Asia Stocks Drop After Tech Rout as Kiwi Slips; Oil Gains

"The MSCI Asia Pacific Index slipped 0.8 percent by 10:01 a.m. in Tokyo, as Japan’s Topix index sank 1.8 percent. Standard & Poor’s 500 Indexfutures fell 0.1 percent after a selloff in Internet stocks sent the gauge down 0.9 percent in the U.S. The yen held yesterday’s 0.5 percent jump as the Korean won and Malaysian ringgit climbed. New Zealand’s dollar fell after the central bank detailed conditions for intervention. Nickel rose and gold advanced as oil in New York added 0.4 percent".

Services data for China is due today, with Hong Kongalso resuming equities trading after a holiday yesterday.Twitter Inc. (TWTR) slid 18 percent in the U.S. as insider shares became eligible for sale, pushing an exchange-traded fund of social-media stocks to the lowest level since July. Alibaba Group Holding Ltd. filed for what could be a record U.S. initial public offering after markets closed. Federal Reserve Chair Janet Yellen addresses Congress on the U.S. economy today.

“Investors need to remain cautious,” Matthew Sherwood, Sydney-based head of investment markets research at Perpetual Ltd., which manages about $29 billion, said in an e-mail. “They have decided to take some profits in the wake of recent upbeat sentiment.”

Asian Stocks

Australia’s S&P/ASX 200 Index (AS51) lost 0.6 percent, led by a 1.6 percent drop in information-technology companies, while New Zealand’s NZX 50 Index (NZSE50FG), which hit a record last week, fell 0.3 percent in a third declining day. The Kospi index in South Korea, where markets have also been closed for the past two days, retreated 0.2 percent.

All 10 industry sub-groups in the MSCI Asia Pacific gauge fell at least 0.1 percent today, with health care, industrial and consumer-discretionary stocks leading declines. Technology shares decreased 0.7 percent.

The Nasdaq Composite Index (CCMP) sank 1.4 percent in the U.S., while technology, consumer-discretionary and financial stocks drove the S&P 500’s biggest one-day drop since April 11. Twitter sank to $31.85, extending its 2014 loss to 50 percent, as about 480 million shares from insiders became eligible for sale, more than quadrupling the amount available for trading.

Services data for China is due today, with Hong Kongalso resuming equities trading after a holiday yesterday.Twitter Inc. (TWTR) slid 18 percent in the U.S. as insider shares became eligible for sale, pushing an exchange-traded fund of social-media stocks to the lowest level since July. Alibaba Group Holding Ltd. filed for what could be a record U.S. initial public offering after markets closed. Federal Reserve Chair Janet Yellen addresses Congress on the U.S. economy today.

Source: Bloommberg

WSJ: Brazil’s Sugar-Cane Sector Shrinks

         The WSJ reports,"Brazil’s sugar processors are downsizing.

The fewest mills in six seasons — 377 — will be processing cane into sugar and ethanol this season, said Plinio Nastari, president of consulting firm Datagro.

It would be the third consecutive season of declines in the number of mills, highlighting trouble in the sector in Brazil, the world’s largest producer of sugar cane and the top exporter of sugar.

A smaller cane crop due to Brazil’s worst drought in decades and the country’s energy policy are driving the declines, Mr. Nastari said".

Brazil’s state-controlled oil company Petroleo Brasileiro Petrobras SA supports gasoline prices, providing a subsidy that makes it harder for ethanol to compete.

“They are competing with a subsidized product,” Mr. Nastari said, referring to ethanol producers.

Since the subsidies are part of the government’s effort to combat inflation, the measure is unlikely to go away any time this year, particularly ahead of October presidential elections, industry members have said.

“It is unlikely that there’ll be any major policy changes this side of the election in Brazil,” Bunge Ltd. Chief Executive Soren Schroder said in a call with investors last week.

It is the latest in a string of challenges for Brazil’s sugar-processing sector. Mills had already been grappling with low sugar prices. In late January, raw sugar traded on ICE Futures U.S. settled at 14.74 cents a pound, the lowest since June 2010, due to a global glut of sugar.

Bunge has said has put its sugar-milling business under “strategic review.” The company’s sugar and biofuels segment lost $64 million in the first quarter.

Smaller production is another problem for mills, Mr. Nastari said. The cane experienced extremely dry weather at a time when it needed moisture to produce sugar. Producers in Brazil’s center-south, where most of the country’s cane is grown, will likely reap 575 million metric tons of cane this season, down from 596 million tons last season, Mr. Nastari estimated.

