Asian macro initial thoughts; China crackdown and MSCI rebalance

This and previous notes can be found at asianmarketsense.com 
Check out ERI-C.com for  interesting research and trading analysis

Asia Mixed open, good pre market data in S Korea but expect caution ahead of the official China PMI data. HK earnings in focus, especially Evergrande’s. MSCI rebalance on the close

Australia Futures indicate market to open +17pts. Earnings still in focus. Oil +VE but Gold weak.
Data duw today: Inflation Gauge, Building Permits, Current Accounts, Private Sector. Credit
Japan Nikkei Local futures opened flat but unemployment data +VE , more data due pre market but I would expect the market to work higher today.
The rebalance for Japan is a relatively small event.  
S Korea Expect markets to open higher following the US, mixed pre-market data but sentiment +VE. Govt due to release budget proposal expected to be supportive. 
Taiwan Expect market to open higher with continued interest in the Tech space.
China Expect market to open lower with concerns over further policy changes with Bberg reporting the regulator intends to crack down on PE firms that sell products to ordinary investors rather than targeted investors. Key will be the pre market PMI data; with further signs of slowing expected. George Soros warns in the FT that the current crackdown in China could prompt a crash.
HK ADR’s -35pts @ 25,504 Game Tech names under pressure with new on-line rules for children’s access. Earnings still in focus; Evergrande due to report today.
Europe UK market re-opens
US Futures 
Opened Dow +40pts, S&P +0.1%, NDX flat,
Ahead Redbook, Case-Shiller Home Prices, House Price Index, Chicago PMI, Consumer Confidence, API Crude Oil Stock Change

DOW -0.16%, NDX +0.9%, S&P +0.43%, Russel 2K -0.49%
Dow initially dipped into the red but then recovered to trade around flat but dipped into the red going into the close. S&P and NDX both worked higher to new highs as Technology names moved higher. Affirm Holdings +46% after the buy now, pay later company announced a partnership with Amazon on Friday. Amazon’s stock rose about 2%.
Financials were weak but PayPal +3.6% rallied on news it is exploring a stock trading platform for US customers. Airline weak as European Union recommended that member countries reinstate a ban non essential travel to the US due to covid-19.
Robinhood -6.9% SEC Chair Gary Gensler told Barron’s that banning the controversial payment-for-order-flow business model was “on the table.”
Banks 
JPMorgan Chase -1.6%, Citigroup -0.1% Wells Fargo -2.8%, Amex -2.6%
Work from home names: Facebook +2.2%, Apple +3%, Amazon +2.2%, Netflix +1.3%,  Disney flat, Zoom Video +2%, Alphabet +0.4% and Microsoft +1.3%,
Tech NXP Semi +0.5%, Nvidia +0.2%, Micron -1.1%, AMD -0.1%, Skyworks +1.4%
Re-opening stocks  Boeing -1.8%, Caterpillar -0.7%, Simon Property -0.2%, Kohl’s -1.5%, Nordstrom -4.1%, Gap +0.9%, United Airlines -3.8%,  Carnival -3%, Wynn Resorts -1.2%, Chevron -0.3%, Exxon Mobil -1.1%,  
Lock down names Campbell Soup -1.1% General Mills -0.3%, JM Smucker -1%
DATA
Pending Home Sales Jul -8.5% YoY vs -2% Jun revised (F/cast was -2%)
Pending Home Sales Jul -1.8% MoM vs -2% Jun revised (F/cast was +1%)
Dallas Fed Manufacturing Index Aug 9 vs 27.3 Jul (F/cast was 25)
USD was weak vs Yen & Euro. Bitcoin -0.86% @ 48,386.41,  VIX -1.22% @ 16.19,  US T10 @ 1.28%
OIL Brent +0.8%, WTI +0.55%  off highs as impact of Ida assessed.
Gold -0.37%, Silver -0.15%, Copper +1.07% Platinum -0.37%, Palladium +3.38%.
AHEAD Redbook, Case-Shiller Home Prices, House Price Index, Chicago PMI, Consumer Confidence, API Crude Oil Stock Change

