Things to do before trading Asia on Monday

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

Asia likely to see a lower open. Interesting to note that companies are looking to increase their spending on capex as they hope pent up demand will translate into purchases. China’s mixed loans data likley to result in a weak open. Property in focus due to the pressure on developers and later this week we get House Price Index. Also this week: Industrial Production, Retail Sales and Unemployment. Other key data is Japanese PPI, Industrial Production, Tankan, Machinery Orders, Trade Data. S Korean Unemployment.
Australian Inflation Expectations, Business Confidence, House Price Index & Sales data. Consumer Confidence, Unemployment data, RBA Bulletin.

Australia Expect market to open lower follow the US. Data due Consumer Inflation Expectations
Japan Nikkei expect market to open lower following the US but downside may be limited by the increased foreign interest in Japanese equities; especially under a new prime minister.
S Korea Expect markets to open lower following the US and with the expectation of more regulation of the online platforms.
Taiwan Expect market to open lower following the US and with Typhoon Chanthu having made landfall.
China Expect market to open lower following the US and the mixed loans data out after market Friday.
HK ADR’s -163pts at 25,553 broad weakness with only CLP and Petrochina closing higher. The mixed Chinese loans data also a negative.

The Economist
Articles concerning Asia

September surprise Suga Yoshihide’s resignation heralds an era of uncertainty for Japan The ruling party’s next president will lead it into lower-house elections in November
China
Codified crackdown China has become a laboratory for the regulation of digital technology There are new protections, but not from the Communist Party
Talkin’ ‘bout a revolution A provocative blog post stirs up a firestorm in China No one knows how far Xi Jinping’s campaign against inequality will go
Chaguan A new book looks behind Xi Jinping’s anti-corruption campaign And shows that princelings are still exempt Looks at “Red Roulette: An Insider’s Story of Wealth, Power, Corruption and Vengeance in Today’s China”,
On the up A coup in Guinea adds fuel to aluminium’s red-hot rally
But developments in China, not Africa, could matter more for the metal’s price
Home comforts China turns to new stock exchanges to channel finance to innovative firms As foreign listings become harder to pull off, Xi Jinping hopes to make domestic ones easier.

