Markets Live: Vive la bounce!

Oil prices are extending Friday's late surge as Saudi Arabia's energy minister said an OPEC-led production cut scheduled to end in June would likely be extended to cover all of 2017, although a relentless increase in US drilling is likely to cap gains.

Brent crude oil is up 1.3 per cent at $US49.74 per barrel, following a 1.5 per cent rise late last week after the price had crashed below $US50 earlier in the week.

Saudi Arabia's energy minister Khalid Al-Falih said today oil markets were rebalancing after years of oversupply, but that he still expected the OPEC-led deal to cut output during the first half of the year to be extended.

"Based on consultations that I've had with participating members, I am confident the agreement will be extended into the second half of the year," said Al-Falih, Saudi Minister of Energy, Industry and Mineral Resources, during an industry event in Malaysia's capital Kuala Lumpur.

OPEC, of which Saudi Arabia is the de-facto leader, as well as other producers including Russia, pledged to cut output by almost 1.8 million barrels per day (bpd) during the first half of the year to prop up the market.

The comments from Al-Falih and rising prices came after steep falls last week due to ample supply in countries that aren't participating in the cuts, including the United States where output is soaring.

A decision on whether to continue the production cuts is expected at OPEC's next official meeting on May 25.

Still, both Brent and WTI crude are holding below $US50 a barrel because of brimming storage tanks, high drilling rates and ample production.

US drilling for new oil continued to pick up last week, with the rig count climbing by 6 to 703. Since a low point in May 2016, US producers have added 387 oil rigs, or about 123 per cent.

More importantly, while the rig count is still well below it speak of around 1600 in 2014, oil output is close to record levels, CBA analyst Vivek Dhar notes (see chart).

Break‑even wellhead costs in key US shale oil basins now average between $US40‑50/bbl, or much lower than just a few years ago thanks to lower servicing costs and advances in technology.

"The fall in production costs help explain why US oil rigs have lifted at prices of $US45‑55/bbl in the last nine months," Dhar says.

"It is inevitable that the market share and influence of US oil producers will grow."

Dhar says deeper cuts to oil production are necessary to balance oil markets by the end of the year, but last week OPEC downplayed any chance of that happening when they meet on May 25.

Domino's Pizza has been hit with a landmark fine for failing to comply with the rules governing franchise chains.

The Australian Competition and Consumer Commission said the $18,000 penalty imposed on Domino's was the first time action had been taken for a breach of the Franchising Code of Conduct.

The penalty for breaches is fixed at $9000 and Domino's was issued with two infringement notices.

Fairfax Media revealed in February, Domino's had failed to release information to franchisees on how money levied from stores for marketing was spent which is a requirement under the code.

Domino's chief executive Don Meij previously described the issue as a "screw up" and on Monday the company said it was an "honest mistake".

Store owners pay between 4-6 per cent of sales as a levy to fund advertising and marketing campaigns. In 2016 Domino's collected more than $40 million from its Australian franchisees.

"These are the first penalties for non-compliance with the Franchising Code," ACCC deputy chair Michael Schaper said in a statement on Monday.

"Marketing fund contributions are often a significant expense and franchisors need to provide timely and accurate disclosure of the fund's activities.

Domino's investors are not too fussed: the stock is up 0.4 per cent at $61.77.

Harry Triguboff, the country's richest person, says he is financing about $200 million of the $1.4 billion worth of apartment sales he expects to make this year, as his mostly Chinese buyers struggle with tougher currency controls to get money into Australia.

Mr Triguboff, founder and owner of developer Meriton Group, said financing apartments was something he started doing recently. 

"Two years ago I didn't lend anything," Mr Triguboff said in an interview with The Australian Financial Review. 

"Now, [I'm lending] maybe $200 million. It might go up to $400 [million]. But then they will start paying back. This is the worst time. What's happening is I don't have old customers, so nobody's paying me back. So I'm building it up. In another year, they'll start paying me back."

Despite saying he was "unfortunately" lending to his customers, it is something Mr Triguboff, who topped the BRW Rich List for the first time last year with an estimated fortune worth $10.62 billion, can afford. Meriton's balance sheet is strong enough to extend finance to its customers. 

Apartment prices are also weakening, he said. 

"Now, if anything, it's going down a bit," Mr Triguboff said. "It went up in the beginning of the year. Now it's gone down."

