Dex 15 Asian Macro Initial Thoughts Asian to open mixed ahead of China Data. US Futures +VE


15 Dec

Asian Futures Nikkei Futures opened flat but rising,  HK ADR’s -127pts and Australia trading lower in early trades.  Japan and S Korea facing public frustration at social distancing and rising covid cases.  Also talk of Foreign investors starting to wind down for Christmas.

US Futures opened Dow +65pts, S&P +0.1% and NDX +0.2% After market Biden confirmed as the winner of the US Presidential Election and Attorney General Barr resigned

Deutsche Bank survey on what the biggest risks for 2021 were; Top 3 were vaccine related; ‘the virus mutates and dodges existing vaccines’, ‘serious vaccine side effects start to emerge’, and ‘enough people refuse to take the vaccine” which hampers herd immunity.  Runaway money supply growth was sixth.  Consensus is that 2021 will be a good year.

DOW -0.62%, NDX +0.5%, S&P -0.44%, Russel 2K +0.1% Having opened higher markets drifted lower through the day as the threat of new lockdowns outweighed the roll out of covid vaccine. New York City Mayor warned of a full shut down soon.
The stimulus negotiations proposes two bills one that has broad agreement; including an additional $300 per week in federal unemployment benefits and another $300 billion for more loans under the Paycheck Protection Program. Then a second contentious one on business liability protections and financial aid to state and local governments.
Overall stocks saw very choppy trading.
Interesting to note a number of Financial M&A deals taking place +VE for consolidation of the regional bank sector; Huntington BancsharesInc agreed to buy TCF Financial Corp. Also other deals Vista Equity is acquiring online training firm Pluralsight and Electronic Arts to buy UK-based Codemasters for $1.2 billion.
Nasdaq review stocks added are American Electric Power Company, Marvell Technology Group, Match Group, Okta, Peloton Interactive and Australia’s Atlassian Corporation. The six companies being removed from the index are BioMarin Pharmaceutical, Citrix Systems, Expedia Group, Liberty Global, Take-Two Interactive Software, and Ulta Beauty.
Banks JPMorgan Chase -1%, Citigroup -0.3% and Wells Fargo -1.5%, AMEX -2.4%
Work from home: 
Facebook +0.23%, Apple -0.5%, Amazon +1.3%, Netflix +3.8%,  Disney -3.6%, Zoom Video -0.3%, Alphabet -1.3% (as Google has technical issues Monday) and Microsoft +0.4%,
Tech 
NPX +8.5%, Nvidia +2.3%, Micron +1.4%, AMD +3.4%, Skyworks unch
Re-opening stocks  
Boeing -0.7%, Caterpillar -0.7%, Simon Property -0.7%, Kohl’s -3.5%, Nordstrom -3.4%, Gap -2.5%, United Airlines -3.4%, Carnival -1.8%, Wynn Resorts -3.1%, Chevron -3.2%, Exxon Mobil -3.6%,  
Lock down names 
Campbell Soup -1.1% General Mills +0.1%, JM Smucker -1.7%
DATA
Consumer Inflation Expectations Nov 2.96% vs +2.84% Oct (F/cast was +2.8%)
USD was weaker vs Yen & Euro. Bitcoin +0.6% @ 19,195, VIX +6% @ 24.72, US T10 @ 0.893%
OIL Brent +0.7%, WTI +0.94%
Gold -0.7%, Silver -0.5%, Copper -0.2%
AHEAD Import and Export Prices, NY Empire State Manufacturing Index, Redbook, Industrial Production, Manufacturing Production, Capacity Utilisation, IBD/TIPP Economic Optimism, Foreign Bond Investment, Net Long Term Tic Flows, Overall Net Capital Flows, API Crude Oil Stock Change.

DAX +0.83%, CAC +0.37%, FTSE -0.23%  opened higher on the news that Brexit talks have extended and that the FDA approved the Pfizer covid vaccine.  DAX strong despite news it will go into lockdown on Wednesday.  CAC strong too.  FTSE trading just above flat in the morning but trending lower in the afternoon as sterling bounced on the news along with Banks and Builders.  M&S also strong.   Late PM it was announced that London was move to highest tier of covid restrictions as new cases surged.
AstraZeneca -6% after announcing it had bought out Alexion Pharma for $39 billion. FT article thinks its a good deal.
DATA
EUROZONE 
Industrial Production Oct -3.8% YoY vs -6.3% Sept revised (F/cast was -4.9%)
Industrial Production Oct +2.1% MoM vs +0.1% Sept revised (F/cast was +1.5%)
GERMANY 
Wholesale Prices Nov +0.1% MoM vs -0.2% Oct (F/cast was +0.1%)
Wholesale Prices Nov -1.7% YoY vs -1.9% Oct (F/cast was -1.7%)
AHEAD
EUROZONE No data due
GERMANY No data due
FRANCE Inflation Rate, IEA Oil Report
UK Claimant Count Changes, Employment Change, Average Earnings, Unemployment Rate

