Oct 13 Asian Market Lunchtime Update. China Trade Balance misses HK closed for typhoon

15 Oct

Oct 13 Asian Market Lunchtime Update. China Trade Balance misses HK closed for typhoon

Summary Asian Markets as at 12:30pm HK time

Asian markets consolidated ahead of US earnings. Apple related names were mixed; Murata Manufacturing and Taiyo Yuden were higher in Japan but South Korea’s LG Display lower along with Taiwan's, Largan Precision.
China’s Trade Balance missed significantly as Import rose significantly which would suggest an expansion of domestic activities. Exports a concern still skewed to medical supplies and electronics with refined products dropping significantly; suggest the global recovery may be faltering.

Tankan index was released pre market but the market still opened higher but sold down and then traded around or just below flat for the morning session. Lunchtime closed -0.1% @ 23,526. After lunch re-opened higher and currently trading sideways +0.1% at 23,578

Pre Market Data Tankan Index Oct -26 vs -29 Sept (F/cast was -24). The recovery trend continues but the pace slowed.

Market opened higher but sold down as investors consolidated position after 8 days and ahead of the China Trade Data and US earnings kicking off.
Kospi opened at 2,417 but trended lower for the first two hours before finding support at the 2,390 level. It then traded sideways around the 2,390 level.
Kosdaq also opened higher at 878 and followed the same pattern; finding support at 866 and then trading sideways.

Market opened higher but trended lower with same large tech names seeing pressure ahead of the China data and US earnings. Sold down in the first 30 minutes to 12,876, then a small bounce before retesting that level and then traded sideways currently -0.4% @ 12,897

Markets opened lower with caution ahead of the Trade Data and the New Yuan loans data which is due this week. The Trade Balance was significantly below market expectations. Exports were strong but imports were much much stronger than expected.
Shanghai sold down in choppy trading to 3,335 before bouncing into lunch. I would expect Team China actively supporting the market.
Shenzhen opened lower and traded sideways between 13,623 and 13,700 for much of the morning before a rally into lunch; which took the market to +0.2% @ 13,733. New plan concept stocks still being interest and with President Xi in the area and telling people to seize the opportunity patriotic investors are heeding the call.
At lunchtime
China CSI 300 flat @ 4,822
Shanghai Comp -10pts (-0.3%) @ 3,349
Shenzhen Comp +25pts (+0.2%) @ 13,733

Data out at 11am HK time
Balance of Trade Sept $37b vs 58.93b Aug (F/cast was $60bn)
Exports Sept +9.9% YoY vs +9.5% Aug (F/cast was +9%)
Imports Sept +13.2% YoY vs -2.1% in Aug (F/cast +0.5%)
Exports Reflects the continuing global recovery as covid restrictions are lifted but the main driver still seems to be medical and electronics. That could be a concern once a vaccine is found.
Sales of refined products -30.5% and those of steel products -28.2% YoY and unwrought aluminium -2%. That suggests the global recovery may still be limited.
Imports of major commodities including crude oil, iron ore, copper, oil and soybeans rose. Unwrought copper and copper products imports +8.1% MoM. Imports of meat were 834 thousand tonnes, slightly higher than last month’s 632 thousand tonnes, reflecting the government’s aim to contain rising prices for essentials.

Data that could be released this week includes
Vehicle Sales Sept. Aug was +11.6% F/cast is +10.5%FDI (YTD) Sept. Aug was +2.6% F/cast is +2.7%New Yuan Loans Sept . Aug was CNY1280b F/cast is 1700bOutstanding Loan Growth Sept. Aug was +13% YoY F/cast is +12.7%Total Social Financing Sept. Aug was 3580b F/cast is 3200bM2 Money Supply Sept. Aug was +10.4% F/cast is 10.3%

Market closed today as T8 still raised at 12 noon. Market should re-open tomorrow. Interesting that the T8 should remained raised as typhoon Nangka only just skirted the 400km from Hong Kong and was tracking clearly westwards. Conspiracy theorists can speculate over the whether the weather man was justified.

Expect market to open lower with caution ahead of the US earnings and concerns about the impact of Covid with many areas under heightened social distancing measures. China trade data at a headline level looks good but the underlying picture is not so convincing with exports skewed towards medical and electronics exports. The positive is that imports for domestic activity were good.
Data due
EUROZONE ZEW Economic Sentiment Index
GERMANY Inflation Rate, ZEW Economic Sentiment & Current Conditions
FRANCE No data due
UK Claimant Count Change, Employment Change, Average Earnings, Unemployment Rate, Labour Productivity

Futures opened flat but sold down Dow -90pts, S&P -0.5% and NDX -0.1%. Earnings tonight include JPM, Citi and Delta Airlines. Last quarter analysts had slashed forecasts and earnings beat. This time forecasts and the markets are higher so the potential for disappointment is also elevated. We also have the Apple Event and the start of Amazon Prime Day. With the lack of agreement on stimulus and covid overhanging the markets. Biden leads in the polls but the markets are not unduly worried as they still expect more stimulus whoever wins.
Data due NFIB Business Optimism, Core Inflation Rate, Inflation Rate, IBD/TIPP Economic Optimism, Consumer Inflation Expectations

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