Asian Macro Initial Thoughts; Cautious open; earnings in focus along PMI data and China regs

This and previous notes can be found at asianmarketsense.com 
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Asia Summary
Australia Futures indicate to open +12pts but pre market data was weak so expect some initial weakness, Oil and Gold weak overnight but miners likely to see support. Afterpay still in focus on M&A hopes but may see some weakness as Square closed lower overnight.
Data out
Construction Index Jul 48.7 vs 55.5 Jun (F/cast was 56)
Services PMI Jul 44.2 vs 56.8 Jun (F/cast was 44.2)
Composite PMI Jul 45.2 vs 56.7 Jun (F/cast was 45.2)
Due later Retail Sales, RBA Chart Park.
Japan Nikkei local futures opened -18pts, Chicago Futures -45pts expect cautious trading with another day with a large number of earnings (circa 130) and lots of analysis from yesterday’s.
S Korea Expect markets to open flat but work higher following the US; earnings remain in focus. 
Taiwan Expect market to open higher with covid seemingly under control and good local results.
China Expect market to open lower with covid concerns added to the existing Ecommerce/gaming crackdown and Property debt concerns. Also PMI data due out after the open but downside limited by hopes of more stimulus from Beijing if PMI weak.
HK ADR’s -5pts flat @ 26,189 Ecommerce names remain weak not helped by Alibaba’s earnings miss, Financial mixed. Tencent announced new measures; many think this is a buying opportunity  
US Futures 
Opened slighty weaker but coming off new highs Dow -33pts , S&P -0.1% and NDX flat.
AHEAD MBA Mortgage Applications and 30yr Mortgage Rate. ADP Employment Rate, Services and Composite PMI, ISM Non Manufacturing Data (PMI, Business Activity, Prices, New Orders and Employment) EIA Oil Report.
Earnings : Booking Holdings, CVS Health, GM, Etsy, MGM Resorts, Allstate, Uber, Fox Corp., Electronic Arts, Roku, Kraft Heinz, Toyota, Sony, AmerisourceBergen, Marathon Petroleum, BorgWarner, Entergy, Apollo Global Management, New York Times, Scotts Miracle-Gro, Tupperware, MetLife, IAC/Interactive

DOW +0.8%, NDX +0.55%, S&P +0.82%, Russel 2K +0.37%
Markets had a weak open, NDX sold down whilst the DOW helped by health stocks and S&P rebounded to trade around flat. Markets then worked better from late morning and closed around highs. Covid concerns hurt travel names and oil but wider market +VE
Q2 earnings season continues, rising earnings are providing some valuation support.
Under Armour +7.5 after the company beat estimates on the top and bottom lines.
Clorox’s stock -9.5% but off the lows after a disappointing report.
Simon Property +2.5% after the mall owner said sales bounced back to pre-pandemic levels, up 80% from a year ago. It also reported a relatively high occupancy rate.
Sentiment helped by the progress of a bipartisan infrastructure bill that would devote $550 billion to U.S. infrastructure.
Biden says that CDC to issue a new eviction ban.
Banks 
JPMorgan Chase +1.1%, Citigroup +2.8% Wells Fargo +2.3%, Amex -0.1%
Work from home names: Facebook -0.2%, Apple +1.3%, Amazon +1%, Netflix -0.8%,  Disney -1.5%, Zoom Video -1.1%, Alphabet +0.6% and Microsoft +0.8%,
Tech NXP Semi +0.7%, Nvidia +0.3%, Micron +4.2%, AMD +3.6%, Skyworks +0.5%
Re-opening stocks  Boeing +1.7%, Caterpillar +1.6%, Simon Property +2.5%, Kohl’s +2%, Nordstrom +1%, Gap +1.2%, United Airlines +1%,  Carnival -0.1%, Wynn Resorts -3.3%, Chevron +1%, Exxon Mobil +1.1%,  
Lock down names Campbell Soup +0.1% General Mills flat, JM Smucker +1.2%
DATA
Logistics Managers Index Jul 74.5 vs 75 Jun
Redbook +17.2% YoY vs +16% prior
Factory Orders Jun +1.5% MoM vs +2.3% May (F/cast was +0.5%)
Factory Orders Ex Trans Jun +1.4% MoM vs 1% May revised (F/cast was 0.5%)
IBD/TIPP Economic Optimism Aug 53.6 vs 54.3 Jul (F/cast was 54)
After Market
API Crude Oil Stock Change -0.879m vs-4.728m (Consensus was -2.9m)
Total Vehicle Sales Jul vs 15.4m Jun
USD was steady vs Yen & Euro. Bitcoin -3.5% @ 37,988.07,  VIX -7.3% @ 18,  US T10 @ 1.172%
OIL Brent -0.6%, WTI -0.9%  after market API data was weaker than expected
Gold -0.5%, Silver +0.1%, Copper -1.2% Platinum -1%, Palladium -1.5%.
AHEAD MBA Mortgage Applications and 30yr Mortgage Rate. ADP Employment Rate, Services and Composite PMI, ISM Non Manufacturing Data (PMI, Business Activity, Prices, New Orders and Employment) EIA Oil Report.
Earnings : Booking Holdings, CVS Health, GM, Etsy, MGM Resorts, Allstate, Uber, Fox Corp., Electronic Arts, Roku, Kraft Heinz, Toyota, Sony, AmerisourceBergen, Marathon Petroleum, BorgWarner, Entergy, Apollo Global Management, New York Times, Scotts Miracle-Gro, Tupperware, MetLife, IAC/Interactive

