Asian Market Update: Asian markets mixed with Nikkei near 2-month high; renewed tensions between China, Vietnam
***Economic Data*** - (JP) JAPAN APR CORPORATE SERVICE PRICE INDEX Y/Y: 3.4% V 3.2%E - (KR) SOUTH KOREA MAY CONSUMER CONFIDENCE: 105 (8-month low) V 108 PRIOR - (PH) PHILIPPINES MAR TRADE BALANCE: -$146M V -$200ME - (PE) Peru Q1 GDP Y/Y: 4.8% v 4.8%e
Market Snapshot (as of 03:30 GMT): - Nikkei225 +0.9%, S&P/ASX flat, Kospi -0.9%, Shanghai Composite -0.3%, Hang Seng -0.2%, Jun S&P500 +0.3% at 1,903, Jun gold flat at $1,291, Jul crude oil flat at $104.38/brl
***Highlights/Observations/Insights*** - The Asia markets were broadly mixed with the Nikkei225 in positive territory tracking overnight gains in European markets. Overall the markets were generally quiet with US closed on Monday for Memorial Day holiday and UK closed for a bank holiday. Foreign exchange volumes were below half their daily averages, with the major currency pairs near their recent ranges. - In terms of economic data the BOJ released the Corporate Service Price Index for April, which was up by 3.4% from the prior month beating expectations and the March reading of 0.7%. Not including the consumption tax increase, the corporate service prices were rose an annual 0.8%. - There were renewed tensions between China and Vietnam after a Chinese ship rammed and sunk a Vietnamese fishing vessel. The spokesperson for the Vietnamese Foreign Ministry said that the fishing boat was initially surrounded by 40 Chinese ships approximately 17 nautical miles from the China Haiyang Shiyou-981 oil rig. The oil rig was the cause of violent anti-China protests this month.
***Speakers/Political/In the Papers*** - (CN) PBoC Gov Zhou: reiterates China to well implement prudent monetary policy - financial press - (CN) China National Development and Reform Commission (NDRC) head Xu Shaoshi: China's progress on over-capacity cut is slow; China to strictly control over-capacity industries - CCTV - (CN) China big four banks new loans CNY130B in May 1st-25th - Chinese press - (CN) Industrial Bank Chief Economist Lu Zhengwei: Necessary for China to cut RRR; probability for RRR cut during H2 increasing given current economic condition - Chinese press - (JP) Japan LDP tax panel to allow cutting corporate tax rate under certain conditions - Japanese press - (JP) Japan Tax Panel chief Saito: too hasty to conduct corporate tax cut from 2015; PM Abe may make decision on whether sales tax rise 10% by Nov - (NZ) New Zealand Institute of Economic Research (NZIER): Sees 2014 GDP at 3.5%; RBNZ may pause rate hikes after June if growth slows
***Fixed Income/Commodities/Currencies*** - (JP) Japan MoF sells ¥400B in 1.70% 40-year bonds, bid to cover: 3.73x v 3.69x - (CN) PBoC to drain CNY20B on 28-day repos (28th consecutive drain) - (CN) PBoC sets yuan mid-point at 6.1687 v 6.1699 prior (1st firmer Yuan setting in 5 sessions) - (AU) Australia Newcastle weekly coal exports for week ended May 26th -19% w/w - LME Copper inventory under 200Kt, lowest level since Oct 2008 - Chinese press
***Equities*** US markets: - AZN: Pfizer says it does not intend to make a bid for company; bound by restrictions in rule 2.8 of code - IBM: (AU) Transport for NSW expected to sign 10-yr contract value up to $1B - financial press - INTU: Said to have agreed to acquire bill-payment service Check Inc for over $350M - financial press
Notable movers by sector: - Financials: OzForex Group OZF.AU -0.1% (FY results) - Energy: Shunfeng Photovoltaic International 1165.HK +1.5% (private placement) - Industrials: Fuji Heavy Industries 7270.JP +2.4% (confident to beat guidance) - Technology: Zhejiang Crystal-Optech 002273.CN +2.1%, Zhejiang East Crystal Electronic 002199.CN +3.9% (China sapphire materials trading higher on LG & Samsung's possible use); LG Electronics Inc 066570.KR +1.7% (Q1 mobile sales rank); Renesas Electronics Corp 6723.JP -1.0% (speculation on LCD unit sale) - Telecom: Daum Communications Corp 035720.KR +15.0% (to merge with Kakao)
Abe's Strategy: Rearrange Region's Power Balance Japan's Prime Minister Hopes to Accelerate Maritime Aid to Vietnam, Maintain Dialogue With Russia
Japanese Prime Minister Shinzo Abe and Bank of Japan Gov. Haruhiko Kuroda each sat down with Wall Street Journal Editor in Chief Gerard Baker, who offers his analysis of their conversations. Photo: Ko Sasaki for The Wall Street Journal TOKYO—Japanese Prime Minister Shinzo Abe laid out an assertive foreign policy agenda, saying he hoped to accelerate maritime aid to Vietnam amid its territorial standoff with China and host Vladimir Putin this year despite the Russian president's isolation from the West.
