This and previous notes can be found at asianmarketsense.com and on SubStack
Check out ERI-C.com for research discovery and trading analysis Free mifid compliant webinar by Daivd Scott this Thursday 4pm HK time; The title is The shift from an 'Early Stage Inflation Bull Market' to a 'Deflationary Boom', Fundamental Signals for Asian Equities & Global Industry Leaders.
Australia Futures indicate the market to opening 19pts higher with iron ore prices rising but Gold and Oil weak after the US close, watch for the impact of the Chinese inflation and PPI data. Woolies downgrade by CS may put the stock under pressure
Data due Consumer Confidence Change & Index, Building Permits,
Japan Nikkei futures opened lower now -15pts and Chicago futures -10pts expect a weak open with cautions ahead of China Inflation today and US inflation data Thursday.
S Korea Expect markets to open lower open ahead of the premarket data GDP revised up +VE but unemployment up to; could be more people coming back into the labour market
Taiwan Market to open flat ahead of the China data but downside limited after good traded data out after market Tuesday but a second month of rising inflation a concern.
China Market to open lower with caution ahead of the Inflation and PPI data. Banks -VE as PBOC tells then to check exposure to Evergrande. Sentiment -VE on Biden’s new supply chain task force. Wild card remains Team China
HK ADR’s +14pts at 28,795 Chinese Banks and Ecommerce weak. Oil slipping slightly and news of restrictions on Petrochina slight -VE Key will be the China data but expect market to trade lower
Opened flat Dow little changed. S&P 500 futures and Nasdaq 100 futures also held steady.
The World Bank on Tuesday raised its global growth forecast to 5.6% for 2021, marking the strongest recovery from a recession since 1940 due to U.S. stimulus spending and faster growth in China but held back by "highly unequal" access to COVID-19 vaccines. Its latest Global Economic Prospects report showed a 1.5-percentage-point increase from forecasts made in January, before the Biden administration took office and enacted a $1.9 trillion U.S. COVID-19 aid package.
DOW -0.09%, NDX +0.31%, S&P +0.02%, Russel 2K +1.06%
Pre market there was volatility when Fastly went down causing outages at a number of key websites.
Dow traded sideways just below flat for more of the day, S&P just above, they it did dip lower when the weak trade data came out but then recovered and continued. NDX started higher, trended lower and dipped into the red on the trade data but then worked slowly better through the day.
Tesla -0.3% having opened +3% despite news China deliveries were +29% MoM on news that Guillen had left the management leaving questions about the management.
Airlines +VE as the Centers for Disease Control and Prevention eased travel recommendations for 61 countries, including Japan, France, South Africa, Canada, Spain and Italy.
Boeing flat despite Southwest Airlines upsized its order for the smallest 737Max by 36 Aircraft.
‘Redditt’ driven stocks were CloverHealth +86% off its highs and Wendys +25.8%.
The JOLTS data set a new record high; more evidence of companies having difficulty in attracting staff or that staff are confident about find new positions and that in some sectors wages need to rise.
After market Senate passed sweeping bill to support the US compete with China and it now moves onto the house; a sign of anti China sentiment; more so in the Senate than the House but -VE for China but does support US manufacturing.