The increasing reluctance of Australian banks to lend to foreign buyers was part of the problem, but the greater reason the Meriton boss had started lending directly to his customers was the Chinese government's moves to restrict buyers from taking money out of the country, he said. 

"The Chinese government is making it hard for them. That is the biggest problem."

It was proving a problem for Chinese customers, who regarded Australian property investment as a way of securing wealth outside of China, and had never previously encountered problems with sending money out, he said. 

"I hope that we will lend money to them because they are very good borrowers. You show me a man that buys a unit – you don't talk about a man that buys for $400 million – I mean a man who buys for half a million. He will pay, no question. So the banks should be allowed to lend to them.

"Then they said 'We don't understand their financials'. But that's bullshit – the fact is, they all pay. Show me one who didn't pay. We should allow them."

Today's slump in building approvals (-13.4% in March) shows the beginning of the end of the housing boom, Citi says.

A steep (22%) slide in apartment approvals drove the fall, providing further evidence that the apartment construction frenzy has also ended.

"The housing boom is now beginning a protracted unwinding as drivers of the boom are being replaced by tighter lending standards, higher lending rates, reduced foreign investment and increased supply relative to demand," said Citi analyst Vivian Jiang. 

"Since APRA's introduction of tighter lending conditions in April, auction clearance rates in Sydney and Melbourne have started to ease off their highs albeit at a gradual rate and house price data have also been weaker."

Jiang says today's data won't come as too much of a surprise to the RBA, which believes that the pipeline of residential investment's contribution to growth will decline from mid-2017/

"So while rate cuts are possible if the economic outlook deteriorates materially, we see this as an unlikely scenario based on our view of favourable spill-overs from improving global growth."

Iron ore's attempt at a rebound lasted just a few short hours as investor concern over robust supplies, including near-record port stockpiles, and speculation some
traders in China were rushing to offload holdings combined to snuff out a brief gain in prices.

The most-active contract on the Dalian Commodity Exchange fell 4 per cent by the midday break, reversing Friday's late surge. The spot price fell more than 10 per cent last week to $US61.73 a tonne, its biggest weekly slide in one year.

But a rebound in Chinese steel prices may cap losses in iron ore, with other raw material coking coal steadying.

Rising supply and the weakness in steel prices, spurred by worries over softer consumption, have dragged down iron ore, said Commonwealth Bank of Australia analyst Vivek Dhar.

"Chinese steel mills also refrained from buying iron ore on speculation that production cuts will be introduced later this week ahead of the One Belt One Road conference," said Dhar.

Leaders from 28 countries will gather in Beijing on May 14 to 15 for talks on what China formally calls the "One Road, One Belt" plan that envisions expanding trade and energy links between Asia, Africa and Europe underpinned by billions of dollars in infrastructure investment.

China typically orders industrial plants to cut or limit production to help clear the skies ahead of a major event such as when it hosted the G20 Summit in Hangzhou last year.

But Dhar said the recent collapse in iron ore prices is unlikely to maintain its downward momentum, thanks to an expected pickup in steel demand in China later in the year.

"Chinese steel demand is likely to remain supported as policy makers look to ensure stable economic growth ahead of elections later in the year. In particular, policy makers have targeted infrastructure investment," he said.

Global investors are betting big on bonds, adding another $US9.7b to the asset class last week, even as they pulled $US3.6b out of equities.

In their weekly money flow analysis, Bank of America-Merrill Lynch strategists call these "risk-off" flows. Sharemarkets have done well this year, driven by an earnings recovery tied to the synchronised upswing in global measures of manufacturing activity - the purchasing managers indices.

And yet bond rates are lower this year and look "trapped" in a "low trading range", the BoA-ML analysts say. They put this down to a "lack of GDP upgrades" in 2017.

They brand the 1 per cent growth in US GDP over the first quarter as "risible". Also contributing, they say, is disappointment around the progress of Trump's pro-growth fiscal agenda and worries about China.

Indeed, investor positioning in 10-yr Treasury bonds is at a nine-year high, the investment bank's data shows. That is, traders are "long more duration than at any time since March 2008".

This extreme bias to be long bonds is a pretty solid contrarian signal, BoA reckons.

"Historically, when positioning becomes this long, rates have risen 70 per cent of the time in the following month."

Meanwhile, the value of global stockmarkets has climbed $US3.3t this year to $US73.4t. Why? In addition to earnings upgrades, central bank liquidity has helped, the analysts say, pointing out that central banks have bought $US1t in assets in 2017.