DAX -0.09%, CAC +0.72%, FTSE +0.34%
Markets saw a weak opened but working higher following the handover from Asia. FTSE & CAC traded in the green all day, DAX traded around flat for most of the day but sold down in the PM.
Earnings still in focus; BP +5.7%, BMW and SocGen +5.6% beat, Stellantis +4% raised its FY profit margin target.
Eurozone PPI accelerated on high energy prices.
BP beat Q2 reporting an underlying replacement cost profit of $2.8bn, its dividend grew by 4% and vowing $1.4 billion of share buybacks in Q3.
Societe Generale beat profit expectations to report a net income of 1.44 billion euros ($1.71 billion) for Q2, beating analysts estimates.
Stellantis raised FY profit margin target after strong first-half results.
Smiths Group -9.5% after agreeing to a $2.3 billion sale of its medical division.
BMW -5% +0.8after warning that the global semiconductor shortage and high raw material prices will weigh on earnings in the second half.
Data
Eurozone

PPI Jun +1.4% MoM vs +1.3% May (F/cast was +0.6%)
PPI Jun +10.2% YoY vs +9.6% May (F/cast was +9.4%)
AHEAD
Eurozone Services and Composite PMI, Retail Sales
Germany Services and Composite PMI
France Budget Balance, Services and Composite PMI, New Car Registrations
UK  Services and Composite PMI

JAPAN 
Nikkei local futures opened -18pts, Chicago Futures -45pts expect cautious trading with another day with a large number of earnings (circa 130) and lots of analysis from yesterday’s.
Yen  currently 109.05
Data due after the open
Services PMI Jul (Jun was 48 F/cast is 46.4)
Composite PMI Jul (Jun was 48.9 F/cast is 47.7)
Tokyo reported 3,709 new covid cases (+1,514 DoD) and the nationwide total was 12,014 -VE for sentiment as Government urged to consider nationwide state of emergency
SoftBank reportedly has built a US$5bn stake in Roche Slight +VE it is said to believe its Genentech division undervalued. Focusing on more mainstream names whilst China ecommerce is weak +VE but news that UK Govt may block the ARM sale to Nvidia which would be -VE
GPIF reported to have cut its US bonds weighting to 35% of its foreign debt holding from 47.5% and increased its European debt holdings.
Thales (TCFP.PA) is in advanced negotiations to sell its railway signalling business to Japan's Hitachi (6501.T) for nearly 1.7 billion euros ($2 billion), a source familiar with the discussions told Reuters. +VE for Hitachi

SOUTH KOREA 
Expect markets to open flat but work higher following the US; earnings remain in focus. 
Data out
Foreign Exchange Reserves Jul US$458.68 vs 454.11b Jun
KDCA announces two cases of the Delta plus variant
North Korea wants international sanctions banning its metal exports and imports of refined fuel and other necessities lifted before it restarts denuclearisation talks with the United States, South Korean lawmakers said on Tuesday.
Over 10 workers at a Samsung Electronics Co. local research and development (R&D) center were infected with COVID-19, but there has been no shutdown of the facility, industry sources said Tuesday.
Krafton, game maker behind global smash hit PlayerUnknown’s Battlegrounds, has drawn lower-than-expected interest from retail investors for its initial public offering, with deposits for the stock offering at 5.04 trillion won ($4.38 billion) by its two-day public subscriptions’ deadline at 4 p.m. Tuesday, according to data compiled by its underwriters.

