Halister News

(Bloomberg) -- Singapore’s CPI will remain negative for a 15th month in Jan., the longest streak of declines in almost three decades, economists’ forecasts unanimously suggest.

• Consumer prices probably fell 0.5% m/m following a 0.6% decline in Dec., according to median est. in Bloomberg survey; range is from -0.9% to -0.1%
• Data due 1pm local time tomorrow
• Central bank, Ministry of Trade and Industry said Jan. 25 that external sources of inflation are likely to remain muted, given ample supply buffers in the major commodity markets and weak global demand conditions
• USD/SGD closed little changed at 1.4302 that day; now at 1.4040

(Bloomberg) -- Indonesia’s rupiah and South Korea’s won lead most Asian currencies higher; sovereign bonds decline in Australia while interest rate swaps rise in China.

• Won rises after two weekly losses; South Korea may revise capital flow control measures, ease currency forward cap, Seoul Economic Daily reports
• Yen snaps two-day gain against dollar; Nikkei Japan flash manufacturing PMI at 50.2 in February, lowest in eight months and below median estimate of 52.0
  • BOJ was wrong to adopt negative interest rates this year, banker turned opposition lawmaker Takeshi Fujimaki says
  • Japanese stocks rise, reversing earlier losses
• U.S. Treasuries slide, with yield on 10-year bonds rising 2 bps to 1.762% in Asian trading; data today should show preliminary Markit U.S. manufacturing PMI rose to 52.5 in February, highest in three months, according to median estimate in Bloomberg survey
• China raises yuan reference rate; Xiao Gang, head of securities regulator, has been removed from post and replaced by Liu Shiyu, former chairman of Agricultural Bank of China; nation needs RRR cut in medium-term: Economic Information Daily
• Aussie snaps two-day drop against dollar; Australia’s bank bill swap rate benchmark threatened by lack of trades: RBA Assistant Governor Debelle
• Rupiah advances for third day; Bank Indonesia to boost proportion of derivatives to 36%-42% of total FX transactions in 2016 from 35% last year, says Edi Susianto, director of financial market deepening program
• Ringgit bucks regional gains; Malaysia to report foreign reserves data for first two weeks of Feb.; rose to $95.5b as of Jan. 29, highest since July 31; nation freezes recruitment of foreign workers after protests
• Peso steady; Philippine fiscal position is better than before elections six and 18 year ago: Finance Secretary Purisima
• Thai financial markets closed for holiday

CURRENCY TECHNICALS:

• Click here to see pivot point and multiple support as well as resistance points for majors/Asian currencies

(Bloomberg) -- NTPC may price $bench 10Y bond today, IPT +275bp area; Nomura expects steepening of India curve to persist and recommends sticking with notes maturing in less than 10 yrs.

• “We suggest investors maintain a defensive stance on India bonds heading into the budget,” analysts including Sonal Varma say in Feb. 19 note; NOTE: Govt to present budget Feb. 29
  • “With a decent rise in yields behind us, we do not rule out some relief for the bond market after the budget”
  • Bonds been under pressure past few mos.; fiscal uncertainty one of the main reasons for this
• Yield on India’s 7.59% Jan. 2026 bond -5bps to 7.74% Feb. 18
  • India’s bonds, forex mkts were closed Fri. for a local holiday
• Yield on 5Y AAA INR corp. bonds little changed at 8.48% Feb. 18; YTD range 8.33%-8.48%
• JPMorgan India USD bond index -4.5bps to 5.26%; YTD range 5.16%-5.53%
• CNX Nifty Index futures +0.3% to 7,223.5 as of 9:52am in Singapore; cash +0.3% to 7,210.75 Feb. 19; BSE Sensex +0.3% to 23,709.15
• Treasuries fell Fri., led by short maturities after Jan. CPI rates rose more than forecast, yields across the curve reached session highs after CPI increases; they retreated from those levels, led by long end, as WTI crude fell as much as 5.6%, and as economists said CPI was influenced by large increases in volatile categories that may not be repeated
  • 10Y UST yield +1.6bps to 1.762% as of 7:25am in Mumbai

WHAT TO WATCH

• HDFC Bank modifying bonds issued from Bahrain branch
  • HDFC Bank’s plan to modify bond terms proactive, MUFG Securities says
• RBI to hold auction of INR207b of bonds for states tmrw
• India’s forex reserves rise $347.2m to $351.8b as of Feb. 12

INDIA PRIMARY MARKETS

• NTPC plans INR10b 5Y bonds
• SBI sells INR30b 10Y Tier 2 bonds at 8.45%
• Andhra Bank issues INR8b PerpNC5 bonds at 10.95%
• HDFC Bank plan to modify bond terms proactive, MUFG Sec says
• Lafarge, L&T, HDFC among Indian cos. to repay at least INR130.4b of rupee bonds this mo.
• Click here for roundup of India upgrades, downgrades
• India Bond Pipeline

GLOBAL MARKETS

• 5/30s UST spread steady at 138
• S&P 500 futures +0.4% to 1,923.10; cash closed little changed at 1,917.78
• Brent crude +0.6% to $33.20/bbl
• Bloomberg U.S. Dollar Spot index little changed at 1,220.27

INDIA RATES MARKET

• 2/10 spread at +46.3bps; YTD high 58.6bps; YTD low 38.5
• 1Y INR swap rate 6.9450%; 5Y MIFOR 6.88%
• INR little changed at 68.47/USD; 1-mo. USD/INR NDF 69.18; 3- mo. USD/INR NDF 69.87; call money rate 6.3%
• RBI operations:
  • Drains INR113.84b added via 4-day repo Feb. 18
  • Drains INR150.04b added via 4-day variable repo Feb. 18
• Foreign institutional investors bought $29.9m bonds Feb. 17

(Bloomberg) -- Rupiah rises 0.1% to 13,482 per dollar, according to prices from local banks compiled by Bloomberg.

