tv First Up With Angie Lau Bloomberg May 8, 2016 7:00pm-9:01pm EDT
>> filipinos go to the polls today. for continuity or change from manila? ."gie: welcome to "first up i am angie lau. let's check in on the markets in the asia-pacific. new zealand, we are seeing losses of one third of 1%, but it's a stronger new zealand dollar at $.68 after china's exports show signs of stability. we're counting down to the open in australia and japan. futures in australia, pointing slower open.ally let's get over to japan, checking futures trading in chicago, pointing to a higher open, this after the nikkei 225 came back in the red after a three-day holiday. it was a -- it was one quarter
of 1% down. we've got the japanese yen weakening. of course, no trading in the philippines because it is election day. the latest trade and foreign exchange data from china point to more stabilization, but signs are modest. we've got stephen engle going through the numbers. stephen: it's modest at best definitely. it's not a huge recovery. the numbers are not falling off the cliff like they used to be. we need to break it out into yuan terms and dollar terms. the exports were up in yuan terms but down in dollar terms because the depreciation in the yuan has flattened out the gains. there's exports in your wand terms. march was an aberration. you are coming after the lunar new year holiday. trade is extremely distorted. we look at april to get a clear sign a stabilization, and yes, in yuan terms, up 4.1%.
let's change the page. in u.s. dollar terms, it was again back down. the yuan depreciated against the dollar. they had the revaluation in august, and the overall trend has been depreciation. the recovery, we could say, is tepid at best. the chinese leadership is not looking at exports. ng therd from li keqia estate -- via state media. measures should target increasing employment and income. let's look at imports, because that is a very good snapshot of domestic demand. it continues to go down. terms. in you one 18 months in a row, down for imports. this should be 1.7. this chart is not doing me very good favors. it should be about here. 5.7% down. changes in dollar terms, similar
picture, down 10.9% in dollar terms. import domestic demand, still week. angie: what about china foreign reserves? stephen: this is the first time since june of 2014 that the fx reserves increased. you know they have been coming off a high of $3.9 trillion. we had the revaluation, in august, and subsequent month of mixed signals from the pbocterms. import domestic demand, still week. angie: what about china foreign reserves? and chinese authorities. the outflow surge at the end of last year, and you saw the reserves dwindle. 3.22. barely, ok? it's an interesting trend. there seems to be some confidence in the one -- yuan. let's look at the dollar-yuan. that is unchanged so far this year. buts as flat as a pancake,
this is kind of a veneer. it's kind of a fall stability in the yuan. look at it versus the trade-weighted basket of the 13 biggest trading partners, and you can see how the yuan is depreciating year to date. angie: stephen engle, thanks for that. pulling is underway in the philippines with voters choosing a new president as well as lawmakers at national and local levels. the focus is on the presidency, and the selection is our giggly the most important in 30 years. haslinda amin is standing by for us in manila. what is the mood like where you are? : there is a sense of apprehension, even trepidation and uncertainty. city, aalked around the lot of people said they were under start -- undecided, and you can understand why. it's a desperate list of candidates. leading the polls, we have
duterte, and men who says if he will become president, he will kill criminals and leave them in the bay of manila. he is seen as being a vigil on take, renegade leader. do we want a president of that nature? also among the candidates, grace poe, a senator in her first term who is seen as being an inexperienced leader when it comes to executive powers, executive decisions. she is not without controversy either. she has spent most of her adult life in the u.s. she even gave up her filipino citizenship to be a u.s. citizen, and that has been in question, although she has been cleared by courts to run. when it comes to philippine elections, it's more about personality as opposed to policies, and there is a sense of a rejection of the usual
leadership. people here are tired. even though the country has seen 6% growth in the last six years, when it comes to wealth, it has been uneven distribution, and many people have not benefited from the growth. more about personality rather than policy. angie: there is a lot at stake here with this election. what is the significance? more importantly, what is at stake is the economy. 6% growth, and economy that has gone from junk rating to investment grade, and ihs recently said this is an economy which has the potential to be a $1 trillion economy by 2030, but there are many challenges. 26% of the nation still lives below the poverty line.
when it comes to ease of doing business, it's not doing too well. , theut of 193 nations worst in all of southeast asia. despite a young population, those from 18 to 34, they form the majority of the voters today . ,espite the young population there is a lot of potential, but that potential has yet to be materialized. it will take a good leader to maximize those opportunities. haslinda amin in live for us, good morning, as the philippines gets to the polls. we are going to be live in manila throughout the morning for insights on the crucial election. richard haight darian from dale lasalle university will be joining us in 30 minutes.
