table. a big day for beijing as the yuan expected to be promoted to the imf elite reserves. china sea as a potential driving force find a new global deal to cut greenhouse gas emissions. foreign investors helped fuel a three-year rally in japanese fuel chips. plus, timeless elegance. could set a world record when he goes under the hammer in hong kong. we're talking about 2 million u.s.. all that and much more on this monday edition of "asia edge." >> keeping an eye on asian markets. we are looking at a mixed slower picture. cuting to expand qe and deposit rates. payroll data from the u.s..
they.hey or won't we are taking a look at where we are sitting ahead of that midday break. hong kong shares sitting exactly flat caps on high gain back -- as shanghai gaining back earlier gains. we had the worst weekly performance last week or china. take a look elsewhere around the region. up 1.5%. the nikkei up by 4/10 of a percent. sales growth were the surprise on the upside. the 200 down by just about 3/10 of 1% on account of a bit of a selloff in commodities prices. we are seeing on
this last trading day in november. rishaad: dollar, euro, pound, the yuan is heading to the top table. yvonne has been watching this for us. someone say it is a done deal -- it is a done deal that could be a surprise? yvonne: some are worried is a conditional yes and the pboc was the fourth to try to relax controls. are they going to be widening that trading band by 3%-4%. we've also seen it coming in the past few months over how it ranks in terms of its share as an official reserve currency. it is ranked seventh among the official reserve currencies of the imf. that is a long -- that is with members along with the aussie dollar in the canadian dollar. the internationalization of the yuan as well.
some say this is more heavily focused toward trade instead of an investment currency. rishaad: if it is put into the basket, what is the kind of waiting people are -- what is the kind of weighting? yvonne: imf staff had suggested 14-16%.hting would be there were concerned about the smaller wieght. 2% is priced at about 10%-1 right now. some analysts say anything less than that would lead the yuan to fall. we also saw the offshore yuan rising this morning. some suspected that there is some intervention involved this morning had of this division. symbolically,
this change is overdue. we have been asking our guests for their take on what inclusion would mean. some believe it sound like a bigger deal than it actually is. >> asset managers and central banks aren't just going to suddenly go by chinese renminbi just because it is in the basket. they are more concerned about what they could do up there is a problem in china, how quickly they could get their money out. just to put it in the fdr basket doesn't make the difference. in the past few months, the way that chinese policymakers responded, it is harder to get your money out. angie: that is a view shared by
glenn maguire says it will take time to see any significant changes. >> you are not going to see a surgeon to chinese assets. over time, that formal inclusion in the special drawing baskets should see a real weighting of both formal and informal holding. + angie: the cohead of asia rates and fx strategy at j.p. morgan chase. >> the first-order flows are very small. any member of the imf will have to shift their allocations away from the other currencies to the renminbi. billion more than $30 to $35 billion. in the longer term, currency where the shares will fall will be the dollar, yen, sterling.
these are very big markets. it shouldn't have too much of an impact in my view. angie: that was word from asia on whether the yuan will be granted reserve currency status later today. rishaad: brazilian billionaire has quit as chief executive after being ensnared in the country's widening corruption inquiries. he renounced all his post after the supreme court extended his suspension. he is alleged to have interfered in january. yet denied the accusation. for billion-dollar energy project has its trouble. refusing to sell land to make space for a power plant. they will rule today on whether the president has the power to formally purchased the land.
france -- ab-inbev is considering a move to win regularity -- to win regulatory approval for its purchase. the merger of sab miller and ab inbev would create a control about one half of the industry's total profit. the nuts and bolts of that story and the rest of the day's news at bloomberg.com/asia. you can catch reports, data, and you can up with some interviews you may have missed. >> chinese skies are once again making headlines. the air in beijing and shanghai is now officially hazardous. pollution will be among the issues on the agenda at the un's climate conference, with 200 nations trying to agree on how to tackle climate change. goal is to keep the
warming levels at two degrees. >> that's right. it is a very challenging task to get to that level. two degrees celsius with the level set in 2010 in copenhagen. that meeting ended in disarray if you will. we didn't have any substance to come out of it. here in paris, we have more than 175 nations committing to cuts, big cuts that are, according to the organization, a record. those cuts, if you let them all mean a 2.7ould degrees celsius rise in temperatures through the year 2100. remember, back in 2010, we had that too degree increase. not as stringent as we had in the past, but if we factor in the economic fundamentals of the day and the nations close toting, it comes
the median level. it will be an interesting discussion to see all of these world leaders and nations come together to try to reach will be the first global greenhouse gas emissions. it would be incredible but one of the sticking point is emerging nations versus developing nations. those in emerging markets point to developing nations and say, wait a minute, you can impose the same standards on us. >> absolutely, they don't have the levels of income, the monetary base support the big-ticket programs you would see in germany, for example, or in the united states. there is that argument. national priorities, resources. , weou look just at china saw the air pollution report --
