*PUTIN IS PREPARING TO INVADE EASTERN UKRAINE: ESTONIAN DEF MIN
*ESTONIAN DEFENSE MINISTER REINSALU COMMENTS ON RUSSIA IN E-MAIL
Early premarket gappers
Gapping up: ULTA +7.2%, MFRM +6.2%, LMCA +3.5%, DK +3.1%, ANAC +3.1%, TSCO +1.7%, OUTR +1.3%, SI +1.3%, MT +1%, EGL +0.9%, FSYS +0.7%, BP +0.5%
Gapping down: ARO -14.4%, ZBB -13.5%, RPTP -10.8%, ZGNX -7.4%, BODY -6.7%,PLUG -5.9%, HIBB -5.8%, FCEL -4.5%, DYAX -3.9%, TICC -3.5%, ZUMZ -2.8%,GIS -2.6%, OMER -2.4%, CSIQ -2.1%, OPTT -2%, JKS -1.7%, FXEN -1.7%, X-1.6%, ITMN -1.1%
Handelsbanken, SEB Cut to Sell at UBS on Tighter Regulation
2014-03-14 06:53:09.562 GMT
By Veronica Ek
March 14 (Bloomberg) -- UBS expects positive earnings
momentum to become less relevant share price driver as
regulatory risks come back to fore ahead of Swedish general
election, in note.
* While regulatory agenda to date has been targeted,
transparent, easy to re-price, UBS says it fears 2014
regulatory agenda will be less-targeted, untransparent, hard
to re-price
* SEB most disrupted by new target capital levels relative to
UBS capital estimates, management’s targets
* Handelsbanken valuation at 1.9x 2014E NAV looks “lofty”
* Removes Swedbank from key call list; stock remains top pick
in Nordics as stock represents “extremely attractive”
risk/reward
* Keeps Nordea at buy, raises PT to SEK101 fron SEK95
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Veronica Ek in Stockholm at +46-8-610-0722 or
vek@bloomberg.net
To contact the editors responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net
Cormac Mullen
2014-03-14 06:53:09.562 GMT
By Veronica Ek
March 14 (Bloomberg) -- UBS expects positive earnings
momentum to become less relevant share price driver as
regulatory risks come back to fore ahead of Swedish general
election, in note.
* While regulatory agenda to date has been targeted,
transparent, easy to re-price, UBS says it fears 2014
regulatory agenda will be less-targeted, untransparent, hard
to re-price
* SEB most disrupted by new target capital levels relative to
UBS capital estimates, management’s targets
* Handelsbanken valuation at 1.9x 2014E NAV looks “lofty”
* Removes Swedbank from key call list; stock remains top pick
in Nordics as stock represents “extremely attractive”
risk/reward
* Keeps Nordea at buy, raises PT to SEK101 fron SEK95
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Veronica Ek in Stockholm at +46-8-610-0722 or
vek@bloomberg.net
To contact the editors responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net
Cormac Mullen
US Market Closed Lower on Ukraine worries & more warning from China, Tech sector lead the move to the dowmside, JPY Moved also pressured the market...Copper continue to trade lower -1,3% @ $2,923/lb...VIX @ 16,22 +12,1%..volume were below avrage @ 678mil shares...Asian shares lower for same reasons...more news in China on coporate default (Haixin - Steel producer)has formally defaulted on debt...Bk of Japan releaased the minutes from its feb meeting...Nikkei -3,30% HS-1,17%...Shanghai -0,80%
Eur$ 1,3856 S&P Fut +0,01% European Fut FTSE indicated -0,36%
- BofAML Cuts China, Brazil, Korea Ratings as Pessimistic on EM {NSN N2EOPC6S972Z <go>}
Keep an eye on :
- AI FP : Air Liquide to Invest EU100m in R&D in France: Le Figaro
- BMPS IM : BMPS attracts interest of JC Flowers - Il Messagero
- CA FP : Carrefour could ditch IPO for up to USD 2.1bn stake sale to investors including Abilio Diniz, Tarpon
- DAI GY : Daimler to Sell 500m Yuan of Bonds in China
- DSY FP : Dassault Systemes extends tender offer for Accelrys to 25 March
- EDF FP : Belgium, GDF Suez, EDF in Agreement on Nuclear Plant, Tijd Says
- FUM1V FH : Fortum's Swedish energy grid sees interest from consortium of Swedish energy companies and China State Grid
- GWI1 GY : Gerry Weber 1Q Revenue Rises 3%; Sticks to 2014 Forecast
- NOK1V FH : Nokia to Name Rajeev Suri as CEO, Helsingin Sanomat Reports
- SPIE FP : Spie Shareholders Mandate Banks for IPO, Les Echos Says
Haixin default to test China’s willpower for market reform
When Chinese Premier Li Keqiang said defaults in the Chinese economy were “unavoidable” at his annual press conference on Thursday, he was probably not talking specifically about debt-laden Haixin Steel in northern China’s arid Shanxi province.
