Xinhua Commentary: Nothing justifies civilian slaughter in China's "9-11"

China was outraged and the world shocked after separatists from Xinjiang knifed down innocent civilians at a crowded train terminal in Kunming Saturday night.

It was a typical terrorist attack and also a severe crime against the humanity.

It was China's "9-11."

Any explanation for the attack, like those in previous cases elsewhere in China, would be feeble at the bloody scene, where mothers, sons and daughters were slaughtered by strangers. Nothing justifies such a carnage against innocent civilians.

This was a random attack, with the sole purpose of causing the greatest casualties and impact within the shortest period of time.

It seems that the terrorists have had their way. Their killing spree has left 29 dead and over 130 injured, shrouding the southwestern city and the whole nation in terror.

This is not the first time that terrorists from Xinjiang launched deadly attacks over the past months, years and decades. In October 2013, Xinjiang separatists on a vehicle slammed into the Tian'anmen Square in Beijing, killing five and injuring 40.

The latest attacks in Beijing and Kunming have clearly indicated a despicable trend that separatists are targeting civilians out of Xinjiang.

It also showed a shift in their attack strategies from targeting symbols of the government, such as public security stations and police vehicles, to roadside civilians.

If the proliferation of their terrorist attack is not reined in, more innocent people will fall victim.

The latest attack showed that China's recent decision to set up a state security committee, headed by President Xi Jinping, to improve systems and strategies to ensure national security is very timely and necessary.

A nationwide outrage has been stirred. Justice needs to be done and terrorists should be punished with iron fists.

Countries and institutions such as the UN and France have condemned the attack. More voices of condemnation are expected.

Anyone attempting to harbor and provide sympathies for the terrorists, calling them the repressed or the weak, is encouraging such attacks and helping committing a crime

WSJ What Could Cause a Ukraine Default?

      The Wall Street Journal reports,''Ukraine’s economic and political crisis may be heating up, but Kiev still has enough emergency cash reserves to cover its obligations for the next two months.
But what would it take to push the country into default? Tensions escalating over Russia’s Crimea incursion, Moscow increasing natural gas prices and any delay in international bailout talks, say economists''.
“The military stand-off heightens Ukraine’s risk of default,” says Lilit Gevorgyan, a senior sovereign risk analyst at the IHS consultancy, in a research note.

If the military standoff turns into violent conflict, pitting the interim government in Kiev against Moscow and pro-West Ukrainians against their pro-Russia countrymen, the hyrvnia could fall much deeper into the danger zone.

“We suspect geopolitical risks emerging in the Ukraine are not likely to dissipate anytime soon,” said Eric Green, a TD Securities analyst.

Moscow could also raise the price it charges for the natural gas Ukraine depends on from Russia. To keep Kiev in the Kremlin’s political orbit, Russia has long kept fuel export prices below-market. The cheap imports allowed the government to subsidize lower fuel prices.

But with the IMF estimating that overall energy subsidies in Ukraine topping 7.5% of the country’s gross domestic product in 2012, any upward pricing adjustment has hard-hitting consequences.

The IMF wants a phased-in natural gas price hike to relieve the burden on government finances.

“Yet to do it too fast will be very disruptive, and likely to plunge the economy into further turmoil,” said Brown Brothers Harriman’s currency strategy team said in an email to clients.

Russian President – and former KGB officer – Vladimir Putin knows that. To press Ukraine and the Western officials trying to support the fledgling government in Kiev, Mr. Putin could end the 33% price discount agreed with the now-ousted pro-Russian government last December when the contract comes up for review in April. He could also insist on Ukraine paying off its overdue natural gas bills worth $1.5 billion.

To help buy time for negotiations, the IMF can offer a short-term line worth $1 billion within week. Other countries have also talked about similarly-sized options to encourage the new government.

But for the longer-term, large-scale financing Ukraine needs over the next couple of years to stabilize the economy could prove elusive.

“Without the expected financial assistance from Western donors, Ukraine is likely to default,” Mr. Gevorgyan said.

Europe Ties with Russia

WSJ, Russia's Power Play Hits Economic Weak Spot

         The Wall Street Journal reports,''markets experienced a classic flight to safety Monday, with stocks down, bonds up and emerging markets falling further from favor. But the harshest judgment was reserved for Russian assets: The RTS stock index plunged 12%, Russian dollar-denominated sovereign bonds fell and the ruble dropped sharply against the dollar".

