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Asia Markets rebound, much seems to be as the selling pressure has eased. S Korea rebounding from 7 down days suggests that domestic investors are feeling that delta covid threat now priced in. Volumes better than seen recently.
India closed tomorrow.
Market opened lower (7,470) but quickly rebounded to 7,532 and then eased back to trade around flat with earnings from Amcor, Coles, Dominos, Tabcorp, Vicinity Centres, Pro Medicus, Pact Group, and Nearmap amongst others.
Laggards were BHP despite good results the propsosal to just have an Australian primary listing seen as -VE and CSL good earnings but CEO warned profit margin under threat next year.
Leaders Financials and Telstra
Leading Index Jul -0.12% MoM vs -0.07% Jun (F/cast was +0.2%)
Wage Price Index Q2 +1.7% YoY vs +0.6% Q1 (F/cast was +2%)
Wage Price Index Q2 +0.4% QoQ vs +1.5% Q1 (F/cast was +0.5%)
Turnover improved pre market data saw the trade balance beat despite weak exports and imports. Machinery orders beat
Nikkei opened lower pre market data was mixed, dipped to 27,400 bounced to 27,440 sold down to 27,350 before bouncing back and climbing through the morning session. PM opened higher but drifting lower. Currently +198pts (+0.7%) @ 27,621
Softbank rebounded from an intial 11mth low +VE
Topix traded in a similar pattern currently +13pts (+0.7%) @ 1,929
Balance of Trade Jul ¥441B vs ¥383.2B Jun (F/cast was ¥300B)
Exports Jul 37% YoY vs 48.6% Jun (F/cast was +45%)
Imports Jul 28.5% YoY vs 32.7% Jun (F/cast was +32%)
Machinery Orders Jun 18.6% YoY vs 12.2% May (F/cast was +15.5%)
Machinery Orders Jun -1.5% MoM vs +7.6% May (F/cast was +3%)
KDCA announced 1,805 new covid cases (+432 DoD). Market looking to break its 7 down day streak. Foreigners still selling but locals buying across most sectors. Tech +VE along with Steel but Pharma slight -VE on rotation after recent strength. Leaders Kakao Bank +3.4% post results, Samsung Heavy +2% on rights offer, SKT +1.4% spin off in Nov.
Kospi opened flat ticked higher initially and then lower before trending higher to 3,172 at midday. Currently trending lower +25pts (+0.8%) @ 3,168
Kosdaq traded in a similar pattern currently +6pts (+0.6%) @ 1,017
Taiex opened lower and trended down to test 16,400 level around 10am and then worked better currently +114pts (+0.7%) @ 16,773
Transport stocks seeing renewed interest along with Financials.
China looking to flatten incomes and address social disparity by focusing on developing the middle classas Presdient Xi stresses common prosperity. Policy likely to address that.
CSI 300 opened higher and then tested down to 4,820 level, before working higher into lunch. +32pts (+0.7%) @ 4,870
Financials, Industrials and Energy leading the gains. BBerg reports that local governments are looking to reduce debts +VE. Tech and Property remain weak.
Pre market opened @ 25,800 +54pts vs -119pts ADR’s. Market initially dipped on margin call selling after Tuesday’s sell off. Then rebounded and trended higher to test 25,950 then eased back into lunch. +193pts (+0.75%) @ 25,939 a 20% rebound after 4 days of losses.
Tencent +0.3% but a rollar coaster ride ahead of results after market
Xinyi Solar +6% rumours of price hike
WMGroup -10% as founders son writes the business has no real operation but worth noting he was recently fired for aggressive behaviour.
Techtronics -3.4% off Tuesday’s record high after poor earnings from Home Depot in US.
Earnings at Lunch: Geely (175 HK +0.2%) missed, Hengan (1044 HK -1%) profit fell; 2H looks to be under pressure; its a popular short. China Resources Beer (291 HK +2.3%) beat.
Expect markets to open higher following the rebound in Asia but key will be the inflation data due today for Eurozone and UK.
Opened Dow -50pts,s&P -0.1% and NDX -0.15%. Housing data and FOMC minutes ahead.
Taliban vows to respect women’s rights ‘within Islam’s framework’
• Promise of amnesty ‘for all’ • Afghans remain sceptical • Evacuation flights resume.
It seems there is a difference between the statements from the upper leaders and the foot soldiers. Many remain sceptical.