But Haixin may become an early test of Mr Li’s determination to see more market-oriented behaviour in China’s state-dominated economy.
The private steel mill failed to pay back overdue bank loans last week in a default that has been felt far beyond the local economy where Haixin is entangled in a web of so-called triangular debt and shadow banking activity.
News of the default was cited by Chinese steel traders as one reason for the jitters that ran through global iron ore markets this week and led to prices dropping to their lowest level since the aftermath of the global financial crisis in 2009.
A general slowdown in Chinese growth is also dragging on commodity prices as factory production, investment and retail sales figures released by the government on Thursday showed a much weaker performance in the first two months of the year than many had expected.
If the slowdown in the world’s second-largest economy continues it will limit Beijing’s room for manoeuvre and could sap its determination to reform.
But, according to people familiar with the government’s thinking, Mr Li’s administration is intent on allowing some high-profile defaults to serve as a warning to China’s profligate lenders in both the formal and shadow banking sectors.
Haixin might just be one of these test cases as it ticks many of the boxes on the list of evils in the economy that the government has pledged to address.
Chinese steel mills are struggling with severe overcapacity, heavy debt loads and a softening market, and more than half of them are losing money by some estimates.
Haixin does not rank among the top 30 mills in China, so officials may be confident that letting it close would be enough to scare the market without posing any systemic risk.
They might be too optimistic. Steel traders fear Haixin is deeply entangled in triangular debts with coal suppliers and other local companies. Haixin was the lead investor, together with other local private companies in a credit guarantee company that backed other companies’ debts for a fee. Loosely-regulated credit guarantee companies are supposed to keep enough capital on hand for multiple defaults, but few are prepared for a cascade of bad loans.
In 2012, local governments and banks offered bridge loans to 62 different companies near the eastern city of Hangzhou to keep them afloat after the collapse of a single property developer at the centre of a web of reciprocal loan guarantees.
beyondbrics
Beyond brics
Emerging markets: News and comment from more than 40 emerging economies
Haixin’s problems have been well-flagged. A December report by the banking regulator’s local branch warned banks against lending to steel mills that had borrowed from multiple banks. It specifically named Haixin in an unusual public shaming. The Shanxi branch of Agricultural Bank of China ordered the local branch to stop lending to Haixin two years ago. BHP Billiton cut off iron ore supply about 18 months ago.
Haixin has also been repeatedly censured over the years for its environmental practices and that puts it directly in the line of fire in China’s newly-declared “war on pollution”.
The struggle with debt – its own, and other people’s – has plagued Haixin for many years.
In 2003, a heavily indebted former classmate and life-long friend killed Haixin’s founder, Li Haicang, with a single shot from a sawn-off shotgun, after Li refused to pay the requested amount for land occupied by the classmate’s defunct paper mill. His son Li Zhaohui, then 22, cut short his punk hairstyle and began running the business.
The younger Li soon came up against Chinese policies designed to forcibly consolidate the steel sector, policies that have resulted in state owned companies, which can access low-interest rate loans from state-run banks, taking over private companies which cannot.