Russia hasn't faced quite the same pressures as other emerging markets that have been grappling with the impact of U.S. monetary policy this year. But the country already had problems even before the Ukrainian crisis hit. Russia's current account risks moving into deficit and the central bank is forecasting growth of just 1.5%-1.8% this year. January's data showed a sharp drop in fixed investment, a contraction in industrial production and slowing retail sales growth, Royal Bank of Scotland  notes. Russia's actions in Ukraine will only be a further red flag for foreign investors.

The ruble in particular looks like a weak point, despite the country's stock pile of $493 billion in foreign-exchange reserves. The currency has already come under severe pressure this year, falling more than 9% against the U.S. dollar. The Central Bank of Russia responded to the volatility Monday with an emergency rate hike of 1.5 percentage points to 7%, a move that it described as "temporary."

But Russia's central bank is caught in a tricky spot: rates rises threaten to push the economy into recession, but failing to tighten policy could lead to a rout in the ruble and higher inflation. For the moment, further ruble weakness seems unavoidable, particularly since the central bank is in the midst of moving to a more flexible exchange-rate regime.

Economic sanctions from Western countries look more likely than military intervention. But Mr. Putin may be gambling that Europe will stop short of measures that could seriously destabilize the Russian economy, such as major restrictions on trade. Russia is clearly reliant on revenues from trading in oil and gas. But by the same token, Europe needs Russian energy supplies: Russia accounts for 31% of European Union natural gas imports and 27% of crude oil imports, Citigroup notes. Asset freezes and travel restrictions might be less dramatic, but could yet cause problems for Mr. Putin, as Russia's political and business elite have increasingly become global players.

Geopolitical risk is always hard for investors to assess: it is impossible to predict how the crisis in Ukraine will play out. Ultimately, it remains to be seen whether Mr. Putin's apparent political ambitions to keep a grip on Ukraine are a stronger force than the undoubted costs his tactics could inflict on Russia's economy. Until that becomes clearer, investors have good reason to shun Russia.

Asian Shares Inch Lower

      The Wall Street Journal reports, "Asian stocks mostly edged lower on Tuesday, while the cost of oil pulled back, as the selling sparked by the crisis in Ukraine moderated.

Although Japan and South Korea continued to weaken, the moves were small, as the situation in Ukraine hadn't deteriorated significantly and stocks had already sold-off in the previous session. On Monday, Ukraine accused the Kremlin of taking border posts and increasing the size of its forces in the Crimea''.

Japan's Nikkei fell by 0.3% as the yen softened slightly against the dollar in Asian trade. The dollar was last at ¥101.53 compared with ¥101.44 late Monday in New York.

"The immediate and likely largest impact from the risk-off sentiment due to the crisis in the Ukraine may have already passed," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Elsewhere in the region, South Korea's Kospi was down just 0.2% and Australia's S&P/ASX 200 added less than 0.1%.

The price of oil, which had jumped 2.3% on Monday, also eased early on Tuesday. Nymex crude fell by 0.2% to $104.70 a barrel.

The situation in the Ukraine is the latest crisis to hurt sentiment this year, and the performance of global markets overnight was broadly negative with stocks in both the U.S. and Europe dropping on Monday. Russia was hit the worst, as the Micex index plunged 11% and the ruble touched a record low against the dollar.

Asia has already weathered shocks from a number of emerging markets in 2014, which has put much of the region in the red for the year. Most notably, investors were spooked by concerns over unrest in Turkey and renewed fears over the state of China's economy. As a result, stocks spent much of February recovering from a sell-off that started in January.

Hostile emergency meeting at the United Nations security council ends.

10.54 p.m. GMT

The “feisty” emergency meeting on Ukraine has just wrapped up at the UN security council, the Guardian’s Ed Pilkington (@EdPilkington) reports:

It turned into a pretty feisty slanging match between the Russian ambassador, Vitaly Churkin, on the one hand, and the combined might of the US, UK and France on the other.

Samantha Power, the US ambassador to the UN, addressed Russia’s professed desire to protect the rights of Russian speakers in the Crimea. “There are so many options available to Russia to safeguard the rights of ethnic Russians short of military action,” she said. “So the very simple question today is why not support international efforts, why not support an observer mission, why not pull back your forces instead of sending more?”

Churkin insisted he was open to observer missions, which encouraged the UK representative Sir Mark Lyall Grant to ask him directly would he agree to the Organization for Security and Co-operation in Europe sending observers to Crimea. The Russian ambassador looked uncomfortable at that suggestion.

“We are not talking about the OSCE,” he said bluntly.

