- Indices trade mixed and Asian currencies (ex Yen) decline as coronavirus continues to impact multiple countries; PBOC cut rates as expected but some want to see even more action; Trump meeting related to Huawei said to still be ‘on’.
- Shanghai Composite trades above 3,000 despite weakness in yuan, steel producing region announces stimulus
- Shanghai Property index underperforms as some want more aggressive easing by the PBOC
- Hebei (China largest steel producing region) announces CNY50B (~$7.1B) special financing vehicle
- Hubei, which has been at the center of the coronavirus epidemic, is expected to sell ~CNY10B in bonds later today
- HK gaming companies trade broadly lower, Macau said it would reopen most of its casinos today
- Lenovo reported better than expected Q4 results, said vast majority of the Group’s factories in China have reopened and are operational on a limited basis, although its suppliers and even logistics services across the countries remained impacted
- Japanese equities pare opening gains, 2 passengers on Japan cruise ship said to have died from the coronavirus
- Softbank Group rises over 3%, reached agreement on up to ¥500B margin loan
- Australian earnings remain in focus, Qantas rises over 5% amid its earnings and capacity reductions
- USD/CNH trades above 7.04, China again set the yuan weaker than the ‘7’ level
- Aussie trades at lowest level since 2009 amid mixed jobs data and risk aversion
- Coronavirus concerns weigh on Korean Won (KRW), South Korea’s total external debt hits record high
- M&A flows in focus for USD/JPY: Japan’s Seven & I said to be in exclusive talks to buy Marathon’s Speedway for $22.0B
- There is speculation that China might bailout troubled conglomerate HNA Group
- China’s Commerce Ministry (MOFCOM) sometimes holds its weekly press conference on Thursday (comments generally seen during the early European morning)
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened +0.1%
- (AU) AUSTRALIA JAN EMPLOYMENT CHANGE: +13.5K V +10.0KE; UNEMPLOYMENT RATE: 5.3% V 5.2%E; Full Time Employment Change: +46.2K v -1.8K prior
- QAN.AU Qantas International will cut 16% of Asia capacity until at least the end of May due to coronavirus, guides FY20 Net profit to be negatively impacted by A$100-150M (lower fuel prices helping to make less impact)
- QAN.AU Reports H1 (A$) Net 445M v 463M y/y; underlying EBIT 900M v 916M y/y; Rev 9.5B v 9.2B y/y
- ORG.AU Reports H1 (A$) underlying Net 528M v 592M y/y; underlying EBITDA 1.6B v 1.7B y/y; Rev 6.7B v 7.7B y/y
- (NZ) New Zealand sells NZ$200M v NZ$200M indicated in 2.75% 2037 bonds; avg yield 1.7453% v 1.9229% prior; bid to cover 2.1x v 2.98x prior
Japan
- Nikkei 225 opened +1.1%
- (JP) Japan Fin Min Aso: No need to revise FY20 budget plan due to coronavirus measures
- (JP) Tokyo Stock Exchange (TSE) may require companies that do not meet listing requirements to delist as opposed to downgrading the companies to a lower market section – Japanese media
- (JP) Japan Investors Net Buying of Foreign Bonds: ¥1.42T v ¥1.63T prior week; Foreign Net Buying of Japan Stocks: -¥214.4B v ¥282.9B prior week
- 9984.JP Has pledged 953M shares related to Japan telecom unit as collateral for margin loan, seeking to borrow up to ¥500B (~$4.5B) (after the close yesterday)
- (JP) Japan MoF sells ¥900B v ¥900B indicated in 0.30% 20-year bonds; avg yield 0.2320% v 0.3000% prior; bid to cover 3.99x v 3.83x prior
Korea
- Kospi opened +0.6%
- (KR) According to Korea Economic Research Institute (KERI): South Korea GDP has nearly halved in the past two decades due to low productivity and regulations
- (KR) South Korea Vice Health Min: No talks of extra budget yet
China/Hong Kong
- Hang Seng opened +0.4%; Shanghai Composite opened +0.2%
- (CN) CHINA PBOC SETS 1-YEAR LOAN PRIME RATE (LPR) AT 4.05% V 4.15% PRIOR (4.05%E); SETS 5-YEAR LPR AT 4.75% V 4.80% PRIOR (4.75%E)
- (CN) China Hebei Govt: Established special financing vehicle with CNY50B (~$7.1B) to restore production and stabilize investment amid coronavirus outbreak
- (CN) China Hubei province coronavirus update for Feb 19th: 349 additional cases v 1.7K prior, Additional deaths 108 v 132 prior
- (CN) China National Health Commission: Hubei lowered its coronavirus case toll by removing clinically diagnosed patients with negative RNA test results
- 521.HK China govt reportedly close to taking over HNA Group amid business slowdown caused by coronavirus outbreak – press
- 2317.TW Warns China caution to have negative impact on FY20 Rev, will be cautious about restarting production in China – press
- (CN) China Transport Ministry: Lunar new year travel 1.48B trips, -50% y/y (20-year low) – press
- (CN) China PBoC quarterly monetary policy report: Fundamentals of domestic economy have not changed but faces several challenges; reiterates its prudent but flexible monetary policy stance
- (CN) China Jan Swift Global Payments CNY: 1.65% v 1.94% prior
- (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the 3rd consecutive time, Net CNY0B v drains CNY0B prior
- (CN) China PBOC sets Yuan Reference Rate: 7.0026 v 7.0012 prior (2nd consecutive weaker setting)
- (CN) China PBOC recent stress test showed 17 of 30 local banks would fail to meet their capital adequacy ratio if growth slowed to 4.15% – SCMP
- 992.HK Reports Q3 Net $258M v $233M y/y, Rev $14.1B v $14.0B y/y
North America
- ORCL Trump Administration said to support the company in its supreme court case vs. Google – Press
- MPC Japan’s Seven & I said to be in exclusive talks to purchase Marathon Speedway for $22.0B – financial press
- LB Follow Up: Said to be close to deal to sell 55% stake of Victoria Secret to Sycamore Partners for $1.1B; Leslie Wexner is expected to step down as CEO and Chairman, but remain on board – financial press
Europe
- (DE) German Fin Min Scholz: no signs of Germany economy entering a recession; we’ll stick to 2020 GDP growth forecast of 1.1% despite coronavirus risks
Levels as of 12:15ET
- Hang Seng -0.8%; Shanghai Composite +0.8%; Kospi -0.5%; Nikkei225 +0.5%; ASX 200 +0.2%
- Equity Futures: S&P500 -0.1%; Nasdaq100 -0.2%, Dax -0.3%; FTSE100 -0.2%
- EUR 1.0816-1.0792; JPY 111.50-111.11; AUD 0.6696-0.6630; NZD 0.6395-0.6352
- Commodity Futures: Gold 0.0% at $1,611/oz; Crude Oil +0.4% at $53.72/brl; Copper -0.4% at $2.60/lb
