>>> Asian Update

Asian Mid-session Update: Cloud of weak US non-farm payrolls hangs over markets


***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -0.2%, S&P/ASX closed, Kospi +0.2%, Shanghai Composite closed, Hang Seng closed, Jun S&P500 -0.7% at 2,045

***Commodities/Fixed Income***
- Jun gold +1.4% at $1,217/oz, May crude oil +1.4% at $49.85/brl, May copper +0.5% at $2.75/lb
- (KR) South Korea Fin Ministry sells 3-year bonds at 1.71%
- BTC/USD: BNK Mellon to experiment with bitcoin, as a potential way for transactions - press

***Market Focal Points/FX***
- Much of Asia remained close, and thin holiday conditions has made it difficult to gauge the regional response to the US employment data disappointment on Friday. However, as US heads into its Q1 earnings season, much of the focus in the coming week will be on whether March report was a cold-weather derived aberration, or the onset of a less impressive labor trend as more companies struggle with dollar strength. S&P500 futures are pointing to a lower open, while the US treasuries have maintained their firm tone from Friday's bounce, with the yield on the 10-year remaining around 1.83%. USD/JPY opened slightly lower below 118.90 but briefly retested 119. EUR/USD opened up by 30pips above 1.10 but reverted below 109.80 later in the session. Metals, energy, and commodities all traded higher as investors pushed out expectations of the first Fed rate hike deeper into late 2015.

- In Europe, the Greece situation remains unsettled even though IMF head Lagarde held a meeting with Greece Finance Minister Varoufakis, maintaining that Athens will make a debt repayment to the IMF on Apr 9th as scheduled. In turn, Varoufakis said discussions with Lagarde were fruitful, reiterating the Greek govt is planning "deep" reform measures.

***Equities***
US equities / ADRs:
- RIO: Mongolia govt approves new phase of the Oyu Tolgoi mine project; To result in $4.2B investment - financial press; 6-month moratorium on merger talks with Glencore to expire on Tuesday; Potential merger hinges on price of copper relative to price of iron ore - financial press
- TSLA: West Virginia Gov signed bill to ban Tesla's direct sale in West Virginia - techblog

Notable movers by sector:
- Consumer Discretionary: Asahi Co 3333.JP -9.0% (FY14/15 results); Jin Co Ltd 3046.JP +6.5% (FY14/15 guidance)
- Technology: Samsung Electronics 005930.KR +3.3% (press speculation on Q1 results); Toshiba Corporation 6502.JP -5.9% (to investigate possible accounting problems); Sharp Corp 6753.JP +6.5% (press speculation on spin-off; considering restructure options)

>>> What to look at today - Week End 4th & 5th of April

The first quarter of 2015 came to an end this week, with Europe and Asia equities up big, while the S&P500 underperformed and the DJIA posted a losing quarter for the first time in two years. There were some green shoots in European and Chinese data. China's March PMI data showed manufacturing returned to expansion after two months of contraction, while Euro Zone manufacturing registered its 21st straight month of growth. But Friday's US payrolls data disappointed, posting the worst gain in over a year, and sending treasury yields and the dollar lower. The Iran talks were extended past the Tuesday deadline, allowing negotiators to arrive at a preliminary agreement that hopes to curtail Tehran's nuclear ambitions. For the week, the DJIA rose 0.3%, the S&P500 gained 0.3% and the Nasdaq slipped 0.1%.

Macro :
- Greece Has Cash to Make IMF Payment Next Week, Minister Says
- Italy Won’t Increase VAT in 2016, Renzi Tells Il Messaggero


