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tv   Asia Edge  Bloomberg  March 1, 2015 10:00pm-11:01pm EST

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bills, but wants new talks with creditors. >> the opposition in russia tens of thousands march through moscow in memory of a slain vladimir putin critic. samsung tries to get back at apple in the global fight for smartphone dominance. i am watching the markets this monday. trade not exactly living up to expectations. we'll be watching india when things open up their later on. -- open up there later on. a little bit higher, down to some declines from large caps.
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korea taiwan, and some of struggle. -- and some australia as well. both expected to fall expected to report below zero. inflation numbers this morning zero month on month. watch the bond markets closely. i will be back to flesh things out for you guys. in the meantime, back to you. >> chinese stocks a mixed weekend. the surprise rate cut from the pboc. fears of deflation, we have been covering this morning. >> disinflation is the slowing
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rate of inflation, deflation is negative inflation. the fear of deflation is coming. japan has been stuck in deflation for 10 years. disinflation is crippling china. they cut rates to deal with this disinflation situation. november, throw in the ratio cuts, pretty aggressive. also proactive. sunday, they come out with the inflation figures, which were disappointing. inflation at the slowest pace deflation does back in. -- backeckon.
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and then you have the housing market slump. today we had pmi, hsbc 50 points. >> the official showing contraction? >> correct. all of that ties into what they said back in february. pboc would consider easing if the january data disappointed which it did. february has also. that is what they face when they go into this congress meeting on thursday, the annual debate about growth, what to do etc. that is the backdrop for us. >> thank you very much. >> india is bumping up
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infrastructure spending by more than $11 billion as part of its first full year budget. narendra modi their mark marquess for roads, bridges, and power plants to spur growth -- earmarked cash for roads, bridges and power plants to spur growth. imports are expected to surge in the coming weeks as traders replenish stock. many have put off buying gold the cause of concessions in the budget. they have no options than to buy a current prices. india wants to tackle so-called black money stashed away in overseas bank accounts. arun jaitley said the government is planning new legislation that went reduce steep fines and
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prison terms for tax invaders. >> concealment of income and evasion of tax will be prosecuted with punishment of imprisonment up to 10 years. >> let's get more on this with our india anchor. good to see you in our hong kong studio. >> this is seen as a balancing act. fiscal consolidation broadly he has extended that. he is committing a significant amount of money and building more roads bridges. he is also putting money in banks for banks to fund these projects. he is putting money to push growth, investment, maintaining his fiscal consolidation plan.
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>> how exactly is he going to spur growth? >> the key point is he has created an environment for the government to start spending. he has created an environment for the private sector to start spending as well. he has maintained high-quality fiscal discipline. all he has done, it is a balancing act that creates an environment for growth to happen. the baby steps have been taken. let's check indian futures right now. we saw a lot of market volatility on budget day. we are seeing a nifty pointing to a higher open. a lot of volatility on saturday,
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not a lot of conviction amongst investors. >> you really did not know which way this was going. this indication, perhaps you will see that on the nifty. this is about the long-term story. this is about building india for the future. this is not about the short-term. >> india also targeting black money. >> it will bring back money abroad and make citizens more accountable. he is going to make a lot of india's economy cashless and paperless. this is about bringing transparency and accountability into the system. making the political parties above the board in their
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funding. this is a significant step. >> we will look forward to all of that in your special. we have a special show on the budget in less than an hour from now. join bloomberg tv at midday hong kong and singapore time. you do not want to miss it. >> hyundai recalling vehicles over issues over power steering. it applies to elantra. the carmaker will notify owners directly and fix the problem free of charge. airbnb set to be making plans to value the company at $20 billion. sources say airbnb may bring about a billion dollars in the latest round of funding.
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it raised $700 million previously. htc moving beyond smartphones. the company planning to release a headset later this year. the device follows the release of an action camera the development of a fitness band. more to come on this edition of "asia edge." >> a new smartphone challenge against apple. china cuts rates as the government tries to tackle the slow down. reaction from that when we returned to "asia edge."
