TheChek News Flow

* Moving on to BofAML Europe 1 list. Further upside

>>> Up

888 bid from William Hill unlikely to succeed

Sika gains support of shareholder group comprising former Sika directors and senior managers 

Asian Mid-session Update: Japan crawls out of technical recession; Greece prepares for tough negotiations

***Economic Data***

- (JP) JAPAN Q4 PRELIMINARY GDP Q/Q: 0.6% V 0.9%E; ANNUALIZED GDP: 2.2% V 3.7%E; GDP Deflator: 2.3% v 1.9%e

- (CN) China Jan FDI Y/Y: 29.4% v 10.3% prior

- (NZ) NEW ZEALAND Q4 RETAIL SALES EX-INFLATION Q/Q: 1.7% (matches 2-year high) V 1.3%E; EX-AUTOS: 1.5% V 1.4% PRIOR

- (NZ) NEW ZEALAND JAN PERFORMANCE SERVICES INDEX: 57.8 V 56.7 PRIOR; highest level since July 2014

- (AU) AUSTRALIA JAN NEW MOTOR VEHICLE SALES M/M: -1.5% V 2.6% PRIOR; Y/Y: +0.2% V -1.1% PRIOR

- (TH) THAILAND Q4 GDP Q/Q: 1.7% V 2.1%E; Y/Y: 2.3% V 2.0%E

- (KR) South Korea Jan Bank Lending to Households (KRW): 519.5T v 519.1T prior

***Index Snapshot (as of 03:30 GMT)***

- Nikkei225 +0.7%, S&P/ASX 0.0%, Kospi +0.1%, Shanghai Composite +0.2%, Hang Seng +0.2%, Mar S&P500 -0.2% at 2,090

***Commodities/Fixed Income***

- Apr gold +0.5% at $1,233/oz, Mar crude oil -0.5% at $52.54/brl, Mar Copper -0.3% at $2.60/lb

- GLD: SPDR Gold Trust ETF daily holdings fall 3.2 tonnes to 768.3 tonnes; lowest since Feb 4th

- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥400B in 3-5yr JGBs and ¥400B in 5-10yr JGBs

- (KR) South Korea sells 10-yr govt bond, avg yield at 2.435%

***Market Focal Points/FX***

- Japan economy resurfaced after two consecutive quarters of decline with a modest expansion, however its growth rate was well below expectations. Annualized GDP of 2.2% in Q4 was below 3.7% consensus, even as nominal (pre-inflation) growth was just below target at 1.1%. Exports bounced sharply by 2.7%, up from 1.5% in Q3, but consumption and private CapEx components weighed on recovery, rising just 0.3% (0.8%e) and 0.1% (1.0%e) respectively. Picking through the overall soft data, govt officials continued to cheerlead selectively. Econ Min Amari focused on rebounding Deflator component as indication of favorable conditions toward beating deflation, adding real wages and consumer sentiment have turned higher in the last month of the quarter. Cabinet Sec Suga noted prices are rising, but wages are not catching up.

- China's FX regulator SAFE warned continued volatility in capital movements could prompt the authorities to institute a short-term fix in the exchange rate, pointing to the most recent rise in outflows in 2014. Jan FDI spiked by 29%, well above the 10% increase in Dec, while MOFCOM spokesperson forecasted 2015 FDI growth to remain stable. MOFCOM's Shen added trade growth outlook is not optimistic, even though he still saw further exports growth. Separately, Chinese press reports cited NDRC official estimating China needs GDP of at least 6.5% for 2016-2020 period to meet medium term growth objectives, and a govt policy advisor anticipated further PBoC easing and tolerance toward CNY weakness to achieve an around 7% growth this year.

- Greek PM Tsipras made a last-ditch effort to enter Monday talks from a more favorable position, holding a phone call with EU's Juncker to discuss the options for continued aid. Latest reports from the EU side suggested there was little reason for optimism, though talks could still result in a "technical bailout" linked to updated terms of relief, which would allow Syriza leadership to present the outcome as a moral victory. Eurogroup's Dijsselbloem said "Greeks have sky-high ambitions", but "possibilities, given the state of the Greek economy, are limited." In the mean time, Syriza govt has already started to roll back further privatisation efforts, as the govt froze the €1.2B deal with Germany's Frapport to run 14 Greek airports.

- Ukraine ceasefire is now over 24 hours old and appears to be "generally" holding. Transport hub of Debaltseve remains the key battleground, and here Ukraine military continues to come under shelling attacks from the pro-Russia rebels. Late on Sunday, leaders from Germany, France, Russia and Ukraine offered praise for upholding de-escalation, and looked forward to Tuesday's expected withdrawal of heavy weaponry.