Banks JPMorgan Chase -0.4%, Citigroup -0.3% Wells Fargo -1.1%, Amex +0.3%
Work from home names: Facebook -0.9%, Apple +0.7%, Amazon +2.1%, Netflix -0.5%, Disney -0.4%, Zoom Video -0.4%, Alphabet -0.2% and Microsoft -0.5%,
Tech NXP Semi -1.4%, Nvidia -0.9%, Micron -4.2%, AMD -0.6%, Skyworks -0.9%
Re-opening stocks Boeing flat, Caterpillar +0.2%, Simon Property +1.2%, Kohl’s +1.3%, Nordstrom +1%, Gap +2.9%, United Airlines +0.8%, Carnival +0.6%, Wynn Resorts -0.8%, Chevron +0.9%, Exxon Mobil +1.8%,
Lock down names Campbell Soup +0.7% General Mills -0.8%,
JM Smucker -0.9%
NFIB Business Optimism Index May 99.6 vs 99.8 Apr (F/cast was 101)
Balance of Trade Apr $-68.9B vs -75B Mar revised (F/cast was -69B)
Exports Apr $204.99B vs 202.67B Mar (F/cast was 204B)
Imports Apr 273.89B vs 227.69B Mar (F/cast was 273B)
Redbook +14.5% YoY vs 13% prior
JOLTs Openings Apr 9.286m vs 8.288m Mar (F/cast was 8.2m)
US Treasury 42 bill auction 0.010% vs 0.005% prior
US 3 yr note auction 0.325% vs 0.329% prior
API Crude Oil Stock Change -2.108m vs-5.36m prior (consensus was -3.576m)
USD was unch vs Yen & Euro. Bitcoin -5.3% @ 33,677.19 weakness as FBI traces and recovers ransom bitcoin, VIX +4% @ 17.07,
US T10 @ 1.538% falls after trade deficit data
OIL Brent +0.95%, WTI +1.17%
GOLD -0.19%, Silver -1.05%, Copper +0.34% Platinum -0.94%, Palladium -0.96%.
MBA Mortgage Applications and 30 yr Mortgage Rate, Wholesale Inventories, EIA Oil Report.
Earnings : Chewy, Dave & Buster’s, Signet Jewelers, John Wiley
DAX -0.23%, CAC +0.11%, FTSE +0.25%
Markets opened flat and traded around flat all day. Data showed the EU’s economy contracted by much less than expected in the first quarter of the year. Weakness in Oil and Gas, Chemicals, Industrials, Basic Resources and Autos. Travel names +VE
Employment Change Q1 -1.8% YoY vs -1.9% Q4 (F/cast was -2.1%)
Employment Change Q1 -0.3% QoQ vs +0.4% Q4 (F/cast was -0.3%)
GDP Growth Rate Q1 -0.3% QoQ vs -0.6% Q4 revised (F/cast was -0.6%)
GDP Growth Rate Q1 -1.3% YoY vs -4.7% Q4 revised (F/cast was -1.8%)
ZEW Economic Sentiment Index Jun 81.3 vs 84 May (F/cast was 84.9)
Industrial Production Apr -1% MoM vs +2.2% Mar revised (F/cast +0.9%)
ZEW Economic Sentiment Jun 79.8 vs 84.4 May (F/cast was 85.1)
ZEW Current Conditions Jun -9.1 vs -40.1 May (F/cast was -26)
Balance of Trade Apr €-6.24B vs -6.14B Mar revised (F/cast was -5.7B)
Current Account Apr €-1.4B vs -2.7B Mar revised (F/cast was -3.4%)
EUROZONE No data due
GERMANY Balance of Trade, Exports, Imports and Current Account.
FRANCE No data due
UK No data due
JAPAN Nikkei futures opened lower now -15pts and Chicago futures -10pts expect a weak open with cautions ahead of China Inflation today and US inflation data Thursday.
Yen currently 109.50
Data due after lunch Machine Tool Orders May (Apr was +120.8% F/cast is +134%)
Tokyo reported 369 new covid cases (+134 DoD) nationwide the total was 1,099 (-21 DoD)
A top Japanese virologist and government adviser has said there was a risk of spreading COVID-19 infections during the Tokyo Olympics, the Times of London reported on Tuesday, the latest high-profile warning about the global sporting showpiece. Tohoku University professor Hitoshi Oshitani was an architect of Japan’s “Three Cs” approach to the pandemic, which advises avoiding closed spaces, crowds and close contact situations.
MUFG Banks blamed the breakdown in 180 ATMs on systems glitches
SOUTH KOREA Futures indicated a lower open ahead of the premarket data GDP revised up +VE but unemployment up to; could be more people coming back into the labour market
Unemployment Rate May 3.8% vs +3.7% Apr (F/cast was 3.7%)
GDP Growth Rate Q1 +1.9% YoY vs -1.2% Q4 (F/cast was +1.8%)
GDP Growth Rate Q1 +1.7% QoQ vs -1.2% Q4 (F/cast was +1.6%)
KDCA reported 454 new covid cases (vs 485 Monday)
South Korea's Samsung Heavy Industries Co. said Tuesday that it has been countersued by Japanese oil and developer INPEX after it filed a complaint against INPEX for not paying the rest of contract amount in April.
