Sept 13 Asian markets fall. FT Ant's break up, Crypto losses in S Korea and more.


13 Sep

This and previous notes can be found at  Substack ( Asian Market Sense )
Check out ERI-C.com  for your research needs

Australia
Market opened lower dipping to 7,390 in early trades before rallying back first to 7,425 level, then 7,430 and 7,436 around 12:45pm  before trending all the way back to the opening level, followed by a small bounce to close +5pts (+0.07%) @ 7,412
Leaders Sydney Airport on a revised bid, Oil and Aristocrat Leisure. Laggards Iron Ore Miners
Japan
Sentiment cautious and T/O light relative to Friday’s SQ.  Auto’s weak as Toyota to make further cuts to production; supply chain names weak as well.  Shinsei +VE on M&A but below offer price. JAL weak as tie up with Qantas rejected by Australian authorities on monopoly grounds.
Leaders Oil/Coal, Mining, Food, Banks
Laggards Transport, Pulp/Paper, Commodities, Property and Pharms
Tokio Marine announces another buyback similar to the one they just completed.
Nikkei opened flat, initially ticked higher to 30,435; but then sold down to 30,229 before bouncing and then trading sideways around the 30,300 level for most of the rest of the day.  Before seeing an uptick at the end to close -29pts (-0.1%) @ 30,358.
Topix trading in a similar pattern to close flat @ 2,092
Pre Market Data
BSI Large Manufacturing Q3 7.0 QoQ vs -1.4 Q2 (F/cast was -1)
PPI Aug 0.0% MoM vs 1.1% Jul (F/cast was +0.4%)
PPI Aug 5.5% YoY vs +5.6% Jul (F/cast was +5.8%)
S Korea
Choppy trading, local retail selling with concerns over the closing of smaller crypto exchanges. Utilities +VE on expectation of hike in electricity prices, Steel +VE too and some Chip plays.   Internet Platforms weak on expectation of more regulation over use of  consumer data.
Expect choppy trading this week ahead of Chusok holiday next Monday - Wednesday.
Kospi opened lower 3,117 then rallied to 3,139 at 10am before retrenching to 3,109 at 11am then worked back to flat, then retested the lows before rallying to close +1pts (flat) @ 3,127
Kosdaq opened lower dipped bounced but then trended lower, support around 1,024 and closed -11pts (-1%) @ 1,027
Data
S Korea Exports 1-10th +30.7% YoY but chip exports -2.1% YoY
KDCA reported 1,433 new covid cases (-322 DoD)
Taiwan 
Taiex opened lower but tested Friday close but failed and sold down to 17,390 in the first 30 minutes and then rallied back to test a couple of times (10:45am and 11:50am) and then trended lower to close -28pts (-0.2%) @ 17,446
China 
CSI 300 opened slightly lower but tested 5,030in early trades but then reversed back to test 5,000 support from 10 -11am but then sold down to trade around 4,994 level into lunch. PM opened lower and tested 4,965 in early trades but then worked higher to close -21pts (+0.4%) @ 4.992.
Chinese Mid Autumn festival 21 Sept so may see selling pressure later this week. Market to be closed Monday & Tuesday.
HK 
Pre market opened @ 25,885 -321pts vs -163pts ADR’s Weakness in Ecommerce on news Ant to be split up and platform operators to allow each other access, protect workers rights and new data usage rules. Macau weak on new covid outbreak in China and poor turnover in local election. Auto’s hurt by ministry saying there were too many EV’s in China. Property weak with Soho -35% after Blackstone backs out of deal to buy the company adding to sector pressure from Evergrande and R&F. Leaders Chalco on Aluminium prices, Shippers still +VE and pockets of tech hardware.
Europe
Markets opened higher,  with expectation of continued ECB support.
Auto & Banks +VE but Tech weak.
Data
Germany 

Wholesale Prices Aug +12.3% YoY vs 11.3% Jul (F/cast was 12.5%)
Wholesale Prices Aug +0.5% MoM vs +1.1% Jul (F/cast was +0.7%)
US Futures
Opened Dow futures +91pts, S&P +0.26% and NDX +0.24% but improved as Europe opened now Dow +153pt S&P and NDX  +VE
Data due Consumer Inflation Expectation, Monthly Budget Statement.

On line
Beijing to break up Ant’s Alipay and force creation of separate loans app  Chinese fintech will turn over user data to new joint venture partly owned by state.  
I think the key here is that the State gets the user data; something the PBOC has been trying to get for years. It will allow the state a much clearer insight into peoples real incomes.
The other big issue is how this leaves the overall company as the part are unlikely to be as valuable as parts as they were as a whole. It may also demonstrate how the rise of ideology over growth could stifle one area in which China has been able to show world leadership.
It notes that going forward ‘Ant will lose its ability to independently assess borrowers’ creditworthiness. For example, a future Alipay user in need of credit would see their request first routed to the new joint venture credit scoring company where their credit profile is held and then on to the new Huabei and Jiebei lending app to issue the credit.’
It seems likely that the government will decide on whether citizens should be allowed credit.

