>>> Asian Update

Asian Market Update: China stocks rally after an outsized PBoC liquidity injection

***Economic Data*** - (NZ) NEW ZEALAND Q4 CPI Q/Q: +0.1% V -0.1%E; Y/Y: 1.6% V 1.5%E (highest level since Q1 2012) - (ID) INDONESIA Q4 FOREIGN DIRECT INVESTMENT (FDI) Q/Q: 25.4% V 18.4% PRIOR

***Observations/Insights*** - PBoC delivered on its overnight pledge to ease the increasingly tighter liquidity conditions going into the Lunar New Year holidays in February; Central bank injected CNY180B in 21-day reverse repos and CNY75B in 7-day reverse repos, making the largest injection since Feb 2013 as well as its first open market operation in nearly a month. Repo rate opened up lower ahead of the announcement, and the 7-day shibor saw an 80bp drop to 5.53%. Shanghai Composite and the Hang Seng both rallied by over 1% in the morning session following the announcement. - New Zealand Q4 CPI tops expectations, with y/y inflation now in the 2nd quarter within the RBNZ target rate of 1-3%. Reports noting the figures pave the way for a certain RBNZ rate hike by March, while some now see a good chance for a tightening as early as next week. Swaps markets are pricing in over 60% chance of the early move, as NZD rises sharply across the board. - USD is supported by an opinion piece from WSJ Fed watcher Hilsenrath, who argues that the FOMC is still on track to continue to taper asset purchases. Hilsenrath sees another $10B reduction in the overall program to $65B/month, noting that Fed officials will see the surprise decline in December non-farm payrolls as a statistical aberration and the result of bad weather conditions.

***Fixed Income/Commodities/Currencies*** - (CN) PBoC to conduct CNY180B in 21-day reverse repos and CNY75B in 7-day reverse repos (biggest injection since Feb 2013, 1st injection after 7 consecutive halted operations) - (CN) Daily Shibor fixings; O/N: 3.6410% v 3.8880% prior (1st decline in 6 sessions); 1-week: 5.5350% v 6.3290% prior (1st decline in 4 sessions) - (CN) China 7-day repo rate opens 134 bps lower at 5.25% - (JP) Japan's MoF sells ¥2.48T in 0.2% (0.2% prior) 5-yr notes; Avg yield: 0.206% v 0.197% prior; Bid to cover: 3.73x v 4.43x prior - (JP) BOJ to buy ¥400B in CP outright on Jan 24th

- USD is seeing its biggest gains against the Japanese Yen following a Hilsenrath piece forecasting further Fed taper this month. USD/JPY is up about 50pips above 104.60, while EUR/JPY and AUD/JPY are up 70pips from the lows for session highs of 141.80 and 92.40 respectively. EUR/USD is down slightly, falling about 20pips below 1.3540 and AUD/USD is tracking the China-driven risk-on sentiment higher above $0.8830. NZD/USD is a sizeable mover following the Q4 CPI release, rising as high as $0.8340 - up about 80pips after the data.

***Speakers/Political/In the Papers*** - (CN) Former PBoC adviser/director of National Economic Research Institute Fan Gang: China potential growth rate may slow to 7-8% in this decade; China's local debt problem is manageable; Real estate market has stabilized - (CN) China listed banks FY13 profit growth may below 10% y/y (record low since 2005) - financial press - (CN) PBoC Academic researcher Wang Yong: China should avoid liquidity risk in commercial banks - Chinese press - (CN) China imposes tariffs on solar-grade polysilicon from US, South Korea - (CN) Credit Suisse head of precious metals: China gold imports may fall as much as 10-15% in 2014 - financial press - (JP) Japan Fin Min Aso: Difficult to find revenue to make up for a cut in corporate tax rate - (JP) Japan Econ Min Amari: US, Japan needs to work together to bring Trans-Pacific Partnership (TPP) positions closer - (KR) South Korea Jan 1-20 exports $27.3B, +5.8% y/y, imports $29.2B, +5.0% y/y; Result seen as a trade deficit of $1.86B - financial press cites South Korean customs agency - NZD/USD: (NZ) Westpac's Speizer: Latest New Zealand CPI solidifies the case for an RBNZ rate hike in March; Raises the possibility of a start this month - NZ press - (NZ) Latest swaps market data indicates the probability of RBNZ rate rise in Jan increased to 65% vs 44% after the release of Q4 CPI - financial press - (NZ) ANZ: New Zealand Central Bank (RBNZ) should raise cash rate on Jan 30th following latest CPI data - financial press