Keep an eye on :
- A2A IM : A2A May Be Aggregator With CDP Entering Capital, Corriere Says
- AFR LN : Afren to Name Alan Linn as New CEO: Sunday Times
- AIR FP : New govt of Sri Lanka said to have launched a criminal investigation of $2.3B purchase of 10 aircraft by the former govt
- AIR FP : India May Agree to Jointly Build Helicopters With Airbus: JD
- ATST LN : Alliance Trust former chairman weighs in against activist Elliott Advisors - Sunday Telegraph
- BAYN GY : Bayer’s CEO Injects a Dose of U.S. Risk-Taking - WSJ
- CAP FP : Capgemini CEO Sees Growth at 5% to 7% in Three Years: Investir
- EDF FP : Areva, Edf Will Soon Make Proposals to Government, Royal Says
- ENI IM : Eni Not Planning Acquisitions, CEO Descalzi Tells Corriere
- GATE SW : Gategroup Compromises With Hedge Funds on Board Candidates
- GSZ FP : Belgian Nuclear Plant Profit Estimate Drops for 2014, Echo Says
- GLEN LN : Still interested in Rio, Glencore barred of biding till next week according to FT artcile
- HEI GY : Holcim was interested in HeidelbergCement before Lafarge clipboard - RTR
- LG FP : Lafarge-Holcim Urged to Pick Chief Able to Unify Factions: FT
- CFR VX : Net-a-Porter Executives, Investors Seek to Sell Stakes: Reuters
- TATE LN : Ajinomoto Considering Bid for Tate & Lyle’s Splenda: Telegraph

WSJ : Producer Prices Could Signal Turnaround in Europe

Producer Prices Could Signal Turnaround in Europe
The eurozone producer-price index normally flies beneath investors’ radar. It may be time to pay attention

With inflation, or its absence, in the market’s sights, every number counts.

As economic indicators go, eurozone producer-price data tends to get elbowed aside by its bigger sibling, the harmonized index of consumer prices. This is understandable. Producer prices can be volatile and don’t drive monetary policy. But with the European Central Bank buying government bonds, the euro having slumped and signs of eurozone growth starting to bubble up, producer prices due Tuesday are worth watching.

The last reading for January showed a steep decline: The index fell 0.9% from the previous month and 3.4% from a year ago. Annual eurozone producer-price inflation has been negative since August 2013; in January, prices fell from the year-ago month everywhere except in Luxembourg.

ENLARGE
As with consumer prices, a lot of this is due to energy costs. Excluding those, producer prices were down 0.7% in January from a year earlier. But it is still a signal that companies lack pricing power. That raises the risk of entrenching more subdued expectations, potentially denting expansion and investment plans. This, in turn, threatens the sustainability of the nascent eurozone recovery. While there are many tailwinds at the moment, growth still isn’t broad-based.

Producer prices, though, might start to show some hopeful signs. Annual consumer inflation moved off its lows in February and March, even if the latest flash reading showed it still slightly negative. And survey data have suggested manufacturers are joining in the eurozone recovery.

Markit’s manufacturing purchasing managers index rose to a 10-month high of 52.2 in March, with incoming business picking up. Companies said they were hiring at the fastest pace in more than 3½ years. Significantly, the survey showed a big rise in input prices, the first in seven months, and broadly stable selling prices. There is evidence the weaker euro is having an effect on import prices. They rose 0.8% in February from a month earlier in both Germany and France.

Meanwhile, the credit straitjacket is loosening for companies. Most important, borrowers seem willing to take on debt. Manufacturers might get their mojo back.

A recovery in eurozone producer prices would be another reason to believe growth is becoming more robust. It also would be another sign last year’s deflation scare was just that—a scare.

FT : Barrick chairman aims to put shine back in gold miner

Barrick chairman aims to put shine back in gold miner

When John Thornton came to Barrick Gold, he found what he calls a “contaminated” culture that meant the world’s biggest and most valuable gold miner had well and truly lost its shine.
For the former Goldman Sachs banker, the evidence was in deals such as Equinox, the copper miner that Barrick bought for C$7.3bn in 2011 and has now written off mostly.