JAPAN Nikkei Futures opened flat but expect the market to open lower.  Yen fell below 104 on Monday, currently 104.6. Expect home entertainment stocks to continue to see interest.
No data due 
Tokyo reported 302 new cases Monday vs 480 Sunday, National Total was 1,661 as at 6:30pm Monday.
Govt to suspend 'Go To Travel’ around New Year from 28 Dec to 11 Jan due to the rising number of cases.
Government has decided to market Japan’s ’Smart City’ comprehensive technologies and services for 'smart cities’ a next-generation city model that optimizes the use of cutting-edge telecommunications, to Southeast Asian countries.
Film ‘Demon Slayer’ poised to become Japan’s top grossing film ever. +VE for companies associated with it or have licensed merchandise:  Namco Holdings, Dydo Group (revised up earnings) and Sony,
ANA launches flights to Shenzhen adding to its services to Shanghai and Guangzhou and Qingdao.
Tokyo Governor says the growing availability of coronavirus vaccines is a “ray of hope” for hosting the Olympics next summer, but remains concerned over complacency on covid. Also reported that Olympic sponsors are considering contract extensions as original contracts are due to expire at the end of December.
Press reports pandemic spurs a tidying-up frenzy, Japan's market for second-hand goods booms +VE for on line operators and the likes of Buysell Technologies, Mercari Inc, and others.

SOUTH KOREA Expect markets to open lower following the US and concerns that local covid cases could rise.
No data due
Govt announced 718 new cases Monday vs 1,030 Sunday (the fall due to fewer tests) but warned it could rise to 1,200 in just a few days.  But Govt said it would save moving to tier 3 restrictions as a last resort.
Govt ordered schools to close from Tuesday in the capital Seoul and surrounding areas as it battles its worst outbreak of novel coronavirus since the pandemic began, surpassing the previous peak in February.
Parliament passed a bill on Monday to ban the launching of propaganda leaflets into North Korea, a move that was condemned by rights activists as a violation of freedom. -VE
FSC Chairman says it is premature to discuss plans on opening individual investors‘ access to short-selling activities of Korean shares, stressing the danger of small investors taking potentially massive risks.  
S. Korea's Nafabeltan gets clinical approval for COVID-19 treatment in Australia to begin a phase three clinical trial for coronavirus treatment with its acute pancreatitis drug.
S Korea’s listed companies are under growing pressure to overhaul their audit systems in time for their regular shareholders meetings, slated for February and March next year, due to a new set of corporate regulations set to take effect soon.  As the new rules restrict the voting power of owner families in the appointment of auditors, conglomerates will focus on defending their managerial authority from external influence while smaller businesses are likely to struggle to attract qualified personnel.  -VE
Korea Shipbuilding & Offshore Engineering Co. said Monday that it has signed a 400 billion won ($367 million) deal to build four crude carriers with a European company.  The 300,000-ton vessels to be built by Hyundai Samho Heavy Industries Co., a unit of Korea Shipbuilding, will be delivered starting in May 2022, the company said. +VE
Asiana Airlines Inc. said Monday it will cut its capital base to improve its financial status amid the COVID-19 pandemic. Shareholders approved a 3:1 capital reduction plan as the airline's capital erosion rate reached 56.3 percent at the end of June, a company spokesman said.Hyundai Rotem said Monday its manufacturing plant for machines to extract hydrogen from natural gas will begin full operations starting this month.  +VE
Banks -VE as won-denominated loan delinquency rate edged up in October from the previous month, but remained stable, the financial regulator said Monday.
LG CNS has clenched a contract worth 100 billion won ($92 million) to digitize Indonesia’s national tax administration system, the information and communication technology solutions provider said Monday. +VE
CJ Group's core units named new CEOs on Monday.  Choi Eun-seok assumed the top job at CJ Cheiljedang, replacing Kang Sin-ho, who moved to CJ Logistics as CEO. Choi, 53, was formerly the head of CJ Corp.’s management strategy office.Kang Ho-seong, formerly the head of management support at CJ Corp. was appointed as CEO of CJ ENM.  “We have appointed new CEOs who can deal with emergency situations such as the fast changing business environment in and outside the country derived from COVID-19, and to gear up for the future,” CJ said.
UK became the biggest net buyers in the South Korean stock market, as they bought shares worth 2.2 trillion won ($2.02 billion) in November, which accounted for nearly 36 percent of stocks purchased by foreign investors in the month, according to data Monday.

