Asian equities rose with U.S. futures and China’s stocks stabilized after Monday’s slide as investors gauge efforts to contain the coronavirus and awaited potential responses from policy makers.
In a wild start to trading Tuesday, Chinese equities tumbled more than 2%, then recouped all that loss within minutes. South Korean shares outperformed in Asia, with Hong Kong, Japanese and Australian benchmarks seeing more modest gains. Oil recovered a slice of recent losses, and traded back above $50 per barrel. U.S. Treasury yields also edged up, while the dollar was flat. European futures gained.
US After Hours GOOG -4.5% HIG -1.8% NXPI -1.8% VIRT +6.6% PAH +3.4%
Nikkei +0.49% Hang Seng +1.30% CSI +2.53% Shanghai +1.25% Shenzen +1.74%
Eur$ 1.1060 CNH 6.9908 CNY 6.9916 JPY 108.90 GBP 1.2999 CHF 0.9681 RUB 63.49 TRY 5.9858 WTI$ 50.61 +1%
S&P +0.80% EuroStoxx +0.63% FTSE +0.63% Dax +0.86% SMI
Macro :
- Historic Plunge in China Car Sales Seen Accelerating on Virus
- Iowa Will Not Release Caucus Results Until Tuesday Morning
Keep an eye on :
- ACS SM : *ACS TO BUILD ADDITIONAL 3.2 GW OF PHOTO-VOLTAIC CAPACITY: CINCO
- ALFA SS : Alfa Laval Fourth Quarter Adjusted Ebita Beats Highest Estimate
- AFP SW : Aluflexpack Sees 2020 Sales EU220 Mln To EU230 Mln
- AMBUB DC : Ambu First Quarter Ebit Beats Highest Estimate; Outlook Kept
- ARJON SS : Arjo Full Year Dividend Per Share Beats Estimates
- ATS AV : AT&S Nine Month Ebitda EU156.4 Mln, -29% Y/y
- AXA NO : Axactor Prelim 4Q Ebitda EU23.8M; Ended Talks on Potential Offer
- BAYN GY : Monsanto Roundup Trial in St. Louis Cancelled, Susquehanna Says
- BMPS IM : *EU DECISION ON PASCHI NPL TRANSFER EXPECTED BY END FEB: SOLE
- CARLN DC : Carlsberg Full Year Adjusted Ebit Meets Estimates
- DEMANT DC : Demant 2020 Ebit Forecast Midpoint 1.8% Below Estimates
- DIE BB : Belgian Jan. Car Registrations Rise 1.5%; D’Ieteren Has 22.3%
- GJF NO : Gjensidige Forsikring Says Request for PIM Adjustments Rejected
- IPS FP : Ipsos Buys Maritz’s Mystery Shopping Operation
- MUL LN : Frasers Group Bought 12.5% Economic Interest in Mulberry Group
- NENTB SS : NENT Full Year Dividend Per Share Beats Estimates
- NUM LN : Numis Says Performance is in Line With Expectations
- ODHN SW : Orascom Development: Sawiris to Be Interim Executive Chairman
- OHL SM : *VILLAR MIR IN TALKS TO MERGE OHL WITH CAABSA: CONFIDENCIAL
- PNDORA DC : Pandora Sees 2020 Organic Revenue Growth of -3% to -6%
- PSH NA : Pershing Square Holdings Jan. Net Performance -1.3%
- RESURS SS : Resurs Holding 4Q Operating Income Beats Highest Est.
