July 7 FT Thoughts & Asain update. China on Didi and others, Afghanistan, Space and more

This and previous notes can be found at Substack ( Asian Market Sense )
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Asian markets  weak except ASX200 and CSI300 but order pads seem light with investors remaining cautious as we approach earnings season and the FOMC minutes tonight in the US.

Market opened higher and has worked higher through the day currently +60pts (+0.8%) @ 7,322.  Laggards miners, banks and retailers.  But  Sydney Airport surged on a takeover offer.  Tabcorp weak as it confirmed it intends to demerge its lotteries and Keno business from its wagering & GamingCo operations, creating two separate ASX-listed companies.    News that Sydney would extend the quarantine seemingly having little impact.
Data Services Index Jun 57.8 vs 61.2 May (F/cast was 61)
RBA Chart Pack released
Broad based selling reflecting concerns over the recovery. Nintendo has a weak open on the unveiling of the new Switch console but has rallied .  
All sector in the read lead lower by Energy, Materials, Consumer and Financials.   Nomura weak as US PB ops being withdrawn, follows losing key analysts.  Softbank continues to be under pressure
Nikkei opened much lower @ 28,262 and initially dipped to 28,200 before working better to 28,430 level before easing into lunch. PM opened and tested 28,400 level; currently easing -265pts (-0.9%) @ 28,378
Topix traded in a similar pattern; opened 1,933, touched 1,926 then bounced to 1,945 and currently -16pts (-0.8%) @ 1,938
Data pre market
Foreign Exchange Reserves Jun $1376.5b vs 1387.5b May
Later Leading Economic Index, Coincident Index
S Korea
Samsung forecast the operating profit in the second quarter to stretch 53%  to KRW12.5 tn (USD11 bn), surpassing the market  estimate of KRW11.3 trillion, mainly due to the strong chip prices and  demand.
Samsung also predicted the second quarter revenue to jump 19% to KRW63 trillion.
Kospi opened lower and sold down to 3,290 in the first few minutes and then sold down to 3,280 which became support through the morning as it worked slightly higher; currently -18pts (+0.6%) @ 3,287
Kosdaq dipped lower initially to 1,042 bounced back to flat before working higher. Resistance at 1,050; trading sideways currently +5pts (+0.5%) @ 1,050
Data pre market
Current account May $10.76b vs $1.91b Apr (F/cast was $2.7b)
KDCA reported 1,212 new covid cases this morning (+494 DoD); the highest since Dec -VE as it could impact the recovery.
Taiex opened lower following the US and after weak employment data. It dipped to 17,880 before bouncing to 17,930 level and traded sideways until around 11 am when it trended lower to 17,840 level before a bounce; currently -71pts (-0.4%) @ 17,841
Industrial’s and Energy weak. Tech, Property and Consumer seeing interest.
Data due after market
Exports, Imports, Balance of Trade, Wholesale Prices, Inflation Rate.
After Market Tuesday
Unemployment Rate May 4.15% vs 3.17% Apr (F/cast was 3.7%)
CSI 300 opened lower at 5,052 but worked higher through the morning to 5,134 before easing into lunch. Suggests team China supporting the market as Tech plays under pressure as China reviews the regulations.
PBoC continues to drain liquidity via reverse repo and regulator to tighten up on market manipulation.
Data due After Market
Foreign Exchange Reserves.
Hong Kong 
Pre market opened @ 27,778 -295pts vs -415pts ADR’s
Tech under pressure but all sectors except Healthcare in the red. With Evergrande under a lot of pressure. But seeing buying in Cosco Ship, Xtep, Chinasoft. Xiaomi announced a bond issue.
Chaoju Eye Care (2219 HK) +31% vs listing price
Xpeng(9868 HK) -0.8% vs listing price
Data due After Market 
Foreign Exchange Reserves.
Expect a weak open following the moves in Asia.
Data due
Germany Industrial Production
France Balance of Trade, Current Account
UK Halifax House Price Index, Labour Productivity, Mortgage Rate
US Futures
Opened Dow -54 points, or 0.16%. S&P 500 and Nasdaq 100 futures dipped 0.10% and 0.06%, respectively.

Front Page
England risks soaring cases
Fears escalated yesterday that up to 2m people in England were at risk of contracting coronavirus or being asked to self-isolate each week once restrictions ease on July 19.