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>> let's take a look at some of the stories making headlines. >> greece wants more talks on
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its debt repayments, but insists it will not renege on what it owes to the imf. the government faces $7.5 billion to the ecb this summer. they pledged a series of government reforms that must be finalized by april. greece will not be given any more money until those reforms are accepted by their creditors. >> we will prioritize, we will not be the first country not to meet our obligations to the imf. we shall squeeze blood out of stone if we need to do this on our own. the ecb payments are in a different league and we shall have to determine this. >> the israeli prime minister has arrived in washington for a speech to congress that president obama does not want him to give.
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the speech has strained relations with the u.s.. he was invited by republican leaders who did not tell the white house in advance. >> police fired pepper spray to break up a protest on sunday. dozens of stores selling baby formula to mainlanders. the protesters blame them for distorting the local economy. hong kong's lack of sales tax make popular items cheaper. the goods are often taken over the border and sold for profit. >> china is joining its global counterparts in fighting deflationary pressures. what did you make of it? that is the story dominating headlines. >> what does it all mean?
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it was widely expected. fourth quarter monetary statement, this is setting the tide. a lot more liquidity to come, a lot more rate cuts, if you look at the look pretty coming out of the system, maybe it is going into the ipo market. we will see a significant amount of liquidity and definitely more interest rate cuts. >> it is going to large firms by traditional means that do not necessarily need it. the smaller guys do. they are left to go to the shadow banking facilities. >> if you bring it back to the third quarter, you have the medium-term lending facilities. you have supplementary lending. a lot of unconventional ways in which they are putting money into the system.
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>> i love acronyms. >> they have a very large toolbox at the moment, using a lot of different tools. 3.5% and it is rolling over. let's reference that to something like the u.s. and qe. it is set by the pboc in terms of the interest rates and it is done by a collateralized loan system. the markets not into context how much liquidity will be needed going forward. it is like a drum roll event.
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>> everybody knows it is probably going to be 7%. >> significant liquidity put into the system by monetary easing and you have the backdrop at the moment, the inflation numbers for 2%. it is running about 15%. -- 1.5%. very good for chinese financials diversified financials, and particularly insurance. not good for the banks. they have not legalized the deposit rate. july 2013, they legalized the lending rate. we cut by 25 basis points on the deposit side. i can go into any chinese bank for one year -- >> what does it mean for buying
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a chinese bank? >> it is the only reason why you would be buying the chinese banks. significant set interest impression. on the other side, why wouldn't you buy an insurance stock that would benefit from all of the look pretty? -- from all of the look pretty? -- liquidity? hopefully, it will work out for us. >> when i say divergence about chinese and hong kong property margins, we are seeing that right now. they are trying to bump up a property slump. we are trying to rain one in. when does this go away? >> you require more equity down. i do not know what signals that is saying. is the hong kong property market pretty expensive? look at the yields you get from
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the investment side. i do not know if that is the real answer. i would go back to increasing supply and making housing affordable for everybody, not just those who can afford property but for everybody. a lot of demand, increase the supply, and allow property prices to come back naturally. >> what happens -- when the housing market slowing down so much in china the stock market was picking up. if that happens in hong kong, is that one of the reasons we have seen it do so badly? >> if you look at property in hong kong versus china, very different vested interest. one of the largest owners of property in china is the government.
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you saw the budget surplus that the hong kong government put out and it was significant. property needs must be supported, it is reformed and mandated in china. we cannot have a falling property price or a property price bubble in china. that would be devastating to the economy. >> stick around with us. >> you are watching "asia edge." we will be live in sydney coming up. ♪
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>> shares in myer are falling sharply today after the sudden resignation of ceo bernie brooks. does his report to have anything -- departure have anything to do with that? >> the market has decided that it does. myer says it does not. the chairman says there is no need for any disclosure on earnings. it is all part of the structural
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review. the outgoing ceo does not want to stick around for another structural review. he has been there nearly nine years. when he started out as the boss, it was a private company. he oversaw a lot of cost-cutting and restructuring and he really turned it around. since then, things have become tougher for meyer with competition in the online space and foreign interlopers. he is stepping aside. it is not clear whether he jumped or was pushed. myer will have a new co, it is richard umberes. -- richard umbers. bernie brooks was to a over for a handover for a couple -- will stay for a handover for a couple of months.