DAX +0.22%, CAC +0.08%, FTSE Market closed
Markets opened flat and traded sideways through the day, Eurozone data eased more than expected. Laggards were Telcos, Healthcare, Insurance, Travel & Leisure.
DATA
Eurozone
Consumer Confidence Aug -5.3 vs -4.4 Jul (F/cast was -5.3)
Economic Sentiment Aug 117.5 vs 119 Jul (F/cast was 118.1)
Industrial Sentiment Aug 13.7 vs 14.5 Jul revised (F/cast was 13.6)
Services Sentiment Aug 16.8 vs 18.9 Jul revised (F/cast was 18.8)
Consumer Inflation Expectations Aug 31.1 vs 30 Jul (F/cast was 28)
Germany
Inflation Rate Prelim Aug +3.9% YoY vs +3.8% Jul (F/cast was +4.1%)
Inflation Rate Prelim Aug +0% MoM vs +0.9% Jul (F/cast was +0.2%)
AHEAD
Eurozone Core Inflation Rate,
Germany Unemployment Rate
France
 Inflation Rate, GDP Growth Rate, Household Consumption, PPI  
UK  BoE Consumer Credit, Mortgage Approvals, Mortgage Lending, Net Lending to Individuals

JAPAN 
Nikkei Local futures opened flat but unemployment data +VE , more data due pre market but I would expect the market to work higher today.
The rebalance for Japan is a relatively small event.  
Yen currently 109.89
Data out
Unemployment Rate Jul 2.8% vs 2.9% Jun (F/cast was +2.9%)
Jobs/Application Ratio Jul 1.15 vs 1.13 Jun (F/cast was 1.1)
Data due pre market
Industrial Production Jul (Jun was 6.5% MoM (F/cast is -3.2%)
Industrial Production Jul (Jun was 23% YoY (F/cast is 19%)
Due later Consumer Confidence, Housing Starts, Construction Orders
EARNINGS Racccoon, Ryoyo Electro and Tri Chemical Lab.
Tokyo reported 1,915 new covid cases dropping below 2,000 for the first time in a month +VE
PM Suga considering an Oct 17 election. Expected to happen without the dissolving the lower house.
Responding to the report by the Financial Action Task Force (FATF), Japan’s finance ministry announced a three-year action plan that will include an anti-money laundering inter-agency task force and tighter supervision of financial institutions.
Toyota Motor Corp said Monday its global output increased 11.9 percent in July from a year earlier to 773,135 vehicles, but the pace of increase has been slowing on the coronavirus pandemic and a global shortage of semiconductors.
 
SOUTH KOREA 
Expect markets to open higher following the US, mixed pre-market data but sentiment +VE. Govt due to release budget proposal expected to be supportive. 
Data out
Industrial Production Jul +7.9% YoY vs +11.9% Jun (F/cast was+7.2%)
Industrial Production Jul +0.4% MoM vs +2.2% Jun (F/cast was -0.1%)
Retail Sales Jul +7.9% YoY vs +1.6% Jun (F/cast was +2%)
Retail Sales Jul -0.6% MoM vs +1.4% Jun (F/cast was +0.3%)
Manufacturing Production Jul +7.6% YoY vs 12.1% Jun (F/cast was +7.4%)
Construction Output Jul -8.1% YoY vs -3.1% Jun (F/cast was -3.3%)
South Korea will ramp up spending on the next-generation automobile, chip and bio-health sectors next year in an effort to nurture homegrown companies into leading players in the global market, the finance minister said Monday.
Hyundai Engineering & Construction’s premium apartment brand Hillstate is to give Seoul another landmark at the heart of the capital city with the construction of Hillstate Namsan. The presale is set to begin soon, according to the developer. +VE
LG Chem said Monday that it would reuse artificial marble waste to produce translucent industrial plastic -- widely used in making pipes, auto body parts and helmets. According to South Korea’s leading chemical company, it has joined hands with Veolia R&E, which has a patented technology to extract a liquid material called methyl methacrylate, or MMA, from artificial marble waste. +VE
Leading oil refinery and gas station operator SK Energy said Monday it has partnered up with the nation’s largest logistics firm Logisquare to accelerate the green transition of cargo trucks. +VE
Seoul-based buyout firm Hahn & Co. has filed a lawsuit against Namyang Dairy Products shareholders for failing to abide by a binding contract to sell their controlling shares to them, the nation’s second-largest private equity fund said Monday. +VE

