This and previous notes can be found at asianmarketsense.com
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Asia @ 1pm HK time Opened slightly higher but eased back on news of new covid varient outbreaks in Asia.
Australia Market opened higher briefly before selling off sharply as the market reacted to the new lockdowns. Finding support at 7,273 after 45 mins of trading. The market then trended higher for the next 2.5hrs but saw resistance approaching flat and eased back to 7,300 and traded sideways currently -4pts (-0.06%) @ 7,404
Travel & Leisure weak with Qantas-3.9% but Woolies +2.9%, Coles +0.7%. Metcash +1.1% onstrong FY results, buyback and higher dividend.
Nikkei opened higher as expected but sold down to 29,030 and then traded sideways for most of the morning around 29,050 level(vs 29,066 close Friday). But then sold down to 29,000 at lunch
PM opened higher and constinued to traded around 29,050 but just turning lower.
Topix Opened higher and traded around 1,965 through the morning before selling down to 1,962 at lunch. PM opened higher and trading around 1,964.
Toshiba +1.5% after shareholder revolt on Friday.
Kospi opened slightly higher, dipped to 3,298 but then rallied to 3,111, eased back to trade around flat. Until 10:50am when it sold down to 3,291 before working back to flat.
Kosdaq Opened higher and rallied to 1,018 in the first 30 minutes and had traded around there for the rest of the session. Currently +6pts (+0.6%) @ 10,18
Taiex opened higher @ 17,531 saw an initial up tick before selling down to 17,480 level before rebounding to flat. Around 10am it rallied to 17,595 level which it tested a few times before easing back to trade around 17,550 level.
Shipping names seeing interest as
CSI 300 opened higher after weekend Industrial Profits number showed the recovery continues but was uneven and slowing on a YoY basis. Market sold down to 5,235 in the first 40 mins befire bebounding to the opening level before trending lower into lunch +9pts (+0.2%) @ 5,249
HK No morning session due to Blackrain. Market to open at 1;30pm. ADR’s -67pts at 29,221 with weakness in some Chinese Financials. After market we get HK Trade balance
Expect markets to open flat/lower following Asia. Only German Import price data due.
Futures opened higher Dow +47pts, S&P +0.1% and NDX flat but have eased lower; Dow +14pts, S&P now flat an NDX slightly +VE.
Ahead Dallas Fed Manufacturing Index
Fed Speaker Quarles
The Big Read Chinese politics & policy
The Communist party at 100: is Xi Jinping’s China on the right track?
The president’s admirers believe he can lead the country to a new era but critics say he has erased all checks and balances
PRINT Front PageWilliams says no to Olympics
Didn’t give a reason but likely related to being unable to take he daughter with her.
Binance banned from Britain as global crypto crackdown widens
• Stinging rebuke for platform • Consumer protection fears • Curbs follow Japan warning
The warning relates to KYC, money laundering and consumer protection.
Bitcoin little changed which reflects the fact that this is not about crypto but the exchange which has sought to evade regulation in serveral juristrictions, not least by having no officalhead office.
The fact that UK citiziens can still legally deal with Binance in other juristrictions reflects how behind the curve and unco-ordinated regulators are.
UBS seeks hiring edge over Wall St with home-office mix for most staff. An interesting move which it hopes will give it an advantage when it comes to recruiting. Only time will tell whether the move really adds value to the bottom line!
China cyber strengths called into question
Poor security leaves Beijing unable to match the US, says think-tank
An interesting read key being that ‘China’s strengths as a cyber power are being undermined by poor security and weak intelligence analysis, according to new research that predicts Beijing will be unable to match US cyber capabilities for at least a decade.’
The report ranks countries on their cyber strengths, digital economy and maturity of intelligence and security functions; ‘China, like Russia, has proven expertise in offensive cyber operations — conducting online spying, intellectual property theft and disinformation campaigns against the US and its allies. But both countries are held back by comparatively loose cyber security compared with their competitors, according to the IISS.’