Beijing's "unilateral drilling activities" for oil in waters claimed also by Hanoi have led to "heightening of tensions," Mr. Abe told The Wall Street Journal in an interview Friday. "We will never tolerate the change of status quo by force or coercion," added the Japanese leader, who has assiduously courted Southeast Asian leaders during the past year and offered himself as a counterweight to China's muscle-flexing.
As part of his broader strategy to rearrange the region's power balance, Mr. Abe also signaled a desire to keep alive his diplomatic overtures to Russia. He condemned Russia's annexation of portions of Ukraine and noted that Japan has imposed sanctions in coordination with the U.S. and Europe. But he made clear that he also hoped to maintain the dialogue he has intensified through five summit meetings with Mr. Putin, more than Mr. Abe has had with any other head of state.
"Regarding the visit to Japan by President Putin, I agreed with the president that we should carry it out in autumn of this year," Mr. Abe said. The two leaders have agreed to accelerate talks over a long-elusive peace treaty from World War II. Mr. Abe hopes to win return of Japanese islands seized at the end of the war, get further access to Russian energy and win a new partner in his bid to contain China.
Mr. Putin was less welcoming to Japan, however, telling foreign journalists Saturday that Tokyo's sanctions against Russia surprised him and left him unsure whether Japan was ready for talks.
Mr. Abe's remarks came a day before tensions flared anew in Japan's dispute with China over a small group of islands in the East China Sea as well as the surrounding airspace. Twice on Saturday, Chinese fighter jets flew perilously close to Japanese reconnaissance craft, leading both governments to file protests. Japan said China's actions were "meant to intimidate," while China said Japan had "carried out dangerous actions, in serious violation of international laws."
The weekend exchange underscored a theme of Mr. Abe's administration—that the region around Japan is increasingly dangerous, and that Tokyo has no choice but to embrace a more muscular foreign policy in response. Since taking office in December 2012, Mr. Abe, 59 years old, has tried to remake the image of a country long defined by passive diplomacy and its role as a junior ally to the U.S.
As part of that campaign, Mr. Abe on Friday will deliver the keynote speech to the annual Shangri-La Dialogue security conference in Singapore, the first Japanese prime minister to do so.
But Mr. Abe has struggled at times to sell his agenda. In mid-May he announced plans to move forward with a proposal to reinterpret Japan's postwar pacifist constitution in a way that would loosen some of the tight restrictions on Japan's military. His goal is to make Japan a more equal partner with the U.S. in policing Asia, a change the American military has encouraged as China boosts its defense spending while the Pentagon faces cutbacks.
"It's difficult for the general public to understand. And there is strong opposition," Mr. Abe acknowledged.
His administration has been unusually stable and popular after Japan endured a series of weak, short-lived prime ministers. After two election victories, the coalition led by his ruling Liberal Democratic Party controls majorities in both houses of parliament. But his power and popularity stem mainly from his "Abenomics" program to end Japan's long economic slump.