Forced to expand to meet minimum size requirements or face takeover by state competitors, private companies, particularly steel mills and coal miners, have borrowed far too much and are now struggling to survive. Meanwhile, the policies have contributed to the overcapacity that now plague many of China’s industrial sectors.
In 2008, Shanxi province released a plan for its steel industry that envisioned state-owned Taiyuan Steel, the nation’s largest stainless steel producer, taking over all the other provincial mills. Haixin briefly shut in 2009, but got back on its feet after a national stimulus plan revved up Chinese steel demand. Mr Li planned to expand to 10m tonnes of steel a year, to meet the threshold for issuing bonds so he could stay independent, but never managed to reach that target.
By last summer, Mr Li’s options were narrowing. He sold a mining subsidiary to get cash, local land records show, but it was not enough.
Haixin default to test China’s willpower for market reform
When Chinese Premier Li Keqiang said defaults in the Chinese economy were “unavoidable” at his annual press conference on Thursday, he was probably not talking specifically about debt-laden Haixin Steel in northern China’s arid Shanxi province.
But Haixin may become an early test of Mr Li’s determination to see more market-oriented behaviour in China’s state-dominated economy.
The private steel mill failed to pay back overdue bank loans last week in a default that has been felt far beyond the local economy where Haixin is entangled in a web of so-called triangular debt and shadow banking activity.
News of the default was cited by Chinese steel traders as one reason for the jitters that ran through global iron ore markets this week and led to prices dropping to their lowest level since the aftermath of the global financial crisis in 2009.
A general slowdown in Chinese growth is also dragging on commodity prices as factory production, investment and retail sales figures released by the government on Thursday showed a much weaker performance in the first two months of the year than many had expected.
If the slowdown in the world’s second-largest economy continues it will limit Beijing’s room for manoeuvre and could sap its determination to reform.
But, according to people familiar with the government’s thinking, Mr Li’s administration is intent on allowing some high-profile defaults to serve as a warning to China’s profligate lenders in both the formal and shadow banking sectors.
Haixin might just be one of these test cases as it ticks many of the boxes on the list of evils in the economy that the government has pledged to address.
Chinese steel mills are struggling with severe overcapacity, heavy debt loads and a softening market, and more than half of them are losing money by some estimates.
Haixin does not rank among the top 30 mills in China, so officials may be confident that letting it close would be enough to scare the market without posing any systemic risk.
They might be too optimistic. Steel traders fear Haixin is deeply entangled in triangular debts with coal suppliers and other local companies. Haixin was the lead investor, together with other local private companies in a credit guarantee company that backed other companies’ debts for a fee. Loosely-regulated credit guarantee companies are supposed to keep enough capital on hand for multiple defaults, but few are prepared for a cascade of bad loans.
In 2012, local governments and banks offered bridge loans to 62 different companies near the eastern city of Hangzhou to keep them afloat after the collapse of a single property developer at the centre of a web of reciprocal loan guarantees.
beyondbrics
Beyond brics
Emerging markets: News and comment from more than 40 emerging economies
Haixin’s problems have been well-flagged. A December report by the banking regulator’s local branch warned banks against lending to steel mills that had borrowed from multiple banks. It specifically named Haixin in an unusual public shaming. The Shanxi branch of Agricultural Bank of China ordered the local branch to stop lending to Haixin two years ago. BHP Billiton cut off iron ore supply about 18 months ago.
Haixin has also been repeatedly censured over the years for its environmental practices and that puts it directly in the line of fire in China’s newly-declared “war on pollution”.
The struggle with debt – its own, and other people’s – has plagued Haixin for many years.
In 2003, a heavily indebted former classmate and life-long friend killed Haixin’s founder, Li Haicang, with a single shot from a sawn-off shotgun, after Li refused to pay the requested amount for land occupied by the classmate’s defunct paper mill. His son Li Zhaohui, then 22, cut short his punk hairstyle and began running the business.