FT Weekend
Front page Washington risks Beijing anger over proposal to rename Taiwan’s US office  Key being the use of Taiwan in the name and it would annoy China.
Epic victory deals payment blow to Apple
• App Store fee is ‘anti-competitive’
• Fortnite creator decries ‘30% tax’
Apps can now refer to payment options outside the the App Store. But the judge did not call Apple monopolistic.
Inside
Biden calls Xi in bid to reset relations
US and Chinese leaders speak directly after talks at lower level stumble. Said that the talks were frank but we will have a wait and see what happens in the weeks and months ahead.
China fandom falls foul of crackdown
Groups’ propensity for social action is believed to be main concern for Xi administration. Suggests that the action is not just about effeminate behaviour but also about how fan groups could become like Falun Gong; a means for social action outside the contral of the government. It notes that many of the governments recent crackdowns have broad social support but that is difficult to really guage the public’s honest reaction.
Blackstone drops $3bn takeover of Soho China. Having failed to get regulatory consent. Interestingly it mentions that there was consternation in China, with the Soho China founders Pan Shiyi and wife Zhang Xin accused online of selling out and trying to flee the country with their money. It followed their purchase of the GM building in Manhatten and a donation to Harvard university. It is also interesting since Soho’s portfolio is mainly in prime cities and also because of Blackstone’s committment to China.
Fears over ‘no rule of law’ as investors clash on outlook for China trading
Xi’s crackdown has scared off some managers but others are on the hunt for opportunities. Global firms have cut their exposure to China, current concerns revolve around Dual Circulation and the switch from companies being run for profit to entering a phase where government ideology become more important. Key now is investing in companies whose business model is aligned with the governments. Whilst the government’s aim is not to undermine or discourage entrepreneurs but to ensure a sound domestic capital market. However, it is not exempt from unintended consequences. Interestingly some still think that businesses that have built up competitive moats still provide good business opportunities. I think they will, but not indefinitely. Areas of interest are those in the green economy (EV’s), Rare Earths, domestic supply chain plays and tech companies; especially in the semiconductor field.
Liquidity crisis pushes property developer Evergrande nearer to default The continuing saga of Evergrande with the threat of default increasing and that could cascade through other Chinese property companies and impact the banking system and bond markets too. The issue is becoming worse as its liquidity issues mean more suppliers are declining to work with the company until they get payment. It is trying all avenues to try and raise funds but with little effect yet as potential investors are aware that this and hence waiting.
The concerns are now spreading to other developers being talked about too with Guangzhou R&F also being watched.
A key thing to grasp is that property development is no longer as important as it was 30 years when China’s housing stock was of poor quality. But now it is now of world quality and means that most of the population are now better housed than ever before. Moreover the government is now worried about property become a devisive social feature; between those who own property and those that cannot afford to get on the property ladder. Additionally property is seen as a sponge for cash; cash that the government would like to see directed into moving China up the advanced development ladder; with an emphasis of semiconductors and tech. That was part of the reason behind the three red lines for developers. So having a world class property stock I think the developers are less likely to get government assistance at this time, in my view. It is also likely that government brings in a property tax putting more pressure on the sector going forward.
For interest
On Wall Street Inflation spectre returns to haunt Latin America By Michael Stott
Sound battle stations as US government shutdown looms larger for investors By John Dizard Once again the US faces a review of its debt ceiling.
Online
US business mood darkens as Delta variant upends forecasts
The failure to bring Covid-19 under control is changing expectations of a quick economic recovery.
Gaming crackdown threatens China’s esports dominance, warn players Beijing’s restrictions hand rivals in the US and South Korea a big advantage, say experts.
White House officials consider probe into China’s industrial subsidies Discussions could lead to new round of punitive tariffs

Friday Market Review

DOW -0.78%, NDX -0.87%, S&P -0.77%, Russel 2K -0.96%
Markets opened hihger but dipped and spent much of the day trading around flat before dipping lower from around 2pm. Apple was weak having touched a new high on Thursday and news that a judge ruled that it can no longer force developers to use in-app purchasing in the closely watched trial between Apple and Epic Games.
The August producer prices index released Friday showed wholesale costs for businesses +8.3% on an annual basis, its biggest advance on record since at least 2010.
U.S. Department of the Treasury met with several participants of the financial industry, in order to inquire about the relevant risks and benefits of the cryptocurrency stablecoins, reported Reuters, citing three people familiar with the matter.
The U.S. government is weighing to launch a new investigation into the potential damage of China's trade subsidies on the U.S. economy, reported Bloomberg, citing people familiar with the matter.
Banks JPMorgan Chase -1.2%, Citigroup -1% Wells Fargo -0.1%, Amex -0.4 %
Work from home names: Facebook +0.2%, Apple -3.3%, Amazon -0.4%, Netflix +0.2%,  Disney -1%, Zoom Video +1.9%, Alphabet -1.9% and Microsoft -0.5%,
Tech NXP Semi +0.8%, Nvidia -1.4%, Micron +0.9%, AMD -0.9%, Skyworks -0.1%
Re-opening stocks  Boeing -1.7%, Caterpillar -0.2%, Simon Property -2.1%, Kohl’s -4.1%, Nordstrom -2.3%, Gap -3%, United Airlines -4.8%, Carnival -2.3%, Wynn Resorts -2.3%, Chevron +0.1%, Exxon Mobil -0.2%,  
Lock down names Campbell Soup +0.8% General Mills -0.03%, JM Smucker -0.2%
DATA
PPI Aug +0.7% MoM vs 1% Jul (F/cast was -0.7% )
PPI Aug +8.3% YoY vs +7.8% Jul (F/cast was +8.3%)
Core PPI Aug +6.7% YoY vs +6.2% Jul (F/cast was +6.7% )
Core PPI Aug +0.6% MoM vs +1% Jul (F/cast was +0.6% )
Wholesale Inventories Jul +0.6% MoM vs +1.2% Jun (F/cast was +0.6%)
WASDE Report
Baker Hughes Total Rig Count 503 vs 497 prior
Baker Hughes Oil Rig Count 401 vs 394 prior  
USD was weaker vs Yen & Euro. Bitcoin -1.36% @ 45,010.10,  VIX +11.4% @ 20.95,  US T10 @ 1.343%
OIL Brent +2%, WTI +2.3% 
Gold -0.66%, Silver +1.72%, Copper +3.35% Platinum -2.39%, Palladium -0.76%.
AHEAD Consumer Inflation Expectations

