Asian Market Update: Japan, Asia market higher on US markets, Ukraine optimism; BoJ minutes show minority dissent

***Economic Data*** - (NZ) NEW ZEALAND APR TRADE BALANCE (NZ$): 534M V 634ME - (HU) HUNGARY MAY GKI BUSINESS CONFIDENCE: 4.8 V 7.7 PRIOR, CONSUMER CONFIDENCE: -18.4 V -15.3 PRIOR, ECONOMIC SENTIMENT: -1.2 V +1.7 PRIOR - (JP) BANK OF JAPAN (BOJ) RELEASES MINUTES FROM APR 30 MEETING

Market Snapshot (as of 03:30 GMT): - Nikkei225 +0.7%, S&P/ASX +0.2%, Kospi -0.2%, Shanghai Composite +0.2%, Hang Seng +0.3%, Jun S&P500 +0.1% at 1,898, Jun gold -0.1% at $1,294, Jun crude oil +0.3% at $104.08/brl

***Highlights/Observations/Insights*** With the US market ending last week on a strong note and a decisive result in the Ukrainian presidential elections, the Asian markets remained in positive territory. Asian equities were higher taking cues from the US housing data, raising investor confidence in the US. The USD traded in the upper ¥101 range early in the session, little changed from levels ended last week. After the BOJ released its minutes from April 30 meeting, the yen weakened slightly against the dollar around the 102 level, while the AUD/USD was little changed. The minutes indicated continued minority dissent regarding views on growth and inflation with three members wanted to revise outlooks to growth and inflation.

Investors expressed optimism that geopolitical tensions would ease after a couple of exit polls in Ukraine showed presidential candidate Poroshenko gained over 55 per cent of the vote. He later declared victory, stating that the election was over after the first round. The candidate is seeking stronger ties with the EU and improved relations with Russia while committed to peace in the region. Former Prime Minister Tymoshenko who came in at second with less than 15% of the votes said she would concede avoiding a subsequent runoff round.

***Fixed Income/Commodities/Currencies*** - (KR) South Korea sells KRW900B in 20-yr govt bonds; avg yield: 3.570%; bid-to-cover: 4.41x - (CN) PBoC gauges demand for 7-day and 14-day reverse repos, 14-day and 28-day repos as well as 91-day bill sales - USD/CNY: (CN) PBoC sets yuan mid-point at 6.1699 v 6.1681 prior (weakest setting since Sept 6th; 4th consecutive weaker setting) - (JP) BOJ offers to buy 400B in 5-10yr JGB and ¥20B in inflation-linked debt

***Speakers/Political/In the Papers*** - (CN) Shanghai new home sales -1% w/w; Avg new home prices +12.94% w/w - Uwin - (CN) Moody's: Sees China real GDP growth to edge into 6.5-7.5% range in 2014 and 2015 - (CN) SOHO China Chairman Pan Shiyi: Not confident with China's housing market; China's housing market is Titanic, will soon 'hit the iceberg' - Chinese press - (CN) China regulator has asked investment banks to submit additional IPO materials - Chinese press - (CN) China Securities Regulatory Commission (CSRC) announces additional 8 applicants for IPO; Total pre-IPO disclosure filings at 380 since Apr 19th - Chinese press - (CN) China Ministry of Fin researcher Jia Kang: China should accelerate legislation of property tax, to help squeeze the bubble in the housing market - Chinese press - (CN) China to allow banks to issue certificate of deposit to ease domestic interest rates regulations - financial press - (CN) China Pres Xi Jinping visited SAIC Motor Corp; Supports development new-energy vehicles in China - Chinese press - (CN) Shanghai Apr FDI rose 8.3% y/y to $1.74B vs 14.2% y/y rise in Mar - Shanghai Daily - (CN) China says it scrambled fighter jets after Japanese military aircraft entered China's unilaterally designated air defense identification zone on Saturday - (IN) India PM-Designate Modi: To have smaller cabinet - financial press - (TH) Thailand former PM Yingluck said to have been released from military detention, placed under house arrest - financial press - (JP) Survey finds Japan Abe Cabinet support for May rises by 1% to 49% - Asahi News - (JP) Survey finds Japan Abe cabinet support for May declines 3% to 53% - Nikkei News - (JP) BOJ Gov Kuroda: Confident about achieving BOJ's 2% inflation target next FY - Nikkei interview - (EU) European Elections: EU-wide turnout in European Elections at 43%, similar to 2009 levels - financial press - (UR) Initial exit polls indicate Ukraine candidate Poroshenko wins first round of presidential elections - financial press - (UR) French Govt: In a phone conversation between the leaders of France, Germany, and Russia on Saturday, Pres Putin reiterated he would respect the outcome of the Ukraine elections on Sunday