The younger Li soon came up against Chinese policies designed to forcibly consolidate the steel sector, policies that have resulted in state owned companies, which can access low-interest rate loans from state-run banks, taking over private companies which cannot.
Forced to expand to meet minimum size requirements or face takeover by state competitors, private companies, particularly steel mills and coal miners, have borrowed far too much and are now struggling to survive. Meanwhile, the policies have contributed to the overcapacity that now plague many of China’s industrial sectors.
In 2008, Shanxi province released a plan for its steel industry that envisioned state-owned Taiyuan Steel, the nation’s largest stainless steel producer, taking over all the other provincial mills. Haixin briefly shut in 2009, but got back on its feet after a national stimulus plan revved up Chinese steel demand. Mr Li planned to expand to 10m tonnes of steel a year, to meet the threshold for issuing bonds so he could stay independent, but never managed to reach that target.
By last summer, Mr Li’s options were narrowing. He sold a mining subsidiary to get cash, local land records show, but it was not enough.
Carrefour could ditch IPO for up to USD 2.1bn stake sale to investors including Abilio Diniz, Tarpon
Carrefour (EPA: CA), the France-based supermarket operator, is considering a private stake sale of up to BRL 5bn (USD 2.1bn) instead of an IPO for its Brazilian operations, according to a newswire report.
Brazilian entrepreneur Abilio Diniz is partnering with a number of investors to invest in Carrefour, according a person with direct knowledge of the situation.
The person told Reuters that Carrefour, which is also the second largest retail chain in Brazil, sees the search for a private investor as more viable than an IPO at the present time.
Diniz, who left Companhia Brasileira de Distribuicao – CBD (PCAR4: BZ) last year via the sale of a large stake in the company, has allegedly joined forces with Tarpon Investimentos and a sovereign wealth fund which the person declined to name, to invest in Carrefour. Negotiations are at a very advanced stage, according to the person.
A second source said the deal could include a stake sale in Carrefour’s wholesale unit Atacadao.
According to a Portuguese-language version of the Reuters item, the second source said Carrefour could raise at least BRL 4bn (USD 1.6bn) in the transaction.
Source Newswire Round-up
BFW 03/14 02:36 *BOFA RAISES POLAND STKS TO OVERWEIGHT VS MARKETWEIGHT
BFW 03/14 02:35 *BOFA RAISES INDONESIA STOCKS TO OVERWEIGHT VS MILD UNDERWEIGHT
BFW 03/14 02:35 *BOFA RAISES INDIA STOCKS TO MILD OVERWEIGHT VS MARKETWEIGHT
BFW 03/14 02:35 *BOFA CUTS KOREA STOCKS TO MARKETWEIGHT VS OVERWEIGHT
BFW 03/14 02:34 *BOFA CUTS CHINA STOCKS TO MARKETWEIGHT VS OVERWEIGHT
BN 03/14 02:34 *BOFA CUTS CHINA STOCKS TO MARKETWEIGHT VS OVERWEIGHT
BN 03/14 02:34 *BOFA CUTS KOREA STOCKS TO MARKETWEIGHT VS OVERWEIGHT
BN 03/14 02:34 *BOFA RAISES INDIA STOCKS TO MILD OVERWEIGHT VS MARKETWEIGHT
BN 03/14 02:34 *BOFA RAISES INDONESIA STOCKS TO OVERWEIGHT VS MILD UNDERWEIGHT
BN 03/14 02:34 *BOFA RAISES POLAND STKS TO OVERWEIGHT VS MARKETWEIGHT
BFW 03/14 02:35 *BOFA RAISES INDONESIA STOCKS TO OVERWEIGHT VS MILD UNDERWEIGHT
BFW 03/14 02:35 *BOFA RAISES INDIA STOCKS TO MILD OVERWEIGHT VS MARKETWEIGHT
BFW 03/14 02:35 *BOFA CUTS KOREA STOCKS TO MARKETWEIGHT VS OVERWEIGHT
BFW 03/14 02:34 *BOFA CUTS CHINA STOCKS TO MARKETWEIGHT VS OVERWEIGHT
BN 03/14 02:34 *BOFA CUTS CHINA STOCKS TO MARKETWEIGHT VS OVERWEIGHT
BN 03/14 02:34 *BOFA CUTS KOREA STOCKS TO MARKETWEIGHT VS OVERWEIGHT
BN 03/14 02:34 *BOFA RAISES INDIA STOCKS TO MILD OVERWEIGHT VS MARKETWEIGHT
BN 03/14 02:34 *BOFA RAISES INDONESIA STOCKS TO OVERWEIGHT VS MILD UNDERWEIGHT
BN 03/14 02:34 *BOFA RAISES POLAND STKS TO OVERWEIGHT VS MARKETWEIGHT
BofAML Cuts China, Brazil, Korea Ratings as Pessimistic on EM
2014-03-14 03:08:00.766 GMT
By Weiyi Lim and Argin Chang
March 14 (Bloomberg) -- BofAML reiterates pessimism on
emerging, Asia markets in report today, citing potential
reversal of carry trade, slowdown in China with heightened
probabilities of liquidation and defaults and geo-political
contraints.