DAX -0.09%, CAC -0.31%, FTSE +0.07%
Markets opened higher and traded just above flat for most of the day but dipped in the last with the DAX and CAC closing in the red. Inflation and the ECB slowing its asset purchases impacting.
Germany’s finance and justice ministries were raided on Thursday as prosecutors investigate the government’s anti-money laundering agency, casting doubt over failings to tackle financial crime in Europe’s largest economy.
DATA
Germany
Inflation Rate  Aug +3.9% YoY vs +3.8% Jul (F/cast was 3.9%)
France
Industrial Production Jul +0.3% vs +0.6% revised (F/cast +0.6%)
UK
Balance of Trade Jul £-3.1B vs -2.5B Jun (F/cast was -2B)
Construction Output Jul +8.6% YoY vs 30% Jun (F/cast was 10.5%)
Industrial Production Jul +3.8% YoY vs +8.3% Jun (F/cast was +3.2%)
Industrial Production Jul +1.2% MoM vs -0.7% Jun (F/cast was +0.5%)
Manufacturing Production Jul +6% YoY vs +13.9% Jun (F/cast was +6.6%)
Manufacturing Production Jul +0% MoM vs +0.2% Jun (F/cast was +0.5%)
GDP 3 Month Ave Jul +3.6% vs +4.8% Jun (F/cast was +4%)
GDP Jul +0.1% MoM vs +1% Jun (F/cast was +0.7%)
Goods Trade Balance Jul £-12.706B vs -11.988B Jun (F/cast was -11.2B)
NIESR Monthly GDP Tracker Aug +2.4% vs +3.9% Jul (F/cast was 4%)
AHEAD
EUROZONE No data due
GERMANY
 Wholesale Prices
FRANCE No data due  
UK  No data due 

For Monday
JAPAN 
Nikkei expect market to open lower following the US but downside may be limited by the increased foreign interest in Japanese equities; especially under a new prime minister.  
Yen currently 109.93
Data due
BSI Large Manufacturing data Q3 (Q2 was -1.4 F/cast is -1) 
PPI Aug Jul +1.1% MoM (F/cast is 0.4%)
PPI Aug Jul +5.6% YoY (F/cast is +5.8%)
Tokyo confirmed 1,273 new cases of coronavirus infection on Saturday
Japan's popular minister of administrative affairs, Taro Kono, on Friday formally announced his candidacy to lead the ruling Liberal Democratic Party (LDP) and become the next prime minister.
Japan will start discussing as early as this week whether to administer third shots of coronavirus vaccine, potentially by the end of the year, amid the spread of the highly contagious Delta variant, sources familiar with the matter say.
Toyota, the world's top-selling automaker, said on Friday it would further slash production in Japan and abroad because of ongoing virus disruptions and a chronic global chip shortage. -VE
The prices of five major wheat brands imported by the Japanese government and sold to private milling companies will be raised by an average of 19 percent for the October-March period from the previous six months, according to the farm ministry. -VE
TEPCO Renewable Power Inc. will start making preparations to build offshore wind farms, which will have dozens of floating wind turbines, in the latter half of the 2020s, President Seiichi Fubasami said+VE
Japan Post Co. and Sagawa Express Co. said Friday that they have reached a basic agreement to collaborate on parcel delivery operations to meet pandemic-induced growth in delivery demand.
The two companies aim for sustainable logistics services by expanding their collaboration at a time of growing concerns about driver shortages. +VE

