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tv   Asia Edge  Bloomberg  February 28, 2016 10:00pm-11:01pm EST

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to boost growth. also coming up this hour, digging out of the deficit. india presents a budget of a couple of hours, promising to reduce asia's biggest fiscal shortfall. and the asiamalaysian ruling party leader tightens his power. policy makers in china try to restore faith in economic management. though stories and more on "asia edge." a quick check on the markets. as volatility returns to china, shanghai stocks are down 3%. we are carrying some the losses that we saw when the gates opened. 4% at the start of the session.
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lows of 8/10 of 1% down in hong kong. picture insome mixed the economic front with the industrial production rate rebounding. retail sales continue to fall, local reports you're talking about the strategies and plans coming out of the csrc chairman. is expected to be promoting stability over reform. shelving theks of ipo process. we could be seeing some changes there, coming out of the new chairman. a stronger yen. little bit ofa paring off on those gains from
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the equity side. the emerging market debate as we continue to talk about this, we continue to see a case that the headwinds are better than expected, better than usual. cheap, it has only been cheaper than these recent levels of six times. we are seeing a 28% discount. it is budget day in india. i want to talk about the india rupee. the dollar is strong trend against the rupee. we are approaching a low on the india rupee. 68 was the low in august. we could see continuing weakness. rish? rishaad: the finance ministers it didg up the g-20, lack critical details on how
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they will tackle immediate challenges. they were talking about engaging in contouring. >> it is interesting that it is not everyone's first interest. it is interesting how they looked to reassure each other. there's not a lot of trust their. -- there. rishaad: "do as i say, not as i do?" vid: it reaffirmed the previous exchange rate commitment. it is ok to pursue very low rates, if you need to do it. if the currency drops, it is fine. but, don't target a weaker currency explicitly. let the others know if you do. this sums up the agreement pretty well. >> the best way to stop com
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valuation is colleagues so there are no surprises. david: the meeting took place on saturday. mark carney was single doubt. out.ngled they are expecting to be tightening, towards the tightening in the spectrum -- end of the spectrum. they say there are limits to the extent which negative rates can achieve this export of exit savings. this was seen by many, in the onions, as a job at the boj. they of course announced negative rates.
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he says, "it is very relevant to have this conversation, because a quarter of the world's gdp is in producing economies where rates are literally to the floor." what was different in this meeting? this is about fiscal stimulus him, something that the germans pooh-poohed. [laughter] rishaad: it might be something in some respects they deserved? david: they said none of that, no more fiscal stimulus, no more monitors to us -- no more monetary stimulus. this gives you an indication of who won, got more points. ,ooking at this list of risks this first part that you see on the screen, this is almost a rehash. flip onu get the page
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the brexit and the refugee crisis. there were trying to rally finance ministers in the eu and even got a mention from the u.s. treasury secretary. choice,we look at the we see a stronger united kingdom world, with the u.k. in the e.u. that's why we think it's important for voters to think about this and to think about the impact this decision will have inside and out of the u.k. five key outflows, capital fiji crisis, the brexit, and drop in
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commodity prices. rishaad: he can find all the info and catch up with this online at bloomberg today. angie: india will be in the spotlight later today with the announcement of the budgets. india must review its fiscal deficit targets in the coming years. harsher in for you supermini in -- harsha su bramanian. >> is the third budget of their government. expectation is whether the government will present a new lead for india they can create jobs that can bring back investors into the continent. 23% since maydown
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of 2014, after the landslide victory. disappointed.feel the government is not push through -- has not pushed through key reforms, and ifestors want to see, america was able to push the reforms, will they want to talk? -- walk the talk? angie: what are the priorities for this budget? harsha: a couple of things. one of the things the government has focused itself on is a sup ernarrative. headlines in india have been far away from the economy. they have been talking about wanting more job reservations as part of the affirmative action infrastructure. growing,ile it is
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is not seeing job opportunities for the youth population. a lot of people want to shift back the narrative to job opportunity investment to save lost michael space. -- lost political space. india's facing a bad banking system and publications to paying back their loans, which goes back to bed balance sheet. broken,ycle is to be then the financial minister will have to present a new plan to recapitalize the banking system, and more portly, offer tax incentives to corporate india. he will not see earnings move up until these issues are fixed. angie: the question is will a total line of fiscal prudence? they toe the line of fiscal prudence?
