Things to know before trading Asia on Monday


12 Dec

Overview 
FDA after market, approves Pfizers vaccine drug for emergency use +VE for sentiment on Monday But with news that Sanofi and GlaxoSmithKline said clinical trials failed to show a good response in older people means the roll out of vaccines globally is not going to be a smooth or quick as had been hoped.
So the continued lack of a US stimulus package will weight on markets in Asia, many of whom are still trading around new highs.

Concerns about China/US relations and the potential for more sanctions from also weigh on the markets. Additional on Monday we get China House Price Index and may get FDI data. Housing is a key driver to China’s recovery so the data will be watched closely. Next week we also get from China Retail Sales, Unemployment and Industrial Production.
There is also a -VE FT article about problems with China’s Belt and Road Initiative and the potential for a debt crisis which would only add to the existing worries about the risks within China’s financial system. Expect a weak open from China.

Japan’s performance will be impacted by the pre market release on the Tankan survey. Later there will also be Industrial Production, Capacity Utilisation and the Tertiary Industry Index. Later next week we also get Trade Data from Japan and at the end of the week inflation data.

For the US the focus likely to be Wednesday's FOMC rate decision. There is also Retail Sales, PMI and Housing data.

In Europe Brexit and covid remain the dominant overhangs on the market.
The last full week before Christmas but most investors will remain focused on the markets and with good flows into Asia along with rotation there will be many opportunities.  A number of press and research articles are positive on region but many see better opportunities outside China after it performed so well in 2020.

DOW +0.16%, NDX -0.23%, S&P -0.13%, Russel 2K -0.57% Opened lower were weak through the morning but worked higher through the afternoon and into the close. Concerns remain over the lack of agreement for a new stimulus package especially in the face of rising unemployment claims. Retail and Consumer names saw selling pressure.Reported that the White House threatened to fire the head of the FDA unless Pfizer’s covid vaccine was approved by Friday.   Qualcomm weak on news Apple was working on its own cellular modem.
Banks JPMorgan Chase -0.6%, Citigroup -2.6% and Wells Fargo -1.4%, AMEX -1.3%
Work from home names: Facebook -1.3%, Apple -0.7%, Amazon +0.5%, Netflix +0.4%,  Disney +13.6% (more than tripled its subscriber guidance) Zoom Video -0.2%, Alphabet +0.4% and Microsoft +1.3%,
Tech NXP -0.7%, Nvidia +0.3%, Micron -1.1%, AMD unch, Skyworks -4.3%
Re-opening stocks  Boeing -1.8%, Caterpillar +0.3%, Simon Property -2.8%, Kohl’s -2.8%, Nordstrom -3%, Gap -3.6%, United Airlines -2.6%, Carnival -4.5%, Wynn Resorts -1.7%, Chevron -1%, Exxon Mobil -0.5%,  
Lock down names Campbell Soup -0.2% General Mills +0.8%, JM Smucker -0.6%
After Market
Supreme Court rejected the Texas lawsuit challenging Biden’s win in 4 key States.
Trump signed the one week government funding bill giving congress more time to agree a stimulus package.
DATA
PPI Nov +0.1% MoM vs +0.3% Oct (F/cast was +0.2%)
PPI Nov +0.8% YoY vs +0.5% Oct (F/cast was +0.8%)
Core PPI Nov +0.1% MoM vs +0.1% Oct (F/cast was +0.2%)
Core PPI Nov+1.4% YoY vs +1.1% Oct (F/cast was +1.6%)
Michigan Consumer Prelim Data
Current Conditions Dec 91.8 vs 87.0 Nov (F/cast was 86)
Inflation Expectations Dec +2.3% vs +2.8% Nov (F/cast was +2.8%)
5 year Inflation Expectations Dec +2.5% vs +2.5% Nov revised (F/cast was +2.7%)
Sentiment Dec 81.4 vs 76.9 Nov (F/cast was 76)
Expectations Dec 74.7 vs 70.5 Nov (F/cast was 72)
Baker Hughes Total Oil Rig Count 338 vs 323 prior
USD was slightly weaker vs Yen but stronger vs Euro. Bitcoin -0.3% @ 18,059, VIX +3.5% @ 23.31, US T10 @ 0.896% falls as Congress cannot agree stimulus package.
OIL Brent -0.36%, WTI -0.47% weaker on covid impact concerns.
Gold +0.33%, Silver -0.1%, Copper -1.16%
AHEAD Consuner Inflation Expectations