With the S&P 500 at record levels once again, the BoA-ML strategists warn of a "max liquidity, minimum growth" backdrop in the coming months, a situation that also reigned in 1999, prior to the dotcom bust.

But back then, as the chart shows, the "mania for equities" was much more advanced than now.

Chinese trade is still growing rapidly but shipments are beginning to slow, with cooling domestic demand weighing on imports.

Here's an overview of last month's drop in many Chinese commodity imports:

• Copper: China imported 300,000 tonnes, versus 430,000 tonnes in March
• Crude oil: China imported 34.39 million tonnes, versus 38.95 million tonnes in March
• Iron ore: China imported 82.23 million tonnes, versus 95.56 million tonnes in March
• Soybeans: China imported 8.02 million tonnes, versus 6.33 million tonnes in March
• Coal: China imported 24.78 million tonnes, versus 22.09 million tonnes in March

The slowdown in imports growth in April mirrors the softening commodity price growth in the month, ANZ economist Betty Wang said.

"Year-on-year growth of global oil prices and domestic iron ore prices slowed sharply compared with previous months, playing a key role in dragging import growth in April lower. In terms of volume, imports iron ore declined 2.3 per cent y/y after three-months' positive growth."

Capital Economic China economist Julian Evans-Pritchard said he expects import growth to continue to slow.

"In particular, policy tightening will further weigh on domestic demand in coming quarters, with the impact on import values amplified by declines in commodity prices."

A likely improvement in the budget outlook thanks to last year's surprise mini-boom in commodity prices is expected to shield Australia's coveted triple-A rating from a downgrade, even as infrastructure spending looks set to rise.

Economists are tipping the budget deficit for 2017-18 to come in around $25 billion, or well below the $28.7 billion projected in December's mid-year budget review, a welcome change from years of downward revisions.

The lower deficit won't be down to tough fiscal reform, though, but comes courtesy of strong rises in the prices of key exports iron ore and coal, which are boosting nominal GDP as well as delivering additional tax revenue.

"With the budget set to look a bit better, an improving nominal economy and signs of some budget reform, we doubt a downgrade will arrive," said HSBC chief economist Paul Bloxham.

The main change from the mid-year review is the likely upward revision of next financial year's nominal growth forecast, which translates into a higher tax intake. As a rule of thumb, a 1 percentage point increase in nominal GDP lifts government revenue by about $3 billion. 

"We see scope for the 2017-18 forecast to be revised up to 5.25 per cent (from 3.75 per cent) or above thanks to the continued strength in commodity prices and a likely upward revision to the real GDP growth outlook," Mr Bloxham said.

Here's more

Some more on Fairfax, yes, yes, the overlord of this blog: the group's shareholders have rebuffed a $2.3 billion offer by TPG Capital and Ontario Teachers' Pension as too low.

The proposal involves the North Americans taking just Domain, the SMH, the Age and the AFR, leaving shareholders with the publisher's New Zealand titles, its stake in a online television streaming start-up and its debt.

"It's an easy thanks but no thanks," said Lee Mickelburough, head of Australian equities at Henderson Global Investors, which owns about 5 per cent of Fairfax shares.

"It's a troublesome structure to say that we get 95 cents for the good business and you get to keep the debt for the transition businesses. It's cheeky, the way they've structured it."

Martin Currie Australia's Patrick Potts said the bid for Domain, the publisher's major metropolitan titles, events and digital ventures undervalues those businesses and leaves Fairfax shareholders structurally challenged assets.

"The current deal basically cherry picks the best assets and Fairfax shareholders are left with assets whose value is hard to work out," Potts said. 

"Fairfax shareholders are left with the risk around some of those structurally challenged assets. To TPG, I would suggest make an all company bid and they can take the risk around some of those structurally challenges assets in the stub (leftover assets)."

Potts said the current bid was too low.

"We're getting our heads around it...we think the TPG bid materially undervalues what Domain and the metro media part of the business is worth. The combination of what those businesses are worth is a lot more than the current proposal, in our view," he said.

Market sources believe Fairfax's board, which is locked up going over the terms of the deal before it makes a recommendation to shareholders, will reject TPG's first proposal. 

The problems flagged were the price of the bid and shareholders being left with the rest of the business TPG doesn't want. Sources suggested shareholders might be warmer to a higher bid, or a bid for the entire company.