air pollution alert being raised to the second-highest level, prompting this new alert, the first time in 13 months that the government there has said that the air is this journey. we thought perhaps it is getting better but it is not. not onlyy playing out in beijing but in many other cities in the asia-pacific. it is getting colder and the need to burn more cold to keep warm. it is what we see every year. we will have more on the summit later in the show including how activists are using social media to turn up the heat on world leaders. rishaad: brokerages continued to tumble as other mainland stocks stabilize. that is next. ♪
flown home from turkey. and kara has warned against not -- ankara has warned against non-urgent rush holt -- not urgent travel to russia. russian companies have been told to not hire turkish workers. russian football clubs will not be allowed to buy turkish players after the new year. a submarine appears to have sailed. saying ita telling -- was a missile was seen floating over the weekend in the sea. korea fired a new type of missile from a submarine. pyongyang is banned from testing ballistic missiles. auctioning millions of dollars worth of jewelry to sit -- to raise money for the state. sell over 200 pieces including a rare pink diamond. once owned by ferdinand
marcos including ones by rembrandt and kosovo. it is estimated that marcos stole as much as $10 billion from the philippine people. >> let's get back to the markets. heidi is keeping watch. >> they were until about 20 minutes ago. shanghai receding into the red, extending losses. it is down by over 1%. we had seen some modest gains earlier in the morning. rest ofook around the the region. it is pretty much a sea of red. a major component of a was driving the selloff for the chinese markets on friday in terms of these investigations that we have been seeing in a
number of these top brokerages in china. despite the ceo still missing, it is up. we are also taking a look at south korean stocks. that market is broadly lower on the back of the disappointing release when it comes to industrial production. it was up by 13% on wednesday. companies have been granted south korea's first licenses when it comes to these online only banks. retailer is down by 7%, extending losses. taking a look at where we are sitting across the rest of asia.
it looks like the msci asia-pacific index is on track. -- on track for its sixth loss in six months. is chiefining us now strategist for asia and the middle east that b -- release at bil. when it comes to the fdr inclusion, do you think the yuan is going to get today and one of the implications for markets? >> i think they will get today. anything else would be a surprise. i think it was a top priority of the chinese government to get the renminbi into the fdr. related to that, what we're seeing today is dollar strength across the board. every currency weakened against
the dollar, and the renminbi, which is pegged to the dollar. the should be some pressure to devalue at some point. angie: when we can see moves from the pboc, chinese government, to widen the trading band, we saw what you called black monday. in the future, are we going to see this type of intervention? you can't really is you're going to be included in the fdr basket. >> it all depends on where our capital flows are going. outflows had capital in with the inclusion, the hope is that this will reverse. the actual implementation of the fdr inclusion, during that timeframe, what is going to
happen, whether the government decides to go for more control, it is hard to tell. downward pressure given the fact that parts of the chinese economy are slowing. angie: as a strategist, have you factor in all of that into your bank? >> it is always a bit difficult. what we have to factor in his continued -- factor in his continued dollar strength. we have some policy divergences. the fed seems to be willing to raise rates in december. whether it is necessary or not is another question. that is probably going to be the case. the ecb later this week most likely announcing more qe. continued divergences in
monetary policies. they have to keep in mind that there will be unintended consequences. i want to ask you about oil since you are based in the middle east. what is the goldilocks price and where is it going to go from there? >> we see crosscurrents in the oil market. we had huge reduction in the rate counts, huge reduction in oil and gas drilling. if you have that kind of drop, usually about six months later, the oil price tends to stabilize. on the other hand, you continued high production by opec and russia. we will see what happens later in vienna.
what i see sitting in the region . probably more than 10 million barrels per day. lifted, sanctions are they have on one hand lower production in the u.s. and higher production the middle east. willmeans the oil price range. 40 seems to be somewhat of a floor. it has been a ceiling. now it seems to be more of a floor. now we are more willing to go long oil. we are going to leave it there. bil chief strategist, asia middle east. up?aad: is flat the new ♪
>> especially in this environment were flat is the new up. given these elevated costs of new regulations, just the fact that the bank is keeping their bonus pool. could be other banks cutting their bonus. we're hearing from sources that their bonus pool could be cut by $529 million, about one third of their total. also, reports that credit suisse could be cutting their pool by some people0% every at barclays may not get any bonus this year. managers withop this decision but things could change, there is still room for change. time --ormance at that
they could change their mind about time. rishaad: what makes jpmorgan different? shery: jpmorgan, led by ceo jamie dimon, have maintained their fan -- maintain their brand. other banks, such as the ones i mentioned, deutsche or credit suisse, they have been cutting their expenses, they have been streamlining their business. not so much for jpmorgan. that theth mentioning number of employees as of september has declined. 4% fewer than a year earlier. the total compensation costs have been on the decline since last year. again, things could change depending on the performance in december. rishaad: thank you very much.
