TheChek News Flow

Asian Market Update: AUD sinks to multi-year lows on sharp decline in Australia employment; China FDI returns to growth in 2013

***Economic Data*** - (BR) BRAZIL CENTRAL BANK (BCB) RAISES SELIC TARGET RATE BY 50BPS TO 10.50%, MORE THAN 25BPS EXPECTED - (AU) AUSTRALIA DEC EMPLOYMENT CHANGE: -22.6K V +10.0KE (largest decline in 9 months); UNEMPLOYMENT RATE: 5.8% V 5.8%E - (AU) AUSTRALIA DEC RBA FX TRANSACTIONS (A$): 884M V 444M PRIOR - (CN) CHINA DEC ACTUAL FOREIGN DIRECT INVESTMENT (FDI) Y/Y: 3.3% V 2.4% PRIOR; 2013 Y/Y: +5.3% V -3.7% Y/Y - (JP) JAPAN NOV TERTIARY INDUSTRY INDEX M/M: 0.6% V 0.7%E (highest level in 3 months) - (JP) JAPAN DEC DOMESTIC CGPI M/M: 0.3% V 0.3%E; Y/Y: 2.5% V 2.6%E (9th consecutive rise) - (JP) JAPAN NOV MACHINE ORDERS M/M: 9.3% (6-month high) V 1.1%E ; Y/Y: 16.6% V 11.7%E - (IN) India Dec Conference Board Leading Economic Index m/m: +0.1% v -1.1% prior - (NZ) NEW ZEALAND ANZ TRUCKOMETER HEAVY M/M: 1.4% V -2.0% PRIOR - (UK) UK DEC RICS HOUSE PRICE BALANCE: 56% V 60%E (3-month low)

***Observations/Insights*** - Australia employment fell by the biggest amount in 9-months. Unemployment rate remained unchanged at 5.8% but only because of declining participation rate, which fell 2bps to 64.6% - a 7-year low. Decline in employment effectively brings back the possibility of further RBA easing, particularly as some of the more recent housing data show signs of deceleration. - China released its foreign direct investment (FDI) figures showing a rebound in 2013 at 5.3% after a 2012 contraction. Dec pace of growth also accelerated from prior month. Separately, China MOFCOM warned 2014 may bring "severe challenges" in the trade sector, since global recovery has not stabilized. Higher costs, liquidity shortages, base effects and competition were specifically attributed to expectations of a choppy trade activity in Q1. - BOJ Kuroda said the central bank will continue easing until 2% inflation is stable. Separately, Japanese press speculated the cabinet office will raise its economic assessment for the first time in 4 months.

***Fixed Income/Commodities/Currencies*** - (CN) PBoC won't conduct open market operations (OMO) in today's session (7th consecutive session of halted operations); Zero net position this week v zero in prior week - (JP) BOJ offers to buy ¥250B in 1-3yr JGB, ¥250B in 3-5yr JGB, ¥200B in JGB with maturity over 10-yr, and ¥100B in corporate bonds

- AUD was in the spotlight following the release of much worse than expected employment data out of Australia. AUD/USD fell just over 100pips below the $0.88 handle - its lowest level since Jul 2010 - while AUD/NZD hit fresh 8-year lows below NZ$1.06. NZD/USD was also initially lower after Aussie jobs, falling some 30pips below $0.8310. EUR/USD reversed its initial decline below $1.3590 to test above $1.3620, and USD/JPY backed away from the ¥105 handle in the afternoon session to fall below ¥104.70.

***Speakers/Political/In the Papers*** - (CN) China Commerce Ministry (MOFCOM) Sheng: Expects severe challenges for trade in 2014 - financial press - (CN) China to begin birth policy reform plans as soon as March - Chinese press - (CN) Shanghai may order vehicles off road under "severe" air pollution conditions as part of the new monitoring system - financial press - (CN) Bernstein: PBoC to maintain tighter monetary policy in H1 to curb shadow banking - financial press - (JP) BOJ Gov Kuroda: Domestic economy has been recovering moderately; expects recovery even with sales tax increase - (JP) Japan cabinet office to raise economic assessment in Jan (1st time in 4 months) - Nikkei News - (AU) Westpac senior FX strategist Callow: Still expects RBA to keep policy rates on hold next month despite weak employment data; Likely to retain a mild easing bias - SMH