DAX -1.36%, CAC -0.76%, FTSE -0.8% Markets opened lower on the prospect that there will be No Brexit deal before Sunday’s deadline and no US Stimulus deal.. They sold down through the morning.  But then rebounded from Midday into the close.  
EU gets approval to raise Euro 750bn from public markets to support the bloc’s economic recovery efforts as Hungary and Poland dropped their veto’s regarding the disbursement of funds. This is in addition to the 1.074 trillion euros ($1.3 trillion) to be spent between 2021 and 2027.
Telco’s lead the declines but UK Banks were also under pressure as most sectors closed in the red.
Resources saw some interest as Iron Ore futures on China’s Dalian Commodity Exchange were +10% on Friday to an all-time high, crossing the 1,000 yuan ($152.95) per ton mark for the first time on the back of supply concerns; as storms hit Western Australian production.
Sanofi and GlaxoSmithKline weak said clinical trials of their covid vaccine showed an insufficient immune response in older people, delaying its launch to late next year. Came as Australia axed a domestic vaccine project. -VE
Hellofresh +6% on broker upgrade.
Rolls Royce -8% after it downgraded its cashflow forecast and warned of a challenging outlook.
Ericsson -4% on news it filed a lawsuit against Samsung in the US over royalty payments and patent licences.
DATA
Germany
Inflation Rate Final Nov -0.3% YoY vs -0.2% Oct (F/cast was -0.3%)
Inflation Rate Final Nov -0.8% MoM vs +0.1% Oct (F/cast was -0.8%)
AHEAD
EUROZONE Industrial Production
GERMANY Wholesale Prices, Bundesbank Monthly report
FRANCE No data due UK No data due

JAPAN Expect Nikkei at this stage to open lower following the US but key will be the Tankan details.  Yen closed Friday slightly stronger at 104.01
Data due Tankan Q4 survey pre market
Large Manufacturers Index Q3 was -27 F/cast is -17
Large All Industry Capex Q3 was +1.4% F/cast is -0.4%
Non Manufacturing Outlook Q3 was -44 F/cast is -38
Large Manufacturing Outlook Q3 was -11 F/cast is -8
Large Non Manufacturing Outlook Q3 was -17 F/cast is -12
Later we get Industrial Production, Capacity Utilisation and the Tertiary Industry Index.
Tokyo on Friday reported 595 new covid cases (vs 602 Thursday) and the national number was 2,954 (vs 2,969 Thursday).
Govt urges a ‘quiet’ year end but continues to promote the Go To Travel campaign although the decision on whether to extend to programme which is due to end next week was deferred on Friday.
Bird Flu outbreak has now spread to about 20% of the prefectures; with mass callings being ordered; it is the worst outbreak since 2016
SoftBank sells robot-maker Boston Dynamics in $1.1bn deal with Hyundai. +VE for Softbank as it sells down assets .