Didi shares hammered as Beijing watchdog unveils investigation
• Ride-hailer’s price plunges • China to tighten foreign listing rules • Threat to Wall St fees
Looks at the impact of the Chinese regulators taking new action against E-Commerce names. The initial concern I think is the vagueness of the comments coming out of the regulator and also the apparent new tack being taken with regard to fund raising.
Companies remain keen to list in the US because the market there understands tech and therefore is where the best valuations had been achieved. It was also presumed that China was keen to attract off-shore money to fund its development. That seems to have changed. But it is difficult to understand the risk from ride hailing data. One theory was that it would give insight into work levels at government departments but the fact that the investigations have been extended to other areas raise some doubts over that theory. But it does highlight the increasing importance of data both in China and the West.
There was also talk that the company knew this action was coming which the company and its advisors denied.
The problem now is investors have been burnt and that will probably mean future Chinese IPO’s will be treated with a lot more caution as the regulatory and political risk in China has escalated. That is also -VE for the Wall Street bank fees. It could also mean a number of existing entities may have to restructure in order to comply with the new regulations.
Read also
Didi caught in the middle as China and US battle over data security  Crackdown by Beijing regulator seen as warning to other groups considering a New York listing

South Africa police delay Zuma arrest after ex-president launches legal cases.
A move which many see as undermining the judiciary and to extent the democratic process in South Africa. With many feeling that the ANC is actually reluctant to jail its former leader.


China casts anxious eye over Afghanistan as US withdraws
Beijing pursues talks with Taliban to allay concerns on terrorism and trade.
Worth noting that China has had previous talks with the Taliban and reached agreement in the past over the construction of infrastructure because Afghanistan in important for Chinese access to the middle east.
The article wonders if China will be draw further into operations within Afghanistan. At present its involvement is largely through Pakistan. One area of concern to China will be Taliban links to Uyghurs within what China calls the East Turkestan Islamic Movement. Which has previously been designated a terrorist group by the UN and US, although the US dropped its classification last year. But China has been claiming the group is active in Xinjiang. It notes ‘In a clear indication of Beijing’s determination to counter the ETIM, Wang Yi, China’s foreign minister, exhorted counterparts from the central Asian states of Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan and Turkmenistan this year to co-operate to smash the group. “We should resolutely crack down on the ‘three evil forces’ [of extremism, terrorism and separatism] including the East Turkestan Islamic Movement,” Wang said in May.’
The question is whether China steps into the void left by the US and if it does; with what level of military involvement. It notes that the Afghan government held onto power because of the US air support, against which the Taliban had little response.
Time will tell.

China gripped by space rage allegations
Party official held after two scientists, including woman, 85, are attacked.
An interesting read about a party official who wanted to be recommended to the International Academy of Astronautics by a couple of scientists who declined.
The incident has tarnished all the good news coming out from the Chinese space programme and has put the party in an awkward position.

Indian state tightens curbs over concern about third Covid wave
A worrying read about a possible new an more virulent third wave in India. On the positive side it seems the government has learnt from the previous waves and it looking to move early.
Companies & Markets

Alibaba joins $1.4bn bailout effort to save ailing Suning
Looks at the bail out of Suning which  is expected to serve as a template for how Beijing would like probably like to  ‘bail out’ troubled companies.  A mixture of state and private finance; with a view to preventing job losses and trying to reduce the burden on the State.   It will be interesting to see how the model develops and whether at some point in the future the state exits from its position.  At this stage the market has reacted positively to the move.
The issue may come later, depending on how failures there are, because there is not an everlasting list of companies that are as profitable as Alibaba to step in; plus Alibaba can only step in so many times!
See also LEX Suning/Inter Milan: put the boot in   Key for Lex is the disposal of Inter Milan.  ‘Suning’s low valuation may look appealing. Its enterprise value to  forward sales ratio stands at just 0.3 times, even after yesterday’s  gains. But until Inter Milan has been sold, the group’s prospects remain  ambiguous.’

Seoul watchdogs step up scrutiny of big IPOs
Key being the rich valuations which have raised concerns over bubbles in the Asian market. Comes after Krafton was forced to cut the size of its deal and some previous IPO’s that have failed to perform like Hybe, the company behind K-pop superstars BTS, and internet group Kakao Games.
At present with the Korean market hitting new highs a large number of companies from many different sectors are keen to list. Seeing the regulator acting in advance of disappointment is encouraging for investors.