* Says EM equities “not out of the woods” on financial
vulnerability
* Downgrades China to marketweight from overweight, citing
growth downgrades, debt defaults and yuan issues
* Cuts Korea to marketweight from overweight
* Cuts Brazil to marketweight from mild overweight
* Also cuts Hong Kong to mild underweight vs mild overweight
on China slowdown, high bank exposure to China, strong
currency and property market risk
* NOTE: China H-Shares Poised for Bear Market as Economy
Concerns Deepen {NSN N2EKVH6TTDS2 <go>}
For Related News and Information:
First Word scrolling panel: {FIRST<GO>}
First Word newswire: {NH BFW<GO>}
To contact the reporter on this story:
Weiyi Lim in Singapore at +65-6212-1886 or
wlim26@bloomberg.net
To contact the editor responsible for this story:
Chan Tien Hin at +60-3-2302-7859 or
thchan@bloomberg.net
2014-03-14 03:08:00.766 GMT
By Weiyi Lim and Argin Chang
March 14 (Bloomberg) -- BofAML reiterates pessimism on
emerging, Asia markets in report today, citing potential
reversal of carry trade, slowdown in China with heightened
probabilities of liquidation and defaults and geo-political
contraints.
* Says EM equities “not out of the woods” on financial
vulnerability
* Downgrades China to marketweight from overweight, citing
growth downgrades, debt defaults and yuan issues
* Cuts Korea to marketweight from overweight
* Cuts Brazil to marketweight from mild overweight
* Also cuts Hong Kong to mild underweight vs mild overweight
on China slowdown, high bank exposure to China, strong
currency and property market risk
* NOTE: China H-Shares Poised for Bear Market as Economy
Concerns Deepen {NSN N2EKVH6TTDS2 <go>}
For Related News and Information:
First Word scrolling panel: {FIRST<GO>}
First Word newswire: {NH BFW<GO>}
To contact the reporter on this story:
Weiyi Lim in Singapore at +65-6212-1886 or
wlim26@bloomberg.net
To contact the editor responsible for this story:
Chan Tien Hin at +60-3-2302-7859 or
thchan@bloomberg.net
Olam is à commodities trading firm
+------------------------------------------------------------------------------+
Temasek Unit Offers to Buy Olam in $4.2 Billion Cash Deal (2) 2014-03-14 03:51:53.450 GMT
(Updates share price in fifth paragraph.)