Asked to define how he would enhance Japan's ability to support American troops in the region, the prime minister seemed to have trouble crafting a message that would satisfy Washington without alarming his dovish coalition partner, the New Komeito Party. "It is very difficult for me to respond in a concrete way," he said, adding that "we will be discussing and reviewing how we can respond to various situations that may arise in waters close to Japan."
Still, Mr. Abe is moving to step up Japan's role. He has repeatedly issued public statements supporting the Philippines and Vietnam in their territorial disputes with China in the South China Sea, suggesting a similarity to Japan's own standoff in the East China Sea.
That has drawn rebukes from China. "The real purpose of Japan is to be involved in the South China Sea dispute to pursue its own hidden political end," said foreign ministry spokesman Hong Lei Friday. "We urge the Japanese side to stop all provocative words and deeds."
Mr. Abe has also extended modest, but symbolically significant, maritime aid to countries facing off with China. In December, Japan provided 10 patrol vessels to the Philippine Coast Guard, and it announced talks that same month for similar aid to Vietnam.
Hanoi has been trying to beef up its military firepower and has sought to persuade the U.S. to lift a ban on sales of lethal weapons.
In the interview, Mr. Abe said he had met Vietnam's deputy prime minister, Vu Duc Dam, the previous day and was told that Vietnam "would certainly like to request the provision of the patrol boats as soon as possible." Mr. Abe said he, too, wants to accelerate the process.
In recent weeks, the standoff between Vietnam and China has turned physical, with vessels ramming each other and water cannons fired. Mr. Abe wouldn't say if he envisioned the Japanese-made boats being deployed in that confrontation. "We are considering providing the boats based upon the view that they will be helpful in bringing about stability and peace in that region," he said.
But, he added, "the boats aren't built yet, so it's not that they'll be ready tomorrow."
+------------------------------------------------------------------------------+
BN 05/26 17:53 *INVESTINDUSTRIAL SAYS OFFER MAY COME 5 WKS AFTER DUE DILIGENCE BN 05/26 17:52 *INVESTINDUSTRIAL SAYS CLUB MED OFFER PRICE SUBJECT TO DILIGENCE BN 05/26 17:50 *INVESTINDUSTRIAL REPLIES TO FRENCH REGULATOR AMF ON CLUB MED BN 05/26 17:49 *INVESTINDUSTRIAL CONSIDERS POSSIBLE TENDER OFFER FOR CLUB MED
+------------------------------------------------------------------------------+
Investindustrial Considers Possible Tender Offer for Club Med 2014-05-26 18:09:14.282 GMT
By Mathieu Rosemain May 26 (Bloomberg) -- Investindustrial Development SA replies to French regulator AMF on Club Mediterranee SA in an e- mailed statement.
• Investindustrial says Club Med offer price subject to due diligence • Investindustrial says offer may come 5 wks after due diligence
Link to Company News:{CUT FP <Equity> CN <GO>} Link to Company News:{CU FP <Equity> CN <GO>} Link to Company News:{PEF2857 IM <Equity> CN <GO>}
For Related News and Information: First Word scrolling panel: {FIRST<GO>} First Word newswire: {NH BFW<GO>}
To contact the editor responsible for this story: Tara Patel at +33-1-5365-5058 or tpatel2@bloomberg.net
Hirai tries to change the script at Sony
Kazuo Hirai spent an enjoyable afternoon at Sony Pictures last year plotting the course of a careering plane in The Amazing Spider-Man 2, as he and other executives examined shots before the final edit of the smash action film. If only charting the Japanese entertainment and electronics group’s course was as agreeable. While Sony’s chief executive is at pains to show he is a hands-on leader who can juggle meetings with product engineers and creative decisions in its media business, he has not yet changed a script Sony investors are painfully familiar with: lengthy restructurings, recurrent profit warnings and formidable competition in virtually every one of Sony’s product categories. Earlier this month Sony delivered its third profit warning in six months, missing its targets as it reported a net loss of Y125bn ($1.3bn) for the year to March, a loss it predicts will shrink to Y50bn in the 2015 fiscal year. Mr Hirai has been under pressure from Dan Loeb, the activist investor who called for Sony to spin its movie and music divisions into a separately listed company and sell off 15-20 per cent to investors. But two years into the job, Mr. Hirai says there are clear signs the company is on the right track. After almost a decade of restructuring, he argued in Tokyo on Monday, it is finally making