Asian shares up on Yellen comments, China trade data.

Asian shares got a lift on Thursday from dovish comments by the U.S. Federal Reserve chief and upbeat Chinese trade data that suggested some signs of stabilisation in the world's second-largest economy.

Risk assets were also underpinned by signs of easing tensions in Ukraine after Russian President Vladimir Putin called on pro-Moscow separatists to postpone a secession vote.

Tokyo's Nikkei share average .N225 rose 1.1 percent while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.5 percent, inching away from five-week lows hit on Wednesday.

Chinese exports rose 0.9 percent in April from a year earlier, beating expectations of a 1.7 percent decline, while imports also overshot economists' estimates.

The data supported the case that Beijing's use of targeted policy measures to underpin growth may be starting to stabilise the economy.

The early impetus for markets also came from Fed Chair Janet Yellen's testimony to Congress, which helped U.S. shares reverse earlier losses to end in positive territory.

Yellen repeated her stance that the economy was still in need of lots of support given the "considerable slack" in the labour market.

"Yellen ... put her emphasis on the ways in which the economy and labour market were still falling short of the FOMC's goals. She also emphasized risks to the economy from a potential continuation of the recent 'flattening out' of housing activity," said Barclays analysts in notes to clients.

"The clear implication is that accommodative policy will be needed for a long time."

The Dow Jones industrial average .DJI rose 0.7 percent and the S&P 500 .SPX gained 0.6 percent.

Emerging market shares  also held firm, with Brazilian shares hitting six-month highs  and Mexican stocks at their highest in more than three months.

Yellen's remarks also kept the 10-year U.S. Treasuries yield at 2.590 percent, near Monday's three-month low of 2.572 percent.

Source: Reuters

Weak French output casts doubts on growth, German industry orders slump

 French factories produced much less than expected in March while German industry orders unexpectedly fell the most in 1-1/2 years, data showed on Wednesday, feeding speculation of fresh European Central Bank action to support the euro zone recovery.

France also reported a wider trade deficit, casting doubt on President Francois Hollande's recent predictions that the bloc's second-largest economy is finally turning around.

Coming after a first-quarter drop in consumer spending, the 0.7 percent drop in French industrial output in March underlined the challenges facing the economy. Analysts had forecast a rise of 0.2 percent.

German industry orders also confounded the consensus forecast for a 0.3 percent rise, tumbling 2.8 percent as demand for German capital and consumer goods from the euro zone slumped, partly due to worries about the Ukraine crisis. [ID:nL6N0NT1PJ]

Still, some analysts said the outlook in Germany remained bright despite the surprise drop.

Overall the data could give the ECB, which ends a policy meeting on Thursday, another reason to eventually loosen monetary policy alongside the strong euro, low inflation and recent money-market tensions.

"The market was getting used to the idea that the ECB would stay put this week. This kind of data is mixing the picture," said Jean-Francois Robin, head of strategy at Natixis.

French industrial output shrank for the first quarter overall as a rise in the manufacturing component was cancelled out by lower energy demand due to mild weather. [ID:nP6N0MG001]

Hollande said at the weekend that the 2 trillion euro economy, bogged down by high unemployment and weak domestic demand, was on the way to turning around after stronger-than-expected 0.3 percent growth in the last quarter of 2013.

A solid turnaround is essential if France is going to keep promises to EU partners to bring its public deficit to within an EU-mandated target of 3 percent of output by 2015, down from 4.3 percent last year.

Market participants say there is very little chance of immediate ECB action to support the euro zone economy, but most believe a rate cut or some form of liquidity injection is likely from next month. Some even argue a move to print money by buying assets - so-called quantitative easing - could be on the cards.


'NO FRENCH TURNAROUND NOW'

Some analysts said the slump in German industry orders did not threaten the outlook for Europe's largest economy and was partly due to below-average large orders.

"The continued strong domestic orders show that the pickup in Germany is supported largely by domestic demand and is therefore less sensitive to swings in the global economy than in previous decades," said Stefan Kipar of Bayern LB.

Others were worried by the sharp drop in orders from the rest of the zone, however.

"The West's conflict with Russia may be unsettling companies in Europe more than previously thought," said Thomas Gitzel, chief economist at VP Bank.