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harsha: that means to be seen. minister --ance plan remains to be seen. many experts argue that oil prices, in india, need headroom to go ahead and spend on infrastructure projects and create jobs. they can wait for a while will the focus will remain, perhaps, on spike in growth. angie: thank you for the review. that is harsher supermini in -- harsha subramanian. the two sides on this weekend went through the list of sharp slide though these could top $2.6 billion. we are now joined from tokyo. what is the latest on these negotiations? boarde last week, sharks
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voted in favor of the foxconn deal, putting an end to the long chase by the taiwanese any facture. -- manufacturer. but new material has come to light and they have had to delay the final signing. foxconnbe reported that there will be in personally to seal the deal. rishaad: ok. a major sticking point then? >> the issue is contingent liabilities. these are late and costs triggered by structuring a layoff. some say could exceed more than ¥300 billion. others say could be a lot less. it's not certain if this is a major styling block. -- dublin block.
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stumbling block. , so eithere deadline there is an extension or a deal today. any major change to the terms would have to go back to the sharp board. it is raising the question of whether the two parties can come to an agreement. in 2012, a lot less was it take -- was at stake. rishaad: thank you, powepavel joining us from tokyo. nissan shares surged after the plan announced -- the company announced a plan to buy dollarsee billion and stock. - in stock.
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nintendo shares are in focus in tokyo. we looking at the weak sales of nintendo three ds. -- 3ds. the news highlights the importance of a new game for mobile. and what of the world's largest free traders in the world as reported a loss of almost 150 million u.s. dollars. that is compared to a profit of $84 million from a year earlier. hollande has received a major loss -- rishaad: china may have succeeded in calling the markets for the time being, but it still
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faces a critical test on its reforms. we have the details later, but after the short break, we hear from economist expecting global growth to accelerate this year. we will join you when asia edge returns.
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rishaad: prime minister of india unveils the new budget of the government. angie: india should offer some interesting opportunities. joins us inhompson the studio. what do you mean by that question where -- by that? [laughter] course turnedof out to be a cultivator of personality and has perhaps
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disappointed in terms of being ineffective bridge builder. if you want to reform a conflicted country such as india, you need supreme diplomatic skills. we would like to see more about come up -- more of that, frankly. rishaad: many people have been lolling some the efforts to try and cut red tape. marie: yes, but the big reforms, the land reform and the national vat, he has stalled on those. rishaad: goods and services taxes are in the pipe for years, i think. marie: they are. won with a large majority but failed to capture the upper house. -- hass come his scuttled his chances. he has made a lot of enemies instead of focusing on bridge building.
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given the large majority, the fact that he has difficulty sitting reforms through is a big concern. you would think that if anyone should be able to succeed, it ought who have been him. angie: that matter if you cannot get the deficit under control? marie: no, and these are the two big issues. they have been greatly helped by the low oil prices. i would like to stress how important this for the oil importers that the oil price is this low. if we had not had oil at this have been closer to those payment crisis is -- payment prices than we are today. rishaad: the important thing is bringing that down. marie: absolutely. it speaks to the incapacity on the political side not only in india but as part of the world
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as a whole. the political leadership is offset thanks to the lower price. it really wants to stress the beneficial impact of the low oil price. rishaad angie: that's a concern for in the second half of the year the oil prices rise. it could go as high as $60? marie: that's the consensus. it could go higher. necessarilythat's not the goal, but it is thought it will rise. yes, and the most important thing for the financial market at the moment will be that it stabilizes. the thing that we don't like is large, sudden moves. that's the problem, not necessarily the level. we can adjust anything as long as it moves gradually. you really pressing on
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the rule side of things. you have got to have economy which is holding to the weather, the months and every year. you have to invest there in the infrastructure, in the agricultural side of the economy. that has a more powerful multiplier effect in the investment elsewhere. marie: that is absolutely true and i agree. we are obviously still like ants on the surface of this planet, being so beholden to the weather. clearly, the two droughts have thwarted a lot of efforts that could have given more positive results. looking at agriculturist hole, we have had -- at agriculture as a whole, we have had dropping food prices. this is a positive piece of news. angie: we will get back to you
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in 20 minutes to talk about the economy and the pressures there. ♪ is 11:20 in hong kong. these of the stories making headlines. the un security council is discussing new north korea sanctions after china indicated it will support them. beijing's north korean envoy says china would back any plant to promote stability. but the yuan is debating resolution over the recent rocket launch. this could block all ship sailing to and from north korea, a ban on mineral exports, and travel restrictions. -- is facing revolt against a possible move to let her become head of state. reports say that hundreds of buddhist nationalists protest against amending part of the constitution to bar her from the presidency. article 59 outlaws anyone with
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foreign families to achieve the post. she has been negotiating with the army to repeal or suspend the clause. ireland is facing the prospect of a so-called "great alliance." the general election left no party with a majority. they will have to negotiate a coalition with other parties, potentially. government had a huge loss of support when voters -- with voters angry at spending cuts. this is bloomberg news. i am shery ahn. after months of tour more -- of turmoil, new moves in malaysia. rishaad: the latest after this.
