Oct 4 Asian update and FT thoughts India vs China, China/Taiwan, Kishida here to stay?

04 Oct

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

Markets turn cautious as Evergrande suspends trading, announcement expected. CBBC warrents putting pressure on the market. OPEC+ meeting in focus.

Market trended higher in early trades but saw resistance at 7,300 after about 40 mins and then trended lower with support 7,240 and then trading sideways.  Banks +VE as CBA share buybacks sees good interest.  Oil +VE but Iron Ore eased.  News of Evergrande suspending trading around midday Australian time -VE for sentiment.
Nikkei opened higher around  29,000 but trended lower finding support around 28,400.
Topix traded in a similar pattern opened at 2,006 and support at 1,970 ahead of the lunch break.
Shipping seeing profit taking along with growth names. Mitsubishi Motors +VE on good US slaes
S Korea 
Market closed
Taiex opened higher at 16,600 tested to 16,650 in early trades but then trended lower to 16,400 level before bouncing back to 16,520 but then trended lower again; currently -130pts (-0.8%) @ 16,440. Concerns about events in China in terms in power strikes and the suspension of Evergrande. Broad based selling, Tech, Shipping and Paper.
Airlines, Tourism and reopening +VE on the Merck’s new oral drug for covid.
Market closed
HK Pre market opened @ 24,479 -96pts vs -178 pts ADR’s but trended lower with Evergrande suspended and China closed.   Bberg reported that it would make an announcement.  Hopson reported to be making a bid for Evergrade services (6666 HK) at a market not distressed valuation; that may  reflect Govt pressure for firms to ‘assist’ Evergrande and ensure social stability.  Signs of weakness in the CBBC warrents prompting downside pressure with brokers reporting more downside pressure should the index hit 23,500/24,000 level.  Pharma  weak on  the Merck oral drug.
Lenovo +VE as China depositary receipts applications is approved.
Futures indicate a higher open;  FTSE +21 points at 7,040, DAX +11 points at 15,137, CAC 40 +9 points at 6,506, according to IG data.  But news on Evergrande could undermine that
Eurozone Eurogroup meeting
France New car registrations
US Futures
Opened higher Dow +100pts S&P +0.3% and NDX +0.35%. Debt ceiling, infrastructure spending, energy prices and inflation plus a jobs report this week all vying for attention.   Today Factory Orders, Factory Orders Ex Trans, Logistics Managers Index.

FT Front Page

Tiny Rwanda projects power
Rwandan military forces in Mozambique as part of a mission to crush an Islamist insurgence.

India dragged into energy crisis as coal supplies fall to critical level
• Power plants have 4 days’ stock • Import prices rise sharply • Economic rebound at risk. Like many countries it has struggled with rising prices and an inefficient SOE Coal India Ltd. Matters being made worse by the Monsoon season rains.

Top Democrats say $3.5tn package can be cut in bid to salvage Biden agenda   It was ambitious to start with but I think necessary in many ways.  It seems that there is likely to be a deal but smaller as partisan views rise in importance.  It will be interesting to see how the voters react when they get the opportunity.
China war jets set record Taiwan incursion

A significant increase in activity as China shows its displeasure at international political support for the Country that China says is a rougue province and one that President Xi has attached significant political capital to making part of China. I beleive mainly for the significant technical advantages that Taiwan would bring to China. Attaching such importance to ‘unifying’ Taiwan makes it difficult for President Xi to change tack on the matter and a lot of chinese believe what they have been told.

BioNTech chief predicts need for new Covid vaccine
Due to the number of mutations it is likely that a new formula will be needed. Underlines that the world will have todevelop a strategy of living with covid. The idea of a zero tolerance of covid is unlikly to work.

Ethereum rises to power in the digital world
Blockchain tipped to become platform of choice for the internet’s future but faces competition from nimbler rivals.
An interesting look at developments in the world of blockchain and the systems used to pay for it. Key being the impact of cost and the technical updates that are due to be undertaken and the fact that there are alternatives.

India can win over investors from China, says Ola chief.
He says ‘“In general, India is a much more rule-of-law, market-driven economy, unlike China,” he said. “The onus is on Indian entrepreneurs to really engage with investors and tell them about both their business and the India story.’
He also notes that in terms of scale both countries are similar.
It suggests that whilst in the past India has been second to China but looking ahead it is projected to overtake it.
An interesting read. Obviously he has a vested interest but well worth a read.

Kishida will need to defy the odds of Japanese political longevity
An interesting read that looks at some of the potential conflict points like; pushing for wage rises, changes to quarterly reporting rules, corporate governance code pushing for a broader focus on shareholder interests. He notes ‘Businesses may welcome those changes; investors would see them as an attempt to roll back the pro-governance reform momentum of the past six years. Kishida has also talked about a new style of capitalism and a rejection of the neoliberal policies Japan adopted in the mid-2000s. One prominent chief executive told me Kishida’s musing on wealth redistribution “gives me the chills”.’
But key is will he last? Why will he last longer than many of his predessors? Abe managed it can Kishida? Worth a read.

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