July 8 FT thoughts & Asian update. Chip shortage into 2022, China's new policy on Tech.


This and previous notes can be found at asianmarketsense.com and Substack ( Asian Market Sense )
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Thursday 8th July 2021 with two session time choices
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Asian Markets at 12:45 pm HK Time

Australia 
Market opened opened higher and tested to 7,380 in early trades but then traded sideways for most of the morning but then sold down following the rest of Asia and comments from the RBA governor saying that rates rises would due to data not calendar he also noted that immigration had kept wages low and that even with borders closed it will take more time for workers’ incomes to lift fast enough to warrant an increase in official interest rate.
Miners and BNPL names firm but Financials were weak. Covid cases continue to rise -VE
Japan
Pre market current account was stronger than expected but bank lending slowed and the rising number of covid cases outweighed the good news.
Nikkei opened lower at 28,332 and trended lower through the morning with support around 28,200.  PM the market opened lower around 28,170 and dipped to 28,124  but now -205pts (-0.7%) 228,162
Topix opened lower at 1,935 and trended lower to 1,928 before bouncing back to 1,935 and then eased into lunch. PM opened lower at 1,929 and dipped to 1,926 before bouncing back to 1,930 currently -8pts (-0.4%).
Data
Current Account May ¥1979.7B vs ¥1321.8B Apr F/cast was ¥1800B
Bank Lending Jun +1.4% YoY vs +2.9% May (F/cast was+2.9%)
Foreign Bond Investment ¥-190.9B vs ¥-1003.4B prior
Foreign Stock Investment ¥-310B vs ¥-146.7B prior
Due Later Eco Watchers Outlook and Current Survey’s
S Korea 
Kospi opened higher and traded around 3,290 for the first hour but then sold down as the latest covid cases numbers came out at a new high (1,275 cases). Market sold down to 3,254 before a bounce and traded around 3,265 although currently dipping: -24 pts (-0.7%) @ 3,262
Kosdaq similar patten opened 1,048, sold down to 1,028 and currently -13pts (-1.3%) @ 1,034
Taiwan 
Taiex opened higher after good trade and inflation data after market Wednesday but sold down on concerns about rising regional covid cases and the selling pressure in regional tech. Found support at 17,750 and started trending higher from 10:30am. currently +6pts (flat) @ 17,857
China 
CSI 300 opened slightly higher but trended lower through the morning on news the government will tighten up on the listing process for companies and the regulations are also likely to hurt the existing big tech names who listed by VIE by limiting their ability to list new shares.
PBOC talk of a RRR cut later in the year but that is a very blunt instruement and some talk that it might indicate GDP is slowing faster that expected. PBOC revers repo was flat, sono more draining of liquidity. Currently -35pts (-0.7%) @ 5,105
Tomorrow we get PPI and Inflation data.
HK 
Pre market opened 27,882 -79pts vs -109pts ADR’s but market trended lower with Tech especially under pressure but all sectors in the red. HKEX +VE on the potential for more listing if Chinese companies forced to delist from the US. A broad sell off. Today’s IPOs +VE; Landsea Life (1965) +81% and Keymed Bio (2162) +31%
Europe
Expect markets to open lower on concerns over inflation and rising covid cases.
Ahead
Eurozone ECB Monetary Policy Meeting Accounts
Germany  Balance of Trade, Exports, Imports, Current Account 
US Futures
Opened in Asia flat Dow+17pts, S&P 500 and Nasdaq 100 both flat but now Dow -100pts S&P and NDX slightly -VE 
Ahead
Initial Claims, 4 Week Average, Continuing Claims, EIA Natural Gas and Oil Stocks Change, Consumer Credit Change.

Front Page
Haitian killing
President shot dead at home
Interim prime minister Claude Joseph condemned the killing, which he called an “odious, inhuman and barbaric act”, and declared a state of emergency. Moise had appointed a new prime minister, Ariel Henry, only two days before he was killed.
See  also Haiti declares emergency after leader killed
Interim prime minister appeals for calm following night-time assassination

Tide of dirty money spurs Brussels’ plans for anti-laundering authority
• Agency to police cross-border finance • Power to levy fines • New tougher rule book.
After years of scandals the EU looks to have got enough support for a single body to address the issue.  Encouragingly the new body would cover crypto too.

Gates Foundation creates escape hatch if Melinda opts for solo charitable path.
Seems the good work will continue albeit that it could be under different unbrella’s.

INSIDE
Surging semiconductor demand lifts Samsung
Looks at the numbers released by Samsung yesterday; showing how it is benefitting from the semiconductor shortage. It’s numbers were slightly ahead of most forecasts.
Many view the sector as being in a supercycle due to the huge increase in chip demand; which due to the complexity of the business and the difficulties in adding new production is expected to continue into next year.
See also Chip shortage at carmakers puts brakes on German economy
The increased demand for chips for use in autos and other capital goods caught everybody by surprise.  Worth considering how much worse it would have been in the US had not prevented sales to Huawei and some other Chinese companies.

Nissan chief apologises for Ghosn era ‘trouble’
An interesting read and a reflection of some of the issues that still dog corporate Japan: Makoto Uchida said “We were only trying to play the melodies that sounded good to our boss. The lack of transparency led to the cause of the misconduct in question. It put all authority into the hands of one person. That absolute power applied to compensation and personnel matters.”

Wall Street reels at China’s listings crackdown
More than $2tn of shares and lucrative IPO trade for US banks at stake following Beijing’s targeting of Didi
Everybody is trying to work out what has changed, why and whether Didi knew it was coming.
The essence seems to be the President Xi wants to ensure that the government is clearly in control of all aspects of business; especially buinesses that have grown to have influence over public opinion.
I think it was the realisation of the esteme with which Jack Ma was held by many ordinary citizens that worried President Xi. But that is only part of the issue. Today there is also talk about tightening up the VIE listing process along with talk about US audit requirements for Chinese listed entities; which could be seen as impacting on Chinese sovereignty.
The key will be potential for HK Exchange (388 HK) to see more listing business as China seeks to retain access to offshore money but without US oversight. The risk there is sanctions against Hong Kong releated the new National Security Law.
A good read and without doubt an issue that has further to play out.

Read also Rubio brands green light for Didi float ‘reckless’
Expects a hardening view from many in Washington over Chinese reporting and auditing.  It may make it impossible for Chinese firms to list; that should then be positive for Hong Kong unless the US decides to bar its citizens and funds from investing into Chinese companies that would be disasterous for Hong Kong. 

Central banks sceptical of reserves role for bitcoin

An interesting read which indicates that crypto in general is gaining more institutional acceptance.