While expectations of a smaller crop has helped drive world sugar prices up nearly 20% from January’s lows, Michael McDougall, a senior vice president and head of the Brazil desk at brokerage Newedge, said it hasn’t been a game-changer for mills.

“The current prices just aren’t enough,” he said.

Alibaba's tentacles into Chinese retail. A conglomerate of IT in China and Hong Kong

WSJ: HTC Outsources Some Smartphone Production

     The WSJ reports,"HTC Corp. began to outsource production of some of its smartphones for the first time this quarter, looking to slash costs and better pursue new customers in developing markets.

The unprofitable Taiwanese smartphone maker has selected Taiwan-based contract manufacturer Compal Electronics Inc. and China's Wingtech Group for at least three of the new models in its midprice Desire series, said people familiar with the matter. Both assemblers began to mass produce smartphones for HTC this spring, the people said. Traditionally, HTC has produced all of its phones at its own factories".

"The move accompanies other efforts by HTC to turn around its business. ChairwomanCher Wang has taken a more active role in management in the past year, and the company recently hired Samsung Electronics Co.'s former U.S. marketing chief, Paul Golden, as a consultant to beef up its marketing.

HTC has long focused on high-end phones and resisted outsourcing, even as competitors from Apple Inc. to Nokia Corp. have turned to contract manufacturers to focus on design and save costs over the years. But as HTC struggles to hold its ground against Samsung and rapidly growing Chinese brands, it has decided to launch more low-price phones this year with the help of contract manufacturers".

"Once the world's largest smartphone maker by shipments at its peak in 2011, HTC has contended with a stock slump of more than 86% amid unsuccessful marketing campaigns, supply-chain mishaps and growing competition. The mistakes brought HTC its second net loss on record in the first quarter, and it has fallen out of the world's top-10 smartphone makers since last year. The company's stock rose by the maximum daily limit of 6.9% on Monday to 169 New Taiwan dollars (US$5.59) on expectations that HTC would forecast a return to profit for the second quarter when it releases guidance on Tuesday".

WSJ: Alibaba Files IPO in the U.S.

       The WSJ reports,"Chinese Internet giant Alibaba Group Holding Ltd. officially filed plans Tuesday to offer its shares in the U.S., in what is expected to be one of the largest stock listings in history.

Alibaba's initial public offering filing to U.S. securities regulators revealed the breadth and scale of China's online-shopping behemoth. It also kicks off a whirlwind sale season in which Wall Street will pitch the mega stock listing".

Alibaba has arranged half dozen of the world's biggest banks to help place its shares, and money managers and small investors are expected to size up the company, which is familiar to many in the Western world more by reputation than firsthand experience.

The launch of the deal is still a few months away.

So far, the estimates of Alibaba's valuehave been mostly guesswork based on comparable companies. The IPO prospectus provides the first extensive look at Alibaba's finances. Until now, Alibaba has only disclosed some bare-bones financial information via filings ofYahoo Inc.,  the holder of a 24% stake.

WSJ: OECD Cuts Forecast for 2014 Global Growth; Urges ECB Action

             

 The WSJ reports,"In its twice-yearly Economic Outlook report, the Paris-based research body once again lowered its forecast for global economic growth, since it now expects a number of large developing economies to be more sluggish than it anticipated when it last published projections in November.

The OECD said the global economy is in a less perilous state than it has been in recent years, and that policy makers "can now switch from avoiding disaster to fostering a stronger and more resilient recovery."

But it added that growth is still more likely to be weaker than forecast, and faces a number of potential impediments, ranging from the impact on developing economies of a normalization of U.S. monetary policy, to instability in China's financial system and the relatively new danger posed by rising tensions between Russia, the U.S. and theEuropean Union over the future of Ukraine.

The research body raised its growth forecast for the euro zone, but warned there is a risk that it will slip into deflation—or a period of self-reinforcing price declines—unless the ECB acts swiftly".

In unusually direct language, the OECD said the ECB's main refinancing rate "should be reduced to zero" from 0.25% now, while policy makers should "possibly" cut the deposit rate "to a slightly negative level." The research body said interest rates should not be raised from those levels until the end of 2015 at the earliest.

"In particular, we call on the European Central Bank to take new policy actions to move inflation more decisively toward target and to be ready for additional nonconventional stimulus if inflation were to show no clear sign of returning there," said Rintaro Tamaki, the OECD's acting chief economist. He noted that new, longer-term funding for banks and purchases of government and company bonds known as quantitative easing may be necessary.