As frustration levels rose, Churkin lashed back at the repeated accusations from his fellow ambassadors that Russia was fabricating the truth about its military intervention.

“There’s too much disinformation going on,” Churkin said, using the exact words that had previously been levelled against him.

Source: theguardian

Remarks of Ambassador Samantha Power at the emergency meeting of the UN security council

10.39 p.m. GMT

Excepts of full remarks of Ambassador Samantha Power  to the emergency meeting of the UN security council :
“Listening to the representative of Russia, one might think that Moscow had just become the rapid response arm of the Office of the High Commissioner for Human Rights,” she began. “So many of the assertions made this afternoon by the Russian Federation are without basis in reality.”

Let’s begin with a clear and candid assessment of the facts.

It is a fact that Russian military forces have taken over Ukrainian border posts. It is a fact that Russia has taken over the ferry terminal in Kerch. It is a fact that Russian ships are moving in and around Sevastapol. It is a fact that Russian forces are blocking mobile telephone services in some areas. It is a fact that Russia has surrounded or taken over practically all Ukrainian military facilities in Crimea. It is a fact that today Russian jets entered Ukrainian airspace. It is also a fact that independent journalists continue to report that there is no evidence of violence against Russian or pro-Russian communities.

Russian military action is not a human rights protection mission. It is a violation of international law and a violation of the sovereignty and territorial integrity of the independent nation of Ukraine, and a breach of Russia’s Helsinki Commitments and its UN obligations.

Source: the guardian

Swarming critics of the Russian military intervention in the Crimea ,at the UN security council

9.22 p.m. GMT

Swingeing criticism of the Russian military intervention in the Crimea is continuing to pour out of the UN security council, writes Ed Pilkington (@EdPilkington), “with the Russian ambassador Vitaly Churkin listening impassively to the pasting he is receiving”:

Gerard Araud, the French ambassador, said the current events reminded him of when he was 15, listening to the 1968 Soviet invasion of Czechoslovakia. “Russia seems to be coming back to its old ghosts playing an old fashioned role in an outdated setting,” Araud said.

The UK representative to the UN, Sir Mark Lyall Grant, put it more pithily: “The pretense is now over.” He accused Russia of fabricating details of threats in Crimea to justify its hostile actions and concluded: “This is not 1968 or 1956.”

Vitaly Churkin,says to UN Security Council the events that led Russia to use its armed forces in Ukraine

 8.55 p.m. GMT

Ed Pilkington reports from the emergency UN security councilmeeting that Vitaly Churkin, the Russian diplomatic representative at the UN, has just shown the other members of the council what he claimed was a letter from Viktor Yanukovich, the ousted president of Ukraine who is now in exile in Russia.

In the letter, the former leader of the troubled country calls on the Russian president Vladimir Putin to use his military to invade parts of Ukraine. Churkin reads:

“As the legitimate elected representative, I say the events in Kiev have resulted in Ukraine being on the brink of civil war. The rights of people in Crimea are being threatened. Under the influence of Western countries, there are open acts of terror. I would call on the president of Russia, Mr Putin, to use the armed forces of the Russian Federation to establish peace and defend the people of Ukraine.”

Samantha Power, the US ambassador to the UN, has just taken the floor with this acerbic riposte: “So many of the assertions made this afternoon are without basis in reality”. 

Source: theguardian

There may be some daylight between the US thinking on sanctions and the EU version.

A European diplomat tells Guardian Washington correspondent Paul Lewis (@PaulLewis) thatA European diplomat tells Guardian Washington correspondent Paul Lewis (@PaulLewis) that there may be some daylight between the US thinking on sanctions and the EU version. “I expect we will not be 100% in line with the suggestions made by the US so far in relation to sanctions,” the source said:

In the EU there are all sorts of different views about how the problem should be tackled. We might be of the opinion that in order to keep talks with Russian open, we should not yet resort to sanctions at such an early stage.”

The source added that the consequences of imposing sanctions are less severe for the US than in the EU, which is significantly more reliant upon Russian trade and gas exports. Japan, a key member of the G8 group of western nations, is also believed to be anxious about punitive measures that could harm the wider global economy. “I expect we will not be 100% in line with the suggestions made by the US so far in relation to sanctions,” the source said:

Source: theguardian 

Quinta edizione del concorso fotografico nazionale di fotografia geografico - ambientale, aperto a tutti i cittadini residenti in Italia.

Il concorso è aperto a tutti i cittadini residenti in Italia; 

Obiettivo Terra, scatta tu!

