Equity Markets In HK And Shanghai Underperform

General Trend:

• China’s National Health Commission has yet to conduct its daily coronavirus update amid the earlier announcement out of Hubei
• China announces leadership shakeup in Hubei
• HK government extends school closures
• Shanghai Composite declines in early trading after methodology change by Hubei; Declining sectors included Consumer Discretionary, Industrials and Financials.
• Tesla supplier Ganfeng Lithium rises over 5% in China on price hike and production resumption
• HK gaming companies mixed in early trading, US-listed MGM Resorts withdrew FY20 guidance due to ‘uncertainties’
• China Life declines over 1% in HK, commented on recent press speculation about IPO related to parent company
• Alibaba is expected to report its results during the NY morning
• Earnings in Australia remain in focus; NAB rises over 1% after quarterly trading update
• Australia Stock Exchange (ASX) drops over 3% as EBIT missed ests
• Aussie telecom Telstra drops over 1%, reported y/y declines in EBITDA and revenues
• Other Aussie companies that reported results included Newcrest Mining (trading lower), AGL Energy (up over 3%) and Woodside Petroleum (trading lower)
• TPG Telecom rises over 10% in Australia, federal court approved merger with Hutchison Australia
• Sectors moving lower in Japan include Iron/Steel, Brokerage and Marine/Transportation
• Softbank Group drops over 3% after recent earnings report
• Japanese companies expected to report earnings include Nissan Motor, Rakuten, McDonald’s Japan, SUMCO and Japan Display
• Apple supplier Foxconn denied press report related to China production resumption timeline, but did not elaborate further [Reminder: Foxconn said to target to resume 50% of production in China by the end of February and 80% of production in China in March (financial press article from Feb 12th)]
• South Korea’s Seoul Semi [LED firm] rises over 11% after FY results
• Singapore bank DBS said revenues to be impacted by the coronavirus
• There continues to be press reporting that various Asian countries could launch stimulus measures to deal with the impact of the coronavirus (countries mentioned today include Japan, Taiwan and Malaysia)
• 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 +0.4%
• NAB.AU Reports Q1 (A$) cash earnings 1.65B v 1.65B y/y Rev +<1% y/y; Considering an offer of a new ASX listed Additional Tier 1 capital security
• CTX.AU Received improved best and final offer of A$35.25/shr (prior A$34.50/shr) from ATD and is currently reviewing it
• NCM.AU Reports H1 underlying Net $280.0M v $237.0M y/y; EBITDA $756M v 739M y/y; Rev $1.79B v $1.73B y/y; Affirms FY20 production
• WPL.AU Reports FY19 underlying Net $1.06B v $1.36B y/y; EBITDA $3.5B v $3.5Be; Rev $4.9B v $5.0Be; Affirms FY production
• TLS.AU Reports H1 (AUD) Net 1.14B v 1.20B y/y; EBITDA 3.9B v 4.3B y/y; Rev 13.4B v 13.8B y/y
• (AU) Reserve Bank of Australia Gov Lowe: Outlook in Australia is improving; China made it very clear they will stimulate in response to virus which should have favorable impact on Aussie economy
• (NZ) Reserve Bank of New Zealand (RBNZ ) Assistant Gov Hawkesby: Rates on hold at record low for a long time, comfortable to use full 1-3% CPI range, inflation above 2% would be healthy
• (AU) AUSTRALIA FEB CONSUMER INFLATION EXPECTATION SURVEY: 4.0% V 4.7% PRIOR

Japan

• Nikkei 225 opened -0.1%
• (JP) Japan Jan PPI (CGPI) m/m: 0.2% v 0.0%e; y/y: 1.7% v 1.5%e
• 7201.JP Said to be considering lower FY19/20 guidance – Japan press
• (JP) Japan PM Abe adviser Hamada: Abe should act first if the coronavirus outbreak inflicts severe economic damage on Japan’s economy, not the BOJ; Coronavirus could be a significant drag for Japan’s economy
• (JP) Tokyo Stock Exchange (TSE) to not allow market access trades from around the start of 2021, this move would require high frequency trading firms to place orders through securities firms – Nikkei
• (JP) Japan Lower House approves BoJ board nominee Adachi

Korea

• Kospi opened +0.5%
• 035720.KR Reports Q4 (KRW) Net -420.2B v +11.7B y/y; Op 79.4B v 40.5B y/y; Rev 867.3B v 385.0B y/y
• (KR) Senior South Korea national security adviser Kim Hyun-chong has left for Russia, talks expected to focus on denuclearization – Yonhap
• (KR) US Treasury Dept confirms it will continue to focus on applying financial sanctions against North Korea – Yonhap citing agency budget request for FY21

China/Hong Kong

• Hang Seng opened +0.5%; Shanghai Composite opened 0.0%
• (CN) China Hubei Coronavirus update Feb 12th: 14,840 additional cases (under revised standards) v 1,638 prior; Daily death toll 242 v 94 prior; notes it has adopted a revised methodology under which additional confirmed cases now include ‘cases that are ‘clinically diagnosed’
• 2282.HK Reports FY19 (HK$) adj EBITDA 6.2B v 4.8B y/y, Rev 22.8B v 19.2B y/y
• 1810.HK Guides FY19 Rev >CNY200B; Guides FY20 R&D >CNY10B v 7B y/y
• (CN) China PBOC sets Yuan Reference Rate: 6.9785 v 6.9718 prior
• (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the 2nd consecutive day; Net CNY0B v CNY0B prior
• (CN) China PBOC sells combined CNY30B in 3-month and 1-year bills in Hong Kong

Other

• 2317.TW Press report on plant resumption in China is not factual (no other details given)
• DBS.SG Reports Q4 (S$) Net 1,51B v 1.32B y/y; Rev 3.46B v 3.25B y/y; Guides FY20 Rev to be negatively impacted by coronavirus by 1-2%; pre-virus was on track for prior outlook; gives 6-month moratorium on repayment for Singapore mortgages
• ST.SG Reports Q3(S$) Net 627.2M v 822.8M y/y; EBITDA 1.16B v 1.19B y/y; Rev 4.38B v 4.63B y/y

North America

• (CA) Bank of Canada Gov Poloz: Canada economy is in ‘pretty good’ place, fiscal stimulus has aided Canada over the last 5-years; rates would have gone lower in 2015 without stimulus
• MGM Reports Q4 $0.08 v $0.24e, Rev $3.2B v $3.21Be; withdraws FY20 guidance due to uncertainties
• CSCO Reports Q2 $0.77 v $0.76e, Rev $12.0B v $12.0Be; Raises Quarterly dividend 2.9% to $0.36 from $0.35 (indicated yield 2.88%)

Europe

• (UK) Jan RICS House Price Balance: 17% v 3%e

Levels as of 12:15ET

• Hang Seng -0.5%; Shanghai Composite -0.9%; Kospi -0.2%; Nikkei225 -0.2%; ASX 200 0.0%
• Equity Futures: S&P500 -0.4%; Nasdaq100 -0.5%, Dax -0.3%; FTSE100 -0.3%
• EUR 1.0877-1.0865; JPY 110.11-109.81; AUD 0.6739-0.6707; NZD 0.6468-0.6427
• Commodity Futures: Gold +0.3% at $1,576/oz; Crude Oil +0.2% at $51.27/brl; Copper -0.6% at $2.59/lb