"It is quite conceivable that the recovery in Germany and in the euro zone loses momentum in the second half of the year," he said.

After growth of just 0.4 percent last year, the German government predicts an expansion of 1.8 percent this year, driven by domestic demand.

France's weak data reinforced expectations that GDP growth would be smaller there in the first quarter than in the last quarter of 2013, however, and could even come in lower than some initial estimates.

"Industrial output, trade balance, GDP: the turnaround is not for now," Credit Agricole analyst Frederik Ducrozet wrote on Twitter. French first-quarter GDP data is due out on May 15.

France's March industrial output was also dragged down by low energy consumption after a mild winter, which led Barclays analyst Fabrice Montagne to say that first-quarter GDP growth could now come to 0.1 percent, below his earlier 0.2 percent estimate.

"French growth is also likely to contrast with stronger numbers in neighbouring countries such as Germany or Spain. GDP is then expected to rebound in Q2 towards the euro area average," he said.
Source: Reuters

Reuters: Euro zone yields edge higher on Putin comments, poor German auction

 Euro zone bond yields edged up on Wednesday after comments from Russian President Vladimir Putin appeared to open a way to resolving the standoff over Ukraine and as Germany found scarce demand for five-year debt at an auction.

Putin called on separatists in east Ukraine to postpone a referendum on independence for the mostly Russian-speaking region and said Moscow had withdrawn troops from the border with Ukraine.

A NATO official said, however, that there was no indication that Russian military forces were withdrawing. 

Nevertheless, Putin's comments took the shine off German Bunds, which investors see as one of the safest instruments in the world.

They also knocked back lower-rated bonds, which since the start of the Ukraine crisis have been sought as a safer alternative to equities. At the height of the euro zone debt crisis two years ago, peripheral bonds would sell off in periods of increased geopolitical stress.

"It looks like the conflict might be easing off a bit so bonds are suffering," one London-based trader said.

German Bund yields , the benchmark for euro zone borrowing costs, rose 1.5 basis points to 1.475 percent, coming off 11-month lows of 1.44 percent hit earlier in the day. Most other yields in the euro zone were 1-3 bps higher, with Spanish, Irish and Italian yields bouncing off record lows.

Another blow for the bond market was a German auction of five-year debt which drew fewer bids than the amount on offer.

The auction result was taken as a signal that many in the market thought yields had fallen too much, especially ahead of a European Central Bank meeting on Thursday which is unlikely to deliver any new monetary policy easing measures.

Five-year debt has historically been more sensitive to central bank expectations than shorter- or longer-term bonds.

"The auction was a big surprise. It seems that the market is getting pretty tired at these levels," said David Schnautz, rate strategist at Commerzbank in New York.

Although no major ECB moves are expected on Thursday, markets are still pricing in some form of easing later this year, as suggested by longer-term money market rates trading below short-dated ones.

Low inflation, a stubbornly strong euro and some recent volatility in interbank lending markets are all reasons for the ECB to consider further easing. Some in the market even argue a move to print money by buying assets - so-called quantitative easing - could be on the cards.

"The ECB is unlikely to announce QE tomorrow because the meeting comes so close to the European Parliamentary elections. June seems more likely, but the ECB is not finding it easy to agree on a QE programme and may need longer still," said Ben Bennett, a credit strategist at Legal & General.

NBG sets price range for share placement 2-2.6 euros(US$2.74-3.56) shares plunged today in NY to US$3.75 in (-4.82%)

The National Bank of Greece (NBG) has set the price range for a share placement worth up to 2.5 billion euros ($3.5 billion), which bankers said was the latest deal by a Greek lender to see strong demand from investors.

The NBG is seeking to shore up its balance sheet and is the fourth Greek bank in the past six weeks to see strong demand for a share sale, as investors hunt for bargains amid a nascent economic recovery in the bailed out country.

Two sources familiar with the matter said on Wednesday that the NBG placement had been priced at 2-2.6 euros a share, in a deal worth up to 2.5 billion euros.

One of the sources added the books had already been covered by Tuesday night, the day the bookbuilding process was launched, and that demand had been strong.

"We did see some very big orders coming through," the source said.