La fotografia è la vostra passione e amate la natura? "Obiettivo Terra", promosso da Fondazione UniVerde, è il concorso che fa per voi. Si può partecipare entro il 23 marzo.

di CHIARA BORACCHI

Il contest giunge quest’anno alla sua quinta edizione. Obiettivo terra, che si svolge in occasione dell’Earth Day (22 aprile), è promosso da Fondazione UniVerde e Società Geografica Italiana Onlus e ha lo scopo di valorizzare e pubblicizzare il patrimonio ambientale dei parchi nazionali e regionali italiani.

Cosa devono sapere i partecipanti La partecipazione a Obiettivo Terra è gratuita. Si concorre con una sola fotografia (pena l’esclusione dal concorso), da caricare esclusivamente online sui sitiwww.fondazioneuniverde.it, www.societageografica.it e www.green-city.it, dal 20 gennaio 2014 e non oltre il 23 marzo 2014. Al vincitore, che sarà decretato il prossimo 16 aprile, andranno un premio di 1.000 euro e una targa – ricordo. La foto prima classificata sarà anche oggetto di una maxi-affissione nella Capitale.

 A chi fosse curioso di vedere le foto più belle di Obiettivo Terra 2013, segnaliamo la mostra di giovedì 6 marzo alle ore 17.00, all’Hotel NH President, allestita in occasione del convegno La forza della natura. L’evento, di cui LifeGate è media partner, è promosso da Fondazione UniVerde e Società Geografica Italiana Onlus.

Regolamento della 5ª edizione del concorso 

“Obiettivo Terra” 

La Fondazione UniVerde e la Società Geografica Italiana Onlus indicono la quinta 

edizione del concorso fotografico nazionale di fotografia geografico - ambientale 

“Obiettivo Terra”, in occasione della 44ª Giornata Mondiale della Terra 

(22 aprile 2014), per valorizzare il patrimonio ambientale dei Parchi Nazionali e 

Regionali d’Italia. 

Requisiti di Partecipazione 

- Il concorso è aperto a tutti i cittadini residenti in Italia; 

- il soggetto fotografato dovrà necessariamente rappresentare un’immagine di 

un Parco Nazionale o Regionale italiano. (L’elenco completo dei Parchi 

Nazionali e Regionali è consultabile sul sito di Federparchi www.parks.it); 

- con la candidatura della fotografia il concorrente ne certifica l’autenticità e la 

titolarità; 

- la fotografia candidata non deve essere già stata oggetto di premiazioni in altri 

concorsi di carattere nazionale; 

- la fotografia candidata non deve in alcun modo ledere alcun diritto di terzi né 

violare le leggi vigenti; 

- in ogni caso l’autore manleva l’organizzazione da tutte le responsabilità, costi e 

oneri di qualsivoglia natura che dovessero essere sostenuti a causa del contenuto 

della fotografia; 

- non potranno partecipare al concorso i dipendenti delle società ed Enti pubblici e 

privati coinvolti nell’organizzazione del concorso. 

Modalità di Partecipazione 

- La partecipazione è del tutto gratuita; 

- la candidatura della fotografia dovrà avvenire attraverso i siti 

www.fondazioneuniverde.it, www.societageografica.it, www.green-city.it, a 

partire dal 20 gennaio 2014 e non oltre il 23 marzo 2014 in occasione del primo 

week end di primavera. Farà fede la data di caricamento della foto. 

- ogni partecipante può candidare soltanto una fotografia pena l’esclusione dal 

concorso; 2 

- la fotografia candidata non si può ritirare e non si può chiedere la candidatura di 

un’altra fotografia in sostituzione di quella inviata; 

- per poter candidare la propria fotografia occorre accedere ai siti 

www.fondazioneuniverde.it, www.societageografica.it, www.green-city.it, 

entrare nell’area dedicata al concorso Obiettivo Terra 2014 e compilare la scheda di 

registrazione con i dati anagrafici (Cognome, nome, luogo e data di nascita…), 

almeno un recapito telefonico e altri dati richiesti quali il nome esatto del Parco 

Nazionale o Regionale e l’area del Parco dove è situato il soggetto fotografato; 

- l’indicazione errata dei dati richiesti può portare all’esclusione della foto dal 

concorso; 

- sono escluse dalla partecipazione al concorso tutte le aree protette che non 

siano Parco Nazionale o Parco Regionale e non riportate nei relativi elenchi 

consultabili sul sito di Federparchi. 