LG Uplus Corp. said Tuesday it has decided to repurchase 100 billion won ($88.3 million) worth of its own shares to strengthen shareholder value. To be completed by June 8 2022. +VE
SK hynix on Tuesday denied a rumor that it is facing damage worth 2 trillion won ($1.7 billion) over defective DRAMs, saying that it has requested a police probe into such a cyber libel. +VE
Hyundai Motor under fire for worker’s death from COVID-19 caught in Kazakhstan whilst workings on Hyundai’s complete knockdown assembly line; raising anxiety in other workers -VE
LG CNS, an IT solution affiliate of LG Group, said Tuesday the company will provide artificial intelligence tutor services to support public English education at elementary through high schools in Seoul. It signed a memorandum of understanding with the Seoul Metropolitan Office of Education on Monday to cooperate on an English teaching service dubbed “AI Tutor,” which will run based on the firm’s artificial intelligence program. +VE
South Korea’s exports of computers, display panels and home appliances could weaken later this year as a result of declining global demand and growing tensions between the US and China, a new report has warned. But other sectors; secondary cell, automobile, semiconductor and shipbuilding industries, would fare better and expect to enjoy an upward trend at least until next year, according to the according to the report released on Tuesday by the Federation of Korean Industries.
TAIWAN Expect market to open flat ahead of the China data but downside limited after good traded data out after market Tuesday but a second month of rising inflation a concern.
No data due but after market Tuesday
Wholesale Prices May +11.33% YoY vs +9.62% Apr (F/cast was 10.1%)
Inflation Rate May +0.27% MoM vs +0.2% Apr (F/cast was +0.1%)
Inflation Rate May +2.48% YoY vs +2.1% Apr (F/cast was +2.3%)
Balance of Trade May $6.16B vs 6.18B Apr (F/cast was 6.1B)
Exports May +38.6% YoY vs +38.7% Apr (Consensus was +26%)
Imports May +40.9% vs +26.4% Apr (Consensus was +25.7%)
Exports in May spiked to a new high of US$37.41 billion, driven by robust demand for all product categories by major countries that have been reopening their economies following progress in their vaccination drives, the Ministry of Finance said yesterday. The increase this month might be 27 to 31 percent as the economic scene abroad looks bright, while a COVID-19 outbreak at home has had little effect on the nation’s manufacturing activity, the ministry said. Shipments of base metals and related products surged 54.2 percent year-on-year, while those of plastic and mineral products rose 74.7 percent and 117.3 percent respectively, she said. Exports of transportation tools increased 58.4 percent, thanks to the growing popularity of bikes, as well as a recovery in the auto market, Tsai said. Demand for electronics, as well as devices used in remote working and remote learning, continued to increase, she said.
Imports of agricultural and industrial raw materials picked up 43.6 percent to US$211.83 billion, helped by price hikes, while capital equipment, a critical gauge of export needs, soared 36.5 percent, Tsai said. Specifically, imports of semiconductor equipment picked up 46.3 percent as local tech firms aggressively acquired new equipment for technology upgrades and capacity expansion, she said, adding that chip shortages continued to plague critical sectors around the world.
At least 7.3 million people in Taiwan will benefit from a fourth round of subsidies the government is issuing to alleviate the impact of COVID-19 restrictions, Premier Su Tseng-chang said at the Legislative Yuan in Taipei yesterday. The legislature is holding an extraordinary session until Friday next week to review a NT$260 billion (US$9.39 billion) relief package proposed by the Cabinet, with Su briefing lawmakers on details of the package yesterday and today.