Front Page
Rivals reach out to France  Looks at start of the French 2022 election campaigns.

Business sentiment darkens as Delta surge tilts forecasts lower
• US companies lower guidance • Europe recovery hopes falter • Consumer confidence wanes.
A change in sentiment from the optimism of having a vaccine to the realisation of the dangerous impact from those that are not vaccinated the prospect for un-vacinated people to facilitate the mutation of the virus into a more dangerous variant.

Horta-Osório stamps his authority on Credit Suisse in wake of twin scandals  Looks at the fact that the new Chairman is taking over more executive duties and appointing allies to the board; actions that suggests a power struggle with CEO Thomas Gottstein.    Internal sources deny the struggle and say Horta-Osório is merely mentoring and coaching Gottstein.
No doubt time will tell but it mentions that some shareholders are happy seeing a tighter grip.

Inside
EU economy in sweet spot but clouds on horizon
Global supply chain concerns and Delta variant are denting optimism over progress.
The recent rebound has been significant but the delta variant and the potential for further variants until we see global vaccination rates increase; especially to the less developed countries.
Other issues include supply chain bottlenecks and it is worth remembering how many of those crewing the important container ships are from the Philippines and India; two countries with poor vaccination levels.
A good read.

Companies & Markets
South Korea cracks down on crypto exchanges

Prices tumble as a regulatory overhaul get underway. Key date is the 24 Sept; that is the deadline for ‘foreign and local exchanges to register as legal trading platforms, part of an effort to tighten oversight of the country’s exuberant crypto sector. But most local exchanges are struggling to meet the conditions, with almost 40 of South Korea’s estimated 60 crypto operators expected to be shut down, according to industry insiders and regulators.’ Key being that they must link up with local banks and open real name accounts but the local banks are worried about the risks of being opened up to money laundering etc.
It highlights the problems of not having set out the rules to start with or of thinking about a constructive solution. Just saying they have to link up with banks without putting any pressure on the banks to take part does not really bode well for the smaller investors.

Food prices Inflationary surge puts squeeze on household budgets in poorer countries.
Global food prices have surged for a little more than a year, heaping pressure on emerging markets where the poorest tend to spend a larger proportion of their income on staples.’
Putting emerging markets under pressure. An interesting read.

Apple’s car project on uncertain journey
The secretive work continues after defections but some say ambitions have been lowered.
An interesting read which notes a number of other claims from other parties that have proved illusionary. It notes that many who have been involved have been disillusioned by the lack of direction. It seems fair to say a car in the near future is unlikely but not out of the question for the future.

Growing risks lie in wait for UBS wealth bosses
Khan and Naratil generated record profits for Swiss lender, but critics question whether their strategy can be maintained.
A good read and bearing in mind the earlier article on Credit Suisse it shows a contrast. Worth a read, from the way the article is written it suggests that the jury is still out.

UPS warns of lasting scar on supply chains
Manufacturing set to become more regional, says delivery group
An interesting read about how strained logistics are having an impact on the planning of supply chains. Not least the fact that the curtailment of passenger travel has had huge impact of the availability of cargo space, with most not expecting passenger travel to return to normal until 2025. For others, with lower value items the availability of containers and shipping space will be the bigger pressure.

Market Questions. Price increases
US focus shifts to wider impact of inflationary pressure
Is the iron ore price slump over?
Is the UK labour market overheating?
Looks at data expected out later this week.

Supply shortages
Miners race for nickel as pace of electric car revolution steps up
Western groups are jostling for assets to secure more of the metal used in batteries.
An interesting read about the competition for resources not just for immediate use but also about sustainable nickel and supplies that are outside the China supply chain.
Interesting to see firms seeking to de-risk dependence on one country and to show green credentials. It will be interesting to see whether countries like Indonesia, which is expected to make up 60% of global supply will clean up their production techniques.

Japan is belatedly recognising the risks of cyber war  By Leo Lewis
Looks at the opening of the Digital Agency which highlights how, in some respects, how far Japan is behind the curve of modern technology. Japan’s failure to move away from traditions chops to digital signatures is an illustration. But the next is the larger an more dangerous threat of cyber war.
A good read. It concludes ‘The challenge of pulling all this together — even when framed as a matter of crucial national urgency — will be formidable. The creation of the Digital Agency, however separate from the cyber war issue, suggests that Japan knows it has no more time to waste’

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