FT : Shell sells Canadian oil sands assets for $7.25bn

Shell sells Canadian oil sands assets for $7.25bn
Deal helps take group closer to target of raising $30bn from disposals by next year

Royal Dutch Shell has agreed to sell most of its Canadian oil sands assets for $7.25bn in the latest sign of global energy groups backing away from some of the world’s highest-cost and most greenhouse gas-intensive sources of crude oil.

The deal with Canadian Natural Resources, one of Canada's largest energy companies, marks the biggest step so far in Shell’s efforts to reduce heavy debts incurred from its takeover of BG Group during the depths of the oil market downturn.

Shell is now two-thirds of the way towards its target to raise $30bn from asset disposals by the end of next year, subject to completion of the Canadian deal and several others struck in recent months.

Ben van Beurden, Shell chief executive, said the oil sands exit would strengthen cash flow, increase returns on capital and accelerate the Anglo-Dutch group’s shift towards more competitive assets with global scale, especially natural gas and deep water production.

However, the deal will result in a post-tax impairment of $1.3bn-$1.5bn on the estimated 2bn barrels of oil being sold because the sale price was well below the $12bn valuation attributed to the assets at the end of last year.

Canadian oil sands — extracted from open-pit mines — have fallen out of favour with international energy groups since the oil market crash in 2014 because of their relatively high cost and also because they are more polluting than other types of oil.

Shell took a $2bn writedown after abandoning another Canadian oil sands project in 2015 and Statoil booked a loss of at least $500m last December after withdrawing from similar assets. Last month, ExxonMobil wrote off 3.5bn barrels of oil sand reserves no longer considered “economically producible”.

“This is all part of efforts by the global majors to move down the cost curve towards more advantaged assets,” said Tom Ellacott, head of corporate research at Wood Mackenzie, the energy consultancy.

However, he said there was still value to be found for those, such as Canadian Natural, buying at discount prices. “Ownership is becoming concentrated among a few domestic players for whom oil sands are still core.”

Canadian Natural will pay Shell $8.5bn, comprised of $5.4bn in cash and 98m of shares for a cluster of assets, including the Anglo Dutch group's 60 per cent stake in the Athabasca project in Alberta. The Peace River Complex in Alberta and a number of undeveloped leases were also included.

Separately, Shell and Canadian Natural will jointly acquire Marathon Oil’s Canadian subsidiary for $1.25bn each in cash, reducing Shell’s net proceeds from the combined deals to $7.25bn.

The Marathon acquisition will allow Shell to keep control of refining and other downstream assets associated with the Athabasca project, in which Shell will retain a 10 per cent stake. Athabasca, which has a production capacity of 225,000 barrels of oil a day, is a joint venture between Shell, Chevron and Marathon’s Canadian unit. 

The deal came days after Saudi Aramco agreed to pay Shell $2.2bn as part of the break-up of their Motiva US refining joint venture, meaning that the latter has raised almost a third of its $30bn disposals target in the space of a week.

Other deals this year have included the sale of North Sea assets accounting for more than half of Shell’s UK production base to Chrysaor, a small private equity-backed company, for up to $3.8bn in January.

“The disposals programme suddenly looks in good shape with two-thirds done with a year to go,” said Mr Ellacott. “The Canadian assets were on the radar but looked tricky to pull off.”

Separately, Shell revealed in its annual report on Thursday that Mr van Beurden received a 54 per cent increase in the pay and benefits in 2016. He received total remuneration of €8.6m for last year, up from €5.6m in 2015, bolstered by increased payouts under long-term incentive and deferred bonus schemes.

>>> Rai Way CEO confirms interest in merger with EI Towers (translated)

Rai Way CEO confirms interest in merger with EI Towers (translated)
10 MAR 2017
Stefano Ciccotti, the CEO of Rai Way [BIT:RWAY], the state-owned Italian transmission tower network, ha confirmed that it is interested in merging with EI Towers [BIT:EIT], according to Italian-language daily Il Messaggero.
The item cited Ciccotti as saying that consolidation in the sector was "logical" and that Rai Way would monitor opportunities closely.
EI Towers has a market capitalisation of EUR 1.7bn and Rai Way of around EUR 1.27bn.