Fairfax shares remain up 2.6 per cent at $1.0875 after surging more than 7 per cent in the first minutes of trade.

Is there much fuel left in Macquarie's rocketing shares? 

Two brokers have take opposite tacks. UBS analysts have downgraded the stock to neutral this morning, concerned that the company is "running out of revenue growth". On the other hand, there is Bell Potter, which is now recommending its clients buy the stock in an evangelical note titled "Mine eyes have seen the glory".

The bank's shares are also within a whisker of reaching their closing all-time high of $97.10 reached almost exactly 10 years ago. The intra-day peak then was $98.64. After adding 9 per cent this year and following a 46 per cent rally over 12 months the question now is: can Macquarie reach $100?

Let's start with the "yes" camp. Bell Potter's TS Lim - who has probably called the big banks about as well as anybody in recent years - is the first to push his 12-mth target price above the century mark to $102.50 a share.

Describing Friday's profit result as "a cracker", Lim has upped his earnings forecast by 5 per cent. He summarises:

We continue to view Macquarie as a global wealth manager with deep infrastructure expertise/exposure and added capabilities in asset finance and financial services. Given these attributes and its predominantly annuity style/lower earnings volatility components in addition to very strong capital management flexibility, we believe our revised valuation for MQG is fully justified. 

UBS analyst Jonathon Mott is less impressed.

He has upped his price target to $91 from $89, but that is still well below the last trade of $95.22, and the stock has been downgraded to neutral. The reckon Friday's result "disappointed" on the revenue side, with cost cutting and a lower tax rate explaining the good bottom line. But in their overall view, the long term investor will still do well out of Macquarie:

While there are always a number of swings-and-roundabouts in revenue given MQG's transactional nature, we believe a broadly flat revenue outcome in FY18 would be a reasonable outcome given the substantial proprietary gains on sale generated this year

We continue to be supporters of MQG and see material upside over time (mainly via operating leverage). However, the stock is up 53% over the last 12 months and is now trading on 14.4x. We think ongoing evidence of cost reduction needs to be demonstrated to justify further share price appreciation.

China's foreign trade growth has slowed, while the country's trade surplus jumped.

Imports grew 18.6 per cent over the year through April, down from the 26.3 per cent pace recorded in the previous month and below expectations of 29.3 per cent growth.

Exports rose 14.3 per cent, also a healthy pace but well off the 22.3 per cent delivered in March and also below predictions of 16.8 per cent growth.

The trade surplus ballooned to 262.3 billion yuan, from 164.3 billion and ahead of predictions for a 197.2 billion surplus.

The numbers are still a bit sketchy at this point but it looks like imports of commodities such as copper and oil have fallen steeply from last year, contributing to the larger surplus.

TPG Capital - perhaps best known in Australia for its role in the controversial buyout of retailer Myer and its failed tilt at airline Qantas - has dipped its toes into digital media and real estate businesses before.  

So what can we learn from that?

Since TPG, considered among the elite tier of global private equity firms, seems to be interested in Fairfax Media mainly for Domain, the best place to start is probably online real estate. 

In 2015, TPG acquired through a consortium a controlling stake in PropertyGuru.com, which claims to be the leading real estate listing site in Singapore, with 16.1 million monthly buyers, and operations throughout South East Asia. 

And in 2011, TPG acquired PRIMEDIA, now known as RentPath, which claims to be the leading digital real estate rentals platform in the US. 

So far so good. But when it comes to traditional media businesses though, the picture gets a little bit more interesting. 

Perhaps most famously, TPG was part of a consortium that acquired Univision, the biggest Spanish language broadcaster in the US for $13.7 billion in 2007. The deal was a "a symbol of the excesses of the credit bubble", the Financial Times wrote, and "a period the private equity sector would prefer to forget".  

It was a top of the market price, the eighth-biggest leveraged buyout in history, according to the Wall Street Journal, and just before the onset of the global financial crisis wrought havoc on asset valuations. 

Interestingly, Ontario Teachers Pension Plan, which has teamed up with TPG in the bid for Fairfax, is also part of the consortium than owns Univision. 

Here's more

Another reaction to Emmanuel Macron's victory in the French presidential election, and the market's muted response (the euro has actually slipped to $US1.0975).

Street State head of macro strategy Timothy Graf says markets can relax about European politics for at least a few weeks.