By Michelle Yun and Jonathan Burgos March 14 (Bloomberg) -- A Temasek Holdings Pte unit offered to buy Olam International Ltd. in a bid that values the commodity trader at S$5.3 billion ($4.2 billion), about 16 months after it helped stave off an attack by short-seller Carson Block. Breedens Investments Pte is offering S$2.23 cash per share, the Singapore-based company said today in a statement, a 12 percent premium to Olam’s last closing price of S$1.995. It’s also making an offer for Olam’s outstanding bonds and warrants. Temasek, Singapore’s state-owned investment firm, became the largest investor in Olam after concerns raised by Block in November 2012 caused the stock to plummet. The bid for Olam, one of the world’s top three coffee and rice traders, highlights growing interest in agricultural investments as rising global populations boost food demand. “Temasek is already a large holder of Olam so they probably know the business better than everybody else,” said Robert Aspin, the Singapore-based head of equity investment strategy at Standard Chartered Plc. “The fact that they are willing to pay a premium is indicative of the value that they see in the underlying business.” Olam gained 11 percent to S$2.21 as of 11:09 a.m. in Singapore as it resumed trading after the stock was halted yesterday. Trading volume on March 12 was 16.2 million shares, or 3.6 times the average daily volume in the previous three months, according to data compiled by Bloomberg.
Group Support
Breedens also has an agreement with a group including Kewalram Singapore Ltd., Olam’s founding family shareholder, and 10 Olam executives including Chief Executive Officer Sunny Verghese to not tender their shares until six months after the offer closes, Breedens said in a statement. All totaled they hold 52.5 percent of Olam stock. Kewalram and three members of key management have agreed to sell a 5.6 percent stake in Olam in acceptance of the offer. Credit Suisse Group AG, DBS Group Holdings Ltd., and United Overseas Bank Ltd. advised Breedens. Olam has rallied 30 percent this year in Singapore through to March 12, compared with a 2.2 percent decline in the benchmark Straits Times Index. The stock is set for its seventh weekly increase amid a rise in farm commodity prices. The S&P GSCI Agricultural Index has advanced 14 percent this year, with price surges in coffee and cocoa.
Keep Listing
Breedens doesn’t plan to make any major changes to Olam’s businesses or terminate employees. It also intends to keep Olam as a listed company, unless the minimum float requirements aren’t met, it said. Olam is a supplier and processor of agricultural products and food ingredients across 16 platforms in 65 countries. “We believe a successful offer will provide Olam with a stronger and more stable shareholder base to support Olam’s strategy and business model for the long term,” Breedens Director David Heng said in the statement. The offer by the Temasek unit comes after Cofco Corp., China’s largest state-owned food company, agreed last month to buy to 51 percent of Dutch grain trader Nidera BV. In a separate deal, Noble Group Ltd., Asia’s biggest commodity trader by sales, is in talks to potentially form a joint venture around its agriculture unit with Cofco.
Block’s Bet
Block said in November 2012 he was betting against Olam because he questioned the trader’s accounting methods and asset purchases, pushing the stock to a more than three-year low in December 2012. Olam rejected the assertions by Block and his research firm Muddy Waters LLC. Block today declined to comment. “Olam has been oversold following the issues raised by Muddy Waters and has bounced back strongly as the company addressed those concerns,” Alan Richardson, a Hong Kong-based money manager at Samsung Asset Management, said by phone before the announcement. As well as adding Olam shares after the Block allegations, Temasek also backed a $750 million bond sale by the commodity trader. Olam said in December 2012 it planned to sell bonds and warrants to address any “lingering doubts” about its finances. The investment firm agreed at the time to buy any rights not taken up by other investors. Temasek holds 24.6 percent of Olam through its units Breedens and Aranda Investments Pte, and the founding family has a 20.2 percent stake, according to today’s statement.
For Related News and Information: Olam’s Second-Quarter Profit Falls 13% as Sales Volumes Fell NSN N0YKP66K50YU <GO> Olam Survives Muddy Waters in Bond Comeback: Corporate Financ NSN MXW4AS6K50XV <GO> Olam Drops Profit Target as It Cuts Spending After Review NSN MLUW7D6JTSEA <GO> Top Stories:TOP<GO> Global Commodity Prices:GLCO<GO>
--With assistance from Elisabeth Behrmann in Sydney, Nikolaj Gammeltoft in New York and Klaus Wille in Singapore.