- (US) WSJ's Fed watcher Hilsenrath: Fed on track to reduce bond purchases at Jan 28-29th meeting by another $10B to $65B/month - financial press

***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 +1.5%, S&P/ASX +0.5%, Kospi +0.5%, Shanghai Composite +0.6%, Hang Seng +0.6%, Mar S&P500 +0.4% at 1,841, Feb gold +0.9% at $1,251, Mar crude oil -0.1% at $93.90/brl

US markets: - CAM: To Sell Reciprocating Compression Division for $550M to GE - BA: GE Capital Aviation Services (GECAS) may order 40 737s in order worth $4B - press; Boeing, GECAS announce order for 20 737 MAXs, 20 Next-Gen 737s; deal valued at $3.9B - AGU: Provides Q4 guidance, reports one-time adjustments; Guides Q4 EPS toward the bottom of prior forecast of $0.80-1.25 v $1.02e

Notable movers by sector: - Consumer Discretionary: Hefei Meiling 000521.CN +6.7% (FY13 guidance); Huayi Brothers Media Corp 300027.CN +3.0% (box office result); Beijing Gehua CATV Network 600037.CN +10.1% (cloud gaming alliance); Nifco Inc 7988.JP +4.2% (press report on 9M results) - Materials: Shandong Chenming Paper Holdings 000488.CN +8.2% (FY13 guidance); Cockatoo COK.AU -2.7% (Harum reduces holding in company) - Technology: Haier Electronics Group 1169.HK +4.2%; Telling Telecommunication Holding 000829.CN +4.3% (FY13 guidance); Lenovo Group 992.HK +3.5% (in talks to acquire IBM's server unit); Liaoning Julong Financial Equipment Corp 300202.CN +5.1% (FY13 guidance); NEC 6701.JP +2.6% (speculation on sale of Biglobe unit) - Energy: CNOOC 883.HK -5.3% (FY14 guidance); Guangzhou Development Group 600098.CN +1.7% (share repurchase plan); Digital Garage 4819.JP +1.3% (H1 results); Jiangsu Zongyi 600770.CN +10.0% (mobile gaming plans) - Industrials: Gome Electrical Appliances Holdings 493.HK +8.7% (prelim FY13 result); Shenzhen Tagen Group 000090.CN +3.6% (FY13 guidance) - Healthcare: Guangdong Taiantang Pharmaceutical 002433.CN +5.7% (special dividend proposal); Zhejiang Jolly Pharmaceutical 300181.CN +4.1% (FY13 result) - Telecom: ZTE Corp 000063.CN +3.7% (FY13 guidance)

FT : Morrison treasurer suspended over insider dealing probe

Morrison treasurer suspended over insider dealing probe

Wm Morrison has suspended its treasurer after his arrest on suspicion of insider dealing ahead of the supermarket chain’s tie-up with Ocado, the online grocer.
Paul Coyle, Morrison’s group treasurer and head of tax, was arrested in Harrogate in December in connection with an investigation by the Financial Conduct Authority, said two people familiar with the matter. He has not been charged with any offence.

The FCA said at the time that a 49-year-old had been arrested and released in relation to insider dealing and market abuse, and that the arrest was not linked to any other insider dealing investigation.
The matter is thought to relate to dealing in Ocado shares before the two companies announced a £200m distribution deal in May.
The tie-up was transformational for Ocado, catapulting it from being purely an online grocery to also having a technology services arm. Shares in the lossmaking online retailer have risen more than 250 per cent since rumours of the agreement emerged.
The 25-year partnership was also widely seen as significant for Morrison. Its chief executive, Dalton Philips, had said the grocer was missing out on about £500m in sales by not having an online business.
News of Mr Coyle’s suspension, coming just 10 days after the first deliveries were made under the Ocado deal, is a further blow to the UK’s fourth-biggest supermarket chain following a disappointing Christmas.