"It is supportive short-term news for risky assets and the euro, but given Macron's consistent lead in second round polls throughout the campaign, gains in each are likely to be more muted than those seen two weeks ago.

"We expect the focus to now shift to how successful Macron's political movement, and new party, En Marche!, will poll ahead of June's parliamentary elections, and how strong a coalition of support he can expect as the leader of what is likely to be a minority party."

Still, in combination with last week's preliminary Greek debt agreement, the result should be enough to support a short-term relief rally, State Street says.

"Looking forward, Macron only offers upside surprises. In a do-nothing scenario, we have the status quo of political paralysis, but with a favourable external environment and steady growth improvement.

"In the goldilocks scenario, Macron gets a working parliament and builds a partnership with Germany to launch meaningful reforms. That would deliver a substantial boost to markets by year-end, which is currently not priced in."

The chairman of takeover target Spotless Group says the company is at an "inflection point" where growth is about to start and continued to urge shareholders to reject a $1.2 billion takeover bid from Downer EDI.

Spotless chairman Garry Hounsell this morning reiterated the board's strident opposition to the $1.15 per share cash bid by Downer. He warned that Spotless shareholders would be giving away the upside that was coming if they sold out in the bid.

"Spotless is at an inflection point," Mr Hounsell said.

"We are set for growth. The strategy reset is clear and we have made the investments to drive growth from this unique platform," Mr Hounsell said.

Downer late last week went to the Takeovers Panel, questioning the Spotless board's reasoning for rejecting the offer and pushing for Spotless to provide a supplementary Target's Statement.

Downer already holds a 19.9 per cent stake in Spotless, while New York-headquartered hedge fund Coltrane Asset Management is its second-largest shareholder with a stake of 10.37 per cent. Downer said last week that its $1.15 per share offer was final and it wouldn't be raising the bid.

Mr Hounsell said the Downer offer had been pitched relative to an all-time share price low and if Spotless shareholders accepted the offer they would be "allowing Downer's shareholders to take the benefits of Spotless' expected growth and synergies".

He said a better option was to reject the bid and "continue as a shareholder in standalone Spotless and enjoy the benefits of our expected growth and strategy reset".

Spotless in its Target's Statement forecast profits of between $85 million and $100 million for 2017-18, compared with existing guidance for 2016-17 of profits of between $80 million and $90 million.

Well, this might be behind this morning's sell-off in retail stocks.

Credit Suisse has slashed its profit forecasts for Myer by as much as 33 per cent and cut its share price target by 43 per cent despite the prospect of corporate activity.

Citing the aggressive expansion of US off-price retailer TJ Maxx, the imminent rollout of Amazon's retail offer and deteriorating discretionary spending, Credit Suisse analyst Grant Saligari has reduced his 12-month share price target for Myer from $1.44 to 82¢ and cut his rating from outperform to underperform.

"The entry of TK Maxx and Amazon, Myer's overly large store portfolio and, in the near term, a deteriorating discretionary spending environment ... is likely to be all too much for Myer," Mr Saligari said in a report published this morning.

The savage downgrade comes less than a month after retailer Solomon Lew's Premier Investments snapped up a 10.8 per cent stake in Myer to avoid it falling into the hands of South African retailer Woolworths Holdings, which owns David Jones and Country Road Group.

Investors believe Premier's stake could be the precursor to a full bid for Myer by Mr Lew, who said last month he had no "current" plans to make a takeover offer, or could be used as a blocking stake in the event of a takeover by South African retailers Woolworths or Steinhoff International.

Myer shares fell 5.9 per cent on Monday to $1.04, the lowest level since November.

Mr Saligari said Myer was facing several major headwinds, including the expansion of discounter TK Maxx and online juggernaut Amazon, which last month confirmed plans to roll out its full suite of retail products and services over the next few years.

TK Maxx and Amazon could create "significant problems" for Myer, he said, as both sell premium branded product, TK Maxx at significantly discounted prices.

Mr Saligari said Amazon's expansion was likely to accelerate the consumer spending shift away from bricks and mortar to online, particularly in categories such as home wares, clothing and beauty, which generate the bulk of Myer's sales and earnings.

"Myer does not have a particularly effective online model," said Mr Saligari, adding that Myer's delivery service levels are low.

Here are a few Tweets in response to this morning's business confidence and building approval numbers:

There's more economic data out today, and it's rather mixed.

On the disappointing side, building approvals plunged 13.4 per cent in March, widely missing market expectations of a 4.0 per cent fall.

