Aug 23 Asian update & FT Taiwan on China, Didi probe, #MeToo not in China?


23 Aug

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

Asian rebound prompting recent shorts to cover but overall flows remain light. Bitcoin touches US$50,000 in early trading

Australia
Market opened higher and touched 4,490 in early trades before tending lower to 7,460 late morning. Flash PMI datawas weaker that forecast.  ASX200  then trended higher again and touched 7,496 around 1pm.  Strength in Miners and IT.  Earnings still in focus; Sonic Healthcare, Nib, Ampol weak after releasing earnings, while Charter Hall and latitude rose.
Sentiment mixed with more resentment over the lockdowns as NSW reports 818 new covid cases. PM Morrison says lockdowns are not sustainable and that Australians will have to live with covid going forward.
Manufacturing Flash PMI Aug 51.7 vs 56.9 Jul (F/cast 57)
Services Flash PMI Aug 43.3 vs 44.2 Jul (F/cast 42)
Composite Flash PMI Aug 43.5 vs 45.2 Jul (F/cast 43)
 Japan
A strong open with Shippers leading but a good rebound in Auto’s, and their supply chain names.  Rubber products +VE along. Relative laggards are Mining, airlines and rail names.  Mizuho weak after another outage.  The flash PMI data showed new orders falling -VE.
Nikkei opened higher at 27,193 and has worked better through the day but seeing resistance as it approaches 27,500 level.
Topix traded in a similar fashion, opened 1,897 and worked better but seeing resistance approaching 1,920.
Manufacturing Flash PMI Aug 52.4 vs 53.0 Jul (F/cast 52.8)
Services Flash PMI Aug 43.5 vs 46.4 Jul revised (F/cast 46)
Composite Flash PMI Aug 45.9 vs 48.8 Jul (F/cast 48.5)
S Korea 
KDCA reported 1,418 new covid cases (-210 DoD)
First 20 day export data was strong +VE for Tech.
Kospi opened higher at 3,087 but initially sold down to 3,064 before reversing and trended hihger before seeing resistance around 3,106 level. Volumes light
Kosdaq traded in a similar fashion opened 978, traded down to 970 currently 993 level.
Data
First 20 days Exports +40.9% YoY, Average Exports +31.5% YoY and Chip Exports +39.8%
Taiwan 
Government rolls out domestically produced vaccine shots. Tech sector seeing good interest along with Shippers. Telcos weak. TSMC outlines plan for speeding up plant construction in US.
Taiex opened higher at 16,460 and worked higher but seeing resistance 16,776 level.
China 
CSI 300 opened slightly higher, initially dipped before rallying to 4,833 but then eased back into lunch @ 4,810
Commerce Minister talks about ‘cross cyclical’ decisions across a number of sectors. Means more smaller steps but with the longer term time frame in mind. He mentioned the need for further opening up with ‘dual circulation’ in domestic and international markets. Said foreign companies are a major part of the economy and that China was considering joining the CPTPP. But warned about the impact of covid on exports for the rest of 2021 and early 2022.
Hangzhou’s Municipal Party Committee Sec being investigated for serious disciplinary violations putting more focus on Alibaba.
HK Pre market opened @ 25,170 +320pts vs +207pts ADR’s
Dipped initial on margin call selling but then rallied to 25,460 level as Hedge Funds covered recent shorts covered before drifting lower into lunch. Brokers report longs buying Ecommerce, Internet but Financials still seeing pressure. Results in focus JD.com due today. Out at lunch Xtep Int, China LiLang, China Overseas Land and
HKEX +5.8% on news it will offer A share futures; signs licence with MSCI and gets SFC approval.
HSI to be increased to 60 names from Sept 6 adding Xinyi Glass (868 HK), LiNing (2331 HK) and China Merchants Bank (3968 HK) and the deletion of BoComm (3323 HK).
Some suggesting sell China Merchants Bank H and buy the A share on the news.
Tencent +VE rebound and there was a 300k share block traded at HK$437.90 this morning.
Europe
Futures indicate markets to open higher following the rebounds in Asia but with some caution ahead of the flash PMI data 
US Futures
Opened Dow +15pts, S&P and NDX slightly +VE
Ahead Chicago Fed National Activity Index, Flash PMI data, Existing Home Sales.
Earnings JD.com, Palo Alto Networks, Madison Square Garden