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angie: the prime minister of malaysia has tightened his grip on power suspending the second in command of his ruling party. correspondent -- let us bring in our correspondent. how is the story here? was deputysuspended prime minister before he was .ired he has been suspended for "undermining the party and the constitution." about two hours before making that call, as you know, muh for -- to calling
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step down. he is chairman of the fun. there are questions about local donations, money trails, to his personal bank account. najib has removed all that have spoken out against them. his attorney general appointed by the government found no criminal offense. what about recent developments. how secure is najib? has: does seem like najib estes position -- has coalesced his position. critics have been silenced.
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he is stronger than before. we are going to get the latest for you on japan's reopening after the short break. stay with us, you are watching asia eddge.
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>> you are watching "asia edge", top stories, shares in shanghai have plunged. investors disappointed by the g-20 meeting. commodity producers and tech companies leading the way down. markets inside china are delivering. will present his third budget this afternoon, and
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advisor said it's time to review fiscal deficit targets. inflation of around 4.5% to 5% projected. pay rise for government workers and moves to shore up infrastructure. foxconnading lower with weighing a possible revision of a takeover deal. weekend tryinge to sellers the $6 billion bill. foxconn delayed after learning of new sharp liabilities that could exceed $2.6 billion. let's get the latest from the markets right now. looks like a mixed bag in terms of the asia-pacific, 3.4%,ai stocks a loss of the hang seng down a must 1%. gaining more momentum, 7/10 of 1% up in tokyo. australian stocks holding gains, 4/10 of 1%.
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let's talk about the stronger yen, some strength today. it snapped three days of declines, but we continue to see that gap widened when it comes to the forecast, some projecting weaknessyen, and some -- strength this, i should say. -- strength, i should say. falling 17%, one of the biggest laggards on the index after the company considering rebuilding five apartment buildings. kumagai gumi saying they will
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rebuild complexes, and that one complex was also sold, so those two stocks under pressure. 2.6%, the carmaker will stop producing and developing minivans and using that freed up resources to build suvs, which have a more global appeal. it has been pretty volatile today. and coastal bank announcing buybacks, some big moves here. , but we areo 2% of seeing a lot of headlines out , aay, but overall japan
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mixed picture in terms of the data coming out with industrial production rebounding, but retail sales were falling today, economists were expecting again. some of the exporters falling just a bit as well. story, ging to our top 20 finance ministers and do more to boost global growth and central banks must take a step back. we have our chief asia economics or correspondent -- economics correspondent here. what did leaders on agree specifically? disagreed morey than agreed, but an emerging consensus that central banks can't do it all. they've gone into on orthodox policy areas, and they have to do more to lower spending, structural reforms that take a long time, but it sends a
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message. how do you enforce this type of g-20 communiqué. the structural reform is a domestic political thing that requires the support of armaments. -- support of parliaments. >> kenzie is in versus non-kins -- politically, monetary policy is very easy, right? fiscal policy is very hard. who will fund that? >> and structural reform. home to youro domestic audience and tell people that we want to borrow more and increase debt, or we want to do this kind of reform and make you work longer for less, and there is not any political appetite. the view now is that you have got to do this stuff or we will
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not get that rev up in growth the world needs. >> was the meeting a success for china? >> yes, on the whole, in terms of the message of stability and articulation of what they are doing with exchange rates. they said that we are not out here for competitive devaluation , but do expect volatility on the yuan. i think they ticked those boxes. there was another sideshow, the narrative was china, exchange rates, but in fact there was attention on japan. japan coming in for scrutiny with their shock move to go negative with for interest rates . overall take away from you and other economists out there? message was the world is in a slowing condition. things aren't great. , butll the mood is subdued
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perhaps markets have overstated a worsening. the fundamentals are better than what the market pricing is suggesting. whetheret is not yet has to be a global push to improve growth. i would say worries, but no crisis yet. >> a good place to be in to give us some time to act. rishaad: let's stay with the g-20 and the attempt to implement social -- structural reforms. it is somewhat overuse, that phrase "structural reforms." ifyou can't blame critics they don't have a solution for anything. whenever we have these meetings, structural reforms does take center stage. the finance minister of china said the g-20's focus on structural reform is unprecedented. in fact, the use of that phrase seemingly also unprecedented.