Over the 12 months to March building approvals were down 19.9 per cent. Approvals for private sector houses fell 4.3 per cent in the month, and the 'other dwellings' category, which includes apartment blocks and townhouses, was down 22.5 per cent.

The big miss has pulled the Aussie dollar down two-tenths of a cent to the day's low of US73.86¢.

Investors are shrugging off the strong NAB business survey as well as solid ANZ job ads numbers.

Job ads rose 1.4 per cent in April, following a 0.3 per cent gain in March, while annual growth in job ads jumped to 10.1 per cent, from 7.1 per cent, boding well for official employment numbers.

"The improvement in ANZ job ads and other leading employment indicators suggests we may be in for a sustained period of strength in the official employment data following the strong lift in jobs in March," said ANZ head of Australian economics David Plank.

After tracking around 5.75 per cent for most of 2016, unemployment has recently moved higher. Meanwhile, business conditions and confidence remain well above the long run average, and capacity utilisation now sits at its highest level since 2010.

 A measure of business conditions jumped in April to highs not seen since 2008 with sales and employment all at levels that bode well for a pickup in economic growth in coming months.

National Australia Bank's monthly survey of more than 400 firms showed its index of business conditions climbed 2 points to +14 in April, well above the long-run average of +5.

Encouragingly, the survey's measure of business confidence, which had been lagging conditions over the past months, jumped to +13 from +6 in March.

"This (convergence) could suggest that firms have put aside peripheral concerns (many of which may have stemmed from global events) to focus more on the improving performance within their own business," said NAB chief economist Alan Oster.

He said business conditions were a bit stronger than expected partly because the level of conditions in Queensland did not deteriorate as much as first thought in the wake of Cyclone Debbie.

Other indicators were more mixed, with the capacity utilisation rate dropping back, consistent with weaker capital expenditure, while forward orders were also slightly softer in the month.

Weekend news in the media sector has seen key stocks burst out of the blocks, with Ten Network Holdings soaring almost 35 per cent and Southern Cross Media Group and Nine Entertainment, jumping more than 5 per cent apiece at the open. 

Investors are buoyed by the possibility the Turnbull government will abolish broadcasting licence fees and relax media ownership rules in tomorrow's budget. 

Meanwhile shares in Fairfax Media, publisher of this blog, are trading 2.4 per cent higher after news broke over the weekend that private equity firm, TPG Capital approached the Fairfax board to buy property listings business Domain and the metropolitan publishing assets for 95 cents a share - an offer that values the entire company at $2.3 billion.

TPG's Fairfax offer could well smoke out others interested in buying parts or the entirety of the media company, said said Fusion Strategy media analyst Steve Allen. "Others have looked at the Financial Review," he said. "Fairfax has never been willing to entertain the idea of a key masthead being sold separately, but this could well put it into play again."

Channel Ten, whose market valuation dipped below $100 million after it a disastrous result release last month, is viewed as most likely to benefit from a relaxation of media ownership rules, which if passed could pave the way for a takeover of the embattled third-placed network. 

A likely beneficiary, said Allen, was News Corp, whose shares were 2.4 per cent higher at the open.

"I know News Corp are generally used as the whipping boy in all these things. One has to say that they have positioned themselves, whether by design and strategy or by luck, extremely well.

"They have said, many times, that they're not interested in free-to-air television. But the precarious situation that Ten finds itself in might very well force their hand."

News Corp Australia co-chairman Lachlan Murdoch paid $128.2 million for a 7.7 per cent stake in Network Ten 2010. He is one of three wealthy investors who need to guarantee a $250 million debt facility needed to ensure Network Ten's survival. 

The French election may be out of the way but that doesn't mean there's nothing left for investors to fret about.

North Korea has soared up the worry list, and it probably hasn't helped its cause that the rogue country has just detained another US citizen on suspicion of "hostile acts", according to KCNA news agency.

The reported detention - the fourth - comes as tensions on the Korean peninsula run high, driven by harsh rhetoric from Pyongyang and Washington over the North's pursuit of nuclear weapons in response to what it says is a threat of US-instigated war.

Business fears over US-N Korea tension soar - biggest jump in worry over any risk tracked in our Global Risk Survey: https://t.co/UKVWJEu3mH pic.twitter.com/vwppZWvzxE

— Oxford Economics (@OxfordEconomics) May 7, 2017