ASIA STOCKS: Asian Equities Track Wall Streets Sell-Off, Focus Turns To Payrolls

As China returns from LNY markets are trading mixed. The CSI 300 is trading 0.20% lower, while small-cap indices are performing better with the CSI 1000 & 2000 trading about 1% higher. Hong Kong listed equities are performing worse with the HSI down 1.20%, HS Tech Index is -1.60%, while the Mainland Property Index trade -1.30%.

• Chinese Travel & Tourism: Airline and travel stocks declined, with China Southern and Air China down ~4%, and Trip.com falling ~5%. However, regional tourism data was positive—Guangdong saw 80m visitors with ¥74b in tourism revenue (+7.5% YoY), Shanghai had 17.8m tourists (+6.1% YoY), and Beijing's retail sales from restaurants and stores hit ¥8.1b (+4.2% YoY).
• E-commerce & Logistics Hit by US Postal Suspension: Alibaba fell 2.1%, JD.com dropped 5.1%, and SF Holding declined as the US halted inbound parcels from China & Hong Kong, adding uncertainty to the sector.
• Sector-Specific Moves: Tungsten stocks gained 3%+ after China imposed export controls, while genetic sequencing firms rose after Beijing blacklisted US company Illumina. AI-related stocks surged, with Iflytek up 8.5%, TRS Information rising 20%, and Beijing Kingsoft up 18%.
• Hong Kong Selling Pressure: The Hang Seng China Index fell 1.8%, with HK$2b ($257m) in mainland investor selling. Maoyan Entertainment dropped 14% despite record Chinese New Year box office numbers, while Enlight Media surged 20%.

• China’s bond futures showed little regard for the uncertainty abounding from the impending trade war.
• Whilst equities are down, (Hang  Seng -1.15%, CSI 300 -0.30%) bonds futures are marginally lower at the open.
• China’s 10YR Bond Mar 25 future is lower by -0.05 at 109.35
• China’s 2YR Bond Mar25 future is lower by -.044 at 102.80
• Prior to the Lunar New Year Break the 10YR future had bounced on the 20-day EMA and moved higher and remains above that technical level of 109.077.
• China’s 2YR Bond future is trending below the 20-day EMA of 102.83 and is at the midpoint of it and the 50-day EMA of 102.78.
• Economic data this week has been softer with PMI Manufacturing and PMI Services weaker, but likely impacted by the earlier than expected Lunar Holidays.
• Over the coming weekend, China will release its January PPI data which is expected to show the deflationary pressures for producers remains a key issue. 

• China’s PMI Services for January declined to 51.0, from 52.2; likely impacted by the earlier than usual Lunar New Year Holiday.
• This follows Monday’s release of the China PMI Manufacturing at 50.1.
• The overall PMI composite saw a decline to 51.1 for January from 51.4 prior.
• The PMI services result was the lowest reading since September and saw the employment component decline to 48.8 to mark the lowest contribution since April.
• Additionally, the prices charged component saw a decline versus the prior month.
• It is likely that this data release will be of little cause for concern due to the impact of the holidays.