Asian Stocks Rise as U.S. Data Overshadow China Slowdown By Yoshiaki Nohara - Apr 18, 2014

Asian stocks rose this week after U.S. data and earnings boosted optimism about the world’s biggest economy while further signs of slowdown in Chinastoked speculation the government will add stimulus to stabilize growth.

The MSCI Asia Pacific Index gained 0.9 percent to 139.16 this week. U.S. industrial production increased more than forecast in March and Federal Reserve Chair Janet Yellen said the central bank remains committed to supporting the recovery.

“Confidence grew about the global economy and that was the No. 1 driver for the market,” said Junya Naruse, chief strategist at Daiwa Securities Group Inc., Japan’s second-largest brokerage. “Shares have yet to start a strong rally, but investors are getting confident that at least downside risk has receded.”

Man Wah Holdings Ltd. (1999), a sofa maker that gets half its sales from the U.S., surged 5.9 percent in Hong Kong after saying it expects higher profit. SoftBank Corp. (9984), which owns about 37 percent of Alibaba Group Holding Ltd., soared 10 percent in Tokyo after Alibaba’s quarterly profit more than doubled ahead of a planned U.S. initial public offering. CapitaMalls Asia Ltd. jumped a record 21 percent in Singapore after CapitaLand Ltd., Southeast Asia’s biggest developer, offered to buy out investors in its mall unit.

Chinese Shares

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong, also known as the H-share index, dropped 1.4 percent this week. Hong Kong’s Hang Seng Index declined 1.1 percent. The Shanghai Composite Index lost 1.5 percent.

China’s gross domestic product rose 7.4 percent from a year earlier in the January-to-March period, the statistics bureau said on April 16, the weakest pace of expansion in six quarters. Aggregate financing, the broadest measure of new credit, was 2.07 trillion yuan ($333 billion) in March, the People’s Bank of China said on April 15, down from 2.55 trillion yuan a year earlier.

China will lower reserve ratios at “qualified” rural banks in order to provide more funds to agriculture-related industries, according to a statement on the government website yesterday, citing a State Council meeting chaired by Premier Li Keqiang. He also said the nation isn’t considering “strong” stimulus, and reiterated that economic growth a bit higher or lower than 7.5 percent is within a reasonable range.

Japan’s Topix index added 3.5 percent as the yen weakened. The Cabinet Office cut its economic view this month for the first time since Prime Minister Shinzo Abe came to power in 2012, citing the sales-tax increase at the start of the month.

South Korea’s Kospi index gained 0.3 percent. Australia’s S&P/ASX 200 Index advanced 0.5 percent, while New Zealand’s NZX 50 Index added 0.2 percent. Singapore’s Straits Times Index climbed 1.7 percent, and Taiwan’s Taiex Index increased 0.7 percent. Markets in Hong Kong, Singapore, Australia and New Zealand were closed for a holiday yesterday.

U.S. Production

U.S. industrial production climbed 0.7 percent in March after a revised 1.2 percent increase the prior month that was twice as big as previously forecast, figures from the Federal Reserve showed on April 16.

Man Wah jumped 5.9 percent to HK$13.18 after saying it expects a “significant” increase in net income for the 12 months ended March 31.

The Fed has a “continuing commitment” to support the recovery even as policy makers now see the U.S. reaching full employment by late 2016, Yellen said this week. Investors should pay attention to shortfalls in both inflation and the jobless rate for signals on the Federal Open Market Committee’s decisions on the policy rate, she said.

The central bank announced last month a $10 billion reduction in monthly bond buying to $55 billion and repeated that it will taper purchases “in further measured steps.”

The Standard & Poor’s 500 Index increased 2.7 percent this week on signs of strength in the economy as well as earnings reports from General Electric Co. to Morgan Stanley that beat estimates. Tech shares rallied as Yahoo! Inc.’s results were boosted by Alibaba, in which it holds a 24 percent stake.

SoftBank soared 10 percent 7,623 yen after Alibaba posted $1.35 billion in fourth-quarter net income. The jump in profit drove the estimated valuation for China’s largest e-commerce company 9.8 percent higher to $168 billion, based on a Bloomberg survey of analysts. Alibaba last month began the process for a U.S. IPO that may be larger than the $16 billion raised when Facebook Inc. went public in 2012.

CapitaMalls Jumps

CapitaMalls Asia soared 21 percent to S$2.19 after CapitaLand offered to take its shopping-center unit private for about S$3.06 billion ($2.4 billion) to boost shareholder value. Shares of the parent company climbed 8.9 percent to S$3.18.

GungHo Online Entertainment Inc. surged 13 percent to 590 yen in Tokyo after the Nikkei newspaper reported the Internet-game maker’s operating profit rose.

