June 25 FT thoughts & Asia update. Solar, Mars, Wuhan and the battle for crypto

25 Jun

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

Asian markets at 1:30pm HK time
infrastructure and footwear names in play after US infrastructure deal and Nike earnings
Market opened rebounded and initially rallied to test 7,320 before easing back to trade around 7,300. Around 12:45pm worked back 7,320 but resistance at 7,325. After testing a couple of times it eased back to 7,300 before a small rally; currently +38pts (+0.5%) @ 7,313. Leaders Financials and Miners. Laggards Healthcare.
A lock down in part of Sydney not a big drag as investors accept the new reality of working with covid.
Pre market inflation data was better than expected.
Toshiba -0.7% but off early lows as shareholders reject the Chairman’s reappointment (stock popped on the news) sending a signal to corporate Japan and I would say the Ministry.
Nikkei opened higher at 29,137 but trended lower to 29,000 in the 90 mins before working back to 29,090 at lunch. PM started trading sideways around 29,100 but now drifting lower. +196pts (+0.7%) @ 29,072
Topix followed a similar pattern, opened 1,964 , support 1,955 and currently +13pts (+0.7%) @ 1,961
Tokyo Core CPI Jun 0.0% vs -0.2% May (F/cast was -0.1%)
Tokyo CPI Jun 0.0% vs -0.4% May (F/cast was -0.2%)
S Korea
Pre Market Business Confidence beat forecasts  
Kospi opened higher and worked better before resistance 3,316 then trended lower to 3,300 level currently +15pts (+0.5%) @ 3,301
Kosdaq similar pattern, initial rally to 1,019 then traded sideways to around 1,018, then around 1:30pm trended lower; currently +3pts (+0.3%) @ 1,016
Business Confidence Jun 98 vs 96 May (F/cast was 97)
Taiex opened higher and rallied to 17,568 and traded sideways until 12:45pm with support at 17,550. Then trended lower; currently +95pts (+0.6%) @ 17,503
CSI 300 opened slightly higher and worked better through the morning to 5,200 in the first 90 minutes then traded sideways before a rally into lunch. PM opened higher and working higher +87pts (+1.7%) @ 5,244 Expect support from Team China going into end of month and Party anniversary.
Pre market opened @ 29,003 +122pts vs +78pts ADR’s broad based buying and then worked better through the morningto 29,200 and lunch and PM working better.
HK administration announces reshuffle with John Lee as Chief Secretary for Administration (From National Sec); Chris Tang as Secretary for Security; Raymond Siu as Commissioner of Police, while relieving the duties of Matthew Cheung as Chief Secretary for Administration; and John Lee's and Chris Tang's duties as Secretary for Security and Commissioner of Police respectively. Said based on Merits.
Expect markets to open higher following the hand over from Asia and the news of a US infrastructure bill.
Data due
Eurozone Loans to Households and Companies, M3 Money Supply
Germany No data due
France Unemployment Benefit Claims, Jobseekers Total
UK CBI Distributive Trades, BoE Quarterly Bulletin.
US Futures
Opened  Dow +100pts, S&P +0.1%, NDX flat and have risen to Dow +137pts, S&P and NDX +VE  Good results from Nike +VE  But focus on the inflation data and Fed speakers
Personal Income & Spending, PCE Price Index, Core PCE Price Index, Michigan Final (Inflation Expecations, Consumer Sentiment, 5yr Inflation Expectations, Consumer Expectations, Current Conditions), Baker Hughes Rig Count, NY Fed Treasury Purchases (2.25 - 4.5 yrs).
FED Speakers Mester and Rosengren
Earnings: CarMax, Paychex

Front Page
Blow for free speech in HK

The closing of the Apple Daily due to the National Security Law

Inside  Hong Kongers rush to buy final edition of Apple Daily newspaper  Shows there is public support for the paper and whilst not necessarily agreeing with its views belief that society should be able to express different views.

Biden pins down milestone $1tn cross-party spending package
• Funding for infrastructure • ‘Compromises’ on both sides • Hope for economic agenda
Smaller than originally targetted but a step in the right direction and investors bought infrastructure related names on the news. Shows also that compromise is possible.