The OECD's advice to the ECB comes two days before its governing council meets in Frankfurt, with most economists expecting policy to be left unchanged following a rise in the inflation rate to 0.7% in April from 0.5% in March.

ECB President Mario Draghi made it clear he didn't welcome similar advice from the International Monetary Fund days before the governing council met in April, but the OECD's acting chief economist said the research body had no other option.

"Our duty is to provide member countries with advice on better policy," said Mr. Tamaki. "This is inevitable."
Source: WSJ

Chinese state firms to hand over more profits to the Government

 Chinese state-owned enterprises (SOEs) will have to pay 5 percent more of their profits to the government, the Ministry of Finance said Tuesday.

The money will be used to improve social services, the ministry said. SOEs administered by the central government will pass on up to 25 percent of their profits depending on their line of business.

The change is based on profits made from the beginning of this year, the ministry said.

Tobacco companies will turn in 25 percent of their profits, with petrochemical, electricity, telcom and coal companies paying 20 percent, steel, transportation, electronics, trade and construction companies transferring 15 percent, while military-industrial companies hand in 10 percent.

Some companies including China Grain Reserves Corp and China National Cotton Reserves Corp can still keep their profits for their own development.

The central SOEs are expected to deliver 141.5 billion yuan (22.7 billion U.S. dollars) to the government this year, up 36.1 percent from last year, according to the ministry.

Source: Xinhua

China Focus: WeChat loses shine amid information overload

WeChat, or Weixin, a popular instant messaging service in China, risks losing its luster as users complain about bombardment by deceptive ads and excessive information.

The situation came to the public's attention when a business account put fake ads on "Moments," one of the major functions embedded in WeChat, which allows users to upload photos and share their daily life via texts.

On Monday, authorities in southwest China's Chongqing Municipality busted a case in which a "travel agency" account told its followers on WeChat to "Like" its ads to win a free trip to Hong Kong and Macao, which was later proved to be deceptive.

Similar cases were reported in provinces of Guangdong, Sichuan, Shaanxi and Jiangsu, with unscrupulous businesspeople trying to lure customers with coveted promotions, but later breaking their promises.

WeChat, developed by Internet giant Tencent, allows people to send texts, photos, videos and voice messages over mobile phones. The application has earned a legion of fans in China thanks to its convenience, reaching 600 million users since its debut in 2011.

Along with fake ads, information overload on the app is forcing some users to escape the flood of daily annoyances.

Wei Kang, a white-collar worker in Beijing, said that he receives "tons of messages" from his colleagues in WeChat's chat groups, even on weekends.

Wei said that he spends about an hour daily replying to messages from his colleagues, and has to check WeChat every few minutes because messages from his boss might be among the sea of notifications.

"I feel like I have been kidnapped by WeChat," Wei said, jokingly.

Wei is not the only one bombarded by the app. Early in February, Huang Zhen, a professor from Central University of Finance and Economics, caused a buzz on the Internet when he announced that he would abandon all WeChat chat groups and "try to find some inner peace."

A survey in March by a newspaper in Shanghai showed that 66.67 percent of respondents had feelings of being "kidnapped" by WeChat, but most chose to put up with the barrage of messages and information.

The "Moments" section on WeChat, for instance, has waned in popularity as it has become a place for people to either share ads or "Chicken Soup for the Soul" type articles.

"My WeChat 'Moments' are basically spammed by these every single day, which is quite annoying," a WeChat user screen-named "HXfengai" told Xinhua.

As urgency for change mounts, WeChat teams need to adjust their product design and services to break the bottleneck and retain users, said Zhang Yi, CEO of iiMedia Research.

Zhang said that WeChat development teams should step up efforts to consider feedback from users and try to understand what they truly need at the moment.

"It's hard to say how loyal users will remain to WeChat, but if the company can make adjustments according to users' specific needs, it may help retain many users," he added.

World Bank: In terms of PPP, China to surpass U.S. in economy size forecast arouses international uproar

The forecast based on the latest study indicating that China’s economy is expected to surpass that of the U.S. in size this year has aroused international uproar.

The study conducted by World Bank's International Comparison Program (ICP), released on April 30 suggests that China's economy was nearly 87 percent of the size of the U.S. in 2011 by purchasing power parity (PPP) based measure, leaping from 43 percent in 2005, much bigger than previously thought.

Given the current growth rate of two countries, China's economy, in the measure of PPP at least, is likely to overtake that of the U.S. in size this year.