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myer shares down 11.5% after the news. >> thank you for that. >> jobs, personal spending, investors on wall street are waiting -- are waiting a lot of economic points. >> investors are expecting to hear from a new round of companies to get the latest round of economic reports and we will be hearing from big companies such as berkshire hathaway, which will be out with its annual report and earnings in a letter to investors. a lot of companies, such as adidas, barclays, merck, scheduled to report. we will also be getting the latest information from u.s. personal spending.
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it probably fell in february, reflecting part of the drop we are seeing in gasoline purchases. it shows incomes -- u.s. manufacturing probably held close to a one-year low in february as falling oil prices limited demand and export markets remain weak. by wednesday, we will get the latest from the beige book. that is a snapshot of the economy in 12 separate bank regions. washington, d.c., the supreme court will be waiting in on obama care. the federal reserve will release results of his latest bank stress test. on friday, the monthly jobs data. u.s. companies probably added about 235,000 workers to their payrolls in february. i am su keenan, bloomberg tv news.
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>> this is the equity position of the moment. we have a market in seoul. south korean stocks samsung announcing a new smart phone. here in hong kong, a very brief look. we are looking for what is going on in the afternoon in tokyo. tokyo stocks reopen in just under four minutes. ♪
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>> samsung's bold new design as it tries to get back at apple in the global fight for smartphone dominance. cooling measures, hong kong makes it harder to get on the property ladder. breaking boundaries, blackberry decides it does not care what phone you have as long as you use it software. let's get straight to our top story.
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china has cut rates for the second time in three months. the cut came ahead of official figures showing a second month of contraction in manufacturing. one portfolio manager says china's economy is doing just fine. >> the government is reacting to media hype and political discussions about the weakening of the chinese economy. the economy is pretty darn strong. if you look at the economies of the rest of the world then you are talking about the difference between a 7.5 or 8% growth and seven or 7.25%, i think you have to say china is doing very well, thank you very much. >> india's spending plan, premised are narendra modi announced he would your mark more money for -- earmark more money for roads, bridges, and
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power plants. >> the landscape has changed so much over the past few years. the competition is much more intense. you have apple, who did hit it out of the park where their recent product. what samsung is doing, they have made improvements. i do not think they are quite there yet. i do not think they have that smash hit yet. >> samsung is hoping the latest galaxy smartphones will arrest its lost of smartphones to apple. it features a screen which curves on both sides. will the phone become a hit? >> let's get the latest on samsung galaxy line. this agreement on social media whether samsung has copied apple's line.
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the latest challenge to apple's want to watch. >> not only two new phones -- >> when we had the apple iphone 6, there were two as well. >> one was a more premium product. the analysts are quite positive on this. jeffries waving -- saying this is a much-needed step forward for samsung. samsung pay is for investor should be paying closer attention. this is samsung's push into the mobile payment space. mobile payments will be pervasive, they already are. this enables samsung devices the two new devices have the software to do that on about 90%
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of terminals. that is for samsung has the clear advantage. they are using technology that allows them access to most of the payment terminals. apple is using a different kind of technology. the analysts very bullish on samsung pay. >> talk to me about virtual reality as well. it is htc getting into that. >> they used to be the number one smartphones seller in the united states. no surprise they would be looking to move into other business areas. one is virtual reality. the two other main players in the space is sony and facebook. the htc product is a set of goggles that allows you to engage and play games like grand theft auto. htc has a bigger vision.
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corporate training sessions, for example. what example of the way these goggles can be used. -- one example of the way these goggles can be used. >> what about a smart watch? >> apple has sent out invitations for an event. >> we have the announcement of an announcement. >> is usually a big announcement. they launched a watch last year, but this new watch is part of this trend by many of these companies to expand into wearables. this is a $30 billion market by 2018. it is huge, it is growing. this will be a luxury watch with the first sapphire crystal.
