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Reports Asia

Asian stock market, economy and companies update (March 17, 2014)

March 17, 2014, Monday, 06:03 GMT | 02:03 EST | 11:33 IST | 14:03 SGT
Contributed by Trade The News


***Highlights/Observations/Insights***
- Sentiment in Asia is mixed with tinges of cautious optimism, as worries over continued Kremlin vs West standoff in the wake of an overwhelming local support for Russian annexation in Crimea were infused with some relief that Russia pulled its troops back from territorial Ukraine and agreed to allow OSCE inspectors to enter all parts of the country. China markets are particularly volatile, with Shanghai Composite switching between gains and losses in the wake of PBoC widening its daily Yuan trading band from 1% to 2% over the weekend.

- Tensions between Russia and Ukraine were heightened early in the weekend amid reports that an armored-vehicle supported force of 80 Russian troops took over the settlement of Strelkovoye of Kherson Region outside of Crimea. Russian border guard justified the presence for protection of energy/water pipelines leading into the Crimean peninsula. The referendum vote yielded a near-unanimous over-95% support for Crimea to be annexed by Russia, and the local leader announced he would lodge a formal application to complete the "return home" on Monday. EU Foreign Ministers are meeting in Brussels on Monday as well, with the initial draft resolution refusing to recognize the referendum and threatening more sanctions against Moscow. Obama and Putin held a phone conference late on Sunday which seemingly produced a thaw from the weekend tensions: the White House reiterated the Crimea vote would never be recognized but noted the crisis can still be resolved diplomatically. Kremlin statement indicated that while Russia holds to its opinion the referendum was legitimate, it also supports deploying international OSCE inspectors in all parts of Ukraine. Earlier, Russian Foreign Ministry also issued a statement condemning ultranationalist - pro-Russia clashes in eastern Ukraine resulting in 2 deaths in Kharkiv, and that it would consider "many appeals to defend civilians".

- PBoC widened the yuan trading band nearly 2 years after the last move, going from 1% to 2%. PBoC said it would allow Yuan to continue to be more market-driven in the future and plans "further develop the role of the market in the RMB exchange rate formulation." Analysts differ in implications of this widely-telegraphed move - HSBC economist noting the PBoC feels the economy is strong enough to handle adjustment, BoA/ML stating the move is to communicate the end of one-way bet on CNY gain, and ANZ noting PBoC wanted to punish speculators, forecasting a move to CNY6.20-6.25 this week. USD/CNY was set slightly lower than on Friday, while onshore trade slightly favored CNY sellers.

- Saber-rattling was also more audibly heard on the Korean peninsula, where the North test-fired 25 short-range missiles that landed into the East Sea. Missile fire follows Friday's statement from North Korea's National Defence Commission on Friday threatening "to bolster up its nuclear deterrence for self-defence". US State Dept said it was aware of rocket launch by North Korea, Calls on Pyongyang to refrain from increased provocations.

- In Europe, Moody's raised the outlook on European Union to Stable from Negative late on Friday, citing improved multi-layer debt-service protection and conservative budget management. Over the weekend, Greece opposition Syriza party leader Tsipras announced international creditors committed a "crime" against southern Europe through imposed austerity and should pay reparations. Also of note, Italy PM Renzi and France Pres Hollande held talks on Saturday, agreeing on the need to approve measures to reduce labor costs and increase competitiveness.

***Fixed Income/Commodities/Currencies***
- (JP) BOJ offers to buy ¥250B in 1-3yr JGB, ¥250B in 3-5yr JGB and ¥400B in 5-10yr JGB
- (VN) Vietnam Central Bank to cut dong deposit ceiling rate to 6.0% from 7.0% prior
- GLD: SPDR Gold Trust ETF daily holdings rise 3.3 tonnes to 816.6 tonnes (highest since 816.8 on Dec 17th)
- GLD: Spot gold extending early gains above $1,390; Fresh 6-month highs
- (CN) PBoC sets yuan mid point at 6.1321 v 6.1346 prior setting

- Risk started on the back foot in early part of the session, sending AUD/USD and USD/JPY to their lows of $0.9000 and ¥101.25, but has since recovered. Despite the referendum and threat of sanctions, the market is showing some tentative hints of relief that Russian tanks are not rolling across the east Ukraine borders. AUD/USD is tesing $0.9050, USD/JPY is approaching 101.60, and NZD/USD was bid as high as $0.8545, up over 20pips from the lows, with NZIER raising New Zealand FY14/15 GDP forecast to 3.6% from 3.1% prior forecast.

***Equities***
US markets:
- ECA: Said to be in advanced talks to sell Jonah Field in Wyoming to Carlyle/Natural Gas Partners for about $2B - financial press
- SHLD: Board approves separation of Lands' End business; shareholders to receive 0.300795 shrs Lands' End common stock/Sears common stock - update
- TGA: Enters into merger agreement with Caracal Energy Inc
- HTZ: Said to be planning spin off its construction equipment rental business valued at about $4.5B - FT
- SINA: Sina's Weibo microblog unit files for IPO of up to $500M in the US - F1 filing
- UPS: Announces 2014 Rate Adjustment for freight by +4.4%; effective March 31

Notable movers by sector:
- Consumer Discretionary: Matrix Holdings Ltd 1005.HK +6.2% (positive profit alert); Trinity Ltd 891.HK -3.2% (FY13 results); Besunyen Holdings 926.HK -4.3% (FY13 results); Future Bright Holdings 703.HK -6.0% (FY13 results)
- Financials: Chinese Estates Holdings 127.HK -2.5% (Chairman found guilty for bribery)
- Materials: China Hongqiao Group 1378.HK -5.1% (FY13 results)
- Industrials: Kai Shui International Holdings 822.HK -9.6% (profit warning); Leo Group 002131.CN +2.5% (acquires stake in advertisement company); Sihayo Gold SIH.AU -3.5% (H1 results)
- Technology: Wangsu Science & Technology 300017.CN +8.9% (FY13 results); Nikon Corp 7731.JP (accuse from China's CCTV)
- Telecom: Softbank 9984.JP +5.7% (Alibaba said to file for IPO in US)


***Economic Data***
- (AU) AUSTRALIA FEB NEW MOTOR VEHICLE SALES M/M: +0.1% V -4.0% PRIOR; Y/Y: -3.5% V -3.0% PRIOR
- (NZ) NEW ZEALAND FEB PERFORMANCE SERVICES INDEX: 53.1 V 57.8 PRIOR (6-month low)
- (NZ) NEW ZEALAND Q1 WESTPAC CONSUMER CONFIDENCE: 121.7 V 120.1 PRIOR (9-year high)
- (SG) SINGAPORE FEB ELECTRONIC EXPORTS Y/Y: -3.7% V -17.0% PRIOR; NON-OIL DOMESTIC EXPORTS M/M: 7.2% V 1.1%E; Y/Y: 9.1% V 7.6%E
- (UK) UK MAR RIGHTMOVE HOUSE PRICES M/M: 1.6% V 3.3% PRIOR; Y/Y: 6.8% V 6.9% PRIOR

Market Snapshot (as of 03:30 GMT):
- Nikkei225 -0.4%, S&P/ASX -0.3%, Kospi +0.2%, Shanghai Composite +0.5%, Hang Seng -0.4%, Jun S&P500 flat at 1,833, Apr gold +0.3% at $1,383, Apr crude oil +0.2% at $99.12/brl