Esclusione candidature 

La Fondazione UniVerde e la Società Geografica Italiana potranno, a loro 

insindacabile giudizio, escludere fotografie candidate, nel caso le ritengano fuori 

tema, di scarsa qualità, indegne, non conformi ai requisiti richiesti nel presente 

regolamento o per qualsiasi altro motivo ritenuto valido. 

La Fondazione UniVerde e la Società Geografica Italiana potranno altresì escludere, 

sempre a loro insindacabile giudizio, gli autori che hanno un comportamento non 

consono a una leale competizione o per qualsiasi altro motivo ritenuto valido. 

Concessione Licenza e autorizzazione al trattamento dei dati personali 

Il partecipante concede alla Fondazione UniVerde e alla Società Geografica Italiana 

una licenza d’uso completa, non esclusiva, irrevocabile e a tempo indeterminato della 

fotografia inviata. 

La licenza concessa comprende anche la possibilità di sub-licenza a terzi. 

Il nome dell’autore verrà in ogni caso sempre indicato. 

Ogni partecipante autorizza la Fondazione UniVerde al trattamento dei dati personali 

ai sensi della Legge 196/2003 e successive modifiche, per tutti gli adempimenti 

necessari all’organizzazione e allo svolgimento del concorso. 

Caratteristiche tecniche delle Fotografie 

- Saranno ammesse soltanto foto in formato digitale, a colori, di risoluzione 

minima 1600x1200 pixel o 1200x1600 pixel in formato orizzontale o verticale e 

che non superino i 10 Mb; 

- le foto inviate devono essere quelle “originali” ottenute da un unico scatto; 

- non sono ammesse foto ritoccate, sovrapposizioni, fotomontaggi e foto manipolate; 

- non sono ammesse foto con scritte sovraimpresse, bordi o con altri tipi di 

addizioni o alterazioni. 

 3 

Criteri 

I criteri fondamentali sulla base dei quali saranno selezionate le fotografie sono: 

aderenza all’obiettivo del concorso, originalità, qualità tecnica e qualità artistica. 

Pre-selezione 

Le fotografie saranno oggetto di una pre-selezione a cura della Fondazione UniVerde 

e della Società Geografica Italiana. 

Selezione finale e decretazione del vincitore 

La selezione finale con decretazione del vincitore avverrà ad opera di una giuria di 

esperti in materia geografico - ambientale, scientifica, sociologica, mediatica e 

fotografica. 

Il giudizio della Giuria è insindacabile e inappellabile. 

Il vincitore sarà informato non appena si avrà il responso della Giuria e dovrà 

presenziare alla cerimonia di premiazione. 

Tutti i partecipanti riceveranno una e-mail di invito alla cerimonia di 

premiazione sulla casella di posta indicata nel modulo elettronico di 

registrazione. 

Risultato 

Il risultato del concorso, con il nome del vincitore e la foto vincitrice, sarà 

riportato sui siti www.fondazioneuniverde.it, www.societageografica.it, 

www.green-city.it . 

Premio 

Al vincitore sarà assegnato un premio di € 1.000 (euro mille) e gli verrà donata una 

targa - ricordo dalla Fondazione UniVerde e dalla Società Geografica Italiana. 

La fotografia vincitrice sarà esposta su una maxi-affissione a Roma. 

Il premio verrà consegnato durante la cerimonia di premiazione che si svolgerà 

a Roma il 16 aprile 2014. 

Vincitore 

Il vincitore, su richiesta della Fondazione UniVerde, dovrà fornire, pena l’esclusione 

dal concorso, ulteriori dati anagrafici e tutte le informazioni ritenute necessarie. 

Menzioni speciali 

Saranno inoltre selezionate, tra le foto pervenute, le vincitrici delle menzioni speciali 

alla migliore foto di ognuna delle seguenti categorie: 

- Alberi e foreste 

- Animali 

- Area costiera 

- Paesaggio agricolo 

- Agricoltura familiare 4 

 (2014 Anno Internazionale ONU dell'Agricoltura Familiare) 

- Borghi (2014 Anno Europeo per la Conciliazione tra la vita lavorativa e la vita 

familiare) 

Potrebbero essere previste altre menzioni speciali. 

La selezione verrà fatta dalla Fondazione UniVerde e dalla Società Geografica 

Italiana solo tra le foto ritenute conformi al regolamento. 

I vincitori della sezione Menzioni speciali riceveranno una targa in occasione della 

cerimonia di premiazione del 16 aprile 2014 a Roma. 

