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Reports Asia

Asian stock market, economy and companies update (February 18, 2014)

February 18, 2014, Tuesday, 05:32 GMT | 00:32 EST | 10:02 IST | 12:32 SGT
Contributed by Trade The News


***Highlights/Observations/Insights***
- BHP is up over 2% in Sydney after posting a first half net profit of $8.1B v $4.4B y/y. BHP also reiterated FY14 production outlook, forecasting further improvement in global economic conditions and demand for iron ore outside of China rising.
- Bank of Japan refrained from further policy easing in the wake of a soft Q4 GDP data, keeping its economic assessment unchanged for the 6th month and also reiterating its outlook on inflation and domestic economy. BOJ did boost its "Stimulating Bank Lending Facility" and the "Growth-Supporting Funding Facility" programs from ¥3.5T to ¥7.0T and also expanded the term of application to 4 years from 1-3 present. After the initial dive, Yen pairs are up moderately on the announcement.
- RBA policy meeting minutes kept to the script of this month's statement, clarifying rationale for dropping the central bank's easing bias. RBA noted Australia trade partners' growth, rising inflation levels (albeit with the possibility of statistical noise), improvement in business conditions, and more forward-looking indicators of labor demand such as vacancies/advertisements data.

***Fixed Income/Commodities/Currencies***
- (CN) Daily Shibor fixings: O/N: 2.6800% v 2.9510% prior (6th consecutive decline, lowest since May 14th); 1-week: 3.7430% v 3.8790% prior (7th consecutive decline, lowest since Nov 12th)
- (CN) PBoC to drain CNY48B in 14-day repos (first drain through repos since June)

- AUD and JPY currencies were notable movers coming out of a quiet US-holiday-thinned trading session. AUD/USD reversed the initial decline after the release of RBA meeting minutes containing a reiteration endorsing weaker AUD to help economic growth, spiking up about 40pip from pre-minutes level above $0.9075 - a 1-month high. AUD/NZD rose over 70pips from the opening lows to as high as NZ$1.0870, with an otherwise hawkish RBA statement spurring a rotation back into the Aussie. AUD/JPY rose 50pips after the minutes above ¥92.70 and then hit a 1-month high near ¥93 after the BOJ statement that produced some fairly heavy yen selling. USD/JPY also reversed the initial drop below ¥101.80 to trade above ¥102.60 in the hour following the BOJ decision release. GBP/JPY rose 140pips from the initial post-BOJ lows around ¥171.60 and EUR/JPY tested ¥140.70 - a 3-week high.

***Speakers/Political/In the Papers***
- (CN) Nomura: expects PBoC to cut Reserve Requirement Ratio (RRR) twice in 2014 to 19% from 20% - financial press
- (CN) China Ministry of Commerce (MOFCOM) spokesperson Shen Danyang: China Jan trade figures are not inflated; Jan exports rise is due to strong demand from developed markets, govt policy and seasonal effect from Lunar New Year
- (JP) Japan METI to issue Fukushima water treatment RFP in the next few months - financial press
- (JP) Japan Fin Min Aso: GDP indicates moderate recovery in Japan; to carefully monitor external demand though expresses no concern - financial press
- (JP) Japan PM Abe approval rating drops 3pct points to 47% - Asahi News
- (KR) Bank of Korea (BOK): South Korea maintains economic recovery; Prepared to take action to stabilize financial markets
- (KR) Bank of Korea (BOK) Gov Kim: South Korea must explore new export markets; South Korea economy to show stability despite US tapering
- (KR) South Korea Dep Fin Min Eun: More trade needs to be settled in local currencies in Asia

**Europe**
- (DE) German Bundesbank's Dombret: Sees no signs of risk yet from appreciation in domestic house prices; Low rates kept for too long can be the beginning of mispricing - financial press
- (UR) Ukraine opposition leaders Yatsenyuk and Klitschko meet with German Chancellor Merkel; Request that EU imposes economic sanctions on Yanukovych govt - press

***Equities***
Market Snapshot (as of 04:30 GMT):
- Nikkei225 +3.1%, S&P/ASX flat, Kospi -0.3%, Shanghai Composite -0.5%, Hang Seng flat, Mar S&P500 +0.2% at 1,838, Apr gold +1.7% at $1,321, Mar crude oil +0.4% at $100.70/brl

US markets:
- DUK: To begin process to exit its 6.6GW Midwest generation business; sees $1-2B Q1 charge
- HOLI: Reports Q2 $0.45 v $0.27e, R$153.4M v $114Me
- FRX: Actavis said to purchase Forest Labs for as much as $25B; official announcement expected to be released Tuesday - financial press

Notable movers by sector:
- Consumer Discretionary: Pacific Brands PBG.AU -10.4% (H1 results); Seven West Media SWM.AU -1.6% (H1 results); Coca-Cola Amatil CCL.AU -4.3% (FY13 results)
- Financials: Shimao Property 813.HK -3.2% (Jan results); Huayuan Property 600743.CN +1.2% (prelim FY13 results)
- Materials: BHP Billiton BHP.AU +2.1% (H1 result; reaffirms production guidance); Arrium Ltd ARI.AU -1.7% (H1 results); Tangshan Jidong Cement 000401.CN +1.9% (Demolishment of cement plant)
- Industrials: Amcor Ltd A; MC.AU-5.6% (H1 results); MacMahon Holdings MAH.AU +10.0% (H1 results); Kawasaki Heavy 7012.JP +1.7% (US bidding plans)
- Technology: Wuhan Fingu Electronic Technology 002194.CN +2.2% (prelim FY13 results); Semiconductor Manufacturing International Corp 981.HK -15.0% (Q4 results)
- Healthcare: Shanghai Fosun Pharmaceutical Group 2196.HK +5.0% (acquires Chindex with TPG)
- Utilities: TEPCO 9501.JP +0.9% (Japan METI to issue Fukushima water treatment RFP)


***Economic Data***
- (JP) BANK OF JAPAN (BOJ) POLICY STATEMENT: REITERATES TO INCREASE MONETARY BASE AT ANNUAL PACE OF ¥60-70T (AS EXPECTED); Extends fixed 0.1% rate loans scheme by one year and doubles ceiling of loans to ¥7T
- (CN) CHINA JAN FOREIGN DIRECT INVESTMENT (FDI) Y/Y: 16.1% V 3.3% PRIOR (fastest pace in 6 months)
- (AU) RESERVE BANK OF AUSTRALIA (RBA) FEB MEETING MINUTES: Lower AUD would assist balanced economic growth; Policy stimulus working to spur economy
- (KR) SOUTH KOREA JAN PPI M/M: 0.2% V 0.2% PRIOR; Y/Y: -0.3% V -0.4% PRIOR (16th consecutive month of decline)