A banker told Reuters earlier on Wednesday the placement was oversubscribed "by more than one time so far".

Yield-hungry investors have snapped up recent offerings from Greek peers Alpha Bank , Piraeus and Eurobank .

Those three lenders have raised 5.81 billion euros between them through similar equity offerings over the past six weeks, as investor confidence in the recession-battered country improves. Piraeus saw over 3 billion euros of orders for its 1.75 billion-euro placement in March. [ID:nL5N0MN2ZN]

NBG, the country's largest bank by assets, is tapping international markets to plug a 2.18 billion-euro capital hole revealed in a central bank stress test in March.

Banks are busy shoring up their balance sheets in a bid to boost their capital position ahead of the European Central Bank's November health check, when it becomes their supervisor.

NBG's existing shares were trading 3.2 percent lower at 2.72 euros on the Athens bourse at 1421 GMT.

Bookbuilding will end on Thursday, with Goldman Sachs and Morgan Stanley acting as global coordinators and bookrunners, joined by BofA Merrill Lynch, Citigroup, HSBC, UBS and Mediobanca.

NBG has a current market value of 6.73 billion euros and is 84 percent-owned by Greece's bank bailout fund, the Hellenic Financial Stability Fund (HFSF).

Proceeds from the sale will be used to cover the difference between the identified capital hole in the health check, and planned moves to boost capital by 1.04 billion euros that have been approved by the Bank of Greece.

NBG also plans to buy back 1.35 billion euros of preferred shares from the government. Its equity offering does not include pre-emption rights for existing shareholders, including the HFSF.

Reuters: Alibaba, Shoprunner plan to launch joint China service

 Alibaba Group Holding Ltd has struck one of its largest deals with a U.S. e-commerce company, agreeing to help Amazon.comrival ShopRunner expand into China.

ShopRunner, whose partners include Neiman Marcus and Nine West, will use Alibaba's domestic logistics infrastructure to launch in China later this year, ShopRunner Chief Strategy Officer Fiona Dias told Reuters on Wednesday

The move would offer a new way for U.S. retailers to tap the world's second largest economy, where many have stumbled in the past. It also allows Alibaba to cater to booming Chinese demand for authentic American products, in a market flooded with counterfeits.

"The history of U.S. retailers going to China is one that's fraught with peril," Dias said in an interview. "This is a very low cost way to do it that doesn't require them (U.S. retailers) to go to China to figure it out."

In October, Alibaba paid $202 million for a 39 percent stake in ShopRunner, which launched four years ago and sells products from thousands of brands like American Eagle Outfitters and Calvin Klein. The startup, with over a million members, is still a minnow compared with Amazon or eBay Inc , but a move into China could afford a major boost to its growth.

"Alibaba and ShopRunner now aim to create a "joint brand" in China, Dias said. The venture will be in addition to Alibaba's other Web sites, including the three marketplaces that make up more than 80 percent of the e-commerce giant's revenue, according to the company's IPO filing on Tuesday.

U.S. retailers from Best Buy to Wal-Mart have long tried to crack a Chinese retail market dominated by strong local players. But many have run afoul of China's patchwork of regulations and competing local interests. Some, like Home Depot Inc and eBay, shut their big-box stores or pulled out of the country.

"Everyone would love to have a way to at least test the market," said Richard Last, a former JC Penney executive and now a professor of retail at the University of North Texas. "If you partner with the Alibaba group, you might have a good shot at being successful."


COURTSHIP

Alibaba, which on Tuesday filed for what could eventually become the world's largest technology debut, has been trying to court U.S. retailers for years. Its Tmall marketplace hosts an increasing number of brands like Gap.

The company also has been investing in U.S. technology startups, from ridesharing service Lyft to mobile messaging service Tango.
Dias said not all retailers have been comfortable selling through Alibaba sites because they are perceived to be cluttered with retailers who might be selling competing, counterfeit goods.

She argued that a partnership with Alibaba could make more goods available to Chinese buyers: while the appetite for American brands in China is large, the selection is narrow at present.

"They do want to access Chinese customers and they want to do it on their own terms," Dias said.

ShopRunner offers free two-day shipping within the United States from a variety of stores for $79 a year, similar to Amazon's "Prime" service.