>>> Parmalat public offer increase by Lactalis rejected by Amber

Parmalat public offer increase by Lactalis rejected by Amber

Investment fund Amber has rejected an increase by French company Lactalis in its public offer for Italian dairy group Parmalat [BIT:PLT] to EUR 3 per share from EUR 2.8, Italian language daily La Repubblica reported. The report cited a statement by Amber saying that Parmalat's shares are worth EUR 3.8-4.5 a share.
The report noted that Lactalis boosted the offer and extended the offer period to 21 March after its public offer, that ended yesterday 9 March failed to reach the 90% threshold needed to delist Parmalat. The report said that Lactalis presently holds 88% of Parmalat.
The item said that Amber holds a 3.1% stake in Parmalat.

>>> Comptel acquisition offer by Nokia could collapse owing to increased oversea

Comptel acquisition offer by Nokia could collapse owing to increased overseas holdings translated)
10 MAR 2017
Foreign investors have started increasing their holdings in the Finnish telco software company Comptel [HEL:CTL1V], which could cause the collapse of the takeover offer by the Finnish telco equipment giant Nokia [HEL:NOKIA], according to Arvopaperi.
The Finnish-language piece cited shares register as its source stating that foreign investors seem to believe that someone is set to make a competing bid for the company adding that Nokia will have to raise its offer for Comptel.
The foreign investors have increased their stake in Comptel since last month, the item added. Nokia will have to secure at least 90% of Comptel's shares in a tender offer in order to have the right to redeem the remaining shares. The tender offer expires on 29 March.

>>> PPG preparing a higher takeover bid on Akzo Nobel – report (translated)

PPG preparing a higher takeover bid on Akzo Nobel – report (translated)

PPG is preparing a higher bid on Akzo Nobel, the Dutch daily Het Financieele Dagblad reported, based on an anonymous source working with PPG.
PPG will not walk away from its attempt to take over Akzo Nobel, the source said. PPG has experience with companies that decline a takeover, but a takeover would benefit shareholders and other stakeholders, the source said.
Akzo Nobel refused the bid because the bid was a ‘significant undervaluation with significant risks and uncertainties’, the report said.
In a response to the refusal PPG announced that it will keep all the different interests in mind: those of shareholders, customers, employees and communities supported by Akzo Nobel.
The unnamed source told Het Financieele Dagblad that the bid came not entirely unexpected to Akzo Nobel. There had been discussions before the bid was placed, he said.
Another Dutch daily, De Financiële Telegraaf, also reported that there could come a higher bid from PPG, citing unnamed analysts.
De Financiële Telegraaf said that, after Akzo Nobel refused the takeover bid PPG made this week, PPG could come with a higher bid so that the company will get pressure from its shareholders to start negotiations.
In these negotiations PPG and Akzo Nobel can also talk about other things, such as employment opportunities. The talks can also take away some of Akzo Nobel’s resistance, the report said.
Link to article Het Financieele Dagblad
Link to article De Financiële Telegraaf

WSJ : Hoteliers Cast Airbnb as Fast-Growing Professional Rival

Hoteliers Cast Airbnb as Fast-Growing Professional Rival
Industry analysis characterizes website as more like a sophisticated rental operation than a casual business

In its quest to prove Airbnb Inc. is more than a casual home-sharing service, the hotel industry issued a stinging analysis of the website that casts the company more like a professional short-term rental operation.
The report released Thursday found that Airbnb hosts who rent out two or more properties in a single month represent the fastest-growing segment of the company’s revenue in the U.S. The analysis, conducted by real-estate firm CBRE and funded by the American Hotel and Lodging Association, an industry trade group, analyzed two years’ worth of Airbnb listings and revenue generated across the U.S.
The researchers found that revenue from hosts who operated two or more entire properties on the platform in 2016 nearly tripled from a year earlier, growing to more than $1.8 billion from about $611 million. Those multiunit hosts accounted for nearly a third of all U.S. revenue on Airbnb during a one-year period from October 2015 through September 2016, according to the analysis, up from about 25% a year earlier.

The findings come as cities around the world have battled with the short-term rental website, arguing Airbnb provides a platform for illegal hotel operators. Clashes in many cities have centered on the growing number of units that are operated year-round as nightly rentals, often run by investors or sophisticated property managers.
The hotel industry has been at the forefront of lobbying for stricter regulations on Airbnb that it says are needed to put the service on a level playing field with traditional hotels. Airbnb has launched a lobbying offensive of its own in recent years aimed at fighting new regulations or seeking compromises that allow the company to continue operating.


