Asian Equities Trade Mixed, US/China Due To Hold High Level Trade Talks On Thursday-Friday

Feb 21 19, 07:10 GMT

General Trend:

There has been speculation US/China are drafting trade-related MOUs, China IT index rises over 2%
Global iron ore producers continue to warn they don’t have ability to raise production in the wake of Vale being forced to cut its production on latest dam disaster
Shanghai Composite fluctuates in early trading, IT shares gain while property index declines
Lenovo rises over 11%, Q3 earnings above ests
Marine Transportation, Brokerage and Machinery firms gain in Japan
Banks in India rise after government approves recapitalization amounts
Australian corporate earnings remain in focus, WesFarmers rises after earnings and declaration of special dividend
Qantas rises after H1 earnings report, buyback announcement
Australia online travel bookings firm Webjet rises over 28% post earnings
Australia Jan employment change beats ests, unemployment rate in line
Westpac now sees RBA cutting rates by 25bps in August and November of 2019 v rates on hold for both 2019 and 2020 prior
Longer-dated JGB yields hit lowest level since 2016, Japan Feb Manufacturing PMI has first contraction since Aug 2016
South Korea Feb prelim chip exports decline over 27%, exports to China -13.6% y/y
Chinese yuan (CNY) gains ahead of trade talks
On Friday (Feb 22nd), RBA Gov Lowe is expected to appear before the Australia House of Representatives’ Standing Committee on Economics

Headlines/Economic Data

Japan

Nikkei 225 opened -0.1%
(JP) JAPAN FEB PRELIM PMI MANUFACTURING: 48.5 V 50.3 PRIOR (1st contraction reading since Aug 2016)
(JP) Japan Dec All Industry Activity Index m/m: -0.4% v -0.2%e
6502.JP Toshiba Memory to receive ¥300B investment from Development Bank of Japan – Japan press
(JP) Japan Investors Weekly Net Buying of Foreign Bonds: ¥193.7B v +¥992.4B prior; Foreign Buying of Japan Stocks: -¥52.9B v -¥102.0B prior

Korea

Kospi opens -0.1%
042660.KR Shipbuilders union voted to strike to oppose Hyundai Heavy’s proposed takeover -Korean Press
(KR) South Korea Feb 1-20th Exports y/y: -11.7% v -1.4% prior; Imports y/y: -17.3% v +2.5% prior
000660.KR May invest KRW120T in Yongin chips cluster to build 4 chip fabricators in 2022 -Korean Press
(KR) South Korea Q4 Real Household Disposable Income y/y: +0.3% v -1.3% prior (first increase in 10 quarters)

China/Hong Kong

Hang Seng opens -0.2%; Shanghai Composite opens -0.1%
(US) US and China drafting 6 MOUs related to key structural issues in trade dispute, MOUs said to cover intellectual property (IP), services, tech transfer, agriculture, currency and non-tariff barriers – financial press
992.HK Reports Q3 Net $233M v $200Me, Rev $14.0B v $12.9B y/y
(CN) Reportedly China’s benchmark interest rate cut not imminent despite stronger yuan and cooling inflation, benchmark rate cut remains ‘last resort’ for if growth slows ‘sharply’ – financial press
(CN) China PBoC sets Yuan Reference Rate: 6.7220 v 6.7558 prior
(CN) China PBoC Open Market Operation (OMO): Skips OMO v injected CNY20B 7-day reverse repos prior; Net CNY0B v CNY20B injection prior
(CN) CHINA PBOC OFFERS CNY71.9B THROUGH PSL (PLEDGED SUPPLEMENTARY LENDING) OPERATION
(CN) China Premier Li: Reiterates monetary policy will remain prudent; will not flood domestic economy with liquidity
489.HK Reports Jan total sales volumes 247.7K units v 298.1K y/y

Australia/New Zealand

ASX 200 opened +0.1%
(AU) AUSTRALIA JAN EMPLOYMENT CHANGE: +39.1K V 15.0KE; UNEMPLOYMENT RATE: 5.0% V 5.0%E
QAN.AU Reports H1 (A$) Underlying pretax 780M v 959M y/y, Rev 9.2B v 8.7B y/y; Announces on-market stock buyback of up to A$305M
(AU) Follow Up: China Dalian city customs bans Australian coal indefinitely -Local Press
(NZ) New Zealand Fin Min Robertson: will take a measured response to tax working group report, unlikely all recommendations will need to be implemented
STO.AU Reports FY18 Net $630M v -$360M y/y, Underlying profit $727M v $318M y/y, Rev $3.7B v $3.1B y/y
WES.AU Reports H1 (A$) Net 1.1B v 0.9B y/y; EBIT 1.6B v 1.5B y/y; Rev 14.4B v 13.8B y/y; declares special dividend A$1.00/share
ORG.AU Reports H1 (A$) Net 592M v 428M y/y; EBITDA 1.7B v 1.5B y/y; Rev 7.7B v 7.3B y/y
(NZ) New Zealand sells NZ$200M v NZ$200M indicated in 2.75% April 2037 bonds, avg yield 2.6079% v 2.6998% prior, bid to cover 2.9x v 1.2x prior
(AU) Westpac sees RBA cutting rates by 25bps in August and November of 2019 v rates on hold for both 2019 and 2020 prior

Other Asia

(SG) Singapore Trade Ministry: Want to remain plugged in with US and China economies, want to remain neutral to both

North America

(US) FOMC MINUTES FROM JAN 30TH MEETING: MEMBERS NOTED THAT FINANCIAL CONDITIONS HAD TIGHTENED SINCE SEPT AND GLOBAL GROWTH HAD MODERATED
(US) Fed’s Daly (dove, non-voter): See more headwinds including slower growth, nothing shows US is falling into a recession
(US) Fed Vice Chair Clarida (moderate, voter): doesn’t believe changes in Fed policy statements represents a U-Turn – CNN interview
(US) US House Speaker Pelosi (D): House will pass resolution to block Trump’s National Emergency order to build wall ‘swiftly’ (as expected)
(US) Special Counsel Mueller report may be finalized next week – CNN

Europe

(UK) PM May and EU’s Juncker had a productive meeting; talks focused on potential guarantees around Irish backstop – joint statement
(UK) Fitch places UK’s ‘AA’ sovereign rating on Watch Negative
(UK) UK Home Secretary Sajid: Risk of ‘No deal’ Brexit has risen
(UK) Scotland Government Chief Economist: No-deal Brexit could see domestic GDP fall by up to 7%
(UK) Un-named UK senior official said UK is considering a legally enforceable “codicil” to the Brexit deal that could give the UK a unilateral exit mechanism from the Irish backstop – press

Levels as of 12:45E

Hang Seng +0.8%; Shanghai Composite +1.1%; Kospi +0.1%; Nikkei225 +0.3%; ASX 200 +0.7%
Equity Futures: S&P500 +0.3%; Nasdaq100 +0.5%, Dax +0.4%; FTSE100 +0.3%
EUR 1.1332-1.1354; JPY 110.59-110.88; AUD 0.7100-0.7207; NZD 0.6822-0.6877
Commodity Futures: Gold -0.4% at $1,342/oz; Crude Oil +0.5% at $57.44/brl; Copper -0.2% at $2.91/lb