Morrison was the worst hit among the big food retailers, reporting like-for-like sales down 5.6 per cent, excluding fuel, in the six weeks to January 5. Its shares fell 8 per cent in response to the trading update, but closed up 1 per cent on Monday at 254.9p.
The Financial Times also reported earlier this month that activist investors – including Elliott Associates, one of the most aggressive US hedge funds – had built a stake in the struggling grocer and were pushing for a radical shake-up of its property portfolio.
Insider dealing is a criminal offence that is punishable by a fine or up to seven years’ imprisonment.
Listed companies in the UK are required to have strict policies on the handling of inside information – including data on companies they are doing corporate deals with. They must maintain lists of company employees with access to the inside information and notify those individuals of their responsibilities to handle it with care.

If a company has failed to control access to inside information or failed to make employees’ obligations clear then it could in theory amount to a breach of the listing rules. This can lead to a censuring of the company or a fine.
Tony Woodcock, a litigation partner at Stephenson Harwood, said: “The investigative process can be a long haul, even for cases which – at their factual heart – appear straightforward.

“Morrison may have its own exposure if there are found to be failings in its procedures relating to the use of inside knowledge. But beyond that, it will be expected to co-operate with the FCA investigation through means such as providing access to relevant documents, background information, witness statements and, if necessary, attendance at court. It can happen that such enquiries uncover wrongdoing on a broader front.”
Morrison, the FCA and North Yorkshire police declined to comment. Mr Coyle could not be reached for comment.

FT : Irish billionaire Denis O’Brien plans ‘massive’ telecoms push

Irish billionaire Denis O’Brien plans ‘massive’ telecoms push

Denis O’Brien, one of Ireland’s richest businessmen, will launch a “massive push” this year to expand his global telecoms business into next-generation mobile and fixed line services.
Digicel, his Caribbean and Central American telecoms group, will invest about $500m in its network in a year when Mr O’Brien said he anticipates a change in the “world order” of the telecoms market. This could have an impact on Cable & Wireless Communications, Digicel’s closest rival, which Mr O’Brien ruled out making a takeover bid for.

“We’re surging capex this year,” he said. “We think there’s great opportunities to go for more market share and new products. We have a massive push.”
However, the media and telecoms billionaire will still take a hefty payout from the business even after the investment plans. Digicel is expected to pay a $650m dividend to Mr O’Brien, who owns about 94 per cent of the private group, although it is headed by chief executive Colm Delves.
“[The dividend] hasn’t been paid yet,” he added, pointing to a net cash position of about $1.1bn. “We have a lot of cash on our balance sheet. The board has to decide what the dividend is going to be but it’s around [$650m].”
The 55 year-old’s net wealth is already estimated at more than $5bn, according to Forbes. Mr O’Brien is a resident of Malta, in part to save on capital gains tax on investments.
The expansion of Digicel comes as the billionaire looks to grow his business interests elsewhere in the world, with a potential listing of China’s third-largest online recruitment company in Hong Kong being considered in the next two years. China HR includes several businesses, such as Monster’s local operations, which it acquired last year, as well as the first jobs website in Myanmar.
“We have 4,000 people working for us in China,” he said. “We just want to keep expanding that business.”
In telecoms, Mr O’Brien said the “world order is changing”, with Digicel positioned for a shake-up driven by large potential mergers or acquisitions. Digicel would remain outside Europe, he added, describing the region’s market as hamstrung by “failed policy” that has meant that operators have struggled with heavy regulation and paid too much for spectrum.
“Europe is not an attractive place to invest, and that’s why you have falling free cash flow and when you have falling free cash flow, what do you do, you just cut investment.”
He said there were no “imminent” flotation plans for Digicel. Mr O’Brien said the private group increased revenues 8 per cent last year to about $2.8bn, with earnings before interest, tax, depreciation and amortisation increasing 11 per cent to about $1.2bn.
Digicel pulled out of the auction to buy Orange’s Dominican Republic business before Christmas, but Mr O’Brien said it was still looking at corporate acquisitions as well as licences in countries such as the Bahamas. Digicel tried to acquire a mobile operator licence in Myanmar last year, but is now focused on building telecoms towers for other operators.
Despite ruling out a bid for Cable & Wireless Communications, he said Digicel could “buy pieces” if another company was to acquire the group.
Mr O’Brien still owns a number of businesses in Ireland, include almost a third of Independent News & Media, the publishing group. Mr O’Brien said that the business was being “turned around” by a management team led by Leslie Buckley, a long-term business partner.
Mr O’Brien is also planning to grow Topaz, Ireland’s biggest petrol retailer, which he acquired control of last year, as well as Siteserv, a construction services business acquired for €45m in the economic downturn. “I’ve been investing heavily in Ireland because I believe in it,” said Mr O’Brien.