***Equities***

US markets:

- AAPL: Follow-up: Apple working on a company-branded electric vehicle model as part of a car project dubbed "Titan" - financial press

Notable movers by sector:

- Consumer discretionary: China Southern Airlines 1055.HK -2.2% (Jan operating results); Asics Corp -9.9% (FY14 result)

- Industrials: China State Construction Engineering 601668.CN +2.0%(Jan operating results); Fanuc 6954.JP +3.8% (to expand capacity); Aurizon Holdings AZJ.AU -2.8% (H1 result)

- Healthcare: China Medical System 867.HK +4.0% (FY14 guidance)

- Financials: Tong Yang Life 082640.KR -6.8% (speculation for China Anbang Insurance to acquire controlling stake); Shengjing Bank 2066.HK -1.1% (PBoC to lower deposit reserve ratio); Cinda International 111.HK -10.6% (FY14 guidance); China Merchants Bank 600036.CN -1.6% (FY14 prelim result); Gemdale Property 535.HK -2.4% (FY14 profit warning); Bendigo and Adelaide Bank BEN.AU -4.0% (H1 result); QBE Insurance Group QBE.AU +2.7% (To sell agency business)

- Technology: NavInfo Co 002405.CN +10.0%(China major taxi apps confirm merger); Ourpalm 300315.CN +10.0% (acquisition announcement)

- Materials: Kuraray Co 3405.JP -3.4% (FY14 result)

Rolls-Royce accused in Petrobras scandal

Rolls-Royce has been accused of involvement in a multibillion-dollar bribery and kickback scheme at Petrobras, Brazil’s state-controlled oil producer, as more foreign companies are dragged into the country’s largest corruption scandal.

The British engineering company, which makes gas turbines for Petrobras oil platforms, allegedly paid bribes via an agent in exchange for a $100m contract as part of a scheme in operation during much of the past decade, according to testimony from a former Petrobras executive.

Pedro Barusco, the Petrobras veteran who has emerged as one of the investigation’s key informants, told police he personally received at least $200,000 from Rolls-Royce — only part of the bribes he alleged were paid to a ring of politicians and other executives at the oil company. The admission was buried in more than 600 pages of documents released by Brazil’s federal court system this month, detailing the testimonies of Mr Barusco who struck a plea bargain in November.

Responding to Mr Barusco’s accusations, Rolls-Royce said: “We want to make it crystal clear that we will not tolerate improper business conduct of any sort and will take all necessary action to ensure compliance.”

The accusations come as Rolls-Royce also faces a Serious Fraud Office investigation in the UK over allegations of bribery and corruption in China and Indonesia. They also come as the company is undergoing a painful restructuring, revealing its first fall in underlying sales in a decade and predicting a bigger than expected fall in profits in 2015.

Rolls-Royce is the latest foreign company alleged to be involved in Brazil’s Petrobras scandal, which threatens to engulf the government of President Dilma Rousseff only two months into her second term and push the country’s most important company into technical default.

Brazil’s authorities are already investigating allegations that Petrobras officials accepted bribes from SBM Offshore, a Netherlands-based supplier of offshore oil vessels. SBM has said it is co-operating with the investigation.

Units of two Singaporean companies, Keppel Corporation and Sembcorp Marine, along with three Brazilian shipbuilders with large Japanese shareholders, have also been accused of participating in the bribes-for-contracts scheme. Keppel and Sembcorp have denied the allegations.

The $100m man’s guide to Brazilian graft

Workers from a company under contract for the Brazilian state-owned oil company Petrobras take part in a protest to demand the payment of three months of wages in arrears, in Rio de Janeiro, Brazil, on February 5, 2015. The chief executive of Brazilian oil giant Petrobras, Graca Foster, resigned along with the entire board of directors as the company reels from a massive corruption scandal, officials said. AFP PHOTO/VANDERLEI ALMEIDAVANDERLEI ALMEIDA/AFP/Getty Images

Allegations threaten to harm government and bankrupt nation’s most important group

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The Petrobras scandal emerged when the former head of the oil company’s refining unit, Paulo Roberto Costa, also struck a plea bargain after being arrested for money laundering in March. According to the testimonies of Mr Costa, Mr Barusco and other informants, Petrobras contractors paid bribes for much of the past decade to executives and politicians from the ruling coalition led by Ms Rousseff’s PT party, in exchange for billions of dollars in contracts. Analysts estimate the scheme has cost Petrobras more than $20bn.

The PT said the allegations are without proof and has promised to sue the “accusers”.

In the latest testimony, Mr Barusco, who helped set up Petrobras’s major rig supplier Sete Brasil after a 30-year career at the state-controlled company, said the kickback scheme was managed by several “operators” or agents who acted on behalf of groups of companies.

Mr Barusco alleged that his friend Luiz Eduardo Barbosa, a former executive of Swiss engineering group ABB, was responsible for organising bribes from Rolls-Royce, SBM and Alusa, a Brazilian construction company. Alusa, which has changed its name to Alumini, vehemently denied the accusations. Mr Barbosa could not be reached for comment.