***Equities*** US markets: - GM: NHTSA reportedly says it's likely that there are more than the 13 deaths that GM has acknowledged that are attributable to the ignition switch defect - press - AZN: Pfizer said to be near abandoning bid for AstraZeneca - financial press - AAPL: Apple said to have requested ban on several Samsung devices following patent lawsuit - financial press

Notable movers by sector: - Consumer Discretionary: BYD Corp 002594.CN +7.9% 1211.HK -3.0% (private placement plan); Beijing Utour International Travel Service 002707.CN +4.4%, China CYTS Tours Holding 600138.CN +2.9% (Tuniu traded up by over 35% in US on Friday) - Energy: Sundance Energy Australia SEA.AU +3.0% (acquisition) - Industrials: Qingdao Haier 600690.CN +0.4%, Midea Group 000333.CN +1.1% (on track to post strong earnings) - Technology: Sony Corp 6758.JP +3.7%, Shanghai Oriental Pearl 600832.CN -0.6% (JV agreements) - Healthcare: Sino Pharmaceutical 1177.HK +5.9% (Q1 results) - Utilities: TEPCO 9501.JP +1.6% (announces LNG delivery)

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Draghi Convenes Mountain Retreat as ECB Contemplates New Horizon 2014-05-24 23:01:01.0 GMT

(For more on European debt, see here.)

By Jeff Black and Alessandro Speciale May 25 (Bloomberg) -- When Mario Draghi secludes himself with Europe’s top minds in central banking this week he won’t be able to escape one question: What’s next? After all but promising that he’ll ease monetary policy in June, the European Central Bank president must now manage market expectations as banks from Goldman Sachs Group Inc. to Societe Generale SA speculate whether he’ll go further and deploy large- scale asset purchases in coming months. Draghi will today open the first ECB Forum, a gathering of policy makers and academics to be held annually in the mountains northwest of Lisbon. What Draghi says in three appearances over the next two days could provide clues on how he plans to overcome the stubbornly-low inflation that’s threatening the euro area’s return to economic health. Officials have said they’re working on a package of possible measures for the June 5 policy meeting, including interest-rate cuts and liquidity injections, while holding out the prospect of quantitative easing as a more- powerful option. “An important part of the package will be the accompanying words,” said Francesco Papadia, a former director general of market operations at the ECB and now chairman of Prime Collateralized Securities in Frankfurt. “If he says that the council has given a first installment of measures and will be ready to do more if needed, especially when it comes to bringing inflationary expectations more quickly toward 2 percent, this could give more weight to the easing package.”

Big Names

Draghi will host a dinner today and give a keynote address at 9 a.m. local time tomorrow at the event in Sintra, Portugal, which the bank is keen to promote as a European answer to the U.S. Federal Reserve’s annual monetary conference in Jackson Hole, Wyoming. He’ll wrap up with closing remarks in the afternoon on May 27. Big-name thinkers on monetary policy such as Nobel Laureate Paul Krugman and Princeton University’s Markus Brunnermeier will address the getaway at Penha Longa, a resort that traces its origins back to a 14th century monastery. They’ll be joined by policy makers from International Monetary Fund Managing Director Christine Lagarde to Eurogroup President Jeroen Dijsselbloem. ECB Executive Board members Vitor Constancio, Peter Praet and Benoit Coeure will chair panel discussions.

Falling Rates

The ECB may use the occasion to elaborate on what Draghi meant when he told reporters on May 8, after leaving rates on hold, that the Governing Council is “dissatisfied” with the outlook for consumer prices and “comfortable” with action in June. Inflation has been below 1 percent since October, less than half the ECB’s goal, and economies from Italy to the Netherlands contracted in the first quarter. So far, investors have taken him at his word. The overnight rate that banks expect to charge each other a year from now, as measured by Eonia forward contracts linked to ECB meetings, was at 0.05 percent on May 23. It was at 0.14 percent on May 7, a day before the last rate decision. The euro fell to a three- month low of just above $1.36, after climbing as high as $1.3993 on May 8. Ninety percent of economists in the Bloomberg Monthly Survey predict the European Central Bank president will ease policy in June. Most forecast a simultaneous cut in the benchmark rate, now at 0.25 percent, and the deposit rate, which is at zero. That would make the ECB the first major central bank to charge for holdings lenders’ excess cash overnight. Denmark ended its experiment with negative rates last month.

Combined Measures

A much lower likelihood is given to asset purchases, which were seen by just 8 percent of the economists in the survey. While Draghi has said that is a policy option, officials have so far stopped short of the quantitative easing programs conducted by the Fed, Bank of England and Bank of Japan. The ECB is currently considering a combination of measures, Praet and fellow Executive Board member Yves Mersch said this month. A package could include a negative deposit rate and a liquidity injection tied to provisos that banks lend the money on to the real economy, Praet said. ECB Governing Council member Jens Weidmann, the head of Germany’s Bundesbank, said last week that he hasn’t yet agreed on any specific measures and the decision will depend on inflation projections rather than the current rate. Draghi said last month that a worsening of the medium-term inflation outlook would justify broad-based asset purchases. The ECB’s Survey of Professional Forecasters published on May 15 showed a downgrade in inflation projections and the central bank’s own staff forecasts, which policy makers will see at their June 5 meeting, may do the same.

