China regulators urge banks to conduct better management of NPLs

Asian Market Update: China regulators urge banks to conduct better management of NPLs after recent rise in bad loans

Economic Data

- (PH) PHILIPPINES MAR CPI M/M: -0.1% V +0.2%E; Y/Y: 3.9% V 4.1%E; CORE CPI Y/Y: 2.8% V 3.0%

Market Snapshot (as of 03:30 GMT):

- Nikkei225 +0.1%, S&P/ASX flat, Kospi -0.1%, Shanghai Composite +0.3%, Hang Seng -0.1%, Jun S&P500 +0.1% at 1,885, Jun gold 0.1% at $1,286, May crude oil flat at $100.33/brl

Highlights/Observations/Insights

- Asian indices and USD majors are in a holding pattern ahead of the critical US non-farm payrolls data - the first print since the spring thaw has presumably unshackled economic data from the drag of the polar vortex. Consensus is calling for about 200K jobs which would be a 4-month high, even though leading employment indicators have been somewhat conflicting. Today's ISM services employment component was very strong, while the most recent publication of Online Conference Board job listings data was suspiciously underwhelming.

- Most notable regional developments are in China, where the national Banking Regulatory Commission (CBRC) requested that banks better manage their NPL ratios. The call comes on the heels of a large increase in bad loans unveiled by China's top-5 lenders in 2013. Separately, we've seen some chatter of a denial of press reports that China city of Changshain Hunan Province may scale back on the home purchasing curb measures. Recall that report earlier this week led to some rather impressive gains among the Chinese property names.

***Fixed Income/Commodities/Currencies***

- (US) Weekly Fed Balance Sheet Total Assets Week ending April 2nd: $4.24T v $4.23T prior; Reserve Bank Credit: $4.19T v $4.18T prior; M1: -$15.7B (3rd straight decline) v -$54.3B prior; M2: +$20.0B v +$12.2B prior; M1 y/y change: 10.0% (7-month high) v 9.9% w/w; M2 y/y change: 5.8% v 5.8% w/w

- (JP) BOJ offers to buy ¥110B in 1-yr and under JGB, ¥250B in 1-3yr JGB, ¥250B in 3-5yr JGB, and ¥1.5T in T-bills

- (AU) Australia MoF (AOFM) sells A$700M in 2016 Bonds; Avg yield 2.8621%, bid-to-cover 5.79x

- SLV: iShares Silver Trust ETF daily holdings rise to 10,229 tonnes from 10,208 tonnes prior(highest since Dec 6th, 2013)

- (CN) China Qinhuangdao coal price flat at CNY525-535/t (remains at multi-month low)

- USD/CNY: (CN) PBoC sets yuan mid point at 6.1557 v 6.1520 prior setting (2nd consecutive weaker setting; Weakest setting since Sept 18th)

- USD majors are locked into tight ranges ahead of the non-farm payrolls. USD/JPY remains capped at the ¥104 mark, EUR/USD is supported above $1.37, while AUD/USD and NZD/USD are only up about 10pips respectively above 0.9230 and $0.8550.

Equities

US markets:

- MRCY: Boeing said to be considering bid for the company as MRCY continues to explore sale process - financial press; +16.0% afterhours

- SNX: Reports Q1 $1.25 v $0.94e, R$3.02B v $2.75Be; +15.7% afterhours

- MU: Reports Q2 $0.85 v $0.61e, R$4.11B v $3.99Be; +1.5% afterhours

- MYL: Said to be considering deal for Meda - FT; +0.2% afterhours

Notable movers by sector:

- Financials: Country Garden Holdings 2007.HK -2.7% (Mar sales results)

- Materials: St Barbara Ltd SBM.AU flat (operation halted due to heavy rain)

- Energy: Santos Ltd STO.AU +1.8% (started environmental approval for coal seam gas project)

- Industrials: China Shipping Development 1138.HK +4.1% (Q1 guidance); Shanghai Zhixin Electric 600517.CN -0.4% (FY13 results); Guangzhou Baiyun International Airport 600004.CN -0.1% (FY13 results)

- Technology: BOE Technology Group 000725.CN +1.3% (private placement plan)