SOUTH KOREA 
Expect markets to open lower following the US and with the expectation of more regulation of the online platforms.
No data due
KDCA announced the country added 1,755 COVID-19 cases, including 1,725 local infections,
Officials from the United States, South Korea and Japan will hold a meeting on North Korea next week in Tokyo, South Korea's foreign ministry confirmed on Friday +VE for sentiment.
Apple rejected on Thursday a request by "Fortnite" creator Epic Games to restore its account on the iPhone maker's iOS platform in South Korea to add its own payment option, in their latest tussle over app development fee -VE.
Amid growing scrutiny of online giants Naver and Kakao, South Korea’s antitrust watchdog chief on Friday spoke of the need to regulate massive online platforms in order to better protect small vendors and consumers -VE.
Kakaopay, a financial unit of tech giant Kakao Corp., will suspend its car insurance comparison service later this month after providing an unauthorized brokerage service, industry sources said Friday -VE.
Doosan Infracore on Friday announced that it will sell stocks to raise 800 billion won ($682 billion). The proceeds from the stock sale will be used mainly to pay off its debts and for other purposes, the company said in a regulatory filing +VE.
Talks between major automakers and the secondhand car industry have fallen through, stalling the process of opening the market to carmakers, sources close to the matter said Friday -VE.
Lotte Confectionery said Friday that it will release a special BTS edition of its popular Xylitol chewing gum next month +VE.
US robotics startup Boston Dynamics said Friday it will expand its partnership with South Korean automaker Hyundai Motor Group to integrate its robotics technologies in future mobility solutions and expand their applications in other industrial sectors. +VE

TAIWAN 
Expect market to open lower following the US and with Typhoon Chanthu having made landfall.
No data due
Taiwan's government scolded Fitch Ratings on Friday for calling the island part of China for the first time, in an announcement on upgrading Taiwan's economic outlook, and said it was talking to the company about the issue
A Financial Times report that the US is considering allowing Taiwan to change the name of the Taipei Economic and Cultural Representative Office in Washington to feature the name “Taiwan” highlighted Washington’s “two-pronged” approach to China, a researcher said yesterday +VE.
Chicony Power Technology Co cut about 80 jobs after dissolving its motor department due to the COVID-19 pandemic, it said yesterday in a filing with the Taiwan Stock Exchange. The dissolution would not significantly affect the company’s operations, as the department accounted for less than 0.1 percent of the company’s total revenue, it said in the filing: Little impact.
Hon Hai Precision Industry Co is using TSMC’s technology to produce its electronic control units (ECUs), as part of its foray into electric vehicle development. In an online Next Forum held by the Hon Hai Research Institute and industry group SEMI on Thursday, Chen Wei-ming, head of Hon Hai’s semiconductor business group, said the company was using TSMC’s 40-nanometer process for ECU production +VE.
Vaccine maker Adimmune Corp yesterday reported revenue of NT$236 million (US$8.52 million) for last month, up 40 percent from a year earlier, on the back of advanced shipments of flu vaccines to China. Chinese customers this year ordered 1.5 million flu vaccines from the company, five times more than last year, Adimmune said in a statement, adding that it began shipping some of the vaccines last month. +VE
Local manufacturers invested NT$429.1 billion (US$15.5 billion) in fixed assets last quarter, 24.5 percent more than a year earlier, the Ministry of Economic Affairs said yesterday. Most of the fixed assets were on manufacturing equipment to cope with surging worldwide demand, it said. The figure represented a quarterly increase of 4.7 percent and marked a record for the second quarter, ministry data showed. +VE
The world’s third-largest container carrier is capping spot rates for ocean freight for the next five months, it said on Thursday, yielding to pressure from some customers and regulators who are concerned that global trade disruptions have pushed the cost of shipping too high. “Although these market-driven rate increases are expected to continue in the coming months, the group has decided to put any further increases in spot freight rates on hold for all services operated under its brands,” CMA CGM SA said in a statement on its Web site +VE for business.