I vincitori saranno avvisati non appena si avrà il responso della Giuria e 

dovranno presenziare alla cerimonia di premiazione o designare un sostituto per 

il ritiro della targa. 

Aggiornamenti Regolamento 

La Fondazione UniVerde e la Società Geografica Italiana si riservano di integrare e 

modificare, attraverso i siti www.fondazioneuniverde.it, www.societageografica.it, 

www.green-city.it il presente regolamento, al fine di garantire un corretto andamento 

del concorso. 

Accettazione Regolamento 

La partecipazione al concorso implica la totale accettazione del presente regolamento. 

Controversie 

Per qualsiasi controversia sarà competente il Foro di Roma. 

How Stocks React to Geopolitical Uncertainty. History, Short-lived Declines.

      The Wall Street Journal reports, ''an escalation of tensions between Russia and Ukraine roiled global markets Monday, but if history is any indication, the declines may be short-lived''.

Stocks have a propensity for getting hit hard immediately following a renewed flare up in geopolitical tensions. Monday has been no different, with the Dow Jones Industrial Average down 226 points, or 1.4%, to 16094. The drop followed sharp declines overseas, with Russian stocks suffering the steepest losses.

The Market Vectors Russia ETF Trust(ticker symbol RSX) dropped 9% to $22.25, on more than three times its average daily trading volume, according to FactSet.

The question now is how much longer will the selloff last. While its still early and there are plenty of unknowns, a look to the past as a guide for potential future performance offers a somewhat calming picture for the U.S. markets.

Sam Stovall, chief equity strategist at S&P Capital IQ, conducted a broad study last year of how U.S. stocks reacted since World War II to anything ranging from wars, near wars, assassinations, assassination attempts, terrorist attacks and financial collapses. In the 14 examples he cited, he found a running theme: Stocks initially sold off, but then didn’t take long to rebound and recover those losses. The chart below, courtesy of S&P Capital IQ, expands upon those examples.

In recent years, three separate examples tell a similar story.

In August 2008, the Russia-Georgia War didn’t have much of a lasting impact on U.S. stocks. The S&P 500 dropped 1.8% on Aug. 7, 2008, the first day of the war. But the market regained those losses the very next day and traded higher for the next month. The major caveat is the war took place barely more than a month before Lehman filed for bankruptcy and Merrill Lynch was sold to Bank of America, moves that ultimately sent the financial crisis to new depths and prompted steep stock-market losses.

The Arab Spring began in December 2010 and ultimately led to the ouster of leaders in Egypt, Libya, Tunisia and Yemen, among others. It didn’t have a profound impact on U.S. stocks. The S&P 500 kept rallying through the end of that year and into February 2011.

And as recently as last summer, Syria’s use of chemical weapons prompted a brief spat of volatility in the markets. The S&P 500 slumped 3.1% in August, but again the decline didn’t last long. The index rallied 3.8% and finished the year up 30% at a record high.

The bottom line about Ukraine and the U.S. markets, at least with regard to information currently available, is any future selloffs could be steep, but they will likely be short-lived.

“Last week major markets ignored the situation based on the assumption that it will be contained,” said David Kotok, president of Cumberland Advisors, which manages about $2 billion in Sarasota, Fla. “The U.S. stock market reached a new high in the midst of the evolution of events. That advance is now in question, and the question may provide an entry opportunity.”

Reuters: Crimea could be spark for bigger Western selloff by Swaha Pattanaik

 Crimean tensions could spark a bigger selloff in Western shares. Russia’s military intervention in Ukraine sent the Moscow index down more than 10 percent on Monday, while safe government bonds rallied, and some developed-market bourses slid by 2 percent or more. Investors are likely to pull even more money out of emerging markets. Their faith in developed equities, particularly European ones, has survived previous stumbles. But this too is now on shakier ground.

In the last three months, MSCI’s dollar index of emerging markets has shed 5 percent, while European stocks have gained by a similar amount. Emerging-market turmoil and a Federal Reserve decision to keep trimming asset purchases caused rich-world ructions in late January. But while investors fled developing markets, cash continued to flow into European equities, and inflows were only temporarily disrupted into U.S. shares. EM equity funds have seen outflows for a record-breaking 18 straight weeks while European ones have now enjoyed eight months of inflows, Bank of America Merrill Lynch said last week.

But Crimea could be a turning point. Britain calls the crisis Europe’s biggest in the 21st century. That alone is enough to send some investors scurrying to hide cash under the mattress.