Airbnb often says its service is ideal for middle-class families looking to make ends meet by renting a spare room or their homes for a weekend here or there. But the researchers at CBRE said their analysis runs counter to that assertion.
“Airbnb has been saying they don’t really want that group to be the main driver of their growth, that they want it to be people sharing their own homes,” said Jamie Lane, a senior economist with CBRE Hotels research. “But the data clearly shows the opposite trend: that operators and hosts are taking a more commercial approach.”
Airbnb spokesman Nick Papas called the study a “misleading, inaccurate report” that was “bought and paid for by the big hotels.” He called the effort “the latest example of the industry’s willingness to say and do anything to protect their record profits, preserve their ability to price gouge consumers and squash their competition.”

Mr. Papas also questioned the study’s methodology, pointing to what he said were problems in how it defined metropolitan areas, as well as data on how frequently given listings are booked, which is proprietary. He said the report also failed to account for hoteliers that use the platform to advertise rooms, which he said would add thousands of listings.
Mr. Lane said CBRE’s report didn’t define operators based on how frequently their listings are booked. Rather, he said the report looked at only whether operators were renting out two or more entire homes, and analyzed data indicating whether a unit was booked or empty on any given night.
He added that most hotel rooms advertised on the site would show up as single rooms, not entire homes.
Separately, Airbnb closed a $1 billion funding round that values the company at $31 billion, according to a person familiar with the matter. It has raised more than $3 billion since it was founded in 2008.
The CBRE report used data from Airdna, a company that gathers details on the types of properties and room rates from Airbnb’s web listings. CBRE focused on Airbnb hosts that operate two or more entire properties, not listings such as an individual room in a house.
RELATED

  • Airbnb Valued at $31 Billion After New Funding Round
The researchers said that approach allowed them to zero in on listings that aren’t likely to be owner-occupied units. In the period between October 2015 and September 2016, multiunit Airbnb hosts represented 7% of all hosts, but 20% of all units and 32% of all revenue generated.
“That is not home sharing; that’s a business,” said Katherine Lugar, president and chief executive of the American Hotel and Lodging Association.
The number of units managed by multiunit Airbnb hosts grew in all of the top 13 markets CBRE analyzed from 2015 to 2016, but the growth was particularly notable in Nashville, Oahu and New Orleans, where the number of such units more than doubled.
Many landlords, particularly in tourist destinations such as Los Angeles, Nashville and New Orleans, have discovered that Airbnb and similar companies like Expedia Inc.’s HomeAway enable them to profit more by keeping dwellings ostensibly unoccupied and renting them by the night rather than offering long-term leases.
That has led to consternation among some neighborhood and tenant associations due to a constant influx of guests, who may have raucous parties or cause damage to buildings’ public areas.
In Nashville, local officials are considering a measure that would phase out short-term rentals that aren’t occupied by owners. The move comes as Nashville gained a reputation as a hotbed for bachelor and bachelorette parties, leading to a proliferation of home rentals in traditional single-family neighborhoods.
John Stern, president of the Nashville Neighborhood Alliance, which supports measures to slow the growth of such rentals, said constant parties have unnerved neighbors.
“It’s the commercialization of residential property, and that doesn’t have a place in our neighborhoods,” he said.
Amy Walters, president and chief executive of Playlist Properties, a Nashville short-term rental operator that lists on Airbnb and other sites, said the biggest problem is that rules on the books aren’t properly enforced. The city already requires companies such as hers to be licensed and meet certain standards, and she said she has always complied.
But Ms. Walters said there are just as many unregulated properties in the city that aren’t shut down.
“I want the bad guys shut down, because they’re making us look bad,” she said. “But instead they’re lumping us all into one big basket and saying ‘Get rid of them all.’ ”
Airbnb has instituted what it calls a “One Host, One Home” policy in some cities such as Portland, Ore., and New York, which bars hosts from having multiple listings on its site simultaneously. But policing the rule can be difficult, with some hosts simply creating multiple accounts to service each of their rentals.
The company faced one of its biggest setbacks last year when legislators in New York voted to increase fines to as much as $7,500 on New York City hosts who advertise rentals of less than 30 days in multiunit buildings, a violation of city codes since 2010. Airbnb has said it hopes to reach a compromise that would free up hosts who occasionally rent their apartments for extra income.
It also yielded to pressure in London and Amsterdam, two of its largest European markets, by placing limits on the number of days hosts can rent out a home each year: 90 days in London and 60 days in Amsterdam.

