflation from transport, communication, education and entertainment.
The Financial Supervisory Commission yesterday unveiled its road map to boost the nation’s capital markets in the next three years, by allowing more foreign investment, tightening its oversight of market manipulation and improving trading mechanisms. +VE
MediaTek new flagship 5G chip launch in February 2021and it expects its 5G penetration rate to climb to about 49% in 2022 and 60% in 2023, CEO Rick Tsai said in Taipei +VE
Far EasTone Telecom yesterday said that it has 300,000 5G subscribers, as it looks to triple its 5G customer base to 1 million subscribers next year. It means the telecom is making faster progress in upgrading to 5G than its original target of signing up 300,000 5G subscribers six months after the commercial launch of its services in July. Far EasTone yesterday said that it would retain its goal of converting 50% of its 4G subscribers to 5G within three years of the launch. +VE
United Microelectronics Corp yesterday posted NT$14.73 billion (US$516.55 million) in revenue for last month,  -3.6% MoM. That represented annual growth of 6% from NT$13.89 billion. In the first 11 months, revenue expanded 19.8% YoY to NT$161.53 billion, +VE
Winbond Electronics Corp’s  revenue dropped 2.76% MoM to NT$6.68 billion last month, from NT$6.86 billion in October, but +64.52% YoY.  That brought the memorychip maker’s revenue in the January-to-November period to NT$53.88 billion, +20.53% from NT$44.7 billion. Winbond said that it made NT$58 million in net profit in October, down from NT$18.57 million in the same period last year.
Fulgent Sun International (sports shoes to global brands)  yesterday posted consolidated revenue of NT$893 million for last month, +45.07% MoM from October, but -15.17% YoY. The month-on-month revenue increase indicated that the effects of the low season had eased, the company said. Cumulative sales in the first 11 months totaled NT$9.88 billion, -13.27% YoY.  +VE


CHINA Expect market to open lower as concerns over US/China relations and the threat of more sanctions worries investors.  But key will be the data out on the open.
Data due
Inflation Nov [Oct was +0.5% MoM F/cast is +0.1%] (or -0.3% YoY F/cast is -0.1%)
PPI Nov [Oct was -2.1% F/cast is -1.8%]
China summoned the acting top U.S. diplomat in Beijing on Tuesday to protest U.S. sanctions on Chinese officials over Hong Kong, and vowed to take “reciprocal” retaliation.
China has not done a good job in complying with international trade rules — and is the principal military and economic threat in the region, U.S. Secretary of Commerce Wilbur Ross said on Tuesday.  The secretary said the Regional Comprehensive Economic Partnership signed by China and 14 other Asia-Pacific countries will not tackle the “most sensitive issues” in trade. Those issues include subsidies to state-owned companies, protection of intellectual property and equal market access, he said.
Joe Biden’s incoming national security aide ‘deeply concerned’ about China’s crackdown in Hong Kong. Commenting on arrests of pro-democracy activists, Jake Sullivan says ‘we stand united with our allies and partners against China’s assault’ on city’s freedoms
The United States has blacklisted six companies, including several based in China, and four ships accused of illicit exports of North Korean coal, the Treasury Department said on Tuesday.  -VE as is keeps the threat of more sanctions in peoples minds.
China-Australia ties face new hit as Canberra gets veto on foreign deals. The Australian parliament voted in a new law that allows foreign minister to scrap agreements between foreign nations and state and territory governments.
China Banking and Insurance Regulatory Commission chairman Guo Shuqing, yesterday said that some financial technology companies have monopolized the business with big data, making it unfair to competitors. Guo's comment came after the regulator stopped the financial technology firm Ant Group's mega listing last month. He said some dominant technology companies are engaged in the financial business, involving public interest. The market needed to pay attention to the risks of these institutions, which were relatively complex, Guo said yesterday. -VE for Ecommerce names
Goldman Sachs Group Inc has signed a pact to buy out its China joint venture partner to make it the most advanced foreign bank to take full ownership of a mainland securities business. The process to boost its stake in the Goldman Sachs Gao Hua (GSGH) venture from 51% to 100% has also been initiated with regulators, according to an internal memo issued on Tuesday to staff of the Wall Street bank.
China’s Sichuan province could start administering new coronavirus vaccinations to vulnerable groups that are more likely to develop severe symptoms after infection, such as the elderly and people with underlying conditions, in the beginning of 2021, local media reported on Tuesday.
Shanghai court’s affirms Hong Kong ruling on keepwell clause Slight +VE  for offshore creditors of defaulting Chinese bonds.   Keepwell clauses are undertakings by Chinese companies to guarantee the solvency and financial well-being of their units when they sell bonds in offshore markets

HONG KONG  ADR’s +60pts to open at 26,364 with Chinese Financials remaining weak. Also expect some early margin call selling BUT key will be the China data out on the open.
No data due
IPO CHINA RES MIXC (01209.HK) debut today, closed at $29.35 in grey market, up $7.05 or 31.6% against the listing price of $22.3, on volume of 11.9 million shares and turnover of $320 million, PhillipMart data showed.

SHORT SELLING Tuesday 14.4% vs 16% Monday 
Top Shorts  Wharf REIC (1997) 48%, Hang Seng Bank (11) 34%, CKI (1038) 32%, CK Asset (1113) 30%, Anta Sports (2020) 29%, HK & China Gas (3) 27%, Country Garden (2007) 27%, Ping An (2318) 27%, BOC HK (2388) 24%.

INSIDER DEALING Li Ka Shing Foundation Limited acquired a total of 800,000 shares in CK ASSET (01113.HK) at the average price of HK$42.9088, HK$42.8385, HK$43.0434 and HK$42.6928 per share on 2 December, 3 December, 4 December and 7 December 2020 respectively.  As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK Asset under the Securities and Futures Ordinance respectively increased from 35.81% to 35.83% and from 35.87% to 35.90%.

National Security Law. News of the freezing of former lawmaker Ted Hui Chi-fung that his and his family's bank accounts in HSBC, Hang Seng Bank and Bank of China (Hong Kong) has raised questions about whether private property ownership is guaranteed in HK and, if someone's property is to be frozen, the authorities have to go through proper legal procedures.  Slight -VE to HSBC who has in the past been criticised by US Sec of State Pompeo.

WATCH
BYD COMPANY (01211.HK)  announced that it received a notice from China Securities Regulatory Commission (CSRC) on 8 December for the acceptance of application of the company's additional overseas share (H-share) issuance and listing on the Stock Exchange, subject to the approval of CSRC, the Stock Exchange and other regulators.
MSCI said JD HEALTH (06618.HK) will be added to MSCI Standard Index and Large Cap Index with effect from 22 December.
POWERLONG (01238.HK) contracted sales value and contracted sales area of the Group in November 2020 amounted to RMB9.525 billion and 632,700 square meters, respectively. The total contracted sales value of the Group for the eleven months ended 30 November 2020 amounted to RMB71.947 billion, up 30.1% yearly.
The Monetary Authority of Singapore (MAS) announced initiatives at the 16th Joint Council for Bilateral Cooperation to enhance financial cooperation between Singapore and China. MAS declared that a qualifying full bank licence is granted to CCB (00939.HK), under the China-Singapore Free Trade Agreement Upgrade Protocol.
Indonesian vaccine maker Bio Farma said the Covid-19 vaccine developed by Beijing's Sinovac (SVA.US) was 97% effective in early tests, foreign media reported.  The preliminary results were derived from a one-month clinical trial. The final efficacy rate will be unveiled in January 2021

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