- (US) Fed's Lockhart (moderate, FOMC alternate): Sees US inflation to rise toward 2% goal - (US) House of Representatives passes $1.1T omnibus spending bill to keep govt funded through Sept 30th, as expected

***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 +0.1%, S&P/ASX +1.0%, Kospi +0.3%, Shanghai Composite flat, Hang Seng +0.3%, Mar S&P500 +0.1% at 1,843, Feb gold +0.2% at $1,241, Feb crude oil -0.2% at $94.17/brl

US markets: - ZOOM: Discloses entry into LOI with Tinho Union Holding Group to acquire all the issued and outstanding shares of Tinho - filing; +45.6% afterhours - SRPT: Eteplirsen Demonstrates Continued Stability on Walking Test through 120 Weeks in Phase IIb Study in Duchenne Muscular Dystrophy; +17.4% afterhours - RIO: Reports Q4 Iron ore output 70.4M tons (record), +3% q/q, +6% y/y - FUL: Reports Q4 $0.68 adj v $0.76e, R$533.5M v $526Me; -0.1% afterhours - YHOO: COO Henrique de Castro to leave the company on Jan 16th - filing; -0.2% afterhours - AMZN: Workers at fulfillment center in Delaware vote against unionization - JCP: Announces strategic initiative to advance turnaround; will close 33 underperforming stores, cutting 2K positions (1.7% of workforce); -0.3% afterhours - CEC: Said to be acquired by Apollo Global for around $1B - FT - TWC: Charter said to have approached Comcast regarding possible cooperation on Time Warner bid - financial press; -0.6% afterhours - CSX: Reports Q4 $0.42 v $0.43e, R$3.03B v $3.01Be; -3.2% afterhours - AMRN: Announces FDA Review Division Response on ANCHOR SPA Agreement Reinstatement Request Will Be Delayed (delayed a 2nd time); -7.5% afterhours

Notable movers by sector: - Consumer Discretionary: Lanzhou Minbai Shareholding Group 600738.CN +3.6% (FY13 guidance); Playmates Toys 869.HK -10.9% (FY13 guidance); Tsui Wah Holdings 1314.HK -4.6% (shareholders cut stake) - Financials: Wedge Industrial 000534.CN +3.2% (FY13 guidance) - Materials: Yueyang Forest & Paper 600963.CN +2.6% (FY13 guidance); Jiaozuo Wanfang Aluminum Manufacturing 000612.CN +1.6% (FY13 guidance); Rio Tinto RIO.AU +2.1%, BHP Billiton BHP.AU +2.3%, Fortescue Metals Group FMG.AU +3.4% (Rio Tinto Q4 production results) - Technology: Unilumin Group 300232.CN +10.0% (FY13 guidance); Guangzhou Hongli Opto-Electronic 300219.CN +5.9% (FY13 guidance); Tencent Holdings 700.HK +2.9%, South China City Holdings +54.8% (Tencent and South China City enters into investment agreement) - Energy: Woodside Petroleum WPL.AU +2.5% (Q4 results) - Industrials: XJ Electric 000400.CN +2.1% (FY13 guidance); Shuangliang Eco-Energy Systems 600481.CN +3.9% (FY13 guidance); Shanghai Hanbell Precise Machinery 002158.CN +5.1% (FY13 guidance); - Healthcare: Guangdong Jiaying Pharmaceutical 002198.CN +2.2% (proposes special dividend) - Utility: TEPCO 9501.JP +0.6% (announces 10-yr turnaround business plan)