A key point is that it ranks the US as the only tier one; despite the recent ransom attacks. What should be a concern for Russia, China and N Korea is that the US is said to have ‘expertise and the ability to execute “sophisticated, surgical” cyber strikes against adversaries.’
An interesting read that reveals that it is an area that it likely to continue to important for investors.
Supply chains on agenda as Taiwan and US restart trade talks
Talks that are likely to annoy the Chinese as they are due to start just before the Chinese party anniversary. Whilst the focus is trade, supply chains, digital trade and trade faciliation it also demonstrates a closer relationship which China will resent; ‘the Trade and Investment Framework Agreement (Tifa) marks a shift from the Donald Trump administration, which gave priority to agreeing a limited trade deal with Beijing.’
The reality is that despite what China might say and claim, Taiwan is independent and very integrated into the global economy.
Interestingly it notes that not everyone in Washington to keen; ‘The latest talks follow a debate in Washington that included calls from the state department to add an economic component to efforts to strengthen ties with Taipei. Katherine Tai, US trade representative, had been less enthusiastic, but Jake Sullivan, national security adviser, urged her office to initiate the talks, said four people familiar with the situation.’
Also it is worth noting that the US is pushing its pork exports which are being resisted in many countries because of the high levels of the feed additive ractopamine. Whilst at the same time trying to secure a safer supply of semiconductors.
It will be interesting to see whether other global nations are prepared to enter higher level negotiations with Taiwan on the basis that the US is? That I think would put more pressure on China.
Companies & Markets
Revolt adds to uncertainty, says Toshiba ex-director
‘Shareholders in Toshiba have only prolonged “instability and uncertainty” at the troubled conglomerate with a vote to remove the chair of the company’s board, said George Olcott a director who saw no choice but to resign after Friday’s investor revolt.’ ‘“Removing him as chair only serves to prolong instability and uncertainty in addition to depriving the board of an outstanding leader. I cannot understand how this development represents a good outcome for the company or any of its stakeholders,” said Olcott, a former investment banker at SG Warburg who sits on the boards of several Japanese companies.’
That I would say was a typical reaction of many in corparate Japan who believe that the existing structure is always the best way to deal with problems.
I think the shareholders are more focused on change. It will be very interesting to see who it appoints as a replacement along with new board members; crucial being whether they are willing to bring in more non Japanese directors. Without doubt corporate Japan and the government will be watching closely.
China crackdown reduces tech listings
Value down more than 60% in second quarter as Beijing increases scrutiny.
A natural reaction to the increased attention and changing regulation that some E-commnerce companies within the tech sector in China is currently undergoing. That makes investors nervous over valuations and business plans.
It notes that Hong Kong Exchange (388 HK) is a loser in the process as potential listings are deferred. But it does note that some parts of the tech sector are still listing with Chinese electric vehicle maker Xpeng said on Friday it would seek to raise up to $2.3bn in a Hong Kong listing with trading to start next month. Ride-hailing group Didi Chuxing plans to raise $4bn in a potential listing on the NYSE in the coming weeks.
Market Questions for this week.
Will US jobs numbers pick up as economic recovery gathers pace?
Looks at the jobs data due this week and whether, after two months of below forecast numbers, the data on Friday will in line and what is can tell us? Key will be whether employment has picked up as vaccinations incease and what presure that is putting on wage growth. Whislt it will also give us sectroial data what would be more useful is how the jobs are coming back across the various states. All important because of the Fed’s focus on employment being a key input into when stimulus might be tapered.
How much has Japan rebounded?
Expectations for the Tankan survey results due on Thursday. It is a comprehensive survey but is historic but should show an improvement as vaccinations get underway.
How strong are price pressures in Europe?
Looks at the inflation data due this week in Europe and the impact of ‘shortages and supply chain bottlenecks, increased fuel and transport costs and upward pressures on wages.’ The big question being for both Europe and the US about whether the increased inflation is transitory or permanent.