TAIWAN 
Expect market to open higher with continued interest in the Tech space.
No data due
The share prices of three major contract chipmakers, including United Microelectronics Corp (UMC), Vanguard and Powerchip, were yesterday boosted by media speculation that the firms are in talks with customers to sign new multiyear supply agreements with fixed prices and volumes amid a dearth of chips. +VE
Developers in northern Taiwan plan to launch NT$150 billion (US$5.39 billion) of presale and newly completed housing projects for the fall season, as the market regains some confidence amid a declining number of COVID-19 cases in Taiwan, the Chinese-language My Housing Monthly said.  +VE
China Steel Corp (CSC,), is setting ambitious carbon emission reduction goals, chairman Wong Chao-tung said yesterday. “By 2025, we aim to reduce emissions by 7 percent, and by 2050, we will achieve carbon neutrality,” Wong told shareholders at the company’s annual general meeting in Kaohsiung, which was also streamed online. “The company will develop into a dual auxiliary company: a high-end steelmaker and a green energy company.” +VE
Restaurant chain operator TTFB Co Ltd is “ready to expand” in the second half of this year, it said yesterday, as the COVID-19 outbreak that started in the middle of May subsides. “TTFB is poised for action as food and beverage rebounds in the Taiwanese market,” chairman Charles Hsu told reporters after the company’s annual general meeting in Taipei. +VE

CHINA
Expect market to open lower with concerns over further policy changes with Bberg reporting the regulator intends to crack down on PE firms that sell products to ordinary investors rather than targeted investors. Key will be the pre market PMI data; with further signs of slowing expected. George Soros warns in the FT that the current crackdown in China could prompt a crash.
Data due
Manufacturing PMI Aug (Jul was 50.4 (F/cast is 50.3)
Non Manufacturing PMI Aug (Jul was 53.3 (F/cast is 53)
China's National Press and Publication Administration (NPPA) proposed in a notice some measures to prevent minors from online game indulgence in four aspects.  
Firstly, all online game companies are only allowed to provide minors with one-hour services between 20:00 and 21:00 on Fridays, Saturdays, Sundays and statutory holidays.
Secondly, all online game users must use real and valid identity information to register or log in game accounts. Thirdly, the supervision and inspection of the implementation of anti-game-addiction measures should be enhanced. Lastly, game companies should actively guide the families, schools and other social sectors to take action, and earnestly assume the responsibility of guardianship on minors' game playing.
The Shanghai Municipal Government held a regular meeting on the high-quality auto sector development, saying Shanghai shall play its cards right regarding technology and innovation by fully protecting its industrial chain and supply chain.  Shanghai would also play its cards right when it comes to leadership and sector ecosystem.
The World Trade Organization said on Monday it would review a long-standing dispute between the China and the United States on Beijing's use of import controls for rice, wheat and corn. The Geneva-based trade watchdog ruled in 2019 against China's use of tariff-rate quotas for agricultural imports, which Washington successfully argued had limited market access for U.S. grain exports. Such quotas allow a specified quantity of goods to be imported at lower rates than usual. -VE
Universal Studios announced Monday that its first theme park in China will open in the country's capital in September. The company set the opening date for Sept. 20, according to a statement and video posted on the Chinese social media site WeChat. Under construction since 2016, the theme park has received strong backing from Beijing authorities, including the extension of one of the city's main subway lines to the site.
Beijing aims to have over 10,000 fuel cell vehicles on the road and 37 hydrogen filling stations by 2025, as part of its ambitious plan to develop the hydrogen energy industry. Beijing will also cultivate 10 to 15 leading hydrogen enterprises with international influence and three to four topnotch industrial research and development and innovation platforms by then, according to a hydrogen energy industry development blueprint released by the Beijing Municipal Bureau of Economy and Information Technology on Aug. 16.