(BFW) Talisman’s GDF Rejection Signals Investors Should Own: Canaccord

Talisman’s GDF Rejection Signals Investors Should Own: Canaccord
2014-01-20 19:40:11.952 GMT


By Divya Balji
     Jan. 20 (Bloomberg) -- Talisman’s rejection of GDF Suez’s
approach shows that there’s risk to not owning TLM CN shrs in
2014, particularly w/ Carl Icahn as “key player,” Canaccord
analyst Phil Skolnick wrote.
  * TLM CN pares gain to 2.3% from 4.2%, biggest intraday gain
    since Dec. 2
  * NOTE: Earlier, Talisman Gains; GDF Takeover Approach
    Rebuffed: Reuters


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--Editor: Stefanie Batcho-Lino

To contact the reporter on this story:
Divya Balji in Toronto at +1-416-203-5714 or
dbalji1@bloomberg.net

To contact the editor responsible for this story:
Joanna Ossinger at +1-212-617-7789 or
jossinger@bloomberg.net

FT : German car club ADAC hit by vote scandal over ‘auto Oscars’

German car club ADAC hit by vote scandal over ‘auto Oscars’

Few organisations enjoy higher trust among a cautious and fastidious German public than ADAC, the car club that provides roadside assistance when members’ vehicles break down.
So the revelation that the German organisation inflated the voting figures for its annual “Germany’s favourite car” award – coveted by vehicle companies as a valuable marketing tool – at a ceremony dubbed the “auto Oscars”, has triggered an outpouring of anger and bewilderment.
ADAC, whose more than 18m members give it huge lobbying clout in Berlin, conceded that Michael Ramstetter, its communications chief, had made up the number of votes cast for the prize, which was awarded to the VW Golf at the annual ceremony in Munich on Thursday.
Süddeutsche Zeitung, the daily newspaper, reported last week that instead of the claimed 34,299 votes cast in favour of the VW Golf, only 3,409 were received.
Karl Obermair, ADAC managing director, criticised the newspaper at Thursday’s ceremony for printing “falsehoods”, only for Mr Ramstetter to admit his mistake the following day. ADAC fears vote totals in previous years were also manipulated.
Although ADAC insisted the vote manipulation had not affected the outcome – the VW Golf outsold any other vehicle in Germany last year – the scandal has undermined public trust in an organisation previously considered unimpeachable.
ADAC members took to the organisation’s Facebook page to voice their anger, and the scandal drew calls for an inquiry from Germany’s transport minister and car companies, all of which sent executives to attend the ceremony. Among the guests were Martin Winterkorn, Volkswagen chief executive, and Norbert Reithofer, BMW chief executive.
Mr Ramstetter has since resigned as ADAC communications chief and editor of the ADAC Motorwelt magazine. Motorwelt claims to have 15.9m readers, making it the most-read magazine in Europe.
Maintaining trust is vital for ADAC, which provides a range of other services including crash-tests and insurance.
The organisation has consistently blocked attempts to impose a speed limit on Germany’s motorways and opposes a plan to introduce a toll on foreign users of German motorways.
Mr Obermair apologised on behalf of ADAC at a hurriedly scheduled press conference in Munich on Monday, saying employees had reacted with a mix of “outrage and disbelief that such a thing could happen”.
He said ADAC took the matter very seriously but that Mr Ramstetter had accepted sole responsibility. The group had begun an “intensive investigation” in order “to restore trust and the credibility of the ADAC”, he said.
Süddeutsche quoted Mr Ramstetter as saying: “I screwed up and inflated the figures. So I’m accepting the consequences and assuming responsibility.”

WSJ : Hapag-Lloyd And CSAV Merger MOU Expected Within Weeks

Hapag-Lloyd And CSAV Merger MOU Expected Within Weeks
German and Chilean Companies Could Form Fourth Largest Container Shipper

LONDON—A deal to bind merger talks between German container shipper Hapag-Lloyd AG and its Chilean peer Compañía Sud Americana de Vapores SA VAPORES.SN -2.48% is expected to be signed by early February, according to people familiar with the matter, as both sides haggle over the shareholding structure in the prospective combined company.

The merger, which would create the world's fourth-largest container shipper, with annual revenue of around $13 billion, has moved ahead in fits and starts since the two companies acknowledged negotiations back in December.