The MSCI Asia-Pacific gauge ended the week trading at 12.65 times estimated earnings, compared with multiples of 15.9 for the S&P 500 and 14.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Jim Powell, Jim McDonald

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India’s Sensex Ends Three-Day Drop as Lenders, Carmakers Rally By Rajhkumar K Shaaw - Apr 17, 2014

India’s benchmark stock index rallied for the first time in four days led by shares of lenders and automakers.

Tata Motors Ltd. (TTMT), the owner of Jaguar Land Rover, soared the most in five months. ICICI Bank Ltd. (ICICIBC), the country’s second-biggest lender, advanced to its highest level since November 2010. Tata Consultancy Services Ltd. (TCS), India’s largest software exporter, led an advance among peers after profit in the last quarter rose 51 percent.

The S&P BSE Sensex (SENSEX) jumped 1.6 percent to 22,628.84 at the close in Mumbai, erasing the weekly loss. Indian markets are closed tomorrow for the Good Friday holiday. The gauge fell for three consecutive days after climbing to a record on April 10.

“The market is continuing its run after some profit booking,” V.K. Vijayakumar, an investment strategist at Geojit BNP Paribas Financial Services Ltd. in the southern Indian state of Kerala, said in a phone interview today. “Some investors had gone short, and now may have been forced to cover. Thus we saw such a sharp bounce-back.” He expects indexes to rally at least 10 percent if a strong government comes to power after election results are announced May 16.

The Sensex is the best performer among the largest emerging markets this year on expectations a victory by the opposition Bharatiya Janata Party will produce a government with a mandate to spur economic growth. Overseas investors have bought a net $4.8 billion of local shares this year, the most inAsia, data compiled by Bloomberg show.

Elections, Inflation

Several opinion polls have projected the coalition led by the BJP will win the general election for the 543-seat lower house of India’s parliament. For the first time, a poll earlier this week found that the coalition may win an outright majority.

India’s elections, the world’s biggest-ever exercise in democracy, began on April 7 and will end on May 12 after nine phases of voting. Counting will take place on May 16.

Investors may have been prompted to sell shares over the past three days after data showed inflation accelerated and factory output declined, according to CNI Research Ltd.

India’s wholesale-price index rose 5.7 percent in March, the most in three months, official figures released April 15 showed. Consumer prices climbed 8.31 percent in March from a year earlier, government data showed. Industrial production contracted 1.9 percent in February from a year earlier, the biggest slide since May, separate data showed on April 11.

Reserve Bank of India Governor Raghuram Rajan has raised the benchmark interest rate 75 basis points since taking charge in September to curb price rises. The next policy review is due June 3.

Tata Motors, ICICI

Tata Motors rallied 4.4 percent, the most since Nov. 14. Mahindra & Mahindra Ltd. (MM), India’s largest maker of sport-utility vehicles and tractors, rose 2.1 percent, ending a four-day decline.

ICICI Bank added 3.3 percent to its highest level since Nov. 5, 2010. State Bank of India Ltd., the nation’s biggest lender, increased 3 percent, the most since April 9.

Tata Consultancy gained 1.2 percent. The company reported after markets closed yesterday that net income jumped 51 percent in the three months ended March 31. Infosys Ltd., the second-biggest software services exporter, forecast on April 15 full-year sales growth that beat analysts estimates, while Wipro Ltd. may report today net income rose more than 20 percent.

Infosys gained 1.1 percent, while Wipro (WPRO) added 2.4 percent.

TCS, Wipro

Tata Consultancy profit rose to 53 billion rupees ($879 million), compared with the 52.4 billion-rupee median estimate of 39 analysts surveyed by Bloomberg. The company predicts growth will be stronger this year as customers in the U.S. and Europe, as well as the Asia Pacific region, outsource more work.

Wipro, the country’s third-largest software services company by market capitalization, reported after the close of trading today that profit rose 29 percent to 22.3 billion rupees in the last quarter, beating estimates of 21 billion rupees.

“We are in a massive bull run for the next four years, said B.P. Singh, chief investment officer for equities at Pramerica Asset Managers Pvt. Higher corporate profits are driving the rally, he said.

The Sensex has risen 6.9 percent so far in 2014 and trades at 14.3 times projected 12-month profits, in line with the average multiple over the past five years. The MSCI Emerging Markets Index has gained 0.3 percent in 2014 and is valued at 10.5 times.

Overseas investors sold a net $15.4 million of Indian shares on April 15, a second day of sales and the first consecutive outflow since February.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net Dick Schumacher

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Tata Consultancy Predicts Stronger Growth on Outsourcing By Anoop Agrawal and Bianca Vázquez Toness - Apr 16, 2014

Tata Consultancy Services Ltd. (TCS), India’s largest software exporter, predicts growth will be stronger this year as customers in the U.S. and Europe, as well as the Asia Pacific region outsource more work.