To make things worse, developed markets’ valuations look stretched, especially in Europe. The price-to-earnings ratio for the STOXX Europe 600 is 14, or nearly a fifth more than its 10-year average. The S&P 500 is above 15 times PE, or 10 percent above its average.

Second, stocks have been bid up by borrowed money. U.S. margin debt hit record highs in January, according to NYSE data. A selloff could trigger margin calls that would see the stock-market slide feed on itself. And third, yields on even the safest government bonds are higher than they were a year ago. That too could tempt risk-averse managers away from equities.

It’s too early to call the end of the five-year stock-market rally. Monetary policy is still ultra-loose in big economies and developed economies are still growing. But high valuations and unpredictable geopolitics raise the risks of a deeper correction.

CONTEXT NEWS

- The price/earnings ratio for the DJ STOXX 600 Europe is 14.1. That is 18 percent above its 10-year average of 11.9, according to Datastream. The p/e ratio for the S&P 500 is 15.2, 10 percent above its 10-year average of 13.8.

Source: Reuters

Russia says no ultimatum issued to Ukraine forces

Russia's Black Sea Fleet hasn't issued an ultimatum to Ukrainian forces in Crimea to surrender by 5 a.m. Tuesday or face an assault, Reuters reported, citing the Interfax news agency. Earlier, Ukraine said Russian forces controlling Crimea were demanding the crew of two Ukrainian warships surrender or face seizure by the Russian navy. Interfax quoted an unnamed representative at the Black Sea Fleet's headquarters saying no assault was planned and adding "This is complete nonsense." 

Source: Marketwatch

West can hurt Russia - if there’s a will

Western powers seem to consider that Crimea is gone, that Russia is there to stay, and that their main option is to increase the “cost” – Barack Obama’s word – that Vladimir Putin must pay for his actions in the Ukrainian territory.

The 10 percent fall in Russian stock markets after the military buildup in the peninsula shows that the economic costs facing Putin might indeed be substantial, even without governments’ intervention. But that is unlikely to impress the Russian president much. What matters more is how Europe and the United States will act to change the fundamentals of their relationship with Moscow.

That explains markets' knee-jerk reaction to the weekend escalation of the crisis. Investors seem to be bracing for an increased economic and financial isolation of Russia. This is likely to be true in the short term. Capital flight will increase and foreign investment will dwindle. Russia’s long-running problem – legal and financial unpredictability – has only increased with Putin’s surprise moves. The rouble’s devaluation, down 10 percent since the beginning of the year, will make mostly-imported consumer goods more expensive.

But the aim of sanctions is not just to punish Russia for its de facto takeover of Crimea, but to prevent it from driving further into the rest of eastern Ukraine. There, the West does not have many options that could be effective in the short term. It needs to untangle the cosy relationship with Russia it built up in the last quarter-century. That is mostly a European Union problem. Continental Europe needs to shake up its addiction to Russian gas, and the City of London must stop serving as a launderette for the money of corrupt Russian officials and businessmen.

That cannot happen in the short term, if only because Europeans are divided on the matter, some of them still intent on trying to talk reason to Putin. It is crucial to send the signal that the EU is taking the Ukrainian crisis for what it is: not a temporary blip in the recent history of their challenged relationship with Russia, but the clear sign that they are facing an unpredictable Russian leader they can no longer do business with.

Source:  Reuters

WSJ Ukraine Troubles Europe’s Banks

      The Wall Street Journal reports,''escalating tensions over Russian military intervention in Ukraine rippled through Europe’s banking sector Monday, hitting banks exposed to Eastern Europe''.

The prices of European bank stocks and bonds tumbled, some banks operating in Ukraine imposed limits on withdrawals from their cash machines, and one bank put on hold the process of selling its Ukrainian unit.

Russian banks suffered the most, with London-listed shares of OAO Sberbank and OAO VTB, the country’s two largest lenders, fell more than 16% and 18% respectively.

Foreign banks with operations in Russia or Ukraine, including Austria’s Raiffeisen International AG, Italy’s UniCredit SpA and France’s Société Générale SA, also got clobbered. Raiffeisen, which has 12.1% of its assets in Russia and 3.4% in Ukraine, saw its shares fall about 8%. Shares of UniCredit and Société Générale, which owns one of Russia’s largest retail and corporate banks, both fell about 5%.

Raiffeisen said in a statement Monday that it is temporarily halting its planned sale of its Ukrainian unit, Bank Alva. Raiffeisen said it has received multiple offers for the business. The process “is on hold for now, however, due to the situation in Ukraine.”