CHINA
Expect market to open lower following the US and the mixed loans data out after market Friday.
No data due but could get FDI (YTD).
After market Friday
New Yuan Loans Aug CNY 1220B vs 1080B Jul (F/cast was 1300B)
Outstanding Loan Growth Aug +12.1% vs 12.3% Jul (f/cast was +12.4%)
Total Social Financing Aug CNY 2960b vs 1060B Jul (F/cast was 2750B)
M2 Money Supply Aug 8.2% YoY vs 8.3% Jul (F/cast was 8.4%)
For the first eight months of 2021, China's imports-exports combined value, exports value and imports value amounted to RMB24.78 trillion, RMB13.56 trillion and RMB11.22 trillion respectively, logging record new highs, compared to corresponding periods in history, according data from the country's Ministry of Commerce.
China's National Health Commission reported 25 confirmed COVID-19 cases yesterday (10 September), with 24 imported cases and one local case recorded in Fujian.
China Banking and Insurance Regulatory Commission (CBIRC) is planning to launch exclusive commercial pension insurance products, with the aim to propel the development of China's third-pillar pension market. Six testing institutions including China Life and Taiping Life Insurance have been actively engaged in the preparation works and have already introduced multiple relevant products.
China and Vietnam should refrain from unilateral actions regarding the South China Sea that could complicate the situation and magnify disputes, senior Chinese diplomat Wang Yi told a Vietnamese official, China's foreign ministry said. State Councillor Wang was speaking with Vietnamese Deputy Prime Minister Pham Binh Minh during a visit to Vietnam, the ministry said in a statement on Saturday.
Another sign of China trying to increase its dominance.
China's industry ministry has told technology companies including Alibaba Group Ltd and Tencent Holdings Ltd to stop blocking each other's website links from their platforms, the 21st Century Business Herald said Saturday.
China has lobbied the Australian parliament to help it join a major regional trading pact, describing the strength of Chinese trade with Australia and avoiding mention of billions of dollars in punitive sanctions imposed by Beijing.

HONG KONG  
ADR’s -163pts at 25,553 broad weakness with only CLP and Petrochina closing higher. The mixed Chinese loans data also a negative. 
No data due

SHORT SELLING HSI Friday 13.5% vs 17.6% Thursday
Top shorts 
Wharf REIC (1997) 58%, Mengniu Dairy (2319) 38%, MTR (66) 34%, CLP(2) 33%, Sunny Optical (2382) 31%, Sands China (1928) 29%, CK Assets (1113) 29%, BYD Co (1211) 28%, Country Garden (2007) 28%, Bank of China (3988) 27%, Haidilao (6862) 27%, Shenzhou (2313) 25%

WATCH
XIAOMI-W (01810.HK) +0.500 (+2.119%) Short selling $478.31M; Ratio 23.500% 's statement disclosed that it has repurchased 2.0174 million shares
of the company on the Stock Exchange on 10 September, at a price ranging between $23.9-23.95, involving a total amount of approximately $48.3153 million +VE.

TENCENT (00700.HK) +10.000 (+2.083%) Short selling $541.74M; Ratio 3.112% 's statement disclosed that, on 10 September, it has repurchased 210,000 shares of the company on the Stock Exchange, at a price ranging between $481.4-489.4, involving approximately $102 million.

Q TECH (01478.HK) +0.420 (+3.415%) Short selling $506.12K; Ratio 2.256% announced that, over August, the total sales volume of camera modules amounted to 40.756 million units, up 20.4% YoY and 4.1% MoM +VE.

JIAYUAN INTL (02768.HK) +0.030 (+0.946%) Short selling $998.42K; Ratio 9.495% announced that, for the period from 1 August 2021 to 31 August 2021, the contracted sales of the group was approximately RMB2.561 billion, representing a year-on-year decrease of approximately 16%; and the corresponding gross floor area sold was approximately 210,047 sq.m., representing a year-on-year decrease of approximately 27%.