TAIWAN Expect market to open lower following the US with tech stocks under pressure as retail investors lock in recent gains.
No data due 
Taipei-based Chinese National Association of Industry and Commerce (CNAIC) chairman Lin Por-fong pleaded with policymakers to give serious thought to the health of local enterprises while they seek to avoid currency manipulation charges from the US.  “A strong NT dollar could deal a heavy blow to local exports if it appreciates above the NT$27 level in Taipei against the greenback,” Lin told reporters on the sidelines of a public function.  
Foreign Ministry confirmed Taiwan is ‘in talks’ ahead of application to join trans-Pacific trade pact of 11 members.  But Taipei’s hopes for membership could be complicated by a potential parallel application to the group from Beijing Slight +VE
The output value of Taiwan’s printed circuit board (PCB) industry is expected to reach a record high this year, despite the effects of the COVID-19 pandemic, the Taiwan Printed Circuit Association (TPCA) said yesterday.  “But fortunately, the 5G early-stage infrastructure and carrier applications filled the gap caused by the pandemic in a timely manner, further promoting PCB price and value.”  It predicted Q4 utilisation rate would remain high +VE
Wistron to close the Karnataka site for two weeks and shift production of the iPhone to its other plants in India and China. Comes after a riot on Saturday which resulted in estimated losses of 4.37 billion rupees or almost NT$1.7 billion (US$59.75 million), Indian media reported. That is a preliminary estimate of losses which included thousands of iPhones stolen during the riot.  Which suggests it was a criminal act more that a riot as the company reported over the weekend. That would be -VE for India’s reputation as a manufacturing base.  But some media reports are saying it was over a wages dispute which would have negative implications for its contract with Apple.  
MediaTek may begin to supply its 5G chips to Honor next year,  Taiwan's
Digitimes cited industry sources. Earlier, the market had rumored that MediaTek is in talks with the US DoC on legal issues for resuming supply to Honor.

CHINA Expect market to open lower following the US and with caution ahead of this morning’s data. 
Data due NBS Press Conference, Fixed Asset Investment (F/cast is +2.7%), Retail Sales (F/cast is +4.4%) Industrial Production (F/cast is 7%) and Unemployment Rate(F/cast is rising to 5.5%)
China’s residential property market rose for the 33rd straight month in November, prompting the government to continue its market-cooling measuresThe stubborn refusal of home prices to yield to the government’s controls underscores why the Chinese bank regulator Guo Shuqing singled out real estate as the “grey rhino” of the nation’s banking industry -VE
The Central Commission for Discipline Inspection announced yesterday that Jin Yongshou, former general manager of Golden Credit Rating, would be prosecuted for allegedly taking bribes from issuers covered by the agency and helping numerous companies improve their credit ratings.
Chinese Foreign Ministry Spokesperson Wang Wenbin noted that Nasdaq had removed some of the Chinese listed companies from its indexes following the US government ban on purchasing these stocks. Wang said China vehemently objected the US groundless suppression on Chinese companies since such move completely went against the market economy principles and international economic and trade rules of the US. China called on the US to stop politicalizing economic and trade matters and any behaviors that misuse national power, generalize national security concept and squash foreign companies. The PRC government will continue to uphold the legitimate interest of Chinese companies.
Brazil’s Sao Paulo state delayed on Monday the release of efficacy data for the COVID-19 vaccine developed by China’s Sinovac, tightening the timeframe for regulator approval before a planned roll out on Jan. 25. Governor Joao Doria said in a radio interview on Monday the data would be released on Dec. 23, eight days later  than planned, to allow for a larger sample size and more complete analysis. SLIGHT -VE
International Criminal Court prosecutors have rejected calls by exiled Uygurs to investigate China for alleged genocide and crimes against humanity, the chief prosecutor’s office said in a report on Monday. It was unable to act because the alleged acts happened on the territory of China, which is not a signatory
Chinese professor, despite no remorse, to return home after guilty plea in Huawei theft case The judge said that while Mao pleaded guilty only to lying, his criminal conduct was “much broader and far worse,” and that “he might even be considered a  patriot” at home.
A bipartisan group of 75 US lawmakers is urging the Trump administration to extend exclusions from import tariffs on medical products imported from China, including face masks, hand sanitizing wipes and examination gloves, that expire on Dec. 31.-VE