“We are exiting the year with a great growth momentum,” Chief Executive Officer N. Chandrasekaran said yesterday after the company reported a 51 percent jump in fourth-quarter profit. “If you look at what clients are telling us, if you look at the deal pipeline, deal closures, order book, sentiment, and the discretionary spend, taking all of this we believe FY15 will be a stronger year.”

Net income rose to 53 billion rupees ($879 million) in the three months ended March, Mumbai-based Tata Consultancy said. That compares with the 52.4 billion-rupee median of 39 analysts’ estimates compiled by Bloomberg.

Tata Consultancy joins competitor Infosys Ltd. (INFO) in posting earnings that beat estimates as more companies spend on cloud-based solutions, mobility and data analytics. Sales growth at Tata Consultancy will be stronger in the fiscal year that started April 1 than the prior 12 months as customers in the financial services, retail and life sciences industries step up technology spending, according to Chandrasekaran.

“We expect the stock to react positively,” said Ravi Menon, assistant vice president at Centrum Broking Pvt. in Mumbai. “People were concerned if there is an industrywide softness in demand. TCS has said they don’t see any weakness in the retail or high-tech verticals. In fact, they are seeing clients spending on digital in these two verticals.”

Tata Consultancy declined 2.5 percent to 2,196.30 rupees in Mumbai trading yesterday, before the earnings release. The benchmark S&P BSE Sensex Index fell 0.9 percent. The stock has climbed 48 percent in the past 12 months, compared with a 38 percent gain for Infosys and the Sensex’s 19 percent increase.

Contract Wins

Revenue at Tata Consultancy rose to 215.5 billion rupees, from 164.3 billion rupees a year earlier. That compared with the 216.9 billion-rupee median of 41 analysts’ estimates.

The software-services provider, which last month said the fourth quarter was “seasonally weak” amid slowing demand in India ahead of general elections, expects the home market to stay “soft” for longer, Chandrasekaran said. “We think that India from the current levels will improve. We’re going to wait for the first two quarters.”

The company, which has won contracts from India’s Department of Posts and the tax office, got 7.8 percent of sales from the home market in the year ended March 2013. Voting in India’s general elections, which began April 7, will conclude May 12 and ballots will be counted May 16.

Discretionary Budget

Tata Consultancy, which maintains computers and provides software and outsourcing services for companies including Citigroup Inc. and France’sGDF Suez SA (GSZ), won nine large deals in the last quarter. Contracts included one with a European utility to transform customer service processes and a multiyear, multimillion dollar order from a North American drugmaker, the company said.

Companies are investing in technology to simplify business processes and drive efficiency, Chandrasekaran said yesterday. “There is a discretionary budget that is going towards digital that we are hearing across the board, and we are engaged with our clients in the area. The third area of spend is regulatory changes, governance, security, controls and risk management.”

Demand Recovery

Worldwide information technology services spending will climb 3.7 percent to $671 billion in 2014, accelerating from 2.8 percent growth last year, according to market researcher IDC.

“We maintain our thesis of an industrywide demand recovery” in the current fiscal year, driven by a spending recovery at U.S. banking and financial services companies, Nitin Jain, an analyst at Ambit Capital Pvt. in Mumbai, wrote in an April 7 report. Demand will also be bolstered by an increased offshoring trend in Europe and greater acceptance of social media, mobility, analytics and cloud, Jain wrote.

Infosys, India’s second-largest software-services exporter, on April 15 forecast full-year sales growth that beat analyst estimates. Revenue in the 12 months started April 1 will climb 7 percent to 9 percent in U.S. dollar terms, Infosys said, faster than the 6 percent to 8.3 percent average of six analysts’ estimates compiled by Bloomberg.

To contact the reporters on this story: Bianca Vázquez Toness in New Delhi at btoness@bloomberg.net; Anoop Agrawal in Mumbai ataagrawal8@bloomberg.net

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net Suresh Seshadri, David Risser

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Unilever Woos Villagers With Free Music on Mobile Phone By Adi Narayan - Apr 14, 2014

Unilever (ULVR) is using a new method to sell products from Lifebuoy soap to Fair & Lovely skincream to 350 million villagers in India: Bollywood music on their phones.

Last month about 2 million people listened to Unilever’s free music service available on mobile phones in two states, said Anaheeta Goenka, executive director of Lowe Lintas & Partners, the agency handling the campaign for the world’s second-biggest consumer company. The offering expanded toUttar Pradesh, India’s most populous state, on March 31.