good on promises to slim down to a leaner, more efficient organisation. In February he sent the clearest signal yet that he was willing to accelerate the restructuring with the announcement that its television business would be spun off into a subsidiary while the Vaio PC business would be sold. “We accomplished all we set out to do,” he said, but he acknowledged Sony could have gone further, saying: “We didn’t plan as aggressively as we should have.” Although analysts cheered the will to deal more decisively with the TV and PC businesses, long regarded as the sick men of Sony, many argued the growth areas identified by the group – its digital imaging, game and mobile units – themselves faced serious competition. Sony’s Xperia smartphone business for instance, long cited as a growth area for the group, last year had a global market share of just 3.8 per cent, placing it in seventh place behind rivals including Samsung and Apple. “Smartphone earnings could deteriorate due to severe competition, and among imaging the sluggish DSLR market could lead to stagnation in sales,” said Yasuo Nakane, analyst at Deutsche Bank, who also highlights higher restructuring charges as a risk. Mr. Hirai stressed the importance of Sony still having a smartphone presence, even as other Japanese manufacturers have pulled back from producing smartphones for international markets. “If we’re not players in this generation we’re not going to be players in the next generation,” he said. “If we lay our cards right hopefully we will be in that business in the next generation.” Sony’s sprawling size has seen it criticised in the past for being too siloed, and Mr Hirai said he now saw a greater willingness to collaborate between businesses. Though he has frequently insisted that Sony would continue to sell televisions and the group is spinning off the TV business rather than selling it outright, he hinted at a slight modification. If it continued to struggle, he said, it would “make sense to work with another company so we’re not completely in the TV business.”
Ericsson warns over stifling effect of regulation
Ericsson will provide greater disclosure about the diminishing returns on the high level of research and development it made in Europe, to highlight how regulation is hampering the industry on the continent. The Swedish telecoms equipment maker is warning that Europe is at risk of falling behind other regions in the development of next generation telecoms technology, including the standards around so-called “5G” that will offer ubiquitous mobile broadband services. Ulf Ewaldsson, chief technology officer at Ericsson, said that the company would disclose more information in Europe such as the level of financial investment and returns it makes in the region. “We want to create a bigger agenda in Europe,” said Mr Ewaldsson, who added that the public sector needed to match private sector expenditure to ensure the future health of the technology and telecoms industry. “North America is driving LTE (4G) and new networks rather than Europe. We can do three to four years ahead but the public sector needs a longer term vision,” he said. Some €2.2bn of the €3.7bn spent by Ericsson on R&D is made in Europe, while the region accounts for about a fifth of global sales. The share of sales has decreased from 28 per cent five years ago. Ericsson is adding its voice to widespread worries about European competitiveness relative to stronger telecoms groups in countries such as the US, where lower level of competition and looser regulations have led to increased investment by the larger operators, which benefits equipment makers such as Ericsson. Telecoms executives have long complained to European politicians that regulations have artificially maintained too many rivals in each country, which has resulted in low prices for consumers but has hamstrung the industry in terms of investment. Ericsson is particularly worried about the development of the next generation of mobile technology, dubbed “5G”. Unlike 4G technology, which is being rolled out around Europe at present, 5G will not just aim to offer higher speeds for individual devices but is hoped to provide an “always on” service to link up the growing market for connected machines and appliances. Ericsson is already working with rival groups to set standards around 5G. Mr Ewaldsson said that 4G was never built for the machine-to-machine market – the so-called “internet of things” – but instead to provide a fast link to multiple screens for consuming data on tablets and smartphones. “5G can provide a low latency that is required, for example to ensure that signals being sent to cars are received,” he said.