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it will be in stores soon. >> thank you for that. a look at some of the other stories making corporate headlines. >> blackberry expands its range of software and apps for business customers regardless of what smartphones they use. they want to double software revenue by next year. blackberry is one significant share of the smartphone market. a purge of pcs of preinstalled advertising software that could expose users to hackers. specialists have criticized the software for its ability to monitor web-based activity. lenovo said it was a mistake to include this on its machines. japanese developer of a 3-d printer that produces human
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tissue set to raise $12 million in funding. they plan to use the investment to boost its sales and fund clinical trials. it turns living cells into artificial tissue. it could regenerate body parts. those are the main company news this hour. >> getting to the market action, getting over to david. >> i am watching gold prices. the country left their import tax on gold unchanged. the back story, a lot of buyers were expecting a cut in the import tax of a withheld purchases. now that we know there will not be a cut, we are expecting positive for gold. india is the biggest consumer of gold.
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we are down 23%. let's see how this goes. it is something to watch coming off of the budget in india. we are watching casinos, we are likely to get the latest gaming revenues for february any time around noon. brace yourselves for a very bad number. we are talking about gambling intake, expected to drop 50%. if you think some analysts, jpmorgan described the gambling numbers as shockingly bad.
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stocks are very expensive, trim your positions, we have seen a little bit of pickup since january. talk to any ceo of gaming companies and they are all about diverse a fine. short-term -- diversifying. let me just wrap things up. property stocks financials. measures were announced friday. we will get more in just a bit. hopefully, we will bring some semblance of logic to these irrationally high prices in hong kong. >> thank you, david. we will stay with hong kong property and the latest attempts
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to colder market. joining us right now is our bloomberg property reporter. >> for the most part, it would be the first time homebuyers. the cuts were announced on friday night. it was targeting properties under 7 million hong kong dollars. it will not get you very much. 400 or 500 square foot apartments. >> this is 900,000 u.s. dollars. it is hard to wrap your head around it. in hong kong, it it is one of the most expensive real estate markets in the world. is this why the government is trying to cool it down? to make it more accessible by making it inaccessible? >> the prices went up 13% last year in hong kong. most of the search was driven by
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-- surge last year was an increase in smaller units. people with a set budget are forced to go smaller and smaller. in the past, measures were directed at luxury properties. trying to stamp out speculators and foreign buyers. now they are telling buyers of companies, maybe not a good time to buy. >> it is so tough out there. what is keeping prices so high here in hong kong? >> not enough supply in hong kong. whether just rates at record those, it makes sense. -- with interest rate at record lows, it makes sense. >> absolutely. u.s. monetary policy does not match with what we are experiencing. we are tied to that u.s. fed
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decision. ultimately, property developers we are seeing real estate equities rising. >> across the board, the opinion is that the latest measures are not tough enough. lowering the percentage points you can borrow by 10%. will the 10% matter of whole lot? for the first time homebuyers yes. >> ok, we will see if it works. thank you so much for that. >> india has outlined its roadmap to higher growth.
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"asia edge" returns in a couple of minutes. ♪
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>> russian opposition has stages biggest opposition in three years to commemorate the murdered activist boris nemtsov. he was a former ally of president putin, but he fell out of favor and became an outspoken critic of the government. he was shot dead on friday. demonstrations were held in other cities, including st. petersburg. >> the exercises start today and run through the end of the month. north korea say they are a preparation for invasion. >> malaysia and indonesia have launched a new location system.