It was also in projects such as Pascua-Lama, an Andean gold deposit whose estimated cost more than doubled before Barrick halted the development unfinished.
“Most outstanding companies, after some period of time, tend to drift off and lose their way,” says Mr Thornton now. In almost a year since he took over as executive chairman from Peter Munk, Barrick’s elderly founder, he has seen his job as reversing that drift.
Barrick’s chief executive departed last year while new cohorts have been ushered into the executive suite and into the boardroom. Head office numbers in Toronto have almost halved and lines of command cut between Canada and Barrick’s far-flung mines.
Barrick will be more rigorous about spending, Mr Thornton says, and executives will have to hold large amounts of stock until retirement to make sure they think like shareholders.
Speaking in London, in his first interview as executive chairman, Mr Thornton acknowledges that these are just assertions of improvement. Barrick, he says, is now “meaningfully different [but] we still have a long way to go”.
Barrick’s share price — it has lost its position as the most valuable gold miner by market capitalisation — suggests investors are biding their time.
The miner is lumbered with debt that is almost as large as its $13bn stock market value. The gold price is also volatile, having come down more than one-third since 2011.
The debt is a big concern amid such volatility, says Mr Thornton. “If I owned a gold company personally it would have no debt. The fact that we have a lot of debt . . . is not a good place to be.”
Barrick has vowed to cut $3bn from more than $10bn of net debt this year. Mr Thornton says Barrick is confident about disposals and more clearly understands the value of its assets.
Chariman of Barrick Gold, John Thornton©Luke MacGregor
John Thornton
He cites a turnround at Acacia Mining, Barrick’s UK-listed African subsidiary, which Barrick was keen to sell before a new chief executive triggered big improvements with an operating overhaul.
Mr Thornton’s conclusion is: if Barrick misunderstood this asset, what else has it got wrong? “The deeper you look [at the assets] the better they look — there is value that was not being optimised previously,” he now says.
Mr Thornton was anointed by Mr Munk as his successor, following a stellar career at Goldman, where he rose to become president, and then a role in Chinese academia that has made him an acknowledged expert on relations with Beijing. A long-term goal remains to develop a strategic relationship between Barrick and China.
Yet the American has been part of recent uncertainty and investor discontent at Barrick, brought in to the company at significant expense and blamed publicly by Newmont Mining, Barrick’s US rival, for the failure of a potential merger deal last year.
Gold price
In his limited public statements, Mr Thornton sent mixed messages on whether Barrick would diversify, initially suggesting that this was an aim, but then this year saying Barrick would remain focused on gold.
Mr Thornton says diversification remains possible — in the longer-term. “This is not carved in stone for all time,” he says.
Jorge Beristain, an analyst at Deutsche Bank in the US, says senior executives’ pay at Barrick remains a source of investor concern. Mr Thornton was paid $13m, mainly in stock, by Barrick for 2014.
“Shareholders want to feel that management shares their pain but instead they see that they are still being well rewarded, whether in stock or cash. There is a feeling that Thornton and the others are in an ivory tower and not yet rolling up their sleeves,” Mr Beristain says.
Mr Thornton argues that Barrick’s new pay structure, including shares that cannot be sold until their holder leaves the company, is “the most owner-centric system in the world”.
But he admits there will be “counter-intuitive” years “where we are turning ourselves around but it hasn’t shown up in the share price”.
Gold mining
As for Newmont, the deal failed because of differences over how to spin off non-core assets, Mr Thornton says. “Sitting here today, Newmont is nowhere on our radar screen . . . we have plenty to focus on to get where we want to be.” Newmont declined to comment.
Mr Thornton says his role is about setting the framework for Barrick to operate. “I am not, and nor do I want to be, involved in the day-to-day running of the business,” he says. “Think of me as both architect and spiritual keeper of the flame, in the same way as Peter Munk was.”

FT : Investors expect European banks to outperform, key survey finds

Investors expect European banks to outperform, key survey finds

BRUSSELS, BELGIUM - OCTOBER 24: European Union flags are pictured outside the European Commission building on October 24, 2014 in Brussels, Belgium. Alongside criticism from outgoing European Commission president Jose Manuel Barroso on the UK's stance on EU immigration and a plan to quit the European Court of Human Rights, the UK has now been told to pay an extra £1.7bn GBP (2.1bn EUR) towards the EU's budget because its economy has performed better than expected. (Photo by Carl Court/Getty Images)©Getty
European banks will beat other financial sector investments this year but valuations will not catch up to international peers until regulatory uncertainty fades and loan growth picks up, a survey of investors by Morgan Stanley has found.
The bank polled about 200 investors at a recent closed-door London conference that attracted about 120 chief executives and finance heads from global banks, as well as policy makers and about 800 investors. Most investors answered only some of the questions.