GlobalWafers Co yesterday said it has signed a US$800 million deal with GlobalFoundries Inc to supply 300mm and 200mm specialized wafers from its US factory. It expects to spend US$210 million on capital expenditure in the next few years to expand capacity for the specialized silicon wafers, or silicon-on-insulator (SOI) wafers, at its MEMC facility in O’Fallon, Missouri, the company said in a statement. The long-term supply agreement with GlobalFoundries, the world’s No. 4 foundry service provider, is one of the biggest deals secured by GlobalWafers. +VE
Apple Inc is in early talks with China’s Contemporary Amperex Technology Co Ltd (CATL, and BYD Co ) about the supply of batteries for its planned electric vehicle, four people with knowledge of the matter said.
Powerchip Semiconductor Manufacturing Corp yesterday said it has taken measures to curb the spread of COVID-19 after one of its Taiwanese employees tested positive for the virus. Slight -VE
AU Optronics Corp yesterday said revenue expanded 47.8 percent year-on-year and 8.5 percent month-on-month to NT$32.12 billion last month, due to increases in prices and shipments. Last month’s revenue hit the highest monthly level in about six years. During the first five months of this year, revenue soared 51.3 percent year-on-year to NT$144.66 billion, it said. +VE
Hannstar Display Corp reported that its revenue surged 123 percent annually and rose 2.18 percent monthly to NT$2.81 billion last month, with aggregated revenue in the first five months soaring 136 percent annually to NT$13.45 billion. +VE
Fulgent Sun International Holding Co which supplies sports shoes and outdoor shoes to global brands, yesterday reported revenue of NT$1.21 billion for last month, up 13.51 percent from a year earlier and the highest May revenue in the company’s history. Fulgent attributed the increase to rising orders, despite shipping cargo shortages and production disruptions at its plants in Cambodia due to the COVID-19 outbreak. Cumulative revenue in the first five months rose 33.28 percent to NT$5.59 billion, it said. +VE
CHINA Expect market to open lower with caution ahead of the Inflation and PPI data. Banks -VE as PBOC tells then to check exposure to Evergrande. Sentiment -VE on Biden’s new supply chain task force. Wild card remains Team China
Data due on the open
Inflation Rate May (Apr was +0.9% YoY (F/cast is +1.5%)
Inflation Rate May (Apr (was -0.3% MoM (F/cast is -0.1% )
PPI May Apr was +6.8% (F/cast is +8.4%)
Loan data could also be released this week
Chinese banks carrying out stress tests/exposure to Evergrande (3333 HK) US$305bn of loans with 77% coming due in the next 12. Also US$20 bn of off-shore debt -VE
The United States will target China with a new “supply chain strike force” to combat unfair trade practices, the Biden administration said on Tuesday, as it rolled out findings of a review of access to critical products, from semiconductors to electric-vehicle batteries. Led by the U.S. trade representative, it is looking for specific violations that contributed to a hollowing out of supply chains that could be addressed with tariffs or other remedies, including toward China, White House senior director for international economics and competitiveness Peter Harrell told reporters. Officials also said the Department of Commerce is considering initiating a Section 232 investigation into the national security impact of neodymium magnet imports used in motors and other industrial applications, which the United States largely obtains from China. -VE
China reported 33 new coronavirus disease infections in the mainland for June 7, up from 19 patients a day earlier, the health authority said in a statement on Tuesday, Reuters reports.
Of the new infections, 19 were local transmissions from Guangdong province, the National Health Commission said. China also reported 16 new non symptomatic infections, compared with 21 a day earlier. China does not classify symptomless infections as confirmed patients.
On the same day, there were 14 new imported infections in the mainland. Three were reported in Guangdong, two each in Inner Mongolia, Shanghai and Fujian, and one each in Beijing, Tianjin, Jiangsu, Sichuan and Yunnan, state news agency Xinhua reported.
Tesla Inc sold 33,463 China-made electric cars in May, including exports, a 29% jump from April, according to data from the China Passenger Car Association (CPCA) on Tuesday. China's new electric vehicle sales surged 177% to 185,000 cars in May from a year earlier, CPCA said. Overall passenger vehicle sales, however, rose just 1.1% to 1.66 million cars.
