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Reports Asia

Asian stock market, economy and companies update (March 25, 2014)

March 25, 2014, Tuesday, 05:18 GMT | 02:18 EST | 10:48 IST | 13:18 SGT
Contributed by Trade The News


***Highlights/Observations/Insights***
- S&P cut Brazil credit rating to BBB- from BBB, the lowest level of investment grade, with Stable outlook. S&P noted the downgrade "reflects the combination of fiscal slippage, the prospect that fiscal execution will remain weak amid subdued growth in the coming years, a constrained ability to adjust policy ahead of the October presidential elections, and some weakening in Brazil's external accounts." Brazil Finance Ministry response noted the downgrade contradicts economic fundamentals, and that the analysis by the credit rating agency of the country's FDI trends is not correct.

- The spigot of western sanctions on Russia has widened further as G7 officials meeting at the Hague announced they would forego the planned G8 summit in Sochi this June in continued protest of Moscow annexation of the Crimea peninsula. Recall the leaders had previously only went as far as suspending the preliminary work on attending the conference, but have since hardened their stance following the swift Moscow-endorsed Crimea referendum as well as elevated concern over the presence of Russian troops amassing near the east Ukrainian borders. G7 leaders also noted they are prepared to bring more sanctions on Russia if the Ukraine situation is further destabilized.

- Former PBoC adviser Li Daokui said China govt has more room to expand credit and forecasted broader economic expansion in Q3-Q4, but also said the State Council is unlikely to heed calls for more stimulus and that a "mini-crisis" in local govt debt is possible. Economist with the Conference Board, which reported further modest growth in China leading economic index, said as much, noting that "any government intent to support growth more actively in the coming months is unlikely to help much in improving economic conditions."

- The head of Japan's top pension fund GPIF reiterated he would not oppose lowering domestic bond holdings to certain extent due to low yield conditions. These comments were similar to the statement made in early March, when GPIF also said investment no longer needs to focus on domestic bonds in portfolio allocations as Japan emerges from deflation, presumably endorsing a greater allocation to the equity market.

- Bank of Korea released its systemic Risk Survey identifying top risks to domestic economy. Fed's tapering of bond purchases topped the list with 77%, followed by China's slowdown with 72% and household debt problems with 70%.


***Fixed Income/Commodities/Currencies***
- (AU) Australia MoF (AOFM) sells A$200M in indexed Bonds due 2022; Avg yield: 1.4017%; bid-to-cover: 3.44x
- (CN) PBoC to drain CNY46B in 28-day repos (11th consecutive drain)
- GLD: SPDR Gold Trust ETF daily holdings rise 4.5 tonnes to 821.5 tonnes (highest since 827.6 tonnes on Dec 13th)
- (CN) PBoC sets yuan mid point at 6.1426 v 6.1452 prior setting (2nd consecutive session of firmer yuan setting)

- USD majors are generally range-bound in a quiet Asian session albeit with some modest relative JPY weakness. EUR/USD is in a 10-pip range below 1.3840, AUD/USD tested a 3-month high above $0.9150 before pulling lower, and NZD/USD briefly rose above $0.8560 - up 20pips from the lows. USD/JPY rose about 15-pips from its lows above 102.30, while EUR/JPY and AUD/JPY rose 20 and 30pips above 141.50 and 93.50 respectively.

***Equities***
US markets:
- SONC: Reports Q2 $0.07 v $0.06e, R$109.7M v $110Me; +7.1% afterhours
- DIS: To acquire Maker Studios, the leading network of Online Video Content for $500M (as speculated); +0.4% afterhours
- LLY: Said to have announced a pay freeze this year amid expiring patents for key drugs (Cymbalta, Evista) expected to weigh on sales - financial press; -0.1% afterhours
- BOX.IPO: Files S1 for $250M IPO

Notable movers by sector:
- Consumer Discretionary: Anhui Anli Artificial Leather 300218.CN -4.5% (FY13 results); Guangdong Advertising Co Ltd 002400.CN +3.7% (FY13 results)
- Consumer staples: Kweichow Moutai 600519.CN -3.9% (FY13 results); Foshan Haitian Flavoring & Food 603288.CN +3.4% (FY13 results); David Jones DJS.AU +2.3% (pushes forward merger deal)
- Materials: CSG Holding 000012.CN +4.3% (FY13 results); Anhui Conch Cement 914.HK -0.3% (FY13 results); Beadell Resources Ltd BDR.AU -7.4% (production update)
- Energy: Ausdrill ASL.AU -1.6% (S&P lowers rating)
- Industrials: Jingwei Textile Machinery 000666.CN +8.3% (FY13 results); Sufa Technology Industry 000777.CN +2.0% (FY13 results); Zhengzhou Yutong Bus 600066.CN +1.8% (FY13 results); China Merchants Energy Shipping 601872.CN +1.7% (FY13 results); Shimadzu Corp 7701.JP +2.5% (CapEx and R&D plan); Orica Ltd ORI.AU -2.8% (CEO comments on H1)
- Technology: Beijing SPC Environment Protection Tech 002573.CN -8.3% (FY13 results); Ningbo Ligong Online Monitoring Technology 002322.CN -8.9% (FY13 results)
- Healthcare: Shanghai Fosun Pharmaceutical Group 2196.HK +1.1% (FY13 results)
- Utilities: Tepco 9501.JP -0.3% (halts decontamination system)


***Economic Data***
- (CN) CHINA FEB CONFERENCE BOARD LEADING ECONOMIC INDEX: 0.9% V 0.3% PRIOR
- (PH) PHILIPPINES JAN TRADE BALANCE: -$1.38B V -$850ME

Market Snapshot (as of 03:30 GMT):
- Nikkei225 -0.3%, S&P/ASX -0.3%, Kospi -0.1%, Shanghai Composite +0.4%, Hang Seng flat, Jun S&P500 +0.1% at 1,851, Jun gold +0.2% at $1,314, May crude oil -0.1% at $99.47/brl

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