Companies from Unilever to PepsiCo Inc. (PEP) have turned to mobile campaigns in the world’s second-largest phone market to reach consumers including those in villages as growth in rural spending exceeds that in urban centers. With ad spends surging, mobile-phone campaigns are more attractive because they cost less and are more targeted than mass media.

“Mobile advertising has the reach, the power to measure, and the power of constant engagement,” said Girish Nair, chief executive of Netcore Ltd., the agency that is executing Unilever’s mobile service. “You now have the opportunity to get data on each subscriber” that can help optimize ad campaigns and improve distribution, he said.

Hindustan Unilever Ltd. (HUVR), the Mumbai-based unit of Unilever, started the service last year in Bihar, one of India’s poorest states, and extended to neighboring Jharkhand, Goenka said. The service has got 8 million listeners since it started in October through end of March, Hindustan Unilever said in an e-mailed response, declining to comment on the costs of the campaign and on the plans for the service.

Not Spotify

This is not like Spotify Ltd.’s popular music-streaming service where subscribers can listen to personalized playlists. On Unilever’s service a user places a call to a toll-free number which disconnects after two rings. The system then calls the user and plays a 15-minute pre-recorded chunk of music interspersed with ads for the company’s soaps, skin creams, shampoos and detergents. All users listen to the same recorded segment each week, Goenka said.

There are some concerns about the effectiveness of such a service.

“It’s a new thing and might be successful for the first three-four months,” said Harsh Mehta, a Mumbai-based analyst at HDFC Securities Ltd. “The customer would eventually get bored with the same stuff.”

Unilever, PepsiCo and other companies are seeking to reach villagers as mobile phone ownership increases. There were 364 million rural mobile phone users as of Jan. 31, and the pace of additions in villages was faster than cities for the fourth consecutive month, according to the Telecom Regulatory Authority of India.

Mobile Ads

“Many advertisers are starting to use mobile as a way to reach” areas where cable television and newspapers have a limited reach due to poor infrastructure, said Anand Thakur, national sales head for digital ad agency Aidem Ventures Pvt. And the medium is also more cost effective, he said.

A 10-second spot on mythological drama Mahabharat on India’s Star Plus television network costs about 250,000 rupees ($4,143). That is enough to pay for reaching at least 21,000 people with a 10-minute phone call, according to Bloomberg calculations based on prevailing mobile tariffs.

Indian companies spent 3 billion rupees on mobile ads last year, and the market is projected to grow 43 percent this year, according to the Mobile Marketing Association. The bulk of this spending goes toward voice-based services because the majority of Indians use basic feature phones.

Free Talktime

PepsiCo last year started a campaign similar to that of Unilever -- playing back entertainment content on mobile phones.

Several companies including Mondelez International Inc. (MDLZ)’s Cadbury’s unit have offered free mobile airtime credit to buyers. A code printed inside the packaging of Cadbury’s 5-Star chocolate bar enabled the user to redeem the points, according to the ad.

Marico, India’s biggest seller of hair oil, in September started a service in which users would receive a pre-recorded call offering basic English lessons, according to its website.

The rising incomes of villagers is an attraction.

Farm wages adjusted for inflation rose almost 7 percent on average annually in the five years through March 2012, from 1 percent in the previous decade, according to India’s Planning Commission.

That’s prompted consumer products companies to expand their rural networks, hire armies of village housewives to sell soaps and detergents to their neighbors, and advertise in hundreds of country fairs.

Market Share

Interacting directly with consumers is vital because the weakest economic expansion in about a decade, combined with consumer-price inflation exceeding 8 percent, has prompted a switch to cheaper substitutes for everything from soaps to food. Unilever has faced the pinch amid intensifying competition.

The company’s market share in the skincare market, which includes whitening creams and moisturizers, declined to 50.5 percent last year from 53.7 percent in 2012, according to Euromonitor. Its share in laundry detergent and bar soap markets increased, as it spent more on ads.

Mobile ad campaigns tend to be more targeted, and may help grab an individual’s attention better than ads on TVs or in newspapers. Even then, some marketers such as Aidem Venture’s Thakur say it’s difficult to measure how a campaign like Unilever’s music service can translate into product sales.

Costs for the companies can quickly rise to “unsustainable levels” if millions of users flock to a free service, said Milind Pathak, global head at One97 Communications Ltd., which owns the mobile recharge provider PayTM.

“It’s impossible to sustain these kinds of costs unless you are a really big company with lots of brands,” Pathak said. “It’s the real-time data that companies can get from mobile that makes it attractive.”

To contact the reporter on this story: Adi Narayan in Mumbai at anarayan8@bloomberg.net

To contact the editors responsible for this story: Stephanie Wong at swong139@bloomberg.net Subramaniam Sharma, Sunil Jagtiani

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