Body Language

Even so, that won’t be enough to trigger quantitative easing just yet, according to Michala Marcussen, global head of economics at Societe Generale in London. “We believe that a more significant deterioration of the growth and inflation outlook is required for the ECB to adopt a large-scale, broad-based asset purchase program in June,” she said. “We also expect the ECB to keep the door open for more should inflation continue to surprise to the downside.” While investors are focused on what the ECB will do on June 5, they’ll also keep looking for clues as to longer-term plans, said Huw Pill, chief European economist at Goldman Sachs in London. “Market participants will focus on whether the new package is presented as another step along an inexorable path toward the introduction of large-scale asset purchases later in the year,” Pill said. “Draghi’s tone and body language in making the announcement are likely to weigh heavily on market sentiment.”

For Related News and Information: Draghi Says See You in June as ECB Clears Decks for Easing NSN N59K996JIJUX <GO> Euro-Area Services Surge Aids Revival as Manufacturing Cools NSN N5YY1J6K50YN <GO> What Lurks Beneath? Market Calm Unnerves Global Central Bankers NSN N5XDTL6JIJV3 <GO> Search for central bank stories: NSE MONETARY POLICY <GO> Stories on ECB interest rates: STNI ECBACTION <GO> Stories related to the ECB: NI ECB <GO>

To contact the reporters on this story: Jeff Black in Sintra, Portugal at +49-69-92041-205 or jblack25@bloomberg.net; Alessandro Speciale in Sintra, Portugal at +49-69-9204-1201 or aspeciale@bloomberg.net To contact the editors responsible for this story: Craig Stirling at +44-20-7673-2841 or cstirling1@bloomberg.net Paul Gordon

Valeant must up Allergan bid to $180-$200/share: JPMorgan survey

(Reuters) - When Valeant Pharmaceuticals International Inc (VRX.TO) raises its offer for Allergan Inc (AGN.N) next week as it has indicated it will, it needs to hit the range of $180 to $200 per share, according to a JPMorgan survey of investors.

Valeant and activist investor Bill Ackman made a $47 billion cash and stock offer for Botox maker Allergan on April 22 but Allergan is fighting the deal, saying it is better off alone. Allergan shares are currently trading above the $153 per share offer price and were up 1.3 percent on Friday at $166.

Allergan rejected Valeant's offer on May 19, saying that Valeant's business model of serial acquisitions is not sustainable. Valeant responded by saying it plans to raise its offer on May 28 and will hold a webcast.

In a JPMorgan survey of 123 buyside investors between May 16 and May 20, about 60 percent of respondents indicated Valeant would need to offer in the $181-$200 range for Allergan to be acquired, according to a May 23 research note. The survey was conducted as Allergan and Valeant both were meeting with investors about their proposals.

About two-thirds of those surveyed believed Valeant's offer will be successful.

"We feel confident that VRX can structure such a deal (using a larger cash component, CVR, collar, etc.) which would still be highly accretive," JPMorgan analyst Chris Schott said in the research note.

Earlier this week, Valeant Chief Executive Michael Pearson told Reuters that investors want the offer to include more equity, not cash, which some Wall Street analysts have said was needed to win over Allergan shareholders.

Valeant shares were up 2 percent at $133.46 in New York Stock Exchange trading on Friday morning.

Valeant was not immediately available for comment.

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Qatar Made ~EU9.7b on Volkswagen-Porsche Investment: Spiegel 2014-05-25 11:38:34.337 GMT

By Cornelius Rahn May 25 (Bloomberg) -- Value of shrs it still holds rose ~EU8.5b since 2009, while state made EU1.2b profit from earlier sales, Der Spiegel reports, citing unidentified people in finance industry involved in original transactions. * Qatar still has 23m VW prefs, which it bought at avg. price of EU63; shrs currently valued at EU190, giving EU3b gain: Spiegel * Qatar also holds 17% of VW voting shrs which were purchased at avg. EU80, now trade at EU190; value increased by EU5.5b: Spiegel * Qatar sold 1/2 of pref shrs in Nov. 2009 at profit of EU750m; last yr sold Porsche shrs back to Porsche and Piech families at ~EU500m profit: Spiegel * Deutsche Bank’s Qatari investor Hamad Bin Jassim Bin Jabor Al-Thani targets supervisory bd post in medium term: Spiegel

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

To contact the reporter on this story: Cornelius Rahn in Berlin at +49-30-70010-6212 or crahn2@bloomberg.net To contact the editor responsible for this story: Kenneth Wong at +49-30-70010-6215 or kwong11@bloomberg.net