Candy brothers’ private eye accused in £28m lawsuit

A private detective – working on behalf of the Candy brothers, the multimillion-pound property developers – posed as a middleman for the Saudi royal family, according to allegations made in a London court case. The detective allegedly tried to blag confidential information from the buyer of one of the Candy brothers’ luxury flats. The £28m lawsuit, filed by a former owner of one of the ultra-chic flats at the One Hyde Park Development, threatens to reignite a scandal over the use of private investigators by blue-chip companies and blows apart the secrecy surrounding the residents of the block, where some apartments have sold for more than £100m. Christian and Nicholas Candy are being sued along with others, including Project Grande. This was the joint venture that Christian Candy’s company, CPC, had with Qatar’s former prime minister to build the high-end development in London’s Knightsbridge. Geoffrey Logue, who agreed to buy an apartment in 2007 while the £2bn residence block was still being completed, states in a court claim that CPC hired RISC Management, a detective agency, and Clifford Knuckey, a private investigator who worked first at RISC and then Hermes Forensic Solutions, during an escalating dispute over the floor plan of Mr Logue’s apartment. Mr Knuckey posed as an estate agent for a Russian family and as a "representative of the Saudi royal family" in an attempt to track down Mr Logue in April 2010 – according to Mr Logue’s court claim, seen by the Financial Times. Mr Logue also alleges that he received "another strange call from someone who claimed to be a representative of Vodafone customer services". He said Vodafone informed him that an unauthorised person had tried to access his mobile-phone account. Methods such as blagging and so-called pretexting – posing as someone else to elicit information – came under parliamentary scrutiny last summer as part of a probe into the use of rogue detectives by blue-chip companies across the City. The Information Commissioner announced in October that 19 of these companies would be investigated. Mr Knuckey and the chief executive of RISC Management, who are both former police officers, have since been arrested in connection with a separate investigation into alleged bribery of police by private investigators. They both deny wrongdoing and have been bailed without charge. Mr Knuckey declined to comment and referred all queries on the Logue matter to Candy & Candy. He is not a party to the lawsuit and therefore has not had an opportunity to file a response to the allegations. The brothers and CPC maintain in their defence that, while Mr Knuckey was retained to locate Mr Logue and serve him with court papers, the detective reported directly to Stewarts Law, a firm of solicitors that the Candys used. The Candys are in turn suing Stewarts Law, alleging breach of contract and negligence, which the law firm denies. The brothers’ defence throws light on what it describes as the "high-risk, high-profile project for which positive publicity was of paramount importance". It says CPC instructed RISC to investigate Mr Logue "to understand the sort of person he was" in the light of threats he was making to sue and seek publicity. It adds: "Had it not been for the fact that Mr Logue had been introduced by Savills [the estate agents], which was familiar with the Logue family, such an investigation would have been commissioned before [Project Grande] entered into the agreement for lease."

Lagarde warns of deflation danger

The growing threat of deflation threatens to derail the global economic recovery, Christine Lagarde, managing director of the International Monetary Fund, said on Wednesday as she stressed that the world had yet to put the financial crisis behind it. "With inflation running below many central banks’ targets, we see rising risks of deflation, which could prove disastrous for the recovery," said Ms Lagarde, in a speech at the National Press Club in Washington. "If inflation is the genie, then deflation is the ogre that must be fought decisively." With central bankers afraid even to mention the word "deflation", Ms Lagarde’s remarks make her the first high-profile policy maker to give warning that extremely low inflation in rich countries could result in the kind of falling prices that have dogged Japan’s economy for two decades. Slow inflation could allow central bankers to keep monetary policy exceptionally loose, even as employment picks up in countries including the US and the UK. "Central banks should return to more conventional monetary policies only when robust growth is firmly rooted," said Ms Lagarde. Inflation in the UK has fallen back to the Bank of England’s 2 per cent target for the first time in years, while the US consumer price index is up by only 1.2 per cent on a year ago. But the eurozone is at greatest risk, with inflation falling to only 0.8 per cent in December and unemployment still stuck at 12.1 per cent. A slide into absolute deflation could discourage consumption and investment as it raised the real cost of borrowing and made monetary policy less effective. Ms Lagarde’s comments were echoed by Charles Evans, president of the Chicago Fed. "The recent news on inflation has not been good," he said in a speech on Wednesday. "Inflation is too low and is running well below the FOMC’s 2 per cent target." Ms Lagarde said that the overall economic picture was encouraging. "This crisis still lingers. Yet, optimism is in the air: the deep freeze is behind, and the horizon is brighter," she said. "My great hope is that 2014 will prove momentous; . . the year in which the ‘seven weak years’, economically speaking, slide into ‘seven strong years’." She said that the global economy had strengthened at the end of 2013, but "is still stuck in low gear". "This means that the world could create more jobs before we would need to worry about the global inflation genie coming out of its bottle." In the US, she said, growth was picking up, but "it will be critical to avoid premature withdrawal of monetary support, and to return to an orderly budget process, including by promptly removing the debt ceiling threat". Ms Lagarde said that the eurozone "is turning the corner from recession to recovery", but that "unemployment is still worryingly high". She said that the European Central Bank could do more to help. "Targeted lending, for example, could help reduce financial fragmentation. The forthcoming review of asset quality and stress tests can also help, but only if they are done in an even-handed and credible manner." She also gave warning that Japan needed to do more to "overcome the ogre of deflation" as the initial boost from "Abenomics" weakens. "Temporary fiscal stimulus should help offset the negative effects of the necessary consumption tax increase. The challenge is to agree on medium-term fiscal adjustments and social and economic reforms needed to strengthen growth," she said. The US economy continued to grow at a moderate pace through until late November, according to the Federal Reserve’s Beige Book survey of local business contacts. Two-thirds of the Fed’s districts said there were increases in hiring but there was little upward pressure on wages.