Beijing turns fire on internet groups in ever tougher crackdown on tech sector
Looks at yesterday’s announcements of more regulation on large Tech names. The main areas mentioned were ‘false advertising, fraudulent online reviews, blocking access to rivals, data protection and consumer privacy’. The aim seems to ensure a level playing field for new and established parties and to encourage free competition which is expected result in better choice and value for money for users.
The wider back drop seems to be to build the middle class and target the rich to give more back to society and ensure that large companies do not exploit workers. It would suggest that Beijing doesn’t want to kill these companies but ensure that the workers and the public benefit not just the owners. But by varying the conditions under which the large tech companies were able to grow and dominate may make it harder for new entrants and innovators to succeed.
China and Russia prepare to take advantage of US departure
Beijing leads effort by west’s rivals to build diplomatic and economic ties with militants.
Both will try and take advantage of the US withdrawal to advance their own causes the question remains is whether they can influence the Taliban to adhere to their desires or whether the Taliban will use them. The first aim of the Taliban is to get international recognition so that it can control the national assets. What happens further down the road is less clear.
Beijing said “The Afghan Taliban will never allow any force to use the Afghan territory to engage in acts detrimental to China,” Beijing said after the meeting. Which sounds great but the US were given assurrances prior to their withdrawal. The article says that currently holds the trump cards including influencing Pakistan.
Personally I doubt the Taliban will see themselves asaccountable to anyone but God.
WhatsApp stops Taliban using Kabul complaints hotline
An interesting read becuase the Taliban have been using such hotlines to try and maintain law and order. But as an organisation already sanctioned by the US they have little choice but to ban them.
It also appears the top Taliban leadership is keen ensure law and order and a good media pressence but that it has less control over the rank and file. That should be a concern for the likes of China, Pakistan and Russia because whilst they can have an agreement with leadership that may not be reflected in the actions on the ground.
Brazil iron ore rush creates mining boomtown where unemployment is almost unknown.
An interesting read and likely to have an impact on iron ore prices and on the likes of BHP who yesterday did mention that they could see more supply coming on stream.
BHP to shift main stock listing away from London
• Miner to unify structure in Sydney
• Henry plans deal to exit oil and gas
‘The UK’s FTSE 100 index is set to lose one of its biggest companies after the miner BHP said it would unify its dual-corporate structure and shift its primary stock market listing to Australia.’
Read also BHP proposal increases London’s existential angst
Hong Kong’s crypto credentials tested by regulatory uncertainty.
Looks at the changes that are currently taking place in Hong Kong regulatory system that would limit trading of crypto’s. Having beeen the birth place of many crypto’s because of the relaxed environment it is now facing the most extreme control; professional investors only and regulation of exchanges. Many of the large crypto firms are considering moving because of the new rules.
'The industry is already lobbying for rule changes that would allow licensed exchanges to sell to retail investors, and seeking to clarify whether the regulations would allow crypto companies based in Hong Kong to service foreign retail investors. If they do not, critics say, there are few benefits to operating in a location where office rents are prohibitively expensive.'
It would appear that Hong Kong is adopting the same attitude to crypto as China in shunning it seeing it as a threat to the Chinese Central Bank Digital Currency.
The article concludes ‘For most large crypto firms, Singapore is unlikely to be a first choice, but the growing sense of unease in Hong Kong is adding to its allure. Its early wins appear to demonstrate the benefits of regulatory clarity; something that Hong Kong nervously awaits.’
Chinese start-ups left in US listings limbo waiting for both sides to finalise their rules.
Looks at the dilemnia that many established start ups are facing as Beijing and Washington regulators face off over control, since Didi’s listing in June. Deals have been halted as they need to explain to US regulators how the new Chinese rules which do not yet exist will impact them but are expected to require them to undergo a cyber security review, again the implications of which are unknown.
That leaves two options; wait and see or withdraw an elect for an onshore or HK listing. The key being that US listings generally value the company at a higher premium to onshore or Hong Kong listings.
It mentions the use of Spacs or backdoor listings the problem is the same though; no one knows if the new Chinese regulations will apply to them as well.
It highlights what SEC Commission Chair Gensler was saying yesterday; the ability of China to change the rules is a risk that US investors should be aware of.
China says it wants a dialogue with the US but at this stage it is not clear if that will take place. For the companies and investors it makes for frustrations.
Defensive ETF flows hint at ‘bullish but worried’ mood
Billions of dollars shift into funds tracking sectors with a more risk-off bias
“Few [investors] think there is anywhere to go with new money other than to equities at this juncture. [But] we suspect that the combination of higher US taxes, potentially more persistent inflation, Fed taper talk and possible margin compression all support the probability of a correction,” cautioned Levkovich.
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