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Reports Asia

Asian stock market, economy and companies update (March 24, 2014)

March 24, 2014, Monday, 05:30 GMT | 01:30 EST | 10:00 IST | 12:30 SGT
Contributed by Trade The News


***Highlights/Observations/Insights***
China
- China flash manufacturing PMI - unencumbered by the seasonal distortion of the Lunar New Year - slid even further, hitting an 8-month low and its 3rd consecutive contraction. And yet in spite of the disappointment and the initial move lower, China equities bounced higher. Investors' focus appears to be on the accompanying commentary from HSBC chief economist stating he expects "Beijing to launch a series of policy measures to stabilize growth... Likely options include lowering entry barriers for private investment, targeted spending on subways, air-cleaning and public housing, and guiding lending rates lower." Heightened concerns over China growth were also on display from several govt officials in Beijing - Vice Fin Min Zhu said 7-8% GDP growth rate range was in line with China real capacity, while NDRC researcher Wang noted 2014 GDP may fall to 7% in 2014. Earlier, premier Li also said China faces downward economic pressure with challenges in stabilizing economic growth.
- On the currency front, PBoC set a slightly stronger Yuan midpoint for the first time in 5 settings. Separately PBoC Dep Gov Yi Gang also reiterated the central bank would focus on liberalising bank deposit rates over the next two years.

Japan
- With about a week to go to the formal increase in Japan's sales tax to 8%, a local press survey saw just over 50% of respondents expecting to maintain their spending levels and 44% planning to reduce spending. An influential PM Abe adviser Hamada called for an agrressive central bank response to anticipated headwinds from higher sales tax, noting that "if statistics such as spending data show weakness after the tax increase, then the BoJ should act quickly to implement more powerful monetary policy."

Ukraine/Russia/Europe
- Despite continued signs of deescalating tensions on Crimean peninsula, foreign ministers in Ukraine, UK, and the US remain concerned about the sharp buildup of Russian troops on the east Ukraine border. Ukraine Foreign Min Deshchytsia said the "risks of war with Russia are growing", UK's Hauge said "theres a grave risk of the Ukraine crisis deepening", and US security officials noted there were now Russian troops along virtually all of the country's border with Ukraine. Russian defense officials maintained that the Ministry is in compliance with all international agreements limiting the number of troops in the border areas with Ukraine", and a statement from Kremlin said the latest round of talks between Pres Putin and German Chancellor Merkel reflected satisfaction on both sides regarding agreement on OSCE mission to Ukraine. Also of note, the far-right Pravy Sektor (Right Sector) paramilitary group formally organized a political party that would stand for presidential elections on May 25th - a move that will certainly antagonize Moscow where officials previously demanded the new Ukraine govt avoids legitimizing extremist elements.

***Fixed Income/Commodities/Currencies***
- (JP) Bank of Japan (BOJ) offers to purchase ¥2.0T in T-bills outright
- (KR) South Korea sells KRW850B in 20-yr government bonds at 3.760%, bid-to-cover 4.11x
- GLD: SPDR Gold Trust ETF daily holdings rise 4.2 tonnes to 817.0 tonnes (highest since 818.9 tonnes on Dec 16th)
- USD/CNY: (CN) PBoC sets yuan mid point at 6.1452 v 6.1475 prior setting (first weaker CNY setting in 5 sessions)
- USD/VEF: (VE) Venezuela govt loosening its curbs on currency - financial press

- Among the dollar majors, dovish comments from Hamada helped elevate the USD/JPY pair some 30pips above 102.50. AUD/USD and NZD/USD opened higher, hit session lows just after the China flash PMI, but since recovered on expectation of more China stimulus - AUD/USD entered afternoon session flat at $0.9080 and NZD/USD traded around $0.8540 in the middle of its 50pip session range. EUR/USD was in a 20pip band just below the $1.38 handle.

***Equities***
US markets:
- AAPL: Apple, Comcast said to be in talks regarding streaming-TV service - financial press

Notable movers by sector:
- Consumer Discretionary: Li Ning Co Ltd 2331.HK -3.9% (FY13 results); Zhejiang Weixing Industrial Development 002003.CN +5.2% (FY13 results); Shanghai Dragon Corp 600630.CN -4.7% (FY13 results); Kathmandu Holdings KMD.AU +9.2% (H1 results)
- Financials: Jiangsu Phoenix Property Investment 600716.CN +6.7% (FY13 results); Greentown China 3900.HK -4.9% (FY13 results); Macquarie Group Limited MQG.AU +2.9% (FY14 guidance)
- Energy: Yanzhou Coal Mining 1171.HK +6.6% (FY13 results); Xinjiang Goldwind Science & Technology 2208.HK +7.8% (FY13 results)
- Industrials: Sieyuan Electric 002028.CN -5.2% (FY13 results); Zhejiang Chint Electrics 601877.CN +4.5% (FY13 results); Great Wall Motor 2333.HK +7.6% (FY13 results); Yamato Holdings 9064.JP +3.5% (to partner with Chinese e-commerce)
- Technology: Tencent Holdings 700.HK +1.8% (invests in online housing site Leju); Leshi Internet Info & Tech Co Beijing 300104.CN -4.6% (FY13 results)


***Economic Data***
- (CN) CHINA MAR HSBC/MARKIT FLASH MANUFACTURING PMI: 48.1 V 48.7E (lowest reading in 8 months; 3rd consecutive contraction; 5th consecutive sequential decline)
- (TW) TAIWAN FEB UNEMPLOYMENT RATE: 4.1% V 4.1%E

Market Snapshot (as of 03:30 GMT):
- Nikkei225 +1.8%, S&P/ASX flat, Kospi +0.3%, Shanghai Composite +0.5%, Hang Seng +1.0%, Jun S&P500 +0.1% at 1,859, Jun gold -0.7% at $1,327, May crude oil -0.2% at $99.25/brl