FT Lex : Saudi Aramco: pachyderm politics

Saudi Aramco: pachyderm politics
Only the largest stock markets will do for the Middle Eastern oil group

Elephants: that is what hunters for oil call the very largest reservoirs holding 1bn barrels or more. One famous elephant burial ground is Saudi Arabia. The country states its reserves at 260bn barrels, unchanged since 1989. Its government has a plan to privatise and list its national oil company, Saudi Aramco. Valuing this state enterprise will be hard enough. Deciding where to list Saudi Aramco, likely to be one of the largest beasts among oil producers, will bring its own weighty problems.

Depending on the final valuation — estimates spread from $2tn to just a fifth of this — Saudi Aramco would likely be one of the largest privatisations ever. Selling even 5 per cent would make it too big to list in its home market alone. The Saudi Tadawul stock market has a total market capitalisation of $440bn, peanuts compared with the New York Stock Exchange, 50 times larger, or even London, still almost seven times that of the Tadawul.

Moelis & Co, a US boutique, is Saudi Aramco’s key adviser. It will need to decide where it is best to list a minimum of $20bn worth of stock. Only the largest securities markets will do, given the sums involved.

In the end, the most sophisticated investors, whether generalists or sector specialists, should find either New York or London palatable. Hong Kong is another possibility, given the large pools of cash in the region. A dual listing is possible, but will increase the cost and complexity of the float.

Yet listing in New York would force discussion about another elephant, the one in the room. Last year, the US Congress overruled a presidential veto to allow lawsuits against countries perceived to be funding terrorist acts. They included Saudi Arabia. Fifteen of the 19 hijackers in the 9/11 attack were of Saudi origin. Lawsuits against the country are under way.

Bankers will need large trunks to carry the Saudi Aramco prospectus to come. Expect a thick section on risks. London looks a safer choice for a listing.

FT : The global stock exchange battle for Saudi Aramco’s IPO

The global stock exchange battle for Saudi Aramco’s IPO
Saudi oil group has much to weigh up about competing venues for record flotation

Saudi Arabia’s initial public offering of state energy giant Saudi Aramco planned for late next year is likely to be the largest ever, surpassing the $25bn raised by Alibaba in 2014.

Deep and active markets are essential for the one or two foreign stock exchanges chosen to host the shares, alongside a listing on the kingdom’s domestic market, the Tadawul.

Amin Nasser, chief executive of Saudi Aramco, this week said the company was evaluating different venues.

While New York and London are favourites to lead an international listing, according to sources, the company is studying others, including Hong Kong and Tokyo. Smaller rivals in Toronto, Europe and Singapore are also pitching for a role.

The big four offer access to great reserves of investor cash, but they also come with different sets of rules and requirements for officials to consider as they prepare a sprawling state enterprise for life as a public company.


New York

Saudi Aramco’s history might lead it stateside. Before nationalisation in the 1980s, it was controlled by a consortium of US oil companies. The company has ExxonMobil governance structures, and generations of Saudi executives attended American universities.

The pageantry of ringing the opening bell at the New York Stock Exchange is also a lure, alongside commercial arguments. “NYSE has historically been the deepest market and deepest not just in terms of trading volume, but also deepest in terms of the [investor and analyst] communities that assist the listed company,” says Ettore Santucci, a partner at law firm Goodwin.

As a foreign private issuer, the company would also be exempt from some onerous reporting requirements imposed on US companies: for instance, the need to avoid selective disclosure of non-public information to analysts and investors.

Home country or international accounting is acceptable, with a reconciliation to a US-style presentation. Practices can differ from US requirements, such as the need for a majority of independent board members, with an explanation where home market regulations differ from those of the US.

However, the Sarbanes-Oxley Act, passed in 2002 after several accounting scandals, requires robust internal controls at US listed companies. Regulators are strict on calculation of proven and probable oil reserves, requiring an independent review process to test the figures.

Saudi Arabia’s oil reserves have long been a state secret, beyond an unchanging published reserve number, but Khalid al-Falih, the energy minister, has said the kingdom will reveal the figures. He confirmed this week the partial completion of a third-party audit.