HONG KONG  
ADR’s -35pts @ 25,504 Game Tech names under pressure with new on-line rules for children’s access. Earnings still in focus; Evergrande due to report today.
Data due after market Retail Sales

EARNINGS due Tuesday include: Beijing Enterprises Environ (154), Melco (200), AVIC (260), Wuling Motors (305), China Travel (308), CogoBuy (400), Karsen Int (496), Lansen Pharma (503), Inspur (596), Sany (631), Genting (678), Comtec Solar (712), China Yurun Food (1068), Milan Station (1150), Sino Biopharm (1177), Huili Resources (1303), China Shineway Pharma (2877), China Evergrande (3333), Legend Holdings Corp (3396),

SHORT SELLING Monday 19.6% vs 18.4% Friday
Top shorts 
CLP (2) 51%, Bank Comm (3328) 49%, CK Assets (1113) 44%,HSBC (5) 43%, Country Garden (2007) 41%, Henderson Land (12) 39%, HKEX (388) 38%, Bank of China (3988) 38%, AIA (1299) 36%, Hang Seng Bank (11) 35%, CKI (1038) 35%, CKH Hold (1) 32%, Link REIT (823) 32%, Shenzhou (2313) 32%, Geely (175) 31%, CCB (939) 30%, Techtronic (669) 30%, Hang Lung Ppty (101) 28%, Ali Health (241) 27%, New World Development (17) 27%, HK & China Gas (3) 27%, Sunny Optical (2382) 27%, MTRC (66) 26%, Haidilao (6862) 26%, SinoBioPharm (1177) 25%, Longfor (960) 25%, 

WATCH

Responding to China's National Press and Publication Administration (NPPA)'s notice on demanding all online game companies to only offer one-hour services to minors between 8-9 pm on Fridays, Saturdays, Sundays and statutory holidays, TENCENT (00700.HK) expressed that the company will strictly comply with the new requirements and will continue to strengthen minor protection through exploration and application of new technologies and features.

CK ASSET (01113.HK) +0.250 (+0.493%) Short selling $97.08M; Ratio 44.433% announced that Li Ka Shing Foundation acquired a total of 2.08 million shares in CK Asset at the average price of HK$50.8720, HK$50.7916, HK$50.8069 and HK$50.6831 per share on 24 August, 25 August, 26 August and 27 August 2021 respectively. 
As a result, the deemed interests of Li Ka-shing, Victor T K Li and Li Ka Shing Foundation in CK Asset increased from 45.85% to 45.9%; increased from 45.91% to 45.97%; and increased from 11.13% to 11.19%, respectively.

BYD COMPANY (01211.HK) -1.000 (-0.381%) Short selling $742.57M; Ratio 20.125% 's high-end brands will realize mass production and sales in 1Q23, 
Cailian Press cited people with the knowledge of the matter. The company targets to deliver 600,000 NEVs this year, and sell 1.5 million units next year, whilst BYD Ocean series of products are expected to roll out in 1H22, the report furthered.

Meituan warned it could be required to pay "a significant amount" of antitrust fines and posted a third consecutive quarterly loss on Monday as it continued to invest in expanding its various businesses.
Meituan, China's eighth largest company by market value, has faced regulatory heat as authorities crack down on the country's sprawling platform economy. China's State Administration of Market Regulation (SAMR) launched an antitrust probe into the company in April, focussing on forcing restaurants and other merchants to use its platform exclusively. SAMR also said on Monday it would further regulate the sharing economy sector and that it has been investigating Meituan not reporting its acquisition of bike-sharing startup Mobike in 2018 for antitrust review.