“Europe as a whole is by far the preferred equity region for the next 12 months, favoured by 56 per cent of pollsters, followed by the US at a distant 20 per cent,” said Huw van Steenis, Morgan Stanley’s head of European bank research.
“Forty per cent of the investors polled think European banks are going to outperform in the next 12 months, while a close 30 per cent favour diversified financials. Insurers have lost ground and only 13 per cent of voters thought they would outperform this year.”
European banks have traded at a discount to US peers since mid-2009, as investors bought into American banks’ post-crisis restructuring and remained sceptical about their transatlantic cousins’ progress. Now, the MSCI US banks index is priced at about 110 per cent of its constituents’ book value. The MSCI European banks index is priced at about 90 per cent.
About a third of investors said European banks would not “re-rate”, or trade at higher materially valuations, until concerns about future regulatory requirements and capital demands eased.
Almost half of the investors fear the European Central Bank will set a common equity tier one ratio of at least 12 per cent for the 130 eurozone banks it supervises, well above the 4.5 per cent demanded by international rules and the 8 per cent set in the ECB’s recent stress tests.
More than half expect European banks to raise at least €20bn of equity this year over and above equity raises that have already been announced.
The next biggest hurdle to re-rating was loan growth, with a quarter saying it was a necessary precondition for improved banks’ valuations. Bank lending contracted sharply during the eurozone crisis, as demand fell in recession-hit countries and banks grappled with new regulations compelling them to have more capital relative to their loans.
Numerous efforts by policy makers, including trillions of euros of ultra-cheap long-term funding from the ECB, have so far failed to turn the tide. “Loan growth is key to unlocking value,” Mr van Steenis said.
He said he found the most surprising finding to be the fact that almost 60 per cent of respondents believed the cost of equity for banks should be 7-9 per cent, the lowest level at which investors have priced since 2007.
“Investors are reassessing the sector’s risk, prompted by QE [quantitative easing] and a perception that the uncertainty in banks’ share count is now perceived to be as low as it’s been since the crisis,” Mr van Steenis said.

FT : Glencore’s Glasenberg bides his time on Rio Tinto

Glencore’s Glasenberg bides his time on Rio Tinto

Ivan Glasenberg is not a chief executive short of opinions. But for the past six months, he has been uncharacteristically silent on one topic.
In October, Glencore, the company he leads, revealed that an informal merger approach to its larger rival, Rio Tinto, had been rebuffed some months earlier.
Under the provisions of UK takeover law, the revelation started an important clock ticking: Glencore was barred from further discussing the Anglo-Australian mining group for a full six months — a period that expires next week.
Will Glencore return with another approach to Rio? A combination of the second and largest miners by market value would create a $130bn resources group with an unprecedentedly broad exposure to a range of raw materials.
It would also be a decisive way to try to fight the gloom in commodity markets, where prices continue to soften amid concerns about slowing growth in China. But six months on, there are few reasons to think Rio shareholders would be interested in merging with a smaller rival. “Glencore still needs Rio more than the other way around,” said Ben Davis, analyst at Liberum.
It was immediately clear in the aftermath of October’s revelations that, for Glencore to pull off a deal, many stars would have to align. So far that has not happened. While the price of iron ore, the source of about 80 per cent of Rio’s earnings last year, has slumped to its lowest level in decade, the company has managed to increase its dividend, launch a share buyback and cut its debt.