SOUTH KOREA Expect markets to open lower with concerns about the US recovery without a stimulus package being agreed.
No data due
Govt reported 689 new covid cases Friday and announced it will mobilise military forces in the capital Seoul to help frontline health workers deal with a surge and ramp up contact tracing.
Hyundai Motor Group said Friday its affiliates and its chairman will buy an 80% stake, worth up to 900 billion won ($828 million), in US robotics firm Boston Dynamics Inc. in the latest move to propel its future mobility business. The stake is being sold by Softbank
Celltrion announced Friday that the company’s adalimumab biosimilar candidate CT-P17 has received a positive opinion for marketing authorization from the Committee for the Medicinal Products for Human Use under the European Medicines Agency.  Celltrion’s CT-P17 is a biosimilar of Humira, a treatment for autoimmune and inflammatory diseases such as rheumatoid arthritis, ulcerative colitis and psoriasis.
Fidelity Management & Research sold common shares of Hyundai Marine & Fire Insurance worth 111.6 billion won ($102.2 million) on the local stock exchange since October, filings showed Friday.  Before the transactions, Fidelity was the third-largest shareholder of Hyundai Marine & Fire.
Woori Financial Group said Friday its Chairman Sohn Tae-seung recently bought back 5,000 company shares to show his confidence in the banking group’s future growth.  Sohn’s stock buyback marks the fifth time this year, following his earlier buying in January, March, April and August. He now holds 88,127 shares in Woori Financial.

TAIWAN Expect market to open lower after the weakness in the US but expect bargain hunting in Tech names if we see significant weakness.
No data due 
Ministry of Foreign Affairs yesterday welcomed an announcement by Singapore that it is to lift border restrictions for travelers from Taiwan from Friday next week, saying that it would help promote potential “travel bubbles” between the two nations. +VE Airlines and Tourist related names.
The Financial Supervisory Commission (FSC) would not tolerate a protracted price war by the three Web-only banks to undercut the competition, as it would disrupt the market.  The commission hopes that the digital banks would offer innovative services or products instead of setting unreasonably low prices to attract customers to ensure solid and sustainable development, the FSC Chairman Thomas Huang said Friday. +VE for Existing Banks in the short term.
China Steel Corp Friday raised domestic steel prices for delivery next quarter by an average of 6.1% , the steepest increase in more than three years, as global economic recovery boosts demand.  Prices are to increase across the board by NT$1,200 (US$42.19) or NT$1,500 per tonne, depending on the product, from this quarter, the company said in a statement, adding that it expects the uptrend to continue in the near term, given severe supply constraints worldwide. +VE
Listed firms’ Chinese investment gains hit a new high. But local firms trimmed their investments in China by NT$8.3 billion, falling for a second straight quarter.  “Listed companies’ performance in China seemed mixed, as some industries seized more opportunities and continued expanding their investments, such as the computer sector and the electronic components sector, while other opted to leave,” Kuo said.

CHINA Expect market to open lower with continued worries about more action from Trump in his final days in power.
Data due China House Price Index Nov (Oct was +4.3% F/cast is +4.1%) and may get FDI data.
There are 15 newly confirmed coronavirus patients including six locals in the Chinese mainland Thursday, the National Health Commission said Friday.  The six locals include four in Sichuan and two in Heilongjiang, the commission said in its daily report, the state media Xinhua reports.  Dongning and Suifenhe, two cities in northeastern Heilongjiang province in China, have launched citywide nucleic acid testing, which are to be completed in three days.Slight -VE as experts still wonder how contained covid is in China.
China’s Politburo said on Friday that the country should do more to tackle monopolies and prevent “disordered expansion of capital”, according to a report by state news agency Xinhua.  Along with efforts to improve oversight and regulation, the country will implement a broad strategy of keeping economic growth “within a reasonable range” for 2021 (the year the ruling Communist Party celebrates its centenary) while expanding domestic demand and strengthening China’s strategic technology.  The meeting of the supreme policy-making body chaired by President Xi Jinping also decided that China must prevent any “scaled rebound or imports” of the coronavirus in this winter, signalling that China will continue to be strict in its border controls.  -VE for Ecommerce
Resetting relations with the US. and strengthening strategic ties with Russia will be among the top priorities for China next year, Foreign Minister Wang Yi said on Friday as he outlined the country’s diplomatic agenda for 2021. Observers said the focus on ties with Russia could reflect concerns in Beijing about its worsening feud with the West.  He also said China’s top foreign policy priority would be to support the world’s post-pandemic  economic recovery.
The head of the powerful U.S. House of Representatives Ways and Means Committee on Friday slammed what he called President Donald Trump’s “unsophisticated response” to China’s ambitions and called for a major recalibration of U.S. policies.  He urged Biden to formulate a package of programs and investment to counterbalance China, including through re-energized cooperation with European allies.  Slight -VE for sentiment as it makes it likely that China will face tougher negotiation on the phase II US Trade deal.
Chinese authorities have detained a Chinese national working for the Bloomberg News bureau in Beijing on suspicion of endangering national security, the news agency and China’s foreign ministry said on Friday.
China’s vehicle sales are likely to hit 25.3 million units this year, the CAAM said on Friday, as the world’s biggest vehicle market continued to lead the global auto industry recovery from lows hit during the COVID-19 pandemic.+VE for Autos
The China Iron & Steel Association (CISA) says it had a ‘candid exchange of views’ with BHP on soaring iron ore prices on Thursday.   A spike in costs threatens the profitability of Chinese steel plants, which are on track to set a record for crude steel production this year. -VE for Steel Makers.
FT article 'China pulls back from the world: rethinking Xi’s ‘project of the century’’.  Suggests that China could face a debt crisis -VE