- SGSN SW : Von Finck Family Places 12.7% of SGS at CHF2,425 Per Share
- SIA IPO : Italy’s SIA Board May Approve IPO Plan This Week: MF
- SIE GY : Siemens Gamesa Sees Solid Long-Term Outlook: Filing
- SMIN LN : Smiths Is Said to Invite Final Bids for $3 Billion Medical Unit
- SNH GY : Spain’s Pikolin Seeks to Buy Cofel, Dunlopillo: Les Echos
- TIT IM : Telecom Italia’s Revenue Officer Is Said to Be on the Way Out
- 02D GY : Telefonica Deutschland Chairwoman Quits to Focus on Group Level
- VLA FP : Valneva Secures Debt, Confirms Intention to List on NASDAQ
- V3S GY : Vectron Systems to Offer Up to 727k Shrs
- VIV FP : Vivendi will appeal today’s decision by a Milan Court and will continue to defend the rights of minority shareholders against
- VOD LN : U.K. Tells Mobile Operators to Fulfill Rural Service Pledge: FT
- WIZZ LN : Indigo Partners’ Sale of 11.9m Wizz Air Shares Is Said Covered, Offering Is Said Expected to Price at 40.1
- WLN FP : Worldline Holder Atos to Offer 23.9m Shrs
>>> Up
* Altice Europe Raised to Outperform at Exane; PT 8 euros
* Atlas Copco Raised to Equal-Weight at Morgan Stanley
* Axactor SE Raised to Buy at Arctic Securities; PT 21 kroner
* Capita Raised to Hold at Deutsche Bank
* Delivery Hero PT Raised to 83 euros at Deutsche Bank
* eDreams ODIGEO Raised to Buy at Deutsche Bank; PT 6.80 euros
* Electrolux Raised to Neutral at Citi
* Glenveagh Raised to Buy at Jefferies; PT 1.03 euros
* HeidelbergCement Raised to Outperform at On Field; PT 88 euros
* Iliad Raised to Outperform at Exane; PT 155 euros
* Keywords Studios Raised to Buy at Berenberg
* Northern Drilling Raised to Buy at SpareBank; PT 20 kroner
* Signify PT Raised to 40 euros from 33 euros at Berenberg
>>> Down
* AB Foods Cut to Sector Perform at RBC; PT 2,850 pence
* Atresmedia Cut to Neutral at Citi
* Cancom Cut to Hold at Commerzbank; PT 55 euros
* HeidelbergCement Cut to Neutral at Davy
* LafargeHolcim Cut to Neutral at On Field; PT 60 Swiss francs
* Morgan Sindall Cut to Hold at Liberum
* Orange Cut to Hold at Berenberg
* Paradox Interactive Cut to Sell at Berenberg
* Royal Mail Cut to Sell at Berenberg
* Swatch Cut to Add at AlphaValue
>>> Initiation
* ASTM SpA Rated New Buy at MainFirst; PT 35.70 euros
* Barratt Reinstated Neutral at JPMorgan; PT 820 pence
* Bellway Reinstated Overweight at JPMorgan; PT 4,890 pence
* Berkeley Reinstated Neutral at JPMorgan; PT 5,370 pence
* Countryside Reinstated Neutral at JPMorgan; PT 510 pence
* Crest Nicholson Reinstated Underweight at JPMorgan
* FirstGroup Rated New Buy at Peel Hunt; PT 164 pence
* Persimmon Reinstated Overweight at JPMorgan; PT 3,310 pence
* Redrow Reinstated Overweight at JPMorgan; PT 930 pence
* Taylor Wimpey Reinstated Overweight at JPMorgan; PT 250 pence
* Tullow Rated New Hold at Renaissance Capital; PT 62 pence
* Vistry Group Rated New Underweight at JPMorgan; PT 1,300 pence
>>> Call
* Atlas Copco Risk-Reward Balanced, Upgraded at Morgan Stanley
* Capita Raised at Deutsche Saying Cost Concerns Now Priced In
* Electrolux Short-Term Negatives Priced in, Upgraded at Citi
* Europe Postal Sector Relief Unlikely, Royal Mail Cut: Berenberg
* FirstGroup Break-Up Could Deliver Considerable Value: Peel Hunt
Could cocktail therapies for HIV and flu be the magic cure for the new coronavirus? Hospitals in Bangkok and Hangzhou put their combination remedies to the test
* Hospitals in Bangkok, and the Zhejiang provincial capital of Hangzhou, are reporting successes in reducing viral loads
* They are combining antiviral drugs with treatments for fighting the flu in “cocktail therapies” for treating the new coronavirus
Signs are emerging that a combination therapy involving cocktails of drugs meant for different ailments may be effective in combating the coronavirus outbreak around the world, with different hospitals from Bangkok to Zhejiang reporting cases of patients recovering from the disease.
Some Chinese companies are pulling out all the stops to research and produce antiviral drugs and other pharmaceuticals believed to be effective against the new coronavirus, even as clinical trials are still needed before efficacy can be scientifically proven.
A combination of anti-influenza medication Oseltamivir and HIV drugs Lopinavir and Ritonavir have been used on three patients with severe symptoms, according to Thai media reports, citing the Rajavithi Hospital’s director Somkiat Lalitwongsa, in Bangkok. One of the patients, a 71-year-old woman, showed signs of improvement 48 hours after being administered the cocktail of drugs, the reports said.