TAIWAN 
Expect market to open higher with covid seemingly under control and good local results.
No data due
CECC reported 16 new codvid cases (3 imported)
Vanguard International Semiconductor Corp, a supplier of display driver ICs and power management chips, yesterday predicted that revenue this quarter would expand more than 13% sequentially to a new record, mainly due to price hikes amid a persistent imbalance between supply and demand. Near-term demand is “very strong,” while its longer-term business outlook is underpinned by a structural change in matured 8-inch technology nodes amid scarce supply, as well as the rapid increase in demand that is expected for 5G devices and electric vehicles in next few years, the Hsinchu-based chipmaker said. +VE
Property Weak as presale and new housing projects last quarter totaled NT$245.6 billion (US$8.73 billion), tumbling 27 percent from three months earlier as unfavorable policy measures and a COVID-19 outbreak sidelined developers, although asking prices remained resilient as low borrowing costs have eased mortgage burdens, a Cathay Real Estate Development Co survey said yesterday.
GlobalWafers Co the world’s No. 3 silicon wafer supplier, yesterday said it has clear order visibility primarily for its advanced 300mm wafers in the second half of this year, next year and even into 2023, as customers have indicated greater willingness to sign longer supply contracts. The Hsinchu-based company said it might need US$800 million to US$900 million to fund ongoing capacity expansion projects, including to remove bottlenecks at facilities at fabs in Taiwan, Japan, South Korea and the US over the next two-and-a-half years. +VE
Ennoconn Corp, a subsidiary of Hon Hai Precision Industry Co, yesterday announced plans to raise more funds from private placements, new share issues and convertible bonds. In addition to a NT$1.5 billion (US$53.71 million) private placement aimed at international strategic investors, the company will also sell 5 million new shares at a provisional price of NT$220 per share and a fourth round of NT$1 billion of convertible bonds, Ennoconn said.
It plans to raise NT$3.6 billion from the plans, it said. Slight -VE
Continental Holdings Corp aims to improve its earnings ability this year and beyond by consolidating resources and deepening environment, social and corporate governance (ESG) accountability.
The conglomerate, which owns Continental Engineering Corp, Continental Development Corp, and HDEC Corp, has closely monitored the performance of its subsidiaries and pooled their resources to boost synergy, Continental Holdings chairperson Nita Ing told its annual general meeting in Taipei on Friday last week +VE.
Local life insurers reported record combined pre-tax profits of NT$259.2 billion (US$9.28 billion) for the first six months of this year, up 155 percent from the same period last year as investment gains amid booming stock markets offset foreign-exchange losses stemming from a stronger New Taiwan dollar, data from the Financial Supervisory Commission showed on Friday.


CHINA
Expect market to open lower with covid concerns added to the existing Ecommerce/gaming crackdown and Property debt concerns. Also PMI data due out after the open but downside limited by hopes of more stimulus from Beijing if PMI weak.
Data due after the open
Services PMI Jul (Jun was 50.3 F/cast is 50.6)
Composite PMI Jul (Jun was 50.6 F/cast is 50.4)
China's Wuhan city will test its 12 million residents for the coronavirus after confirming its first domestic cases of the highly transmissible Delta variant.
China’s National Health Commission on Tuesday reported 83 locally transmitted cases, with the majority detected in eastern Jiangsu province. The total number of infections from the outbreak stands at about 400.
A company controlled by the founder of China’s e-commerce giant JD.com Inc has been granted approval to set up a new cargo airline based in the eastern province of Jiangsu, China’s aviation regulator said on Tuesday.


HONG KONG  
ADR’s -5pts flat @ 26,189 Ecommerce names remain weak not helped by Alibaba’s earnings miss, Financial mixed. Tencent announced new measures; many think this is a buying opportunity  
Data due pre market PMI Jul (Jun was 51.4 F/cast was 51)

EARNINGS Due Wednesday Include Power Assets (6), HK & Shanghai Hotels (45), Concord New Energy (182), Pacific Century Premium Developments (432), Lee&Man Chemical (746), CK Infra (1038), Lee&Man Paper (2314), Beijing Capital Land (2868) and others

Short Selling Tuesday 12.9% vs 16.3% Monday
Top Shorts 
Country Garden (2007) 47%, Bank of China (3988) 43%, Mengniu Dairy (2319) 41%, CLP (2) 41%, BankComm (3328) 40%, Hang Lung Property (101) 38%, CK Asset  (1113) 36%, Baba (9988) 33%, MTRC (66) 32%, Wharf REIC (1997) 31%, Shenzhou (2313) 31%, Ping An (2318) 29%, HSBC (5) 28%, CKH (1) 26%, Hang Seng Bank (11) 25%, Haidilao (6862) 25%.