Japan machinery orders hit 5-year high

Japanese companies are gearing up for significant new investments in domestic factories, distribution networks and other infrastructure this year, government data suggested on Thursday, in a shift that would bolster the country’s Abenomics-driven expansion. Orders of new machinery by businesses, considered a leading indicator of overall capital investment, surged to a five-year high in November, rising 9.3 per cent to Y882.6bn. The year-on-year increase, which handily beat analysts’ expectations, was the second in two months and the fifth biggest on record. Business investment has been a missing element in Prime Minister Shinzo Abe’s year-old effort to stimulate the Japanese economy. Mr Abe has ramped up government spending while the Bank of Japan has massively loosened monetary policy, but private companies – possibly concerned that the state-driven surge in demand will be temporary – have been cautious about expanding their production capacity. Capital investment picked up slightly in the second quarter of last year and was flat in the third. Although the machinery orders number excludes the volatile shipping and electric power sectors, it is still prone to sizeable month-to-month fluctuations. Yet Marcel Thieliant, an analyst at Capital Economics, said Thursday’s data nonetheless "point to a renewed recovery in business investment". He noted that Japanese companies can easily fund such investment, thanks to deep cash reserves and ultra-low interest rates. In the services sector, in particular, companies have suppressed their spending for years but are now looking to upgrade ageing information technology and distribution systems. Capacity utilisation in the non-manufacturing sector is at the highest level since the early 1990s, according surveys by the BoJ.

After Hours Summary: KMP +1.5%, WD +1.1%, PLXS +0.5%, CSX -3.4%, KMI -0.8%, BPFH -0.7% following earnings/guidance

After Hours Gainers: Companies trading higher in after hours in reaction to earnings: KMP +1.5%, WD +1.1%, PLXS +0.5%

Companies trading higher in after hours in reaction to news: - ZOOM +69.3% (entered into a non-binding Letter of Intent with Tinho Union Holding toacquire Tinho), - TXTR +11.2% (SAC Capital Advisors disclosed 5.0% passive stake in 13G filing), - SRPT +11.1% (announced eteplirsen demonstrates continued stability on walking test through 120 weeks in Phase 2b study in Duchenne Muscular Dystrophy), - HELE +2.8% (Co implements succession plan and appoints Julien Mininberg Chief Executive Officer effective March 1, 2014), - AOL announced the creation of a joint venture to run Patch, a platform for local news and information), - ILMN +1.8% (announced it entered into agreement to develop an oncology companion diagnostic test),

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: CSX -3.4%, KMI -0.8%, BPFH -0.7%

Companies trading lower in after hours in reaction to news: GLOG -7.3% (announced agreement to purchase three LNG Carriers from BG Group for ~$468 mln; announced public offering of 8.4 mln shares and concurrent private placement of common shares), AMRN -4.2% (announced FDA review response on ANCHOR SPA agreement reinstatement request will be delayed), ORC -1.8% (announced public offering of 1.5 mln shares of common stock), JCP -1.6% (announced strategic initiative to advance turnaround; Co to close 33 underperforming stores; generate annual savings of approximately $65 mln beginning in '14)

comScore releases December 2013 U.S. search engine rankings

Google (GOOG) Sites led the U.S. explicit core search market in December with 67.3 percent market share (up 0.6 percentage points), followed by Microsoft (MSFT) Sites with 18.2 percent (up 0.1 percentage points) and Yahoo (YHOO) Sites with 10.8 percent. Ask Network accounted for 2.5 percent of explicit core searches, followed by AOL, Inc. (AOL) with 1.3 percent.