Similarly in China, three patients diagnosed with the new coronavirus infection recovered after taking Lopinavir and Ritonavir, according to a Monday stock exchange filing by Ascletis Pharma, citing the Henan provincial health commission. Ascletis, the Hong Kong-listed hepatitis drugs producer, said it has received requests from unnamed medical institutions and medical researchers to use its antiviral drug candidate ASC09 in combination with Ritonavir in clinical trials for coronavirus patients.
The new coronavirus, the second viral pandemic to emerge from China since the 2003 Sars outbreak, has infected more than 20,000 people, 99 per cent of which are found across all provinces in mainland China. The death toll stands at 427 cases, or just a little over 2 per cent of those infected, with two deaths outside the mainland while the remainder of the fatalities had been in China.
Weeks after the viral outbreak was first reported, a clear vaccine or treatment remains elusive. The desperate search for a cure has thrown up a range of recipes, from traditional Chinese medicine to home-grown boiled garlic.
SCMP Infographic: Coronavirus overtakes Sars
Out of this mix, the combination of antiviral drugs and medication for treating flu appear to be showing the most potential. Combination therapy is not a novel concept, as it’s being increasingly used in the treatment of cancer.
“As there is no proven cure for the new coronavirus yet, existing antiviral drugs such as Oseltamivir has been used to treat patients with the coronavirus besides influenza,” said UOB Kay Hian senior health care analyst Carol Dou.
More than 20 confirmed cases of coronavirus patients had turned “negative” after taking Lopinavir and Ritonavir, Ascletis said, citing a preliminary survey by its medical team at several hospitals in Zhejiang province that the company didn’t identify.
A cocktail comprising Ritonavir – used for HIV treatments – and the antiviral drug AS09 showed a 62-fold reduction in viral load in coronavirus patients after 14 days of treatment, Ascletis said, citing a previous phase two clinical trial that was completed offshore, which the company did not specify.
To be sure, Ascletis “cannot guarantee that we will be able to obtain approval for, or ultimately market, the Ritonavir and ASC09 combination, successfully,” the Hangzhou-based company said, even though it has been “actively assisting” medical researchers to initiate clinical trials in coronavirus patients. The company’s stock, which has plunged 68 per cent since its initial public offering (IPO) in August 2018, fell by 17 per cent on Tuesday to an intraday low of HK$4.10.
Lopinavir and Ritonavir were developed by Chicago-based Abbvie for treating immunological diseases including HIV.
Ritonavir is not sold in China, and at least two companies are claiming to be making generic versions in the country. Ascletis claims it has developed China’s first generic version of Ritonavir and has applied last August to the National Medical Products Administration for permits to produce and market it.
China Health Group, a Beijing-based pharmaceutical company listed on Hong Kong’s GEM, claimed that its Wanquan Wante Xiamen Pharmaceutical affiliate is the sole Chinese company that has produced raw material for Lopinavir and Ritonavir, according to an exchange filing last Wednesday. An official at Wante said it had no licensing relationship with Abbvie, in a statement to South China Morning Post.
Still, Wante had applied to the government for permission to resume production of the materials, and China Health will invest in clinical research on producing and marketing the drug in China, according to the company’s statement. Wante soared 14-fold since its announcement about the coronavirus business opportunity.
Meanwhile, Hong Kong-listed Yichang HEC Changjiang Pharmaceutical, licensed by Swiss pharmaceutical giant Roche to produce the flu medication Oseltamivir – better known as Tamiflu – in China, has been doing brisk business.
Its sole distributor of the drug, Shanghai-listed Jointown Pharmaceutical Group, sold 1 billion yuan of the drug in January alone, with accumulated sales since September 2019 topping 1.5 billion yuan (US$214 million), according to its disclosure to the Shanghai Stock Exchange on Monday.
Antiviral drugs are not the only drug used for other diseases being tried on patients infected by the coronavirus.
Tongfang Kontafarma Holdings, a Hong Kong-listed producer of cement clinker, said its chloroquine phosphate – used for treating malaria – has been tested and proven to have “certain curative effect” in combating the coronavirus, according to its filing to the exchange, citing the Chinese Ministry of Industry and Information Technology (MIIT) and the Chongqing municipal government.
Tongfang said it was told by the authorities to “promptly resume” producing the pharmaceutical ingredient, even as other companies whad been barred from resuming operations at least until February 10, amid a general lockdown of facilities to observe a state-ordered quarantine of affected areas. Its production has resumed at Tongfang's subsidiary Chongqing Kangle Pharmaceutical, Tongfang said, without giving volume and financial details.