Chinese consumers will get their products 10 days after ordering on the U.S. website, Dias said. But they will have to pay shipping costs from the U.S. market, which Dias said could wind up as high as 20 percent of the product price, or as much as $10 for a $50 item.

Alibaba will offer some customers in China complimentary memberships on ShopRunner. ShopRunner has a similar arrangement with American Express , also an investor in Shoprunner, in the United States".

Some angry Chinese Nationalists vent over "Jack Ma, the traitor" on microblogs

 Angry Chinese nationalists finally woke up on Wednesday to the fact that Japanese and American companies own more than half of e-commerce juggernaut Alibaba, and have done for years.

"Who is Jack Ma working for?" asked some on microblogs, hours after Alibaba Group Holding Ltdfiled a prospectus for an initial public offering of its shares in the United States, which some say could be the biggest listing ever of a technology stock. 
Ma was the lead founder of Alibaba in 1999 and has become something of a cult hero to entrepreneurs and many ordinary Chinese, saying he champions small business against industry giants.

"Jack Ma is a big traitor," wrote another user on Tencent Weibo, a major Twitter-like Chinese microblogging site.

In its IPO prospectus, Alibaba detailed ties with its two principal shareholders - Japanese telecoms firm SoftBank Corp <9984.T>, which owns a 34.4 percent stake, and Yahoo Inc with a 22.6 percent stake.

SoftBank invested in Alibaba 14 years ago, and Yahoo bought a 40 percent stake in 2005. Both holdings have long been public knowledge and have been covered in previous disclosures.

Yet this old information triggered a clamour of dismay and indignation among some anti-Japan Internet users in China on Wednesday, who also noted that Chinese native Ma is only Alibaba's third-biggest shareholder, with an 8.9 percent stake.

Some called for a boycott of Alibaba's popular trading websites - Taobao and Tmall - though that's likely to have little impact on businesses that brought in most of Alibaba's $6.5 billion of revenue in April-December.


TROUBLED TIES

The Asian neighbours - and the world's second- and third-largest economies - have a troubled history.

Japan invaded China in 1937 and ruled it with a brutal hand for eight years. Millions of Chinese were killed and tens of thousands of Chinese men were shipped off to work in Japanese mines and construction. Chinese women were forced to work as so-called comfort women. China last month impounded a ship owned by Japan's Mitsui O.S.K. Lines Ltd <9104.T> over a dispute dating back to the 1930s war. Mitsui later paid about $29 million for the release of the vessel.
In 2012, sales of Japanese-branded cars were badly hit in the fallout from another row between Beijing and Tokyo over disputed islands in the East China Sea.

"Calling someone 'traitor' has been (a custom) since the May Fourth period," said Zhang Ming, a professor of international relations at Beijing's Renmin University, referencing student demonstrations in 1919 against Japan receiving Chinese territory from Germany after the First World War.

"When it comes to why Chinese people make a big fuss, it relates to China's environment: China's officials don't stop this kind of behaviour," said Zhang. "These past couple of years, there's been a massive clamour for populism and nationalism."

As one microblogger wrote of SoftBank's stake in Alibaba:

"Oh my god, Japan's claws reach everywhere!"
Source: Reuters

All Eyes and all Blames on Alibaba's IPO

   According to press:
Chinese inet stocks falls because of Alibaba.

Nasdaq falls because of Alibaba,according to Jim Cramer CNBC

WSJ: Alibaba's Limited Mobility

         The Wall Street Journal reports,"Alibaba's filing for a U.S. initial public offering boasts rapid growth and rising margins, but it raises concerns around its ability to make money off mobile traffic. This is no idle matter: Companies that can't show their business migrating well from desktops to mobile devices have justifiably fallen out of investor favor, as more people access the Internet through smartphones and tablets.

Alibaba says mobile accounted for 19.7% of total transactions on its e-commerce platforms in the fourth quarter of last year, up from 7.4% in the same period a year earlier. But that is only one piece of the puzzle.

For Amazon and eBay, mobile has been a blessing as it allows more users to shop for longer, driving volumes higher, says Bernstein analyst Carlos Kirjner. But companies that rely on advertising have faced greater challenges due to the limited real estate on smartphone screens.