Exor could make investments up to EUR 3bn Exor, the Italian holding company controlled by the Agnelli family, has EUR 3bn available for making acquisitions, La Repubblica Affari e Finanza reported. The report cited John Elkann, chairman, who said that Exor has EUR 2bn cash and it could ask banks for a further EUR 1bn in order to make acquisitions. He added that Exor is interested in companies which have global dimensions and projects.
It is likely that these targets are located in the US or Europe, concluded the report.
Source La Repubblica
Apple readying new software platform for the ‘Smart Home’
Apple is readying a new software platform that would turn the iPhone into a remote control for lights, security systems and other household appliances, as part of a move into the "internet of things". Apple plans to take on rivals Google and Samsung and make a "big play" in the world of smart home technology at its Worldwide Developer Conference on June 2 in San Francisco, according to people familiar with the matter. This will reinforce the view, held by some in Silicon Valley, that Jetsons-style home automation is the next frontier in technology as growth in smartphone sales begins to slow in developed markets. Apple’s coming move follows Google’s $3.2bn acquisition in January of Nest Labs, makers of internet-connected thermostats and smoke alarms, and Samsung’s recent debut of its Smart Home range of refrigerators, washing machines and TVs that can be controlled from its smartphones and watches. Apple’s integrated system will make it easier to set up and control new "smart home" devices. For example, a home’s lights might automatically come on when the owner enters the house, using their iPhone to wirelessly signal their arrival. Such a system was outlined in an Apple patent filing, published in November last year. The connected-home system will give Apple customers more reasons to buy several devices in its iOS family, by using the iPhone or iPad in conjunction with its Apple TV box, an upgraded version of which is expected to be released later this year, to control other domestic devices. Apple has been talking to a select group of other device makers whose smart home products will be certified to work with its forthcoming new system and then be sold in its retail stores. The scheme will be similar to Apple’s existing "Made for iPhone" label, given to compatible headphones, speakers and other accessories, but with a new brand and logo. Apple may also provide additional checks and assurances that certified products are not vulnerable to hackers. The Cupertino-based company was likely to emphasise the privacy protections built into its smart home system, one person familiar with Apple’s plans told the FT, given heightened sensitivity about technology companies’ access to personal information amid revelations about US intelligence agencies’ online surveillance programmes. Apple considers privacy a key advantage over Google, the person said, since Google relies on targeted advertising as its main source of income. In a regulatory filing last week, Google said it was preparing for a "multi-device future" where "we and other companies could be serving ads and other content on refrigerators, car dashboards, thermostats, glasses, and watches". An Apple spokesperson declined to comment. The company has been known to change its plans for WWDC at the very last minute. As it hunts for new sources of growth, Apple has in the past year launched CarPlay, which lets drivers show iPhone apps on a screen in their vehicle’s dashboard, and iBeacon, an indoor positioning system used by retailers, event venues and marketers to send messages based on location. CarPlay, iBeacon and the older AirPlay system, for beaming music to wireless speakers, all use Bluetooth technology to connect the iOS operating system to other nearby devices that are not made by Apple. A similar set of technologies will soon be extended to other parts of the home such as security systems, lighting and appliances – perhaps with the addition of a new component, near-field communication. Analysts expect NFC to be built into the next iPhone, as part of Apple’s rumoured plans for a new payments service. Apple’s retail stores will also play a key role in its plans for the internet of things. Its new retail chief, Angela Ahrendts, joined from fashion brand Burberry at the beginning of May with a broad mandate to overhaul its high-street and online presence. Apple stores already sell several smart home products in the $50 to $250 price range, including Nest thermostats, Dropcam wireless cameras, Philips Hue lightbulbs and Belkin WeMo switches, each of which is controlled by a separate iPhone app. As the smart home market is still in its very early days, Apple may face challenges in convincing consumers and technologists to use its platform. But Apple’s longstanding promise that its products "just work" when used together, thanks to its tight integration of hardware, software and cloud services, could give the iPhone maker an advantage over its rivals.