To contact the reporters on this story: Michelle Yun in Hong Kong at +852-2977-4643 or myun11@bloomberg.net; Jonathan Burgos in Singapore at +65-6212-1156 or jburgos4@bloomberg.net To contact the editors responsible for this story: Jason Rogers at +65-6231-3673 or jrogers73@bloomberg.net Andrew Hobbs at +61-2-9777-8642 or ahobbs4@bloomberg.net Madelene Pearson, Iain Wilson
Asian Market Update: Nikkei down 3% as geopolitical jitters and China growth concerns remain in the spotlight
***Economic Data*** - (SG) SINGAPORE Q4 FINAL UNEMPLOYMENT RATE: 1.8% V 1.8% PRELIM - (NZ) NEW ZEALAND FEB NON-RESIDENT BOND HOLDINGS: 63.3% V 63.7% PRIOR - (NZ) NEW ZEALAND FEB BUSINESS MANUFACTURING PMI: 56.2 V 56.2 PRIOR - (CL) CHILE CENTRAL BANK CUTS OVERNIGHT RATE TARGET BY 25BPS TO 4.00%; AS EXPECTED - (PE) PERU CENTRAL BANK LEAVES REFERENCE RATE UNCHANGED AT 4.00%, AS EXPECTED - NPD: Feb total US video game sales $810M, +9% y/y
Market Snapshot (as of 03:30 GMT): - Nikkei225 -2.9%, S&P/ASX -1.3%, Kospi -0.6%, Shanghai Composite -0.5%, Hang Seng -1.1%, Mar S&P500 +0.1% at 1,841, Apr gold flat at $1,371, Apr crude oil flat at $98.17/brl
***Highlights/Observations/Insights*** - Asian indices are on the back foot again after yesterday's bounce, with familiar themes of China slowdown and Ukraine-Russia standoff sending more investors to the sidelines. Disappointing multi-year low rates of growth in China's industrial production, retail sales, and fixed-asset investment are illuminating that the official 7.5% GDP target may in fact be optimistic, explaining why several mainland officials were quick to underscore it is a "flexible" or "elastic" forecast. Key themes outlined by the NPC this week - reining in credit, fighting pollution, and even stamping out lavish gifts - are all conceivably growth-negative. Chinese press reports today noting a senior govt official said people should not panic if growth is below target, with 7% still meeting employment objectives. ANZ economists also note the latest Feb data puts Q1 GDP below 7.5%. - Corporate defaults also appear to be a new thorn on the side of China economy, weighing further on confidence in the immediate-term. An FT report today noted a second company in China - Haixin Iron and Steel (second largest steel maker in Shanxi Province) - has formally defaulted on debt. Questions to confirm the default in a phone call to the company were unanswered. AUD/USD is bumping along its US session lows near $0.9010, while NZD/USD has backed away from its overnight $0.86 highs to trade around $0.8540.
- With 3 days to the controversial referendum in Crimea, neither side appears to be backing down from its firmly entrenched position. Ukraine interim PM Yatsenyuk, who is travelling to the US this week, addressed the UN Security Council with a plea for help. He also spoke directly to the Russia envoy Churkin in Russian, asking if Russia wants war or to return to talks. Churkin remained resolute in opposition to the overthrow of Yanukovych and failure to follow the Feb 21st agreement, but also responded that Russia does not want war. - Separately, US govt rejected Ukraine's plea for military assistance in the form of weaponry, but said it will continue to consider the request based on the situation on the ground. Meanwhile in eastern Ukraine's industrial city of Donetsk, pro-Russian protesters clashed with pro-Ukraine marchers, with 2 reported fatalities and the possibility of a pretense for Russia to protect its interests outside of Crimea.
- Bank of Japan released the minutes from its February meeting when it extended/expanded its 0.1% fixed rate lending scheme. Most members agree economy remains on recovery path and that the loans measure would further help escape from deflation, but were also quick to point out that it should not be taken as adjustment of key policy. Recall the rally after that decision was widely attributed to perception that the BOJ is signalling it is prepared to undergo more easing - a perception that was negated with this week's fairly neutral statement. USD/JPY hit a low of 101.60 in Asia, around the US-session lows, while Nikkei225 is leading regional markets to the downside with a 3% slump below 14,400, also its 3-week lows.