Alibaba is a mix of the two models. Tmall, its newer, higher-end shopping platform charges merchants a percentage of total sales. For this business, increased mobile adoption should be a clear positive.

But Taobao, the site where small business and private individuals go to sell their wares, is free to use. It sells advertising space to merchants, and charges them for more prominent placement on the marketplace website. Room for both is more limited on smartphone screens, says Mr. Kirjner.

So understanding how much revenue comes from Tmall and how much from Taobao is crucial for investors to judge the outlook on mobile monetization. Unfortunately, Alibaba neglected to share this crucial information with investors.

Alibaba does say it expects monetization rates to be lower on mobile as compared with PCs. But the company seems unconcerned, explicitly stating that it has no plans for now to focus on maximizing mobile monetization. Throughout the prospectus Alibaba is at pains to stress a lack of focus on short-term profits, probably enabled by a corporate structure giving insiders control over most of the board.

Investors may not be so sanguine. Concern over mobile monetization was one factor that drove down Facebook shares after they listed in 2012. The stock rebounded sharply once Facebook was able to show traction in mobile.

In China, mobile is likely to be even more important as many new Internet users skip desktops and rely mainly on smartphones. The number of mobile Internet users in China rose 19% last year to 500 million, nearly twice as fast as overall Internet users, according to according to state research center CNNIC.

Mobile is also where Alibaba will encounter the fiercest competition, notably from archrival Tencent. This diversified Internet giant has the advantage in mobile thanks to WeChat, a massively popular messaging app that is native to smartphones.

Tencent is now using WeChat to direct potential shoppers to JD.com, a smaller Chinese e-commerce company, also preparing for a U.S. listing, in which it holds a 15% stake. It is also integrating its payment platform Tenpay, which competes with Alibaba-linked Alipay, into WeChat.

Alibaba isn't sitting on its hands. It has amassed a 66% stake in UCWeb, a popular mobile Web browser, and recently struck a deal to take full control of mapping service AutoNavi. Alibaba says it will likely make more acquisitions in this area. Yet these investments, plus intense competition in the mobile space, may start to eat away at Alibaba's sky-high operating margins, which were north of 50% in the fourth quarter.

Given the importance of mobile, investors may forgive Alibaba for some heavy spending. But the experience of Facebook and others indicates Alibaba will need to show before long that it is translating eyeballs on smartphones into real money".

Source: WSJ, article by Aaron Back

The Shanghai Composite Index slid 0.9 percent

China’s stocks fell, dragging the benchmark index to its lowest level this month, as consumer companies and property developers sank after a private services index declined and concern mounted that home sales are slowing. 

BYD Co. , the automaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., tumbled 5.6 percent. China State Construction Engineering Corp. paced losses by property companies after the central bank said it will toughen monitoring of the real-estate industry. Tencent (700) Holdings Ltd. sank to its lowest close since December in Hong Kong following a rout in Internet stocks in the U.S.

“The economy is still on a downward trend and the market is cautious,” said Wei Wei, an analyst at West China Securities Co. in Shanghai.

The Shanghai Composite Index (SHCOMP) slid 0.9 percent to 2,010.08 at the close. A services index from HSBC Holdings Plc and Markit Economics dropped to 51.4 in April from 51.9 in the previous month. A gauge of property stocks fell for a sixth day as the China Securities Journal said some small and medium-sized property developers are facing liquidity problems.

The CSI 300 Index lost 0.9 percent to 2,137.32. The Hang Seng China Enterprises Index fell 0.9 percent to its lowest level since March 21.

The Bloomberg China-US 55 Index retreated 0.5 percent in New York yesterday, when Alibaba Group Holding Ltd. filed for what could become the largest U.S. initial public offering ever. Alibaba, founded by former English teacher Jack Ma, filed for its U.S. IPO after the close of trading in New York. The online marketplace might raise as much as $20 billion, topping a $19.65 billion offering by Visa Inc. in 2008, data compiled by Bloomberg show.
Source: Bloomberg

Putin urges Ukraine separatists to postpone referendum

Russian President Vladimir Putin called on separatists in east Ukraine on Wednesday to postpone a referendum on independence for the mostly Russian-speaking region and said Moscow had withdrawn troops from the border with Ukraine.