Macau's chief executive Ho Iat-seng expressed that, according to the regulations under the Constitution of the PRC and Macao Basic Law, the gaming industry is not allowed to operate in the Mainland China. The gaming corporates, therefore, will not be moved into Hengqin and will continue to stay in Macau.

BAIYUNSHAN PH (00874.HK) +0.550 (+2.613%) Short selling $1.32M; Ratio 2.959% announced that GP Corp., a subsidiary of the company has sold initial underlying assets (accounts receivable with a face value of approximately RMB1.013 billion) to Industrial Securities Asset Management, for a consideration of RMB1 billion.

GAC GROUP (02238.HK) -0.040 (-0.476%) Short selling $12.45M; Ratio 6.187% announced the relevant data for August 2021. The production volume of vehicles for the period was 117,379 units, representing a year-on-year decrease of 29.4%. The sales volume was 122,366 units, representing a year-on-year decrease of 32.3%.

Fitch Ratings announced that it downgraded MEITUAN-W (03690.HK)'s Long-Term Foreign-Currency Issuer Default Rating (IDR) to BBB- from BBB with Negative Outlook.
 The rating agency also lowered the company's senior unsecured rating and ratings on its bonds to BBB- from BBB. Fitch elaborated that the downgrade reflected the greater regulatory uncertainty that the company faced, intensifying the volatility of profitability and investment. -VE

CHINA MOBILE (00941.HK) +0.550 (+1.140%) Short selling $29.17M; Ratio 2.500% announced to start the centralized procurement project of ordinary optical cables for 2021-22 as the market expects the sector's demand-supply dynamics to see further improvement. The highest bidding price for this procurement project is set at RMB9.859 billion, with the procurement scale expanded by 20% and 36% respectively, compared to 2020 and 2019.

SOHO CHINA (00410.HK) +0.300 (+9.375%) Short selling $21.85M; Ratio 11.661% announced, in relation to the pre-conditional voluntary conditional cash offer to be made by Two Cities Master under Blackstone Group for all the issued shares in the company, that, as at the date of the announcement, none of the pre-conditions to the making of the offer has been satisfied.  The relevant parties have concluded that the pre-conditions are unable to be satisfied on or before the long stop date and have also agreed that there will be no extension to the long stop date. In order to release the company from its ongoing obligations under the takeovers code and to enable an orderly market for the shares to be maintained, the parties have determined and mutually agreed that the offer should not be made. The offer deadline has, therefore, been terminated today (10th). -VE for sentiment

PICC P&C (02328.HK) +0.080 (+1.078%) Short selling $50.40M; Ratio 28.659% announced that the original insurance premium income of the Company for the first eight months of 2021 was RMB309.843 billion, up 0.7% yearly. Slight +VE

Centaline Rental Index (CRI) last printed at 116.11, logging a 18-month high. The index rose 1.18% MoM, marking the sharpest surge in 24 months.
Centa-City Leading Index (CCL) last stood at 189.77, hitting the 5th-highest level under a 0.01% weekly rise. 
CCL Mass last stood at 193.18, up 0.22% weekly. 
CCL (small-and-medium units) last reported at 190.41, up 0.05% weekly.

Kowloon CCL Mass set a record high at 189.94, up 2.18% weekly with the sharpest growth in 12 weeks, said the research department of Centaline Property.

The online ceremony of Cross-boundary Wealth Management Connect in the Guangdong-Hong Kong-Macao Greater Bay Area was held today (September 10), marking the official launch of the scheme 
which enables residents in Hong Kong, Macao and nine cities in Guangdong Province to carry out cross-boundary investment in wealth management products distributed by banks in the area.
The Chief Executive, Carrie Lam, said Wealth Management Connect is a milestone in the financial development of the Greater Bay Area and an important measure that deepens and widens mutual access between the financial markets of the Mainland and Hong Kong.
Hong Kong is very grateful for the support of the Central Government and the preparation work by the relevant regulatory authorities for launching this scheme long-awaited by the industry, which will further consolidate Hong Kong’s role as the international financial centre of its country. +VE