This has helped support Rio’s share price and means that Glencore is no closer to solving the main obstacle to any deal: the fact that Rio remains a bigger company.
“The likelihood of a deal being announced in the near term remains unlikely,” said Jeff Largey of Macquarie Bank in London.
When Mr Glasenberg called Rio chairman Jan du Plessis to pitch the merger idea, the Glencore/Rio share ratio was around 9:1, that is, the price of a Rio share was equal to about nine of Glencore’s. That widened to 12:1 in January as the price of copper, Glencore’s most important commodity, slumped. It is now just under 10:1.
“We still wouldn’t even expect the possibility of a bid till the share ratio gets to below 8:1. Even then I don’t see where there is a sweet spot that gives enough premium for Rio shareholders and is not too dilutive to Glencore shareholders,” said Mr Davis.
Institutional investors are largely content with the job Sam Walsh, Rio’s chief executive, has done in pruning costs and cutting spending, even if some have reservations about his strategy of pumping more iron ore into the market, in an effort to keep market share and drive higher-cost producers out of business.
“Mr Walsh has shown that he can and will cut costs,” said Michael Hulme of Carmignac Gestion, a fund manager.

The relatively weak performance, which analysts attribute to Glencore’s debt levels, is not the only reason a fresh approach looks unlikely. Glencore’s triple B credit rating could be in jeopardy if it attempts a major deal this year.
Furthermore, Rio remains resolutely opposed to a combination of the two businesses. Mr Walsh told an audience at Chatham House in February that even if Glencore could come up with an offer that was attractive for Rio shareholders, a merger would never happen because it would not clear regulatory hurdles.
“The interesting thing is that, the media are sort of infatuated with this, and I guess it’s because it sells newspapers or gets people watching TV or what have you. But as I move around investors, investors say: ‘I don’t get it. Why are you giving this any ear? Because it actually isn’t going to happen’,” he said.
But for Mr Glasenberg, the attractions of a deal remain. Not only would it create the world’s biggest resources company but Glencore would get access to Rio’s balance sheet and its Australian iron ore assets, widely acknowledged to be the best in the industry.
Yet the steelmaking ingredient, which plunged 50 per cent in 2014, has extended its losses this year on concerns about a supply glut and currently iron ore languishes below $50 a tonne.
It means Mr Glasenberg’s best option is to remain patient.
“Glencore is content to let the iron ore price continue to fall and put further pressure on iron ore miners,” says Mr Largey. “Rio’s balance sheet remains solid but further weakness in iron ore prices will weigh on its valuation and affect the way investors feel about the company.”

>>> Alliance Trust former chairman weighs in against activist Elliott Advisors

Alliance Trust former chairman weighs in against activist Elliott Advisors

Alliance Trust’s former chairperson, Lesley Knox, is supporting her successor, Katherine Garrett-Cox, against activist shareholder Elliott Advisors, The Sunday Telegraph reported.

Knox wrote to the newspaper expressing her scepticism that Elliott is a long-term investor and adding that a buyback proposed by the activist would be detrimental to other shareholders in the UK-listed investment company.

The ex-chair stressed that she is investing in Alliance Trust for the long term to fund her pension and is seeking certainty of returns rather than volatile performance and a high level of investment risk, the item reported.

Elliott is nominating three new non-executives to the board of Alliance Trust and the matter will be put to a vote at the company’s annual general meeting on 29 April, the report said, adding that Knox stated she will vote not to elect the three nominees.

Alliance Trust is hoping to persuade its shareholders not to vote for Elliott’s proposals, and the company’s position is strengthened by Knox’s comments, the report said.

Sunday Telegraph

WWD : The Kooples Said to Be Drawing Interest From Private Equity

PARIS — Hot French fashion chain The Kooples is the latest “affordable luxury” property to get private equity players into a lather.

According to sources, General Atlantic’s chief executive officer William E. Ford met with Kooples executives in Paris last month, and private equity fund Permira has also kicked the tires.

Reached on Thursday, Kooples ceo Nicolas Dreyfus told WWD he has met with many private equity funds that are attracted by the retailer’s strong results and growth prospects, confirming the meetings with General Atlantic and Permira. But he said there is no official sale process and no bank has been given a mandate to explore a possible sale.