Putin's comments appeared to open a way to resolving the East-West standoff over Ukraine.

The pro-Russian separatists behind the referendum said they had the utmost respect for Putin and that they would consider on Thursday whether to postpone Sunday's referendum.

"We call on the representatives of southeastern Ukraine, the supporters of the federalisation of the country, to postpone the referendum planned for May 11," Putin said.

He said this would create conditions for dialogue between the Ukrainian authorities in Kiev and the separatists, some of whom want greater autonomy while others demand secession.

Putin added that Russians troops that had been placed near the border with Ukraine during the crisis, fuelling tension with the European Union, NATO and the United States, had been withdrawn.

"We're always being told that our forces on the Ukrainian border are a concern. We have withdrawn them. Today they are not on the Ukrainian border, they are in places where they conduct their regular tasks on training grounds," Putin said.

He made his comments after talks with the head of the Organization for Security and Cooperation in Europe, who said the security and rights body would soon propose a "road map" to defuse the Ukraine crisis.

The Russian stock market surged 6 percent on the day after Putin's comments, but later fell back to a rise of 4 percent.

Source: Reuters

Ukraine has received US$ 3.19 billion from the IMF. May be used partially to pay Gazprom debt

WSJ: Macro Horizons: Glum Data, Surveys Hold Back Markets

"European and Asian equities were pushed in the red by a combination of a U.S. selloff overnight and a dribble of bad news. Japanese services were hit hard by the introduction of a consumption tax, while China’s service sector failed to offset weak manufacturing, according to the latest PMI reports. Australian retail sales were muted and in Europe there were some very disappointing industrial production data from Germany and France. Investors’ moods were hardly lifted by the continuing Ukrainian crisis or by the latest development in Thailand’s political turmoil. In among the rest of the news, it was easy to ignore the morning’s one bright light, Taiwan’s export data".

"GERMANY: March manufacturing orders fell 2.8% on the month against expectations of a 0.2% rise. February’s orders were revised to a rise of 0.9% from an initially reported 0.6% gain.

Germany’s March industry data came as a shock. The weakness was largely down to a collapse in foreign orders, down 4.6%, with euro-zone orders down nearly 10%. In part, that’ll be down to uncertainty over the Ukraine crisis. Japanese and Chinese weakness will have played their part too. Some will be down to the lumpiness of bulk orders, which, based on past performance, could well lead to a big bounce back over the coming months. But even with all these caveats, the data are worrying. (AM)

FRANCE: March industrial production fell 0.7% on the month against expectations of a 0.3% rise following a 0.1% gain in February.

The French economy remains a concern. Domestic demand remains in the doldrums, but there had been hopeful signs of a recovery in industrial output. The latest data question whether even industry is managing to expand. (AM)

ASIA: April HSBC services purchasing managers indexes

–CHINA was 51.4 from 51.9 in March

–JAPAN was 46.4 from 52.2 March

HSBC’s China figure – which comes after the government’s official nonmanufacturing PMI last Saturday rose to 54.8 from 54.5 – suggests that services activity continues to expand but is hardly enough to offset weakness in the far more important manufacturing sector. That adds to the evidence that China’s economy has lost a good bit of momentum since late last year and will be hard-pressed to meet authorities’ 7.5% growth target for the year. In Japan, meanwhile, the plunge in the services PMI is seen as a temporary response to the April 1 rise in the sales tax, mirroring weakness in the manufacturing PMI. Still, despite the downbeat headline number, the survey showed Japanese service providers at their most optimistic since last September, expecting economic conditions to improve over the next 12 months.

THAILAND: Thailand’s constitutional court ordered Prime Minister Yingluck Shinawatra removed from office, saying she abused her power when she demoted the country’s top security officer in 2011. Nine Cabinet members also were ordered removed, while 24 will remain in place, with Deputy Prime Minister and Commerce Minister Niwattumrong Boonsongpaisan appointed as caretaker prime minister for now.

The turmoil has sent one of Southeast Asia’s most promising economies into a tailspin. It’s not clear whether national elections currently set for July will go forward as planned"

Source: WSJ.