COVID
HK to close the Macau ‘return2hk’  this evening
-VE for Macau names; comes after Two Macau residents had tested positive for coronavirus at a Zhuhai testing center on 2 August, reported Macau media. The four family members were initially diagnosed with the virus. The Macau Government declared a state of immediate prevention, asking residents to present negative virus test results within 24 hours before departing the region.

WATCH
Alibaba Group Holding Ltd missed analyst estimates for first-quarter revenue on Tuesday,
as its e-commerce business was hurt by rising competition from smaller players such as JD.Com Inc and Pinduoduo Inc. Net profit -5% to 45.14 billion yuan (HK$54.30 billion) for the quarter to the end of June with lower-than-estimated revenue.
The first-quarter revenue climbed 33.81 percent year-on-year to 205.7 billion yuan ($31.8 billion), compared with the 209.4 billion yuan average of analyst estimates. Commerce revenue grew about 35 percent to 180.24 billion yuan in the quarter, compared with estimates of 184.23 billion yuan. The company also announced it was boosting its share buyback program by 50 percent to US$15 billion (HK$117 billion). Alibaba's shares were down in New York

NEW WORLD DEV (00017.HK) announced that it repurchased 1.5 million shares of the company on the Stock Exchange today 
(3rd), involving $55.5868 million. +VE

LANSEN PHARMA (00503.HK) issued a supplemental announcement, stating that for the six months ended 30 June 2021,
 the group’s net profit is expected to record a significant decrease by approximately 98% as compared with that of the same period last year. -VE

SJM HOLDINGS (00880.HK) announced interim result ended June 2021. 
The gaming, hotel, catering, retail and related services revenues rose 19.4% year on year to HK$5.222 billion. The loss widened to HK$1.466 billion from HK$1.412 billion in the corresponding period of the previous year. LPS was HK25.8 cents. No dividend was declared.
Adjusted EBITDA was a negative HK$510 million, versus a negative HK$984 million over a year ago. Slight -VE

Trendyol, a Turkish e-commerce platform backed by BABA-SW (09988.HK), is in talks to raise around US$1.5 billion from investors including the US' General Atlantic and Japan's SoftBank Group, reported foreign media. The deal could be completed as soon as next week. +VE

CK Life Sciences (0775) recorded a 15 percent rise in first-half net profit to HK$100.4 million, as compared with last year.
No interim dividend will be paid. Sales revenue increased by nearly 10 percent to HK$2.638 billion from the same period in 2020.

RONSHINECHINA (03301.HK) announced that during the month ended July 2021,
 the total contracted sales of the group amounted to approximately RMB15.853 billion, up 30.55% YoY; with the contracted gross floor area of the group amounted to approximately 764,000 square meters and the average contracted selling price amounted to approximately RMB20,752 per square meter. +VE

NTES-S (09999.HK) announced to initiate the 2021 summer rectification works on the online environment for minors, with the aim to build a healthy and green online world for the teenagers, reported Chinese media. NTES-S has also completed upgrades on the anti-addiction systems of its online games, imposing reasonable restrictions on the gaming hours as well as gaming expenses of minors. +VE

EVERGRANDE (03333.HK) announced that in July 2021, the Group achieved contracted sales of properties of RMB43.78 billion, down 12.96% yearly. 
From January to July 2021, the Group achieved aggregate contracted sales of properties of RMB400.56 billion, up 0.4% yearly -VE.

Wheelock Properties has submitted a new redevelopment plan for Kowloon Godown in Kowloon Bay to the Town Planning Board to build 1,782 residential flats but with smaller sizes. Nearly 1,000 units have been added to the 784 flats that were approved 10 years ago, but the average size of each unit will shrink 56 percent to 465 square feet. The developer wants to build seven 28-story buildings on the 165,812 sq ft site, providing a total gross floor area of 829,059 sq ft.
The project is located on Kai Hing Road, near the Kai Tak Cruise Terminal. +VE if approved