jpmorgan keeping its bonus pool flat from last year. we have the reopening coming up after this break. declines taking place when it came to equities in turkey. about 4/10 of 1%. generally speaking, asian equities seeing chinese shares. that was the biggest selloff in three months. staples shares leading the losses on the benchmark indices. a pivotal week for this part of the world market. ♪
washington. the list has not been altered since the year 2000. christine lagarde says she to be approved. security is tight in paris as world leaders gather for a summit. countries have already pledged cuts. stronger political will since the 2009 copenhagen summit which ended in disarray. let's get the latest from the markets. clarity on the morning session. ofdi: angie, quite a bit volatility. the chinese markets, halfway through the trading day. this is how we are sitting as of
midday. shanghai and hong kong heading to lunch. about a quarter of 1%. we are seeing quite a lot of losses. one of the biggest losers in the region. let's take a look at the brokerages, one of the major catalysts for last friday's selloff. shang i had its worst weekly performance in about three months -- shanghai had its worst weekly performance and about three months. it is a pretty mixed picture when it comes to these securities brokerages. the chairman and ceo is missing.
since not been in contact november 18. it is unclear what is driving this extended selloff. we had a number of analysts saying the selling on friday was overdone. these probes into the brokerages are ultimately a good thing because it shows the shares climbing. regulators are keen to prevent another buildup towards that down wend another come saw early in the summer. angie: we had a mixed bag of data out this morning. that is waiting on sentiment. are there some standouts in japan? >> it was a mixed bag of data. industrial production missed the mark. we are still seeing a rise in factory activity. retail sales was a beat, 1.8%. the nikkei not seeing a steep
losses as the rest of the reason -- rest of the region. toan display is one i want talk about. it is planning to go into mass production for these led screens by 2018 and hoping to buy for an apple contract as well -- vie for an apple contract as well. toshiba is up by almost 3% at the moment. the accounting scandal was might be -- woes might be behind the company now. investors are piling back into toshiba. overall, it is a pretty miserable session across asia. rishaad: foreign investors are looking elsewhere for returns.
they are looking at more interesting stocks rather than staying with the tried and tested. russell, what is this all about? russell: with japan's stock market rally three years old, this maturing, foreign investors are feeling they have to look a little deeper for value in japan's market. a number have received inquiries from foreign investors who want to meet with lesser-known companies around japan. betweenrranged meetings five lesser-known japanese companies listed and some foreign investors gathering this week in tokyo. rishaad: which companies are meeting? russell: it is really a broad-based cross-section of companies.
geographically and in terms of industry, companies all around the country. drugstore chain from ishikawa on the west coast of japan, dental tokyo.nt maker north of the common feature of these companies is they are all valued under $1 billion. foreign ownership is about 20%. how did they select these 25 for the meeting? russell: they started with a list of about 100 companies. they whittled it down based on growth potential. the ability to stand out and shape the industry's. they were chosen based on their valuations. the median valuation of 17 times running.
cheaper.a little bit the stocks have risen about 11% on average this year. we spoke with a number of joint chiefs of global markets and he was saying japanese companies are becoming much more open to forming a dialogue with foreign investors. ,ase in point is the factory the robot equipment maker. using more ofat its cash for shareholder returns. rishaad: thank you very much. angie: checking in on some other stories, american airlines will keep the rights to its l.a.-tokyo route.
american has march 27 to start flying. decision is the latest in the development of a year-long spot between the carriers for one of only four existing routes. china's first domestically designed passenger plane has been handed over to its new owner. the twin-engine plane can carry up to 90 passengers with a maximum range of 3700 kilometers. spiesjetdget carrier spicejet, the stock has surged more than 280% this year. the chairman says the shares are undervalued and now is not the right time to sell. they have reported a profit for
the last three quarters. they will buy 150 new planes by march. bhp billiton on the decline in sydney this morning. the cost of the disaster could top $5 billion. paul allen has been watching the story for us. the lawsuit likely to go ahead? is still very early hours of monday morning in brazil. we understand the lawsuit will be filed this morning. that is what the attorney oferal says, seeking damages $5.2 billion. the money will go into a fund to pay for the cleanup over the next 10 years. all of this relates to that november 5 disaster. 50 million tons of mine waste went down into the valley, 13
confirmed dead, six still missing. the first of the high profile court cases look set to get underway. bhp says it has received no formal notice. they are committed to building -- rebuilding the mine. been a veryhas tough here for bhp. this is just the latest. paul: we see a lot of pressure on the share price this morning. it is down 2.7%. pressure on all four of their commodities, particularly iron ore. todaybelow $40 per town -- per ton today.
it all feeds into a broader narrative of what we have been talking about the last week or so. they may be at risk of losing their a credit rating. it has been a difficult year for bhp in 2016 at this stage. rishaad: as many as 200 people were arrested during rallies demanding a global accord at the climate change summit. protesters clashed with police who fired pepper spray in response. hundreds of thousands attended protests around the world over the weekend demanding world leaders to take action. let's see how this climate change debate is going on.