Online
Taiwanese shrug off China threat and place their trust in ‘Daddy America’
An interesting read that notes that the majority of Taiwanese do not believe there will be a war with China. Despite the increased commentary out of China there has been little change in stance from the ordinary people. Presdient Tsai used the fall of Afghanistan as an opportunituy to highlight the threat from China but there was little reaction from ordinary people. But most people in Taiwan are against the idea of falling under China’s control. A sentiment that has been growing since 2014 and that mood intensified after 2019 as Beijing cracked down on Hong Kong.
Some blame the Tsai administration’s handling of the threat; ‘“The government should be raising people’s awareness of the military threat. But instead of doing real things, they just talk, telling people to hate China and love the US and Japan,” said Liu Kuan-yin, editor of the English web edition of CommonWealth, a Taiwanese news magazine.’
It mentions how society ‘Cherishing its hard-won democracy, which created a social welfare system and Asia’s most socially progressive society, the Taiwanese public has no appetite for militarising society or even discussing defence.’
But some are seeking to change that and to bring the topic more attention ‘Enoch Wu, a former special forces officer who chairs the DPP’s Taipei chapter, has teamed up with Admiral Lee Hsi-ming, former chief of the general staff of Taiwan’s military, to educate the public about how Taiwan can better resist a Chinese invasion. He also organises safety and first aid seminars for young people.’

It will be interesting to see whether there is more public awarenes the real key for Taiwan should be more international recognition from countries that rely on its Tech sector. Allowing it to take a seat in the UN and at the WHO would go a long way to helping that, but China obviously is seeking to block both of those.



FT Front Page
Crisis talks as Russia and China drawn into Afghan aftermath
• G7 leaders to focus on airlift • US deadline extension possible • Airport crush kills 7
The evacuation continues to raise concerns with the expectation that the US, UK and other nations will have to seek assitance from Russia and China in order to keep their pledges to airlift people out.
Other articles inside; including a move by the US to ‘activated the Civil Reserve Air Fleet to provide commercial aircraft’ Small +VE for American Airlines, Atlas Air, Delta, United, Omni Air and Hawaiian Airlines.
There is also one looking at the wider impact of the Taliban’s return ‘Afghans face loss of hard-won economic and social progress’  Arrival of Taliban and cuts in foreign aid cast cloud over output and jobs.
Merkel vows ‘no’ weaponisation of Nordstream gas in bid to reassure Kyiv
Whilst seeking to reassure Ukraines president the current aggreement only runs until 2024. Likely to be a point of contention formany years to come.
INSIDE

High-profile rape and sexual assault allegations boost China’s #MeToo movement
Looks at how, despite the recent high profile sexual assault cases, the women’s right activists movementstill does not have the support of the party.
An interesting read which reflects again the fact that the party wants to be the sole controller of agenda.
Companies & Markets
Stunted growth Global data disappointments add to investor angst over pace of recovery.
Highlights the fact that the delta covid variant is having a significant impact on the pace of the global recovery. It will be interesting to see the impact that has on the comments that we get from the Jackson Hole symposium at the end of this week.

Focus at Jackson Hole will be on clues to Fed taper
HSBC are expecting other subjects for discussion including ‘income inequality could also potentially have an effect on bond yields. Economic inequality “is one of the longer-run structural drivers that has contributed to rates being so low”, Steven Major wrote in a note last week.’

China tech groups braced for Didi probe repercussions
The Cyberspace Adminstation of China is expected to announce the results of the probe that started on July 2 shortly. Officals have up to 45 days for their investigation. The results are expected to set out the ground rules for other companies although at this stage there is no indications of what the report will say.
It notes that Didi is still facing a class-action lawsuit; which alleges that investors were misled in its US IPO.
People are currently talking about the Chinese government taking a golden share in the company along with rumours of senior management changes, third parties being brought in for data management.


For Interest
FT BIG READ. CRIME
How Myanmar’s coup fuelled the drugs trade
Seizures of illegal drugs have risen in south-east Asia this year, signalling increased production and trafficking from Myanmar. Some are pointing the finger of blame at February’s military takeover.

Companies can stop the ESG backlash
Growing boardroom self-congratulation has been mirrored by rising public dissatisfaction. Worth a read.

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