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Reports Asia

Asian stock market, economy and companies update (June 06, 2014)

June 6, 2014, Friday, 06:16 GMT | 01:16 EST | 09:46 IST | 12:16 SGT
Contributed by Trade The News


***Highlights/Observations/Insights***
- World Bank maintains its China 2014 GDP target of 7.6% and 2015 target of 7.5%, echoing comments from IMF head Lipton overnight suggesting that there is no evidence of a significant slowdown in China. Note that in contrast, the IMF called on China to lower its 2015 GDP objective to 7.0% to achieve more sustainable growth. World Bank also said China has the ability to step up fiscal and monetary support for growth, which it will likely use should growth weaken. Also of note out of China, the CBRC reiterated policymakers would maintain reasonable lending and fine-tune policy at the appropriate time, with lending priority given to small business and major infrastructure projects.

- In Japan, local press indicated PM Abe has requested the Health and Welfare minister to make a more concerted effort to press forward with GPIF pension fund reform to increase its investment in the stock market. Report suggested that Abe is looking for the Government Pension Investment Fund (GPIF) to announce a portfolio rebalancing by September or October, ahead of its initial year-end deadline. Later in the day, Minister Tamura confirmed the reported request, stating he has asked GPIF to work on the early review of its portfolio guidelines and urging administrators to complete review process quickly.

- Down under, Australia's AiG put out the last of its monthly metrics with Construction data. All 3 indices - manufacturing, services, and construction - have now been in contraction for at least 3 months. AiG noted the milder decline in the Australian PCI in May was due to less pronounced reductions in employment and supplier deliveries, while construction activity and new orders fell more sharply. In New Zealand, the Treasury announced its Fiscal Deficit in Apr was less than expected due to lower spending, reiterating it was on track to achieve a budget surplus in FY14/15.

***Speakers/Political/In the Papers***
- (JP) Japan PM Abe asks health and welfare minister to push the GPIF public pension move faster to increase its stock investment - Japan press
- (JP) Japan Health Minister Tamura: PM Abe calls for early review of GPIF portfolio - financial press
- (JP) Japan Fin Min Aso: Intends to bring forward GPIF review; ECB took preemptive measures due to worry on risks of deflation
- (CN) Shanghai Deovolente Realty Co researcher: Land market continues to be soft in June amid continued cautious sentiment - Shanghai Daily
- (CN) China Banking Regulatory Commission (CBRC): China to maintain reasonable lending and social financing growth; To fine-tune policy at the appropriate time - financial press
- (CN) Several provinces in China may significantly reduce corporate tax to boost economy - Chinese press
- (US) Appaloosa's Tepper says some prior concerns about the market have been "alleviated" - CNBC's Kelly
- (US) US Senate to vote on advancing Brainard and Powell to Fed Board of Governors next week - financial press

***Fixed Income/Commodities/Currencies***
- (JP) BOJ offers to buy ¥300B in 1-3yr JGB, ¥200B in 3-5yr JGB and ¥150B in JGB with maturity over 10-yr
- (AU) Australia sells A$700M in 3.25% bonds due 2025; Avg yield: 3.8594%; Bid-to-cover: 4.28x
- (US) Weekly Fed Balance Sheet Total Assets Week ending June 4th: $4.33T v $4.32T prior; Reserve Bank Credit: $4.29T v $4.28T prior; M1: -$1.7B (3rd consecutive decline) v -$11.0B prior; M2: +$36.1B (biggest increase in 4 weeks) v +$5.0B prior; M1 y/y change: 10.6% v 10.6% w/w; M2 y/y change: 6.2% v 6.2% w/w
- USD/CNY: (CN) PBoC sets yuan mid point at 6.1623 v 6.1708 prior setting (strongest Yuan setting since May 9th)

***Equities***
US markets:
- MY: Receives approval to develop and operate 300MW off-shore wind power project in China Jiangsu Province; +14.6% afterhours
- PAY: Reports Q2 $0.37 v $0.33e, R$467M v $445Me; confirms restructuring, to cut headcount by 500 (9% of workforce); +3.7% afterhours
- PNRA: Approves 3 year, $600M buyback program (15% of market cap); terminates prior; +1.8% afterhours
- AIG: Authorizes Repurchase of Additional Shares of AIG Common Stock for up to $2B (2.5% of market cap); +0.9% afterhours
- SEAC: Reports Q1 -$0.22 v -$0.04e, R$24.3M v $30.8Me; Raises buyback authorisation by $15M (5.2% of market cap) to $40M; -11.4% afterhours

Notable movers by sector:
- Consumer Discretionary: Intime Department Store Group 1833.HK +2.7% (launches e-commerce platform with Alibaba)
- Financials: Shimao Property 813.HK -2.0% (May sales results); Poly Real Estate Group 600048.CN -0.4% (May sales results)
- Materials: Beadell Resources BDR.AU +6.2% (BlackRock raises stake)
- Industrials: Guangzhou Automobile Group 2238.HK +3.5% (May production results)
- Technology: Beijing Ultrapower Software 300002.CN +1.2% (launches mobile game); Omron 6645.JP +0.8% (technology used in Amazon phone)
- Healthcare: China Medical System Holdings 867.HK +1.3% (announces acquisition)
- Utilities: Kurita Water Industries 6370.JP +0.7% (awarded contract)


***Economic Data***
- (AU) AUSTRALIA MAY AIG PERFORMANCE OF CONSTRUCTION INDEX: 46.7 V 45.9 PRIOR (5th consecutive contraction)
- (NZ) NEW ZEALAND MAY QV HOUSE PRICES Y/Y: 8.2% V 8.4% PRIOR (10-month low)
- (JP) JAPAN MAY OFFICIAL RESERVE ASSETS: $1.28T V $1.28T PRIOR
- (JP) Japan May 1st-20th Merchandise Trade Balance: -¥1.18T v -¥1.01T y/y

Market Snapshot (as of 03:30 GMT):
- Nikkei225 flat, S&P/ASX +0.6%, Kospi -0.7%, Shanghai Composite -0.6%, Hang Seng +0.3%, Jun S&P500 +0.1% at 1,941, Aug gold +0.1% at $1,254, Jul crude oil flat at $102.47/brl

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