Politics could still intervene. A recent ruling to allow families of 9/11 victims to sue the kingdom — 15 of 19 hijackers were Saudi citizens — cannot be ignored. President Donald Trump has opened the door to better relations, but the fluidity of US foreign policy, particularly towards Middle Eastern countries, is seen as a potential wild card.

London

Saudi Arabia has long shopped in the UK for everything from racehorses to fighter jets — it is the largest buyer of British arms. Extensive diplomatic ties suggest the London Stock Exchange, home to some of the world’s biggest resource companies, is a natural choice.

The Financial Conduct Authority is also consulting on a new form of foreign listing, an “international segment” with looser rules than for the premium listing almost every company seeks. “It may be there is slightly more keenness to be open as an exchange following Brexit,” says Nicholas Holmes, partner at law firm Ashurst.

A premium listing usually requires board independence and other investor protections: equivalence between ownership and voting rights, pre-emption rights requiring UK shareholders be offered stock in future rights issues or sales of new shares.

Some flexibility in these rules already exists. Companies can take a comply or explain approach to the corporate governance code, and the authorities can waive a requirement to sell at least 25 per cent of shares if the market will be deep enough to operate properly, as it would probably be with Saudi Aramco. Merlin Entertainment, owner of Madame Tussauds, listed with an initial free float of 20 per cent in 2013, for instance.

A question, however, is the importance officials place on membership of prominent stock market indices. For a group incorporated outside the UK, a 50 per cent free float is required to join the FTSE 100. “Would it all be in vain if they can’t get suitable indexation?” asks Mr Holmes.

Hong Kong

Charles Li, head of the Hong Kong Stock Exchange, said last month that the world’s largest listings venue for the past two years was working “very hard” to secure a part in the Saudi Aramco float.

Positioned as the gateway for China, Hong Kong’s Stock Connect trading scheme is the only direct link between the outside world and the Shanghai and Shenzhen markets — the world’s second-largest pool of equity capital after New York.

The city already hosts three state-owned energy champions in PetroChina, Sinopec and Cnooc. “Hong Kong, London and New York are frankly the only markets with the knowledge of the sector, the peer group and the depth of liquidity to handle a float like this,” says Keith Pogson, senior partner in EY’s Asia-Pacific financial services practice.

“Hong Kong’s added advantage is we have tradition of working with state-owned enterprises and managing through the governance issues of that,” he said.

Bankers also say Hong Kong’s political stability may be an attraction, and technical requirements are unlikely to be an issue. Hong Kong demands a free float of 25 per cent of a company’s equity but this is regularly waived for deals over $1bn. Last year for example, Postal Savings Bank of China floated 15 per cent to raise $7.4bn in the biggest IPO worldwide since Alibaba.

One sticking point could be the strict one-share-one-vote stance, which saw Hong Kong lose Alibaba to a New York market tolerant of a self-selecting management structure.

Tokyo

Japan is going all out for Saudi Aramco, with orders from “very high in the government” to make it happen, if at all possible, say officials.

>>> Asia Update

Asia Mid-Session Market Update: Court unanimous in upholding South Korea President Park impeachment; PBOC officials justify use of reserves to prop up CNY

***US Session Highlights***
- (US) FEB IMPORT PRICE INDEX M/M: 0.2% V 0.1%E; Y/Y: 4.6% V 4.4%E
- (US) INITIAL JOBLESS CLAIMS: 243K V 238KE; CONTINUING CLAIMS: 2.06M V 2.06ME
- ECB leaves rates and QE targets unchanged, as expected
- (EU) ECB’s Draghi: Reiterated view that interest rates to stay low or lower for extended period; Signs that the cyclical recovery may be gaining momentum; risks surrounding euro zone growth outlook have become less pronounced but remain tilted to the downside
- ECB raises 2017/2018 GDP and inflation forecasts (inflation stays below 2% target)

***US markets on close: Dow flat, S&P500 +0.1%, Nasdaq flat***
- Best Sector in S&P500: Healthcare
- Worst Sector in S&P500: Real Estate
- Biggest gainers: SIG +8.7%, MRO +8.1%, FTR +4.4%, NRG +4.0%, EW +3.9%
- Biggest losers: SPLS -5.3%, PPG -3.7%, AAL -3.5%, RIG -3.1%, SPG -3.1%
- At the close: VIX 12.3 (+0.4pts); Treasuries: 2-yr 1.38% (+1bps), 10-yr 2.60% (+5bps), 30-yr 3.18% (+4bps)

