Asia Market Update: HK and Chinese equities underperform as confirmed cases of coronavirus rise, concerns remain about impact of virus on Lunar New Year travel; Shanghai Composite drops in final trading session before holiday break; RBA rate cut bets decline on jobs data.


General Trend:

- World Health Organization (WHO) delayed decision on whether to declare the coronavirus outbreak an international emergency, to meet again on Thursday

- Gaming and airline companies trade lower in Hong Kong, Macau reported 2nd case of the coronavirus

- China Unicom drops over 3% amid FY guidance

- Property, telecom services and consumer discretionary firms are among the decliners in Shanghai

- Decliners in Australia include Energy, Consumer Staples and Resource companies

- Downer [construction services co.] declines over 20% in Australia on lower outlook, increased the costs related to certain projects and reduced forecast construction revenue

- Aussie construction services firm CIMIC Group drops over 19%, BIC Contracting [co. affiliate] is holding talks with lenders

- National Storage REIT rises over 7% in Australia on takeover talks

- Sectors moving lower in Japan include the trade sensitive Marine/Transportation index; Nidec is expected to report its earnings later today

- Probability of Feb 2020 RBA rate cut declines sharply after better Dec jobs data, some bank analysts revise easing expectations

- Fitch raised New Zealand’s foreign currency rating outlook to Positive

- PBOC to conduct targeted MLF operation ahead of Lunar New Year break (as speculated), but rate will be kept unchanged

- PBOC Adviser commented on financing costs and inflation pressure

- China upwardly revises its Dec USD-denominated trade data

- China Commerce Ministry (MOFCOM) sometimes holds its weekly press conferences on Thursdays (comments generally seen during the early European morning)

- ECB and Indonesia Central Bank are due to hold policy meetings later today

- Companies expected to report results during the NY morning include Comcast, Freeport-McMoran, Jetblue, Southwest, Kimberly-Clark, Procter & Gamble, Travelers, Union Pacific and VF Corp

- Lunar New Year Holiday Schedule: China markets to be closed Jan 24-30th for Lunar New Year holiday, Hong Kong markets to be closed Jan 27-28th for Lunar New Year Holiday

Headlines/Economic Data

Australia/New Zealand

-ASX 200 opened -0.2%


- DOW.AU Cuts FY20 (A$) Net 300M (prior 365M); to provide A$10M for one off restructuring costs to reflect net impact of staff redundancies

- WBC.AU Appoints John McFarlane Chairman, effective April 2nd; will be in charge of appoint a permanent CEO


- (NZ) New Zealand sells NZ$150M v NZ$150M indicated in 2.75% 2037 bonds; avg yield 1.9229% v 1.7147% prior; bid to cover 2.98x v 3.13x prior


- Nikkei 225 opened -0.8%

- (JP) JAPAN DEC TRADE BALANCE: -¥152.5B V -¥152.6BE; ADJ TRADE BALANCE: -¥102.5B V -¥236.0BE

- (JP) Japan Cabinet Office (Govt) Monthly Economic Report for Jan: Maintains its overall economic assessment (after the close yesterday)

- 4755.JP Expands mobile service trial to 20K additional people, has over 3.0K base stations (ahead of plan)


-Kospi opened -0.6%

- (KR) US State Dept Official: Will continue "slow, patient, steady diplomacy" with North Korea - Yonhap

China/Hong Kong

-Hang Seng opened -0.8%; Shanghai Composite opened -0.7%

- (CN) China PBOC sets Yuan Reference Rate: 6.8876 v 6.8853 prior

- (CN) China PBoC Advisor: Will continue to lower financing costs and must prevent leverage ratio from rising; will also consider inflation pressure


-(CN) China PBoC Open Market Operation (OMO): Skips v injects CNY30B in 14-day prior; Skips v injects CNY30B prior

- (CN) Wuhan bus, metro, ferry and passenger service have suspended operations from Jan 23rd to address China coronavirus outbreak; recovery time will be announced separately - China state media

- (CN) China local doctors in Wuhan estimate number of cases may be as high as 6000; Wuhan Municipal Health Commission said to have prepared at least 5,600 beds in hospitals across the city to receive coronavirus patients - China Press

- (HK) Macau cancels all Lunar New year festivities (due to coronavirus)

- (CN) China Dec Swift Global Payments CNY: 1.94% v 1.93% prior

Other Asia

- (PH) Philippines Q4 GDP Q/Q: 2.2% v 2.0%e; Y/Y: 6.4% v 6.4%e; 2019 GDP: 5.9% v 5.9%e (slowest growth in 8-years)

- (PH) Philippines Central Bank Gov Diokno: 7.0% GDP is attainable in 2020

North America

- TER Reports Q4 $0.88 v $0.79e, Rev $655M v $615Me; raises dividend 11% to $0.10 (implied yield 0.5%), to buyback $1.0B in shares (8.1% of market cap)

- (US) Weekly API Crude Oil Inventories: 1.6M v +1.1M prior

- BA CEO: Expects 737 MAX production will resume months before return to service in midyear; no discussions about cutting dividend


- (UK) PM Johnson's Brexit agreement passes through UK Parliament; now moves to queen for royal assent

- (FR) France Fin Min Le Maire: Hope for a compromise on digital tax with US soon


Levels as of 12:15ET

- Hang Seng -2.1%; Shanghai Composite -2.5%; Kospi -1.1%; Nikkei225 -1.0%; ASX 200 -0.6%

- Equity Futures: S&P500 -0.2%; Nasdaq100 -0.2%, Dax -0.1%; FTSE100 -0.1%

- EUR 1.1099-1.1080; JPY 109.86-109.56; AUD 0.6879-0.6838; NZD 0.6601-0.6585

- Commodity Futures: Gold +0.1% at $1,558/oz; Crude Oil -1.7% at $55.75/brl; Copper -0.5% at $2.76/lb

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