For the past few years, China surpassed Germany to be world’s largest exporter in 2009, outpaced Japan as world's second largest economy in 2010, and catched up with the United States to become the biggest trader last year.

In fact, as an unconventional statistical methods, PPP measurement remains a controversial way in economy ranking.

China's National Bureau of Statistics has expressed reservations about this methodology, according to the World Bank's statement.

As costs are much higher in the industrialized world, especially for non-traded goods, comparisons of GDP by PPP exchange rates tend to boost the relative size of poorer nations' economies.

In addition, PPP calculations are a statistical construction, based on complex surveys of baskets of goods in many countries. Some statistical errors may exist, said IMF.

There's a margin of error of 15 percent when using its data to compare economies of different sizes, ICP mentioned in a report.

Although China has overtaken some advanced countries in major economic indicators, there are still great challenges and complex problems in pushing forward economic and social development. It is not cause for complacency and it is far too early for declaring victory, according to an analyst with a leading economic research consultancy.

What China valued much more are the overall sustainability, wellbeing of people, harmony, soft power and influences among the globe, the analyst added.

Source: Xinhua

Tencent to buy stake in digital map provider Navinfo

Chinese IT giant Tencent will buy a 11.28-percent stake in Navinfo, one of the country's major digital map providers, the seller said in its filing to the Shenzhen Stock Exchange on Monday evening.

Tencent will buy 78 million of Navinfo's shares for 1.17 billion yuan (189 million U.S. dollars), according to the deal.

Source: Xinhua

China: Report forecasts 7 percent rise in power consumption

 China's power consumption is expected to mildly rebound starting from the second quarter, but it may still be below the level recorded in 2013, according to a report released on Monday.

China Electricity Council forecast in the report that power consumption may pick up in the remainder of the year following 5.4-percent year-on-year growth in the first quarter.

The growth rate in the fourth quarter of 2013 was 8.4 percent.

The report said the country's power consumption may finally increase by 7 percent for all of 2014, and it will still be 0.5 percentage point lower than in 2013.

Power consumption is widely deemed an indicator of a country's economic vitality.

The report attributed the relatively low growth in the first quarter to economic slowdown, China's efforts to phase out overcapacity and factory shutdowns to curb emissions.

Source: Xinhua

WSJ: EU, Russia, Ukraine Plan More Talks on Gas Debt

          The WSJ reports,"the three sides held a first, joint meeting last Friday in Warsaw, Poland, to discuss Ukraine's gas debts to Russia—now estimated at more than $3.5 billion—and concerns about disruptions of gas supplies to Europe".

"We're holding these further meetings to find a solution to Ukraine's debts," said Sabine Berger, a European Commission spokeswoman. No further details about the dates or location of the talks were given.

She said the three sides had "until the end of the month to resolve the issue", adding that the commission wasn't worried that Russian gas supplies to Ukraine could be disruptedin the meantime.

Russian Energy Minister Alexander Novak, his Ukrainian counterpart Yury Prodan and the EU's energy chief, Günther Oettinger, said on Friday they would come up with measures by the end of May to address Ukraine's energy debts.

WSJ: WTI Oil Glut? U.S. Crude is being drilled by same characters that oversupplied gas market.

NBG launching bookbuilding for US$ 3.5 billion equity offering

National Bank of Greece (ADR) (NYSE:NBG) was trading higher after Reuters reported Greece’s largest lender, National Bank (NBG), will launch the bookbuilding process for its 2.5 billion euro ($3.5 billion) equity offering on May 6 and announce the pricing of the new shares on May 9. The bank has picked Goldman Sachs and Morgan Stanley as global coordinators for the share issue, which will be offered to foreign institutional investors.

The report says there will be no public offering in Greece, the pricing of the shares will be announced on May 9 before the scheduled shareholders meeting on May 10.

Source: Emerging Markets 5 May, 2014

BofA Merrill Lynch upgraded shares of National Bank of Greece

BofA Merrill Lynch upgraded shares of National Bank of Greece (ADR) (NYSE:NBG) from an underperform rating to a neutral rating in a report issued on Thursday,American Banking & Market News reports. National Bank of Greece (ADR) (NYSE:NBG) shares fell -1.01% in last trading session and ended the day on $3.92. NBG return on equity ratio is recorded as 42.40% and its return on assets is 0.60 %. National Bank of Greece (ADR) (NYSE:NBG) yearly performance is -57.39 %.

Source: Gaining Green