***US movers afterhours***
- PAY Reports Q1 $0.21 v $0.21e, R$457M v $449Me; +0.8% afterhours
- ALR Loses in effort to immediately regain Arriva's Medicare billing rights - press; -3.2% afterhours
- LOCO Reports Q4 $0.12 v $0.13e, R$92.5M v $90.8Me- Guides initial FY17 $0.65-0.69 v $0.69e, SSS 0-2%; -4.4% afterhours
- ULTA Reports Q4 $2.24 v $2.13e, R$1.58B v $1.54Be; Adds $425M to buyback plan (2.5% of market cap); Guides Q1 $1.75-1.80 v $1.80e; R$1.24-1.27B v $1.28Be; -5.0% afterhours
- SGRY Reports Q4 $0.35 v $0.20e, R$306.0M v $298Me; Guides initial FY17 EBITDA +10-15% y/y, Rev +9-11% y/y, implies $1.25-1.27B v $1.29Be; -9.8% afterhours
- ZUMZ Reports Q4 $0.74 v $0.66e, R$263.6M v $262Me- Guides Q1 -$0.21 to -$0.17 v -$0.03e, R$178-182M v $185Me, SSS 0% to +2%; -14.3% afterhours
- FNSR Reports Q3 $0.59 v $0.61e, R$380.6M v $389Me; Guides Q4 $0.50-0.56 v $0.57e, R$360-380M v $389Me; -16.5% afterhours

***Politics***
- (US) Washington State joining Hawaii in requesting that US federal judge bans the latest Executive Order restricting travel from the Middle East - US press
- (US) Jon Huntsman accepts Pres Trump's offer to become ambassador to Russia - NY Times

***Asia Key economic data:***
- (JP) JAPAN Q1 BUSINESS SURVEY INDEX (BSI) LARGE ALL INDUSTRY Q/Q: 1.3 V 3.0 PRIOR; BSI LARGE MANUFACTURING Q/Q: 1.1 V 7.5 PRIOR
- (AU) AUSTRALIA JAN HOME LOANS M/M: 0.5% V -1.0%E; 3rd straight increase
- (NZ) NEW ZEALAND FEB CARD SPENDING M/M: -0.6% (first decline in 6 motnsh; biggest decline in 22 months) V -0.4%E; TOTAL M/M: -1.0% V 2.5% PRIOR

***Asia Session Notable Observations, Speakers and Press***
- Asian equity indices are markedly higher as more positive sentiment has resurfaced in Asia; Nikkei225 is the best performer, as higher US yields continue to support the greenback at the expense of the Yen; Risk-on flows have also put a bid in US equity futures going into tomorrow's NFP report, as traders bet the risk of a strong print following blow-out ADP numbers earlier this week. USD/JPY was up over 40pips above 115.30, a fresh 6-week high. In other FX majors, AUD/USD and NZD/USD are also higher by some 25pips from the lows, reversing some of the USD-strength driven weakness.
- Among key speakers, PBoC Gov Zhou and Dep Gov Yi Gang covered a range of topics at a local conference. Zhou forecast more stability in CNY this year, calling the recent volatility as normal, while also advocating for more open bond market to foreign investment. Zhou also said FX reserves had grown too fast over the past 15 years, and the recent use of funds in normalizing Yuan is acceptable. Dep Gov Yi added China will not devalue Yuan to stimulate exports after this week's surprise trade deficit.
- South Korea has taken a big step in normalizing its political situation at a time when extra vigilance is needed to deal with North Korea provocations. South Korea Court Justices unanimously uphold Pres Park's impeachment, and a new election is expected to be held in the next 60 days. Finance officials are closely monitoring for any protracted impact on the markets, while analysts with NAB note the political transition is constructive as candidates for the post are all in favor of reforming the chaebol system.