Chinese authorities have ordered a unit of state-run PetroChina to stop trading off crude oil import quotas with local refineries as part of a crackdown on excessive fuel production, a move that could cut the country's crude imports by 3%, sources said. Beijing has stepped up scrutiny of crude oil quota use and imports by state and private firms this year to ease a fuel surplus that has weighed on the sector's profits and led to excess emissions that have undermined China's climate goals, said five industry sources with knowledge of the matter.
US and EU to back investigation into origins of coronavirus. The US is among several countries that have called on China to be more transparent with its data amid ongoing questions over how the outbreak started. The World Health Organization has also called for further studies.
China’s top legislative body is set to pass a new anti-sanction law on Thursday, giving substantive legal backing and protection to the country’s retaliatory measures against punitive actions by Western governments on Chinese officials and companies. State media announced on Monday night the latest move by the National People’s Congress Standing Committee to counter the United States and its allies who have been piling pressure on Beijing over such issues as Hong Kong’s freedoms and the treatment of the Uygur minority in Xinjiang. State broadcaster CCTV reported that the new law was aimed at offering a legal basis for the central government to take retaliatory measures against foreign sanctions, but stopped short of fleshing out details of the legislation. -VE
China will always support Myanmar in choosing its own developmental path, Chinese senior diplomat Wang yi told his Myanmar counterpart on Tuesday, Reuters reports. Wang assured Myanmar foreign minister Wunna Maung Lwin that China's friendly policy towards Myanmar was not affected by changes to Myanmar's domestic and external situation, according to a statement by the Chinese foreign ministry. Both men met in Chongqing on Tuesday. First real declaration from China comes after an international delegation visited Myanmar and called on the junta to cease killing citizens. -VE
FT reports ‘The Chinese Communist party’s claim that it had eliminated extreme poverty has been challenged by a new study by a former UN economist that argues Beijing used a limited and inflexible definition of what it means to be poor. -VE
HONG KONG ADR’s +14pts at 28,795 Chinese Banks and Ecommerce weak. Oil slipping slightly and news of restrictions on Petrochina slight -VE Key will be the China data but expect market to trade lower
No data due
Short Selling Tuesday 12.8% vs 10.8% Monday
Top Shorts Bud Apac (1896) 45%, Bank Comm (3328) 32%, Henderson Land (12) 32%, BoC HK (2388) 29%, Shenzhou Int (2313) 28%, Xinyi Solar (968) 28%, Bank of China (3988) 27%, Country Garden (2007) 26%, Sunny Optical (2382) 23%
POLY PROPERTY (00119.HK) announced that the Group have recorded contracted sales of approximately equivalent to RMB21 billion (up 52.17% YoY), with contracted area sold totaling approximately 1.102 million square metres for the first five months of 2021. +VE
CHOW TAI FOOK (01929.HK) announced annual result ended March 2021. The net profit amounted to HK$6.026 billion, up 107.7% yearly. EPS was HK60.3 cents. A final dividend of HK24 cents was declared. +VE
Vanke Hong Kong will open show flats and unveil the price list of VAU Residence, its residential project in 11 Liberty Avenue, Ho Man Tin, as soon as this Thursday (10 June), said Executive Director Quincy Chow at a press conference. He expected the project to be launched in mid-June at the earliest. At least 50 flats will be offered in the first price list. +VE
Online brokerage Scalable Capital said on Tuesday it had raised 150 million euros ($183 million) from investors led by China’s Tencent, becoming the latest German fintech to attract sizable funding.
The funding round, backed by existing investors including fund manager BlackRock Inc, values Scalable Capital at $1.4 billion and comes on the heels of a $900 million raise by rival online broker Trade Republic. +VE
China's banking watchdog named Liang Qiang, an asset management veteran, to the senior post of deputy communist party boss at China Huarong Asset Management Co (2799.HK), the state-run firm that has faced restructuring, the company said on Tuesday. Liang, now president of state-owned Great Wall Asset Management, was also recommended for the position of Huarong's president and executive director, the company statement said, citing a meeting of executives on June 4.