"If no major disagreements emerge, we should have [a memorandum of understanding] signed within the next three weeks or so," said one person familiar with the talks. The two sides are still negotiating how much each will hold in the merged entity and whether CSAV's ships will be part of the deal or be leased to Hapag-Lloyd, this person said.

If an MOU is signed the companies will then proceed to due diligence and the merger could be completed some time in the first quarter.

Under current talks, the Luksic family, one of Chile's richest, and CSAV's main shareholder, will become a major holder in Hapag-Lloyd with a stake close to that of German billionaire Klaus-Michael Kühne, who owns 28% of the Hamburg-based shipper, according to another person involved in the deal. The Luksics started buying into CSAV in 2011 and now control 46% of the company.

As previously reported, the German company will control 70% of the merged entity, with CSAV owning the remainder, based on current discussions. Hapag-Lloyd and CSAV declined to comment on the progress of the talks.

Big mergers are rare in the container-shipping industry, which moves 95% of all manufactured goods. The industry is dominated by families and sovereign-wealth funds, typically better equipped than publicly traded firms to endure years of losses during long down-cycles. But recently, pressure for consolidation has strengthened ahead of the expected launch later this year of an alliance between Denmark's A.P. Møller-Maersk MAERSK-B.KO -0.61% A/S, Switzerland's Mediterranean Shipping Co. and France's CMA CGM SA, the industry's top three players in terms of capacity. The alliance, called P3, will control about half the market share of the world's busiest trade routes.

Two earlier attempts by Hapag-Lloyd to merge ultimately foundered—its 2008 proposed tie-up with Singapore's Neptune Orient Lines, N03.SG -0.95% and last year's talks with fellow German shipper Hamburg Süd.

Hapag-Lloyd operates around 150 ships, competing head on with the P3 partners in the Asia-Europe, trans-Atlantic and trans-Pacific routes. CSAV operates around 50 vessels.

(BFW) German Utilities to Benefit From Clean-Energy Aid Cuts: Goldman

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German Utilities to Benefit From Clean-Energy Aid Cuts: Goldman 2014-01-20 14:37:43.745 GMT

By Stefan Nicola Jan. 20 (Bloomberg) -- Slower growth in renewables, as proposed by Economy and Energy Minister Sigmar Gabriel, will benefit coal- and gas-fired plants as they raise output to meet demand, Goldman Sachs says in research note. * More thermal power output needed over time as pace of renewables growth insufficient to counter loss of atomic reactors closing 2015-2022 * More older coal-fired plants likely to shut as Gabriel’s proposals lack short-term commitment to capacity mkt * Forward power prices to rise over time, “reflecting a likely increasing share of higher-priced gas” * EON, Verbund, CEZ, GDF Suez, RWE, Fortum to benefit from higher prices; Goldman sees EPS impact (unhedged on 2015e) of +25% to +65% from EU10/MWh increase in prices * NOTE: German clean-energy companies today said govt plans to accelerate cuts in solar and wind-power aid threaten shift to renewables NSN MZPCGU6S972F <GO>

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To contact the editor responsible for this story: Reed Landberg at +44-20-7330-7862 or landberg@bloomberg.net

(BFW) Acciona Confirms in E-Mail Osx Leasing Shares Seized in Holland

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BN 01/20 12:26 *ACCIONA CONFIRMS IN EMAIL OSX LEASING SHARES SEIZED IN HOLLAND BN 01/20 12:26 *ACCIONA SAYS DUTCH JUDGE AGREES TO EMBARGO ON OSX UNIT BN 01/20 12:26 *OSX LEASING UNIT SHARES SEIZED TO GUARANTEE CREDITORS PAYMENT

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Acciona Confirms in E-Mail Osx Leasing Shares Seized in Holland 2014-01-20 12:33:56.984 GMT

By Juan Pablo Spinetto Jan. 20 (Bloomberg) -- OSX leasing unit shares seized to guarantee creditors payment, Acciona says * Dutch judge agrees to embargo on OSX leasing unit shares * Seizure first reported by Veja columnist Lauro Jardim * OSX press officer in Rio de Janeiro not immediately available for comment * NOTE: While OSX declared bankruptcy earlier this month, its leasing unit, through which the company owns the ship securing debt, wasn’t part of the judicial recovery petition filed in a Rio de Janeiro court.

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