HONG KONG  ADR’s -242pts at 26,263 with weakness across all sectors only Petrochina’s ADR closed in the green.  Govt says its employees will WFM until Dec 23 and urges employers to allow their staff to do the same.
Data due after market Industrial Production

SHORT SELLING Friday 12.9% vs 14% 
Thursday Top Shorts  Country Garden (2007) 46%, NWD (17) 41%, Bank of China (3988) 34%, Hang Seng Bank (11) 33%, Anta Sports (2020) 28%, Ping An (2318) 29%, Wharf REIC (1997) 28%, Sunny Optical (2382) 27%, CKI (1038) 27%, HSBC (5) 26%.

BUYBACKS/INSIDER DEALING 
SINO BIOPHARM (01177.HK)  announced that Senior Vice Chairman Tse Ping had today acquired 15 million shares of the company, involving roughly $100 million.
S HARBOURHOLD (01663.HK) announced that the chairman and substantial shareholder, Wong Lam Ping, acquired an aggregate of 850,000 shares, involving $119,000.

HK Vaccination 
The government will roll out a vaccination program as soon as the vaccines arrived in Hong Kong, but citizens will not be able to choose which manufacturer’s vaccine they wish to receive, said Chief Executive Carrie Lam Cheng Yuet-ngor.

WATCH
DA MING INT'L (01090.HK) positive profit alert. For the eleven months ended 30 November 2020, the Group is expected to record an increase in net profit of over 40% as compared with that of the same period in 2019.
CPIC (02601.HK)  announced that the primary insurance premiums of China Pacific Life Insurance and China Pacific Property Insurance, both of which are the subsidiaries of the Company, for the first eleven months of 2020 amounted to RMB202.6 billion and RMB136.026 billion, down 1.9% YoY and up 12.8% YoY, respectively.
CHINA LIFE (02628.HK) accumulated premium income of the Company for the first eleven months of 2020 was about RMB586.2 billion, up 8.29% yearly.
NCI (01336.HK) announced that the accumulated gross premium income for the period between 1 January 2020 and 30 November 2020 was RMB152.57 billion, up 17.2% yearly.
HUANXI MEDIA (01003.HK)  announces that its “huanxi.com” has entered into a strategic cooperation agreement with Huawei and a cooperation agreement with XIAOMI-W (01810.HK) respectively and formally effected the cooperation in respect of the video broadcasting business.
Centa-City Leading Index (CCL) last posted at 177.75, up 1.26% weekly to a nine-week high. Centaline Property, analyzed that the index level pointed to an overall passionate sales of new properties with brief price spike, but did not imply an upturn. As the reading this week has not factored in the Policy Address and the fourth wave of plague, housing prices were expected to keep juggling.
CCL (large units) last printed at 171.98, up 0.33% weekly;
CCL Mass last stood at 181.42, up 1.43% weekly;
CCL (small-and-medium units) last reported at 178.84, up 1.42% weekly.

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