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we talked to a lot of people over the weekend, good insights, and guess what came up? >> week, out of here saying we need to boost growth, we need to have appropriate fiscal and monetary policies. again, different countries at different stages. and, we need to focus on structural reform. commodity producing countries, oil exporting countries, and also -- and each one of them needs to do another reform in order -- structural reform in order to accelerate economic growth. isthe only area where there profound agreement is that the structural reform is the key element. it will be the real instrument. ok, on the bloomberg there is a way you can track how many times a certain phrase or word was mentioned in news articles.
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it also gives you a sense of what people are talking about out there. keyword, date range, and come up with something like this. i put "structural reforms" in and here we go. bit whenome up quite a policy makers gather in one place to talk about solutions to the world's problems. -- this spike was mentions the g-20, 120 in news articles tracked by bloomberg, not just bloomberg. the last time we were close to june,levels was back in guess what happened then? that was during the crash of markets in china, and people started to talk about the underlying reason. we need structural reforms. let's in the on this. there's a reason why were also getting a lot of mentions, part of the official g-20 communiqué.
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let me quote them on this. there we go. on your screens. at the moment, #oscars, but it should also be #structuralrefor ms. rishaad: thank you much -- so much there. wrapping up the g 20 meeting in shanghai, done and dusted, but the economic focused as with china, beijing leaders take a crucial -- face a crucial test of policy reform. we have a preview for you right now. the policymakers seem to have calmed the volatility and the market right now, but there is still a lot of work here. >> you can tell the reaction on the chinese markets today, china's bravado speech impacting
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quickly. get #structuralreforms trending. this is the biggest and most challenging thing that chinese policymakers have promised to do , but also one of the most difficult aspects of what they need to do in terms of balancing these painful structural reforms, but also not at the expense of us having a moderate to high level of growth, which they have promised to have. we are expecting they were open up proceedings. the prime minister will go through the work report for 2016 end up back at the year, touching on everything from economic growth to health issues aneducation, and also gives indication of what fiscal measures we can expect. we notify minutes minister on friday gave an indication that policymakers will be looking stimulus asal opposed to monetary stimulus, because they are running out of room after six interest rate cuts.
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given the downward pressures on currency, capital outflows of individuals and corporations, freaking out about where the market is going, getting money out of the country, but this comes at an unprecedented time of challenges for china growth, the slowest in 25 years. the inflation and traditional drivers of growth, industry, manufacturing, all of this is slowing and the new growth driver is consumption, technology, they're not catching up quickly enough to take over. >> the past couple of months is evidence that you are dammed if you do or dammed if you don't. it will be interesting to see what they can do when it comes to these pledges that have to deal with the overcapacity and industrial sectors, mining, coal. we've had estimates of a 10% reduction in the sectors resulting in millions of jobs being cut, so they will have to balance that. >> thank you for that. rishaad: let's check on some
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stories were following during citigroup and paroled in the corruption inquiry, suspended -- subpoena by the u.s. attorney regarding its role in bribes taken by officials in fifa. the u.s. claims that bribe money pass through a number of big banks, including citibank and j.p. morgan. the indictment does not accuse them of wrongdoing. the man who controls godzilla is going after mickey mouse. the chinese billionaire planning to spend more than $3 billion on a retail and leisure project outside of paris could europa city will include a theme park, hotel, shopping, conference centers. he has set his sight on dating disney in the themepark business, his second major deal this year alone. in january, he agreed to by legendary entertainment for $3.5 billion.
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largest budget airline sees good weather ahead, taking delivery of new planes over the next year. airbuswill pick up 24 airplanes by march of next year. fourth quarter capacity will rise by 19% year on year, while revenue will increase 6% to 8%. up, we are discussing structural reform with our next guest. which countries appeared to be leading the way in bringing about change. is back into.
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>> welcome back. it is 11:45 a.m. in hong kong. these are the stories making headlines around the world. winter playing havoc with lights in japan. at least 27 domestic flights canceled today because of heavy snow and driving wind.