RESULTS after market Monday

LI AUTO-W (02015.HK)  (LI.US)  announced that the total revenues were RMB5.04 billion in the second quarter of 2021, 
representing an increase of 40.9% QoQ, topping consensus. Loss from operations was RMB536 million, representing an increase of 31.4% QoQ. Net loss was RMB236 million, representing a decrease of 34.6% QoQ. Non-GAAP net loss was RMB65.1 million, compared with RMB177 million net loss in the first quarter of 2021. 

CCB (00939.HK) -0.060 (-1.064%) Short selling $325.31M; Ratio 30.103% 's interim net profit stretched 11.4% YoY 
to RMB153.3 billion. The bank tracked higher net profit growth given lower base last year, according to the management. The management said CCB will optimize its asset and debt structure in 2H21, while expecting the full-year NIIM to resume to a more reasonable level.

BOC HONG KONG (02388.HK) 0.000 (0.000%) Short selling $29.82M; Ratio 17.071% announced the interim results.
 Net profit was HK$12.576 billion, a decrease of 17.3% year-on-year. EPS equaled HK$1.1895. The interim dividend per share was HK$0.447. Total operating income declined 6.7% annually to HK$35.02 billion.

MEITUAN-W (03690.HK) announced the interim results for the six months ended 30 June 2021. 
The non-IFRS adjusted net loss amounted to RMB6.109 billion, compared to a net profit of RMB2.502 billion for the corresponding period of previous year, which was better than the forecasts (nine brokers previously forecast MEITUAN-W's non-IFRS adjusted net loss for 1H21 to range between RMB6.629-8.692 billion, as complied by our reporters earlier). Adjusted EBITDA loss was RMB3.623 billion, compared to an EBITDA of RMB2.652 billion in the year-ago period. The loss for the period amounted to RMB8.205 billion, compared to a profit of RMB631 million for the corresponding period of previous year. LPS was RMB1.38. No interim dividend was declared. It pointed out in its interim result that, in April 2021, the State Administration for Market Regulation (the SAMR) commenced an investigation on the Company pursuant to the Anti-Monopoly Law. The investigation is ongoing and the Company is actively cooperating with SAMR. The Company is not able to predict the status or the results of the investigation at this stage, and the Company could be required to make changes to its business practices and/or be subject to a significant amount of fines.

BANK OF CHINA (03988.HK) 0.000 (0.000%) Short selling $163.35M; Ratio 37.853% announced the interim results. Net profit for the period hiked 11.8% YoY to RMB112.813 billion, higher than the estimated range of RMB105.789-108.946 billion forecast by four brokers as complied by our reporters earlier. EPS was RMB0.36. No interim dividend was declared. It delivered a narrower 1H21 NIM than that in the same period last year. The management mentioned at a conference call the persistent downside NIM pressure in 2H21, adding the lender will heighten its medium-to-long term credit ratio by optimizing deposit structure and expanding fund sources at low costs. In this way, BANK OF CHINA anticipated to enhance its NIM level.

ABC (01288.HK) announced the interim results. 
Net profit stretched 12.4% YoY to RMB122.278 billion, above the estimated range of RMB114.973-116.6 billion forecast by four brokers as complied by our reporters earlier. EPS was RMB0.34. No interim dividend was declared.
President Zhang Qingsong foresaw the NII and net handling fee to keep growing steadily given China's economic rebound, whilst the earnings will also rise sturdily. Meanwhile, the company has not held any bonds of default companies, the President told, adding more than 95% bonds held by the bank are rated above AAA. As such, he believed the potential default risk to be surprisingly low.

CHINA RE(01508.HK) announced interim result ended June 2021. The total income declined 16.8% year on year to RMB82.704 billion. The net profit amounted to RMB4.011 billion, up 62.6% year on year.
EPS was RMB0.09. No dividend was declared.

SHIMAO GROUP (00813.HK)  -0.220 (-1.416%)    Short selling $29.03M; Ratio 22.587%   announced interim result ended June 2021. 
The net profit amounted to RMB6.283 billion, up 19.3% yearly. EPS was RMB178 cents. An interim dividend of HK70 cents was declared.