Tongfang shares closed the morning trading session up 51.5 per cent at 20 HK cents after surging as much as 135 per cent.
After Hours Summary: GOOG falls on earnings, EZPW also weak on earnings
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: VIRT +6.6%, PAHC +3.4%, HXL +1.2%, RBC +0.6%, ARE +0.4%, KRC +0.4%, FN +0.3%, HLI +0.2%, LEG +0.2%, VVV +0.2%, HP +0.1%
Companies trading higher in after hours in reaction to news: EYPT +7.3% (signs exclusive license agreement with Equinox Science), AYX +1.7% (announces 5-yr strategic relationship with PwC U.S.)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: EZPW -9.2%, KMT -7.8%, HLIT -4.8%, GOOG -4.5%, HIG -1.8%, NXPI -1.8%, SXI -0.8%, BECN -0.4%, PCH -0.4%, AFG -0.1%, CBT -0.1%
Companies trading lower in after hours in reaction to news: RMTI -13.7% (stock offering), CTLT -2.7% (stock offering), IVR -2.7% (announces offering of 18 mln shares, also issues upside EPS guidance), BNTX -1.6% (commences public offering of 6.0 mln ADSs), BMRN -1.1% (CFO departs)
Closing Stock Market SummaryThe S&P 500 advanced 0.7% on Monday, as investors presumably viewed last week's drop as a good opportunity to buy the dip. The Nasdaq Composite (+1.3%) and Russell 2000 (+1.1%) outperformed, while the Dow Jones Industrial Average (+0.5%) trailed its peers.
Eight of the 11 S&P 500 sectors posted gains, including the materials (+2.1%), information technology (+1.3%), and communication services (+1.3%) sectors. The latter was aided by shares of Alphabet (GOOG 1485.94, +51.71), which rose 3.6% in front of the company's earnings report after the close.
The energy sector (-1.3%) remained hampered by falling oil prices ($50.05, -1.53, -3.0%) amid pestering concerns that the coronavirus outbreak will undercut demand for oil. Prices barely reacted to reports that Saudi Arabia will try to convince OPEC+ to agree to large production cuts.
Good news included the ISM Manufacturing Index returning into expansion mode in January, although market reaction was muted. The index checked in at 50.9% (Briefing.com consensus 48.1%) after five straight months of below-50% readings. In addition, news that Gilead Sciences (GILD 66.36, +3.16, +5.0%) will be testing a treatment for the coronavirus was encouraging to hear.
Despite the positive bias in the market, coronavirus concerns didn't go just away. Negative news related to the outbreak included more cases being reported in other countries, including the U.S.; China's Shanghai Composite dropping 7.7% in its first trading session since Jan. 23; and Apple (AAPL 308.66, -0.85, -0.3%) closing its China stores through Feb. 9.
Separately, today's session included some bullish analyst recommendations. Nike (NKE 99.27, +2.97, +3.1%) was upgraded to Buy from Neutral at UBS and added to JPMorgan's Analyst Focus List. Tesla (TSLA 780.00, +129.43, +19.9%) had its price target raised to $808 from $556 at Argus. Uber (UBER 37.59, +1.30, +3.6%) was added to Wedbush's Best Ideas List.
U.S. Treasuries started the day on a lower note but spent a bulk of intraday action rebounding from session lows. The 2-yr yield increased three basis points to 1.35%, and the 10-yr yield was unchanged at 1.52%. The U.S. Dollar Index rose 0.5% to 97.84.
Reviewing Monday's economic data, which included the ISM Manufacturing Index for January and the Construction Spending report for December:
- The ISM Manufacturing Index for January jumped to 50.9% (consensus 48.1%) from an upwardly revised 47.8% (from 47.2%) in December. January marked the first reading above 50% in six months.
- The key takeaway from the report is that the manufacturing sector went back into an expansion mode in January, aided by a jump in new orders, production, and new export orders.
- Total construction spending decreased 0.2% m/m in December (Briefing.com consensus +0.5%) on the heels of an upwardly revised 0.7% increase (from +0.6%) in November. Residential spending was up 1.4% m/m and nonresidential spending was down 1.2% m/m.
- The key takeaway from the report is that there was continued strength in new single-family construction (+2.7%), which was the main driver of the pickup in residential spending.
Looking ahead, investors will receive Factory Orders for December on Tuesday.
- Nasdaq Composite +3.4% YTD
- S&P 500 +0.6% YTD
- Dow Jones Industrial Average -0.5% YTD
- Russell 2000 -2.2% YTD