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almost 2200 passengers affected. is worse off, canceling 73 flights today with more than 6500 people unable to travel. reformists and moderate candidates have won all 30 parliamentary seats and to run in a sweeping victory for president hassan rouhani. the results follow a high , anout in the capital referendum on iran's nuclear deal with world powers. reform is coalition also has an early eat in a separate vote for the assembly, a senior clerical body that selects iran's supreme leader. spacex forced to abort the latest launch of falcon nine rocket at the very last moment. ae mission plan to place satellite into orbit and then attempt again to land the booster on a floating barge. it failed on three previous attempts, and elon musk was playing down expectations of
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success. it is not clear when they may try to launch again. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. >> welcome back. now here in hong kong, chief economist indosuez wealth management, marie owens thomsen. >> any other countries quite there yet? >> it is hard for people to imagine what it might contain. the two structural reforms in every country is to liberalize the service sector, and second of all, get the 330 million young people who are not in work
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, they need gainful employment. that would be too successful structural reforms. >>? how many years are we going to talk about this? this has been the focus since the eurozone crisis. the rationale for the exceptional monetary policies we have had is to open a window for the governments to undertake structural reform. when they don't do that, we leave the window open for too long and we might all caps called. rishaad: what changed here? this financial crisis, 'main role was to control and contain inflation. would you believe if somebody told you in 2006 that 10 years from now their job would be to create inflation? it seems absurd, does it not? absurd.nk that is
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that is an absurd monetary policy goal. in what universe doesn't make sense to target higher inflation when you are -- your actualization is below target? the only thing that happens when you do that is you grow real wage gains. this is not a clever policy. it is clever only for those who are invested, because it makes it easier to repay the debt. float your data way, the cost of services? >> if you have to use that policy to deal with your debt it is because your governments are not capable of taking the decision that would lift growth, which would make it easier to pay back that debt. >> it seems that for a while we t ofthat sweet spo optimism, particularly in asia, a political appetite for reforms. has that window closed? >> i think the appetite is
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there, but obviously the political trend we are seeing that is quite disturbing is that the majority for any sitting .overnment tends to shrink we have done a cross-country study of this. it is almost universal, this tendency for smaller majorities. smaller majorities mean less legislative capacity. example,is a prime right? since 2010, there have been virtually no legislative capacity in the u.s., so this is shared by brazil and india as well. that is indeed a disturbing trend. >> it is ironic in that sense when we talk about it. when times are good, that's when you're supposed to act reforms. when it is bad, it is unpopular to do so. rishaad: fix the roof while the sun is shining. beene countries of not able to do that, specially when were looking at some much
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downside in the global economy. >> real political leadership seems to be scarce, doesn't it? only onerkel is the on such are to take road when she says that we need to let all these refugees in. leader a real political who looks outside of her own self-interest and outside of the short-term gains and looks to the long-term structural issues. unfortunately, there are not that many politicians of her caliber around. >> which countries are poised most to gain if they and ask structural reform? >> all are. transformedthat has into a service economy. we are no longer industrialized good we have 64% of world gdp and services over 48% in china compared to some 43% for
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manufacturing, and of course in countries such as the u.s., service sector is in excess of 80%. services are so huge, as donald trump might say, that this is clearly where structural reform would give the highest rate of return. the tpp, the transpacific could lift gdp and those countries concerned by probably 0.3 percentage points annually. it doesn't sound like a lot, but it makes the difference between 2.3% and 2.5%, so it is a significant axis of lifting the potential growth rate. >> we are very glad to have you here on her show today. thank you for joining us. that is indosuez wealth management chief economist there. we have been asking our guests to predict what is in store. find out what they have to say
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when powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. returns. ♪
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>> india and the spotlight later with the announcement of the latest budget. growth might be better next year as long as we don't have another drought. we are looking for concrete capitalization measures, concret e discussion of goods and forices, and support farmers in india. rishaad: she is looking for on how signs india plans to revive the economy. >> they have to come up with of addressing infrastructure spend in terms of
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irrigation and roads, not just urban infrastructure, but rural infrastructure. also protecting farmers, crop insurance schemes, so we think that will be in focus, but when you look at investor portfolios, it's about improving sentiment. theus, recapitalization of private sector banks will have an impact. >> what can be done to help boost private investment? on the nonperforming assets side, it is about supporting growth while they go through that process. mention, some incentives for the private sector to invest and take advantage of some of the red tape that has already been removed, that could be something that boosts confidence, but i'm not so sure it is something that can be solved in this fiscal year. it is something that will be a challenge over the next couple of years, because as soon as you , it written off bad debt
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takes a while before they start to get a lot more aggressive again and start lending and being more willing to take risks with these investment plans. >> that was the word on india. rishaad: you can catch the indian budget right here on bloomberg. we will bring you arun jaitley's live. ourou don't want to miss special show at 1:00 p.m. hong kong time. marketske a look at the before we go. two weeks of gains for asia, but this is how were looking now. torrid time when it comes to the shanghai composite. looking at that one as we head towards the launch break come off by 1%, the shanghai composite. the news for japan -- >> we are seeing gains, nikkei kospi,her, also gains in
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also gains out of japan. rishaad: there we have it. asia-pacific on the way up, minas chided.
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