Japanese emperor breaks protocol by expressing concern about Olympics.
An interesting move as the Emperor usually avoids any comments that could have political implications and will be viewed as unwelcome byPM Suga who decided to go ahead with the games and also has an election looming.

US bans import of Xinjiang solar products
Biden steps up pressure on Beijing over treatment of Uyghur Muslims
A big move considering the importance of green power but could underline the political impetus of putting human rights ahead of costs.
It also high lights the lack of transparency in supply chains in China. In some fields there are companies that go in to check and certify supply chains but in some areas they cannot get the access.
As a UN ambassador commented recently to China, ‘if you have nothing to hide why are you not allowing free access’
That is an accusation that China will find being increasingly leveled against it. Claiming things to be a domestic issue are unlikely to hold weight in free western countries although autocratic states are likely to support it.
For polysilcon suppliers outside China like Wacker and OCI it should be good news.

Chinese scientists accused of obstruction over Wuhan data
Looks at how some Chinese scientists asked for data to be removed from a US data base. Adding to concerns that China is not being as open as it could be about tracing the original source of the virus.
Does make the point that the specific data would not specifically shed light on the origin but equally its removal does not help in building a complete picture.

Beijing plots mission to put astronauts on Mars by 2033
Ambitious targets being set by China but noted that it would need to complete a number of missions in the meantime. An interesting read. ‘China’s progress in mastering launch vehicle and satellite technologies needed for advanced space flight has become a source of domestic and international prestige for the Communist party ahead of next month’s celebrations for the centennial of its founding.’
It will be interesting to see how the spending on defence and space impacts the Chinese budget. It mentions the tie up with Russia, obviously for technical help because the Russian space budget was largely reliant on NASA payments.

Darwin port investors caught up in worsening China-Australia diplomatic storm  
An interesting read because it reveals how parties on both sides are the equation can take extreme positions.
China in expecting it’s companies to be treated like companies from other countries despite the fact that China’s laws make them effectively an extension of the State. Equally it also reveals how some people in Australia may be taking an extreme view of Chinese companies.
Landbridge’s claim that the current actions may deter other international investors equally misses the point. It’s the China angle that is the issue and that is quite unique situation.
What is also apparent it that companies and many western countries are becoming more wary of Chinese investment since China has sought to impose its standards on the global rules bases systems.

Companies &  Markets 
Commodity traders rush to book their place in the sun amid energy transition
Sector determined to play big role in solar, wind and hydrogen while continuing to back fossil fuels.
I think the key about green energy is that that it will take time before we can abandon the fossil fuels.

Hedge funds seek to avoid blockbuster ‘meme’ losses
Short-selling hit from stocks including GameStop brings drastic change in tactics.
A interesting change for hedge funds in addition to looking for the fundamental reason to short a stock they are also now having to gauge retail opinion on the stock too.
An good read.

Andreessen bets on digital assets with $2bn vehicle
Interestingly raising money for its third fund but this one is far bigger that the previous ones. This one focused on ‘finding “the next generation of visionary crypto founders”, it said’
That seems to reveal the fact that crypto and blockchain are fast becoming accepted by investors. It believes ‘the next wave of computing innovation will be driven by crypto,’
Worth a read.
See also OPINION A contest to control crypto is under way  By Gillian Tett   Looks at crypto from the view point of Niall Fergusons dynamic of a metaphorical ‘tower’ and  ‘square’.  An interesting read concludes  ‘But the really interesting issue is what will happen  in the US, a country that venerates free-market ideas and network-driven  innovation. “American cultural values — from support for the underdog  to adulation of the frontier explorer — seem to be the precipitating  source of how crypto is changing our concept of money,” notes  anthropologist Sara Ceraldi. Don’t count out the crowd.
Either way, the point is that nobody can explain crypto prices or other meme assets with monetary economics or portfolio theory alone. The power and culture of “squares” and “towers” matter. Rarely has finance been so fascinating or so hard to model with maths.’

Deception, disarray and mismanagement
The payments processing company, once worth €24bn, presented itself as one of Germany’s rare technological success stories. But documents reveal it was a chaotic and often ineffective organisation.

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