UniCredit’s unit in Ukraine announced on its website that it was limiting cash withdrawals from its ATMs to 1,500 hryvnia, or about $150, per 24 hours. The bank said it was taking the step “in order to provide all the clients with an access to cash money” and that the limits would be removed “in the nearest time with the normalization of the situation.”

UniCredit’s move came after Ukraine’s central bank last week imposed limits on withdrawals on foreign-currency accounts, barring customers from withdrawing more than $1,500 or the euro equivalent. There were no central-bank restrictions on hryvnia accounts.

Ukraine’s impact on western European banks will be more limited than it would have been in the past, as direct cross-border exposures are less than half their level in 2008, said Elena Romanova, an analyst with Raiffeisen International. Prior to the financial crisis, European banks were chasing market share in what they perceived to be one of the continent’s last high-growth markets. However, those banks now hold less than 20% of Ukrainian bank assets.

Neither of Russia’s top two banks have much of their balance sheets tied up in Ukraine. VTB’s $8 billion exposure represents about 3% of its total assets, while Sberbank’s $4.5 billion exposure is 1% of its assets, according to Bob Kommers, an analyst with Deutsche Bank in Moscow. The chief executives of Sberbank and VTB said last week that they had suspended new loans to Ukraine but intended to stay in the country over the long term.

“But today’s price moves are hardly related to Ukraine exposures,” Mr. Kommers said. “What’s happening today is that people are factoring in higher country risks” for Russia.

The market turmoil pushed up Russian banks’ costs of market funding. VTB saw the yield on its benchmark notes jump by 0.6 percentage point to 7.25%, according to Tradeweb. The rise is potentially problematic, as VTB gets more than half its funding from the capital markets, Mr. Kommers said.

VTB declined to comment on the impact on its business. Sberbank didn’t immediately respond to a request for comment.

Russia Raises Interest Rates After Markets Plummet

    The Wall Street  Journal reports,Russia pumped up interest rates aggressively Monday as its currency and stock market plunged, suggesting that the country's military buildup in Crimea could backfire on the economy.

A slide in the ruble in recent months has already been putting pressure on some parts of Russia's economy. Data released on Monday showed that the country's manufacturing sector had contracted for the fourth consecutive month, with the weaker ruble adding to import prices.

But following the escalation of tensions around Crimea, and Moscow's threat to send troops to Ukraine, the currency fell further, to more than 37 to the dollar and more than 51.2 to the euro, prompting the Central Bank of Russia into a 1.5-percentage-point interest-rate rise, taking the key rate to 7%, to try to stabilize the markets. It also bumped up its repo rate, at which banks receive liquidity, to 8%, and banks said it sold dollars heavily to support the currency.

The rate hike, which the central bank said was temporary, may put additional pressure on flagging economic activity. In 2013, economic growth slowed to 1.3%, its weakest pace since President Vladimir Putin came to power in 2000.

A weaker ruble is a boon for Russia's exporters. But by boosting import prices, it also carries risks for inflation, which the central bank plans to contain at 5% this year.

Analysts at VTB 24, a retail arm of the country's second largest lender VTB, said in a note that it was too late now to ditch rubles for dollars. VTB 24 said on its website it is ready to sell cash for 37.90 rubles per dollar and 52.50 rubles per euro, far above the central bank's official rate of 36.37 and 50.15 respectively. Other foreign-currency vendors across the country said they were seeing increased demand for cash.

"People are buying currency much more activley than before; there is a line in the exchange office of the bank," said Nina, an Otkritie Bank employee in Siberian city of Krasnoyarsk, who declined to give her surname.

Other markets also suffered a heavy selloff, potentially imposing losses on wealthy business owners in the region. Russia's Micex stock index dropped to its lowest since June, losing more than 10% on the day. All the blue-chip stocks slid into negative territory, with Gazprom, the country's most liquid stock, down 11%. The state-run gas giant has a vital pipeline running through Ukraine for delivering energy to Europe.

All the Russian assets are being sold now. It is a panic, the market is nervous and one should not wait for positive news," said Egor Fedorov, an analyst at ING Bank in Moscow.

Citigroup said that the Russian-listed companies most exposed to Ukraine are Gazprom, Mobile Telesystems, VimpelCom Ltd., VTB Bank, Sberbank, and Evraz. "Russia serves as a proxy for playing a fraught situation in Ukraine, with equity and fixed-income markets coming under severe market pressure," said Ivan Tchakarov, chief economist at Citigroup in Moscow.