HONG KONG  ADR’s -127pts at  26,262 broad based weakness. Also expect some initial margin selling initially.
No data due but After market Monday
Industrial Production Q3 -7.4% YoY vs -5.1% Q2 (F/cast was -3%)

SHORT SELLING Monday 13.3% vs 12.9% Friday 
Top Shorts  Hang Seng Bank (11) 49%,  Country Garden (2007) 48%, MTRC (66) 37%, Anta Sports (2020) 33%, Wharf REIC (1997) 32%, Sinopec (386) 30%, Galaxy Ent (27) 30%, CK Asset (1113) 29%, Ping An (2318) 29%, Bank of China (3988) 28%, Link Reit (823) 25%

BUYBACKS/INSIDER DEALING 

CK ASSET (01113.HK) announced that Li Ka Shing Foundation Limited acquired a total of 620,000 shares in CK Asset at the average price of HK$41.8058, HK$42.7847, HK$42.7333 and HK$43.1300 per share on 8 December, 9 December, 10 December and 11 December 2020 respectively.
As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK Asset increased from 35.83% to 35.85%, and from 35.90% to 35.91%, respectively.
WATCH
New World Development said its land investment in mainland China may exceed that in Hong Kong in the near future, as a new Chinese policy gives it an edge over indebted peers in the hunt for premium land in the “Greater Bay Area”.
PING AN (02318.HK) announced that the accumulated gross premium incomes of the four subsidiaries of the Company for the period from January 1, 2020 to November 30, 2020 ratcheted up 0.98% yearly to RMB729.727 billion.
SWIRE PACIFIC A (00019.HK), CATHAY PAC AIR (00293.HK) and SWIREPROPERTIES (01972.HK)  announced that effective 1 April 2021, Martin James MURRAY will become the finance director of Swire Pacific; and LOW Mei Shuen Michelle will cease to be a director of Swire Pacific.  Basically rotating Martin Murray from Cathay to Swire;  may indicate that there are further plans to restructure Cathay although his leaving was mentioned earlier in the year.  He’ll be replaced by Effective 25 January 2021, Rebecca Jane SHARPE will become an executive director and the chief financial officer of Cathay Pacific.  Slight -VE to change Financial Director as such a precarious time unless abandoning ship
Singapore entered into COVID-19 vaccine agreements with each of Pfizer-BioNTech, Moderna and Sinovac Biotech. Singapore plans to vaccinate the entire adult population on a voluntary basis.
JD-SW (09618.HK)'s retail group has completed a new round of organizational structure overhaul, 36Kr citing sources.  JD Retail's lifestyle service group will be headed by Qin Miu, while the unit's former head Yan Yao will be in charge of the 3C home appliance retail business group. Both of them will report to JD Retail CEO Lei Xu.
Fitch Ratings' mentioned about Chinese official press criticism against tech magnates' foray into community group buying market. It assumed the reasons behind the criticism were tied to unemployment concerns where community group buying averts "agent" role. Yet, the rating agency deemed such business mode could enhance retail efficiency and reshape mainland agricultural and retail sectors.  In Fitch's opinion, the Chinese government did not intend to squash such online platforms, instead it nudged offline-online alliance. BABA-SW (09988.HK), MEITUAN-W (03690.HK), JD-SW (09618.HK) and so on were not expected to withdraw from the community group buying market given the strategic significance. While e-commerce platforms still need to undergo expansion and coordination, Fitch foresaw community group buying platforms to keep a low-profile operation and increase ties with small-and-medium retailers.
MTR CORPORATION (00066.HK)  to invite developers and/or consortia to submit Expression of Interest (EOI) for Wong Chuk Hang Station Package Five  Property Development today (15 December). The deadline for submission is 2:00 pm on 22 December 2020.  Wong Chuk Hang Station Property Development, situated on Aberdeen Inland Lot No. 467, is a comprehensive development located atop the MTR Wong Chuk Hang Depot and adjacent to MTR Wong Chuk Hang Station. It is bounded by Heung Yip Road, Police School Road and Nam Long Shan Road, and is being developed in phases.

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