Founded in 2008 by brothers Alexandre, Laurent and Raphael Elicha, The Kooples is ramping up expansion in the U.S. and tracking double-digit growth.

In a recent interview, Dreyfus said the brand was logging same-store sales growth of 9 percent in the U.S. and the brand was on track to finish its fiscal year ending Aug. 31 with sales of $28 million in the U.S. and Canada.

The company is forecasting total sales of 220 million euros, or $267.4 million at current exchange, this fiscal year, which represents 20 percent growth year-on-year in reported terms and a same-store sales increase of 9 percent.

Dreyfus predicted earnings before interest, taxes, depreciation and amortization of 38 million euros, or $46.2 million, for the period, and this will help fund the firm’s expansion.

In 2011, the Elichas sold a 20 percent stake in the company’s capital to private equity fund LBO France, the first of many transactions involving fast-growing French labels with a high fashion quotient and an “affordable luxury” positioning.

LBO declined to comment Thursday. It is understood the fund has also received expressions of interest, but not launched any formal process.

TA Associates acquired a 30 percent stake in Zadig & Voltaire in 2012, and Kohlberg Kravis Roberts & Co. bought a 65 percent stake in SMCP, parent of the Sandro, Maje and Claudie Pierlot chains, in 2013, signaling heightened investor interest in the segment.

Alongside BDT Capital Partners, General Atlantic made a minority investment in Tory Burch, an American fashion brand with attainable positioning, in late 2012.

The Kooples recently opened its fifth American boutique on SoHo’s Mercer Street, its second store in New York. The brand — whose preppy clothes have a rock ’n’ roll slant and are aimed at couples — is also carried by Saks Fifth Avenue and Nordstrom, as well as specialty stores.

The Kooples operates about 150 wholly owned stores in Europe and boasts a total of 360 sales points worldwide.

RTR - Holcim was interested in HeidelbergCement before Lafarge clipboard

Holcim was interested in HeidelbergCement before Lafarge clipboard

ZURICH, April 5 (Reuters) - Holcim studied late 2013 the possibility of a takeover bid for German HeidelbergCement before opting for its proposed merger with the French Lafarge, reported Sunday the Swiss newspaper SonntagsZeitung.

The then president of the Swiss cement, Rold Soiron, had contacts with the major shareholder of HeidelbergCement, Ludwig Merckle, said the Sunday paper on the basis of two sources.

"Just before his talks with Lafarge, Soiron discussed a merger with Heidelberg," said one of them. "Heidelberg has declined to blame proposal to obtain a merger of equals."

A spokesman for Holcim has declined to comment and HeidelbergCement could not be reached immediately.

The merger between Holcim and Lafarge, expected to create the world's biggest cement, was announced in April 2014 but was plunged into doubt in recent weeks, the Swiss party challenged the terms of the merger.

Holcim and Lafarge agreed to renegotiate a new exchange ratio of more favorable actions for the Swiss part but some investors, including Russian billionaire Filaret Galtchev second shareholder of the Swiss group with 10.8% of the capital, continue to challenge .

The uncertainty also concerns the choice of the Director General of the future group LafargeHolcim, Bruno Lafont, Lafarge's boss, who agreed under pressure to give up this position only to be non-executive co-chairman.

Holcim shareholders will vote on the project on May 8

In an interview published this weekend by the newspaper Le Monde, Bruno Lafont ensures that the merger "is not in danger."

>>> Israel PM Netanyahu: Reiterates opposition to Iran nuclear agreement as a "b

Israel PM Netanyahu: Reiterates opposition to Iran nuclear agreement as a "bad deal" that "endangers" Israel - CNN 
- Says: "It doesn't roll back Iran's nuclear program... It keeps a vast nuclear infrastructure in place. Not a single centrifuge is destroyed. Not a single nuclear facility is shut down, including the underground facilities that they built illicitly. Thousands of centrifuges will keep spinning enriching uranium. That's a bad deal.... I think it will also spark an arms race with the Sunni states."