Massive local and foreign capital flew into the housing market as immigrants from China raced to invest in properties before Hong Kong's border is reopened, resulting in the rising transaction
volumeand the price in the housing market throughout the first half of the year, reported Midland Realty. As the effects of the economic recovery start to manifest, Midland Realty estimates the housing market to enter into a bull phase with first hand property sales predicted to rise over 24% year-over-year and the full-year property price predicted to surge over 10%. +VE
CK ASSET (01113.HK), CKH HOLDINGS (00001.HK) and Li Ka Shing Foundation jointly organized a lucky draw gifting $20-million coupons to encourage vaccination in the community and facilitate the government's "Early Vaccination for All" campaign to protect citizens' health. Any HKID card holders aged 18 who receive two shots of Covid vaccine prior to 31 August 2021 are entitled to register for lucky draw. There will be one first prize of a $5 million CK coupon; two second prizes of $3 million coupon each; three third prizes of $1 million coupon each, and so on.
CHINA RES LAND (01109.HK) announced that on 8 June, Zhuhai Rundi, a subsidiary of the Company, entered into the Agreement with CR Bank in relation to the proposed collaboration arrangement for the bidding of the Land (located at the Hi-Tech Industrial Development District in Zhuhai) by Zhuhai Rundi and the sale and purchase of the Target Properties, for a total consideration of RMB1.262 billion, in accordance with the terms and conditions of the Agreement.
Mundipharma has added Boyu Capital and Sinopharm to a shortlist of bidders for its upcoming business venture in China, Reuters reported, citing people familiar with the matter. It is known that CITIC Capital has also been shortlisted for the China unit of Mundipharma, which has an estimated value of over USD1 billion. Bids for the second round are non-binding and are expected to be due in July.
Cushman & Wakefield attributed the early bottom-out of local housing prices in January upon its previous forecast to worries of the unemployment rate last year. Yet at this juncture, the firm forecast prices to ascend by 5% in 2H21, or up to about 10% broadly, recouping pre-pandemic level in June 2019, given positive after-market, subsiding epidemic, faster-than-expected economic revival and better employment etc..
Considering that fintech sector would be a major driving force post-pandemic era, now is the appropriate time to expand the fintech development with extensive investment, said Eddie Yue, Chief Executive of HKMA. HKMA recently unveiled its “Fintech 2025” Strategy, addressing various developing directions, including e-HKD, which is currently being studied on technical and policy levels. The preliminary results of the study is expected to be released in 12 months time.
Hong Kong is exploring the prospect of a central bank digital currency and hopes to have initial ideas within 12 months, says Eddie Yue Wai-man, chief executive of the Hong Kong Monetary Authority.
The banking regulator has been researching digital money with a focus on wholesale cross-border payments. And it will soon begin a study on issuing retail digital currency - e-HKD - Yue said.
The authority has also been working with the Bank for International Settlements Innovation Hub Hong Kong Centre on the technical aspects of issuing retail digital currency and possible architectural designs, he said.
It has also established a cross-departmental working group to study technical, policy and legal issues.
The Financial Reporting Council (FRC) and the Stock Exchange of Hong Kong Limited (the Exchange), a wholly owned subsidiary of HKEX (00388.HK), today (8th) signed a new Memorandum of Understanding (MoU) to further strengthen collaboration between the two organizations, in ensuring the upholding of quality financial reporting by listed entities and their auditors. The new MoU replaces the one signed in 2007 and facilitates efficient and effective collaboration between the FRC and the Exchange in respect of the Financial Reporting Council Ordinance’s regulation of public interest entity auditors and the compliance by listed entities with regulatory requirements in financial reporting.
Worth noting The certificates and registrations are currently handled by the Hong Kong Institute of Certified Public Accountants. HKICPA president Raymond Cheung said that the latest proposal was "major surgery" on the institute and industry. He said the HKICPA was not informed about the new framework until yesterday's meeting, adding that the guild would hold an emergency meeting to discuss the proposal. Cheung said he is disappointed the proposal was made without consulting the industry.