***Fixed Income/Commodities/Currencies*** - (AU) Australia MoF (AOFM) sells A$800M in 6.0% 2017 Bonds; avg yield: 2.8861%; bid-to-cover: 4.85x - JGB: (JP) Japan's MoF sells ¥2.46T in 0.2% (0.2% prior) 5-yr notes; Avg yield: 0.204% v 0.185% prior; Bid to cover: 3.81x v 4.07x prior - (JP) BOJ offers to purchase ¥2.0T in T-bills effective Mar 18th - GLD: SPDR Gold Trust ETF daily holdings rise 2.1 tonnes to 813.3 tonnes (highest since 814.1 on Dec 20th) - USD/CNY: (CN) PBoC sets yuan mid point at 6.1346 (weakest Yuan setting since Dec 3rd) v 6.1320 prior setting - (US) Weekly Fed Balance Sheet Total Assets Week ending Mar 12th: $4.18T v $4.17T prior; Reserve Bank Credit: $4.14T v $4.13T prior; M1: +$103.6B (4-week high) v +$14.8B prior; M2: -$13.9B (biggest decline in 3 months) v -$8.2B prior; Foreign central bank holdings of US Treasuries: $2.86T (***LOWEST holdings since $2.85T in Dec 2012) v $2.96T w/w; M1 y/y change: 9.3% (5-month high) v 8.8% w/w; M2 y/y change: 5.7% v 5.6% w/w
***Equities*** US markets: - ULTA: Reports Q4 $1.09 v $1.07e, R$868M v $856Me; +7.7% afterhours - MFRM: Reports Q4 $0.30 v $0.29e, R$312.1M v $312Me; +6.2% afterhours - BP: Said to have reached administrative agreement with the EPA - financial press; +0.9% afterhours - ZUMZ: Reports Q4 $0.71 adj v $0.61e, R$226.8M v $227Me; to repurchase up to additional $30M in common stock (approx 4% of market cap); -2.8% afterhours - NSTG: Study shows precision, reproducibility of PAM50-Based Prosigna Breast Cancer Assay in Multiple Clinical Testing Laboratories - update; -2.8% afterhours - BODY: Delays 2013 annual report filing; Guides Q4 R$66M v $75Me - NT 10K filing; -6.7% afterhours - ARO: Reports Q4 -$0.35 (ex items) v -$0.30e, R$670M v $699Me; -11.9% afterhours
Notable movers by sector: - Financials: China Investment Holdings 132.HK -4.7% (FY13 results); China Development Bank International Investment 1062.HK +9.1% (positive profit alert); Northeast Securities 000686.CN +7.7% (FY13 results); New World Development 17.HK -13.7% (issues rights shares); New World China Land 917.HK +28.8% (privatization plan); Ping An Insurance 2318.HK -2.1% (FY13 results) - Materials: POSCO 005490.KR -0.9% (CEO comments); China Polymetallic Mining 2133.HK -11.7% (FY13 results); Adelaide Brighton Limited ABC.AU -10.6% (potential loss of key customers) - Industrials: Sino-Ocean Land 3377.HK -1.5% (FY13 results); Zhangjiagang Furui Special Equipment 300228.CN +6.1% (Q1 guidance); Changshu Tianyin Electromechanical 300342.CN -10.0% (FY13 results; negative Q1 guidance); Leighton Holdings LEI.AU -2.9% (may face write-downs) - Technology: Shenzhen H&T Intelligent Control 002402.CN +3.4% (FY13 results) - Healthcare: Town Health International Investments 3886.HK +2.5% (positive profit alert); Tianjin Ringpu Bio-Technology 300119.CN +4.3% (FY123 results); Xizang Haisco Pharmaceutical Group 002653.CN +3.5% (FY13 results