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they can track planes every 15 minutes. that would drop to every five minutes if the airliner deviates off course. >> we have the other big story we are looking at. this indian budget. you are invested in india, what are you making of it? >> look at where the futures were set. it looks like india will have a reasonably strong day. it is kind of balancing the reforms and the growth. a difficult task inheriting the current situation where it is. if you bring it back to the equities market, our view of
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india -- >> it is a bit choppy. >> it had a very strong run last year. whether or not optimism has gotten ahead of itself, we are sitting on the fence at the moment. >> you guys are very bottoms up investors. you have somebody on the ground monitoring things. what are you looking for? >> it is a great question. he is going to go through the corporate earnings. where do the risks lie at the moment? whether or not that will help. we want to see tangible evidence on the corporate level. some sectors will benefit more
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than others. that is why you have to be quite selective. we are favoring indian banks, indian health care, a lot of stocks in india with very popular names are a bit overbought at the moment. we are trying to be risk-averse and weigh the best values. >> we have a big position -- we have been long-term shareholders of that company. from the highs all the way down to the lows. they questioned the corporate governance. more of a valuation play. very attractive net interest margins as well.
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incredibly strong run, but we believe u.s. banks will be in a position to help the structural growth of the economy. we have been long-term shareholders of that. >> manufacturing sector, is that important for you guys? >> it is typically underweight. the success is the lowest labor cost imports. what we are observing now, a bit of a structural shift out of china, out of india, and some of the neighboring economies. pakistan, bangladesh, these types of regions. whether the industrial stocks are stable, it is quite questionable. we like the health care plays generics.
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you have to be selective i think. some things are very expensive and other areas where there are pockets of value. it is a difficult market this year after such a strong one last year. >> let's go back to china. you are underweight and india in manufacturing -- in india in manufacturing. how does this ramp up the pressure? >> a lot of spotlight if you see the latest pmi numbers, under 50 consecutively. a lot more monetary easing and a lot more tools to be put in place to boost the economy. if you took a survey at the moment of most economists, they
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would be expecting the underlying growth in china is a lot lower than 7%. 7.3% in the fourth quarter. i expect it is a lot lower than that. we think the 7% target is more symbolic than anything. good evidence of that, department stores will report their earnings this week and next. they will be tough. i think the consumer is doing a little tough. >> when you say a lot lower, it sounds pretty bleak. >> it will be negative the cross. you have a lot of new store openings. retail sales are about 10%. department stores traditionally
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very good working capital you do not hold the inventory. for china department stores, you will see very soft earnings in both the actuals and the guides. anyone who has been the china and -- to china and walk-through department stores, they are nowhere near as full as they used to be. we said look at them in march and the february number will come out and it will be absolutely horrible. >> it will be priced in already? >> i do not think it is yet, but it is a tough question. let's bring it to the february numbers. they will be a lot worse. last year february was one of the highest on record in terms of revenues. and then you have very soft conditions at the moment.
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march should be flat, fingers crossed you see some increase. the first quarter will be down year on year in february will be significantly down year on year. where are we sitting for 2016? dubai, you have to be long-term. >> it is always a big bet no matter how you look at it. >> samsung lives on the edge. is it a gimmick or the next big thing? >> a special report after this break. ♪
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>> samsung new smartphones
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going on sale next month with a host of new features. sam grobart has a look. >> samsung has been showing a flagship phone. they are showing two of them. this is the galaxy s6 and this is the galaxy s6 edge. they are both using higher-quality materials. they are using those materials in a range of interesting colors. you will find the usual set of improvements. faster processors, a sharper camera, brighter displays. one improvement does stand out and that is battery life. you can charge these phones for 10 minutes and have enough power to watch a two hour movie. you can now charge both of these phones wirelessly.
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of the two phones the edge is the more radical one. it's curved display as extras -- the curved display gives extra space. the side display can discreetly notify you when one of your frequent contacts is calling you. you assign them a specific color. here is the thing about the high-end. it keeps getting higher and samsung has cleared -- has heard calls for glamorous devices. it is obvious they are not ceding the market to anyone. >> let's check in on the india market. it is just open for business. on the heels of that first full your budget. >> we have a special program coming up. next, we have a special program
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on the indian budget. >> progrowth or missed opportunity? that is next on bloomberg television. ♪
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>> a plan to set india on a new path and inspire investments or a missed opportunity? 48 hours after the hype, how is the budget being seen? over the next 30 minutes, i will be dissecting india's budget 2015. >> the budget was seen as

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