• Pivot point at 13,522; USD/IDR support at 13,476, 13,454, 13,386; resistance at 13,544, 13,590, 13,658
• USD/IDR 1-month NDF steady at 13,565; slow stochastics %K at 41, highest in a month
• BI to boost derivatives to 36%-42% FX trades in 2016
• Latest RRR cut to add 165t rupiah potential capital for economic development, according to director at economic and monetary policy department
• BI may lower rates twice by June, with the next reduction possibly in April, while RRR could be cut 50 bps to 6.0%, Barclays economists write Feb. 19 note
  • Accelerated easing increases chances government’s 5.4% growth target will be met this year, shielding economy against falling commodity prices: Barclays
• Foreign investors were net buyers of Indonesian stocks for fourth straight week last week
• Yield on 10% govt bond due July 2017 closed down 11 bps at 7.543% on Feb. 19, lowest since May; according to IDMA data

(Bloomberg) -- HSBC reports 4Q results today after a tumultuous month in which the bank retracted a pay freeze, decided not to move its headquarters following months of deliberations, and is said to have scrapped plans to sell its Turkish business after struggling to find a buyer. ESTIMATES

• 2015 avg profit before tax $21.8b (range $20.5b-$23.2b), based on survey of 15 analysts compiled by HSBC
• 2015 loan impairment charges $3.04b (range $2.72b-$3.31b)
• 2015 net oper. income before LIC $61.8b (range $60.8b-$63b)
• ROE 8.6% (range 7.7%-9.9%)
• CET1 ratio 11.9% (range 11.4%-13.6%)
• Pretax profit by business:
  • Retail Banking & WM $5.9b (range $5.5b-$6.7b)
  • Commercial Banking $8.9b (range $8.8b-$9.3b)
  • Global Banking & Markets $8.1b (range $6.8b-$8.9b)
  • Global Private Banking $424m (range $356m-$567m)

ANALYST COMMENTARY

• Bernstein (market perform): 2016 div. is the big concern for investors, expects mgmt to give more precise div. policy beyond just being “progessive"; income outlook (loan growth/trade refinancing) also seen as key; risk may increase in 4Q due to provisions against commodities in N. America and MENA
• J Safra Sarasin (neutral): Quality of the loan book in focus as ‘‘any nasty surprise may reduce the dividend yield;’’ planned sale of Brazil business to Banco Bradesco reduces risk profile to some extent
• Investec (buy): Expects earnings to ‘‘materially’’ miss ests. from 2015-2017, though says that is already priced into the stock; sees dividend as sustainable, says decision to keep headquarters in London is ‘‘a missed opportunity’’ to escape U.K. bank levy
• Deutsche Bank (hold): Key issues are still revenue outlook, cost cutting, capital progression; renewed focus on costs amid likely weaker revenue environment; DB is skeptical of cost reduction plans over longer term
• Keefe, Bruyette & Woods (market perform): Looking for commentary on credit quality, more detail on energy/commodity exposure; too early to see meaningful effect from cost cutting

DATA

• HSBA LN is down 16% YTD vs 18% drop in FTSE All-Share Banks Index
  • 14 buys, 17 holds, 5 sells; avg PT ~GBp545 implies 21% return potential: Bloomberg data
• 5 HK is down 19% YTD vs 17% drop in Hang Seng Finance Index
  • 15 buys, 14 holds, 3 sells; avg PT ~$HK63 implies 25% return
• HSBC expected to announce 4Q div. of 21c, paid 10c in 3Q and 20c in 4Q14: BDVD
• Dividend yield in London over past 12 months 7.2%, expected to increase to 7.9% over next 12 months: Bloomberg data

RELATED

• Feb. 17, HSBC Said to Restructure Turkish Business After Scrapping Sale
• Feb. 17, HSBC Ordered to Disclose Bids Rejected for Brazil Unit, And Why
• Feb. 15, HSBC to Move 1,000 Bankers to Paris on ‘Brexit’, CEO Says
• Feb. 15, HSBC Keeps London Headquarters in Victory for U.K. Over Asia
• Feb. 11, HSBC CEO Gulliver Said to End Pay Freeze After Staff Revolt
• Feb. 6, HSBC Reaches $470m Accord Over Foreclosure Abuses

TIMING:

• HSBC reports noon H.K. time (4am London time)
• Conf. call 4:15pm H.K. time
• See TLIV for live blog of both events