China
- (CN) PBoC Gov Zhou Xiaochuan: Fed factor contributing to volatility in FX; CNY expeted to be stable this year - press
- (CN) Goldman Sachs raises China 2017 GDP forecast to 6.6% from 6.5% prior guided

Japan
- (JP) According to one survey, analysts are unanimous in expectation for BOJ to leave all policy settings unchanged next week - press

Korea
- (KR) South Korea Court Justices unanimously upholds Pres Park impeachment; South Korea to hold a special presidential election within 60 days
- (KR) South Korea Finance Ministry: Closely watching financial markets
- (KR) NAB: Impeachment ruling for Korea's Pres Park is a positive for Korean stocks - press

***Asian Equity Indices/Futures (00:30ET)***
- Nikkei +1.4%, Hang Seng +0.2%, Shanghai Composite flat, ASX200 +0.6%, Kospi +0.3%
- Equity Futures: S&P500 +0.2%; Nasdaq +0.3% Dax +0.1%; FTSE100 +0.1%

***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.0570-1.0600; JPY 114.90-115.35; AUD 0.7500-0.7525; NZD 0.6890-0.6915
- Apr Gold -0.5% at $1,197/oz; Apr Crude Oil +0.6% at $49.61/brl; May Copper flat at $2.58/lb
- SLV iShares Silver Trust ETF daily holdings fall to 10,268 tonnes from 10,303 tonnes prior; 11-month low
- GLD: SPDR Gold Trust ETF daily holdings fall 2.7 tonnes to 834.1 tonnes; lowest since Feb 9th; 3rd straight decline; Apr Gold extending decline below $1,200; 5-week lows
- (CN) PBOC SETS YUAN MID POINT AT 6.9123 V 6.9125 PRIOR; first stronger setting in 4 sessions
- (CN) PBoC skips open market operations for 2nd straight session; Drains net CNY110B this week vs CNY280B
- (JP) BOJ announces amounts to buy in upcoming QE operation; lowers 1-3-yr JGB purchases to ¥300B from ¥320B
- (AU) Australia MoF (AOFM) sells A$600M in 5.75% 2021 Bonds; avg yield: %; bid-to-cover: 5.26x

***Asia equities / Notables / movers by sector***
- Consumer discretionary: TWE.AU Treasury Wine +3.2% (Seeks to maintain earnings margin in Asia); DLX.AU Dulux Group +2.3% (Ellerston initiates holding); RFG.AU Retail Food Group +2.5% (UBs initiates holding)
- Consumer staples:090430.KR Amorepacific Corp +0.4% (South Korea court ruling)
- Financials: 665.HK Haitong International Securities Group -0.9% (FY16 result); 4.HK Wharf +8.8% (FY16 result, to scrap i-CABLE); 8795.JP T&D Holdings +4.2%, 8750.JP Dai-Ichi Mutual Life Insurance +3.0% (Nomura raises rating)
- Industrials: 368.HK Sinotrans Shipping -7.5% (FY16 result); CSR.AU CSR +5.1% (JPMorgan raises rating); 9202.JP ANA Holdings Inc +3.5% (Tier 1 firm raises rating)
- Technology: 2038.HK FIH Mobile -1.9% (FY16 result); 6502.JP Toshiba Corporation +1.2% (asset sale consideration); 1097.HK i-Cable Communications -35.5% (Wharf scraps interest); 732.HK Truly International Holdings -13.9% (profit warning)
- Materials: JSP.IN Jindal Steel +4.7% (India court rejects pleas on coal block bid); ILU.AU Iluka -1.8% (Gearing likely to remain elevated among increased capex outlook)
- Healthcare: NRT.AU Novogen Limited -8.6% (CFO resigns)

>>> Emerging-Market Rally Has Room to Run, Morgan Stanley Says

Emerging-Market Rally Has Room to Run, Morgan Stanley Says
Valuations of EM assets aren’t looking “frothy” and dips present opportunities to buy, Morgan Stanley analysts, led by Hans Redeker, global head of fx strategy, write in report.
  • This week’s wobble in EM is not due to sensitivity to a more hawkish Fed but more related to drops in stocks and commodities
  • Morgan Stanley forecasts 7 Fed hikes through the end of 2018, compared with around 5 priced in by the market at the moment
  • Not every Fed tightening cycle results in EM weakness and USD strength, as seen in the 2004-2006 period
  • Near-term weakness in EM is possible, and should global markets struggle Morgan Stanley is adding a long USD/KRW position
  • NOTE: EM stocks have fallen 1.6% in past 3 days, while EM currencies dropped 0.9%: MSCI indexes