Market Wrap for 12 Feb 14

• HK/CN (Morgan):

o China Banks: Local media said the amount of Jan 2014 new loan granted by big four banks was only Rmb350bn, -7% YoY and also ~100bn lower than the number of first 20 days in Jan. The estimated deposit outflow for big four in Jan reached Rmb450bn.

o China Internet Finance: Local media reported PBoC will regulate online finance to ensure risk under control and the safety of clients’ information. On a separate note, local media said the there might be some violations in the promotion materials of Alibaba’s fixed term product for overstating annual returns.

o Tencent (700) signed contract with Wangfujing (600859.SH) to start WeChat in-store shopping in Wangfujing’s flagship store from this Valentine’s Day. On a separate note, Vanke (000002.SZ) declared that they would not establish bank together Tencent and Guojin Securities (600109.SH) said they were not under any M&A negotiation with Tencent.

o China liquidity: PBoC did not do any open market operations and there were Rmb330bn reverse repo expired on Tuesday.

• Msia: GDP #s today @ 6pm, cons 4.8% YoY Vs 5% in 3Q. Separately, S&P said that Malaysian banks’ generally healthy financial positions should mitigate the effects of high household debt & property prices but it expects the government to take actions to curb the recent rapid rise in property prices & growth in household debt (major concerns). Failing which, downgrades would be likely.

• Overnight market extended their 4 days winning streak as Fed Reserve Chairwoman Yellen pledged to keep interest rates low and continue to tape the pace of bond purchases as the economy improves. Her speech was thought to be well rehearsed and offered little insights from the previous ones done by Bernanke. The usual lines were included – unemployment rate of 6.5% is not a triggering point for the Fed to act/Fed will keep interest rates low for extended period depending on market conditions, notably unemployment rate and inflation/ Fed will continue to monitor the market conditions and will be ready to act if there’s significant deterioration. Markets were also in high spirit as news from Washington sighted signs that the House of Representatives are ready to pass an unconditional bill to raise the debt ceiling. Treasuries ended on their lows with 10 yrs yield @ 2.72% (+ 4bp). T/O was below average with around 700m shares traded.

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