>> there are images of where there are thousands of pairs of empty shoes line one square in paris. symbolizes a, it pro-climate deal march that was canceled because of the security measures in place. world leaders gather in paris. bringing attention to the urgency of finding a truly global accord. let's have a look at some of these things. how do we appear to be doing something about climate change without doing anything?
they do want to see something concrete coming out of these meetings. back here in asia, and ironic turn of events. on the same day the chinese government laid out and said it had met in the pollution targets for the year, one of the worst days in pollution. it reached hazardous levels in beijing on sunday. on twitter, this comment -- this problem cannot be solved overnight. the target may not be enough to move the needle on this one. under sevenin just hours from now. rishaad: thank you very much, david. angie: our next guest calls the
rishaad: welcome back to "asia edge." off with that one, we have the yuan probably included in that. what are the implications when it comes to equity? >> there has been a strong relationship between chinese foreign exchange reserves and risky assets. when you find that the reserves are declining, risk assets are declining. that is what happened over the summer. the inclusion may result in some inflows into china, which
reduces the pressure on them to devalue, which means the risky asset prices get supported. positions in that have been reduced by two thirds in the last few weeks. it is very significant. angie: what is going to happen? we have been talking about stimulus. intervene,ing to not we could very well see a drop in the yuan. >> we are waiting for the pmi data that will come out tomorrow. we think there is a possibility the pmi data may be a little bit stronger than what people think. angie: which would be expansion? the market is expecting 49.9.
market is pricing in gdp in china falling. sudden, everybody is positioned the wrong way around. that is what we are looking for out of super week. if you could weakness in the notar, the chinese economy as bad as what people think, maybe the ecb does not deliver as much, the market could look very different than where it is today. >> are you concerned they might imfget the weighting the anticipated? mo: i don't think there will be an immediate pressure. notdirect impact will
reveal itself until 12 months time. the impact is not that significant. it is more the signaling of it. if you are a foreign reserve fund manager right now, you cannot hold it. bad.wards, it is not so rome. roads lead to this chinese resilience theme has been striking. what does this tell us about the future? mo: the problems in china may still be there, but the key difference we have with our clients we talked to is it is really about the timing. if you look at the positioning of the market, a lot of people
playing -- plan for evaluation event by february -- devaluation event by february. it may not be that early. it might happen later on in the year. you might get some movement, but it will be a lot more controlled than what people think. this idea of china spiraling out of control may be a little bit aggressive. the key point is this -- if you get the dollar turning around, some form of stabilization in china, you could see a hefty squeeze in the last couple of months. right now, it is quite difficult. the overall view is you could get a rebound in a lot of these. emerging markets fx is quite well positioned. equities,arkets
underweight positions. it is mainly a position argument going into chinese new year. by the middle of february, a 7% value, i will be taking a little rest for the rest of the summer. rishaad: what about this counterintuitive hong kong property stocks being a buy? mo: everybody is focused on the prime rate. -- rates havees been falling. 26 basis points to around 19. they are at the lowest levels since 2011. liquidity could come in and affordability is an issue globally, but overall, we are not that concerned about the
he is at the four seasons hotel. >> this is a hong kong watch auction. on the front cover of the catalogue is appraised -- is the prized piece. one of only two thought to been made with white gold. theyare not expected -- are not expecting that went to rid the auction until about 6:00 p.m. there will be 350 other prized timepieces. this is not necessarily considered a large catalog. sometimes, they have as many as 600 lots. today, it is 350. some of the other prized timepieces that we will be talking about are also in your pocket. there is an observatory pocket
watch from 1924. the most accurate watch on the planet, expected to go as high as one million u.s. dollars. there was also a smaller pocket watch originally sold to the russian princess catherine. we cannot get much closer to them because they have security with big muscles. steve, rumors of the collapse of the chinese economy greatly exaggerated? how much of this is a test for luxury brands? we asked those questions exactly and he said there is a
large pool of international watch collectors. hong kong is the largest luxury watch market in the world surpassing the united states for the last several years. there are increasing numbers of mainland buyers for these type of timepieces. in hong kong, they are more readily available, and cheaper than they would be on the mainland. there are fewer luxury items being sold in the hong kong market. yes, the chinese economy is slowing down. these are niche alternate investments and there is still a pretty robust market. it is not a huge auction. they are emphasizing quality over quantity. prized 1985 white gold watch to perhaps even surpass the $2 million target. angie: time is luxury,