to30 minutes, we will speak john forbes from the american chamber of commerce in the philippines.in "trending business ," we're going to hear from first grade holdings president. checking other headlines for you in asia, australia is officially in campaign mode, entering its longest campaign since the 1960's. voters will go to the polls on july 2 after malcolm turnbull called an election seven months after seizing power in a liberal party coup. the former investment banker is looking to stamp his authority on the leadership in a cycle, which has seen australia churned through six prime ministers in a few years. the new rba governor won't have long to settle in. inwill succeed glenn stevens september, and jpmorgan says he
may have to cut rates to 1% or less in his first three months after the rba admitted it will miss the bottom of its core inflation target this year. the commonwealth bank of australia has declared on unaudited third quarter cash profit of 2.3 billion aussie dollars. that is $1.7 billion. the bank joined its competitors in reporting higher changes -- charges for bad or doubtful debt. the debt charges rose to 427 million aussie dollars from 256 million a year earlier. hasgreek government says it enough support among lawmakers to approve pension and income 6.2reforms as part of a billion dollar package to secure further aid from the imf. parliament debated the issue the day before finance ministers are set to review the status of the bailout. they are going to consider whether to release the second
installment of the $90 billion rescue package following a six-month delay. crude is on the rise this morning on the back of fires cutting protection in canada and the announcement of the new oil minister in saudi arabia.brent crude oil , $46.21 per barrel. the new oil minister says he intends to maintain policy to defend market share. we've got stephen stich and ski joining us from tokyo. what does this say about the prospects of a production freeze? steven: he is going to be keeping with the current policy saudi arabia has held for the last few months. the freeze will be unlikely unless iran joins. if things continue as they have for the last few weeks, a freeze most likely won't be happening anytime in the near future. that being said, over the thatnd, iran signaled
their production was hitting where they would like to see it. from analysts i have been talking to, they think perhaps ath a fresh face, there is slight or chance for a freeze during negotiations with iran. if you look at what the new minister has been saying and the has hoarded arabia the last few months, to say there will be a freeze one way or the other is difficult this early on. angie: at these prices, is a freeze even necessary? stephen: that's a really good point. it seems that the market has aready accepted that perhaps freeze isn't necessary, and saudi arabia's strategy, which is pushing production higher, might be good for the market. looking at itare is, the higher saudi arabia
pushes production, that means non-opec numbers -- members like shell producers in the u.s. cut production. that cut in u.s. production this year, the iaea expects the united states will cut 700,000 barrels, and that could be bullish news for the market if it comes to fruition. perhaps the market doesn't need a freeze, and we might be in a post-freeze sort of era with opec and saudi arabia especially taking more of the market share. angie: thank you so much for that. coming up, our next guest sees globalof further volatility this year. we are going to be live in melbourne to hear from the chief economist coming up next. ♪
p.m. in the prairies of canada. wildfires in canada's oilsands region have knocked out more than one billion barrels a day of production and are threatening to spread to neighboring saskatchewan. at least 80,000 people have left their homes in the town of fort mcmurray, further damaging an economy suffering from cheap oil. canada's biggest energy company, suncor and others, including phillips 66, have pulled workers out of the area. north korean leader kim jong-un said the party congress he would not order a nuclear first strike. he told delegates that the north was a responsible state and would use only weapons if attacked. kim a five-your economic plan, north korea's first since the 1980's. it's intended to revive a stagnant economy and improve manufacturing. it also calls for better relations with the outside world. reports from india say authorities have asked interpol
to issue notices for the rest of -- [indiscernible] he's living in the u k and is said to own about one point $4 million connected to his defunct airline. india has asked the british government tount extradite him. powered by overturning 400 journalists in 150 bureaus around the world, this is bloomberg news. key eventsa look at that may drive asian markets this week p rejoining us from melbourne's alan off to her, chief economist at now. are these signs of stability, or are we still on shaky ground? alan: i think there are signs of stability. this week, we got the inflation numbers, and we are so it is
-0.2 and said of -0.4. what you are starting to see is sort of a bottoming off, particularly in the secondary industry. pmi'sof the pm eyes -- don't look great, but at the end of the day, i would say the idea that china would get something like 6.5% is probably right. you will need some more stimulus, and the chinese come if you look at it in terms of their credit numbers, they are up around 40%. angie: the recent data, the exports and the foreign reserves also indicate that it is the rmb helpedty, the weaker rmb boost the export number. alan: yeah, that's right. careful.to be really what it is really saying is if you look at it in terms of u.s. dollar terms, it is slightly
down, but generally, you are seeing it is contributing little bit to growth. also, there is probably some net outflow. hadink the idea that people 3-6 months ago that china was about to fall through the cracks is probably settling down a bit. it's not great, but china is still the largest economy in the world, and it is still traveling north of 6%. that's not terrible. if you are a miner or relying on commodities, this secondary market in the chinese economy is very weak. angie: speaking of minors for australia, this has contributed to that low inflation gauge that stoke the rba to action. will we see more of this? alan: i think what really happened is you had a core inflation number, both in quarterly and 12 month terms, radically different from what we were expecting.
it is at 1.5% over the last 12 months. we haven't seen a number like that basically since 1983 when we first started to collect the data. two things happened. number one, wages haven't increased much at all. in real terms, they are going sideways even though the economy is doing well and unemployment is coming down. over the last few months, as the australian dollar went down, you didn't see any pass through. going forward, you are going to get something like 1.5, 1.75 by the end of this year. as au are targeting central bank, you have to do something, which is why we changed our view last week, and now the markets have priced in one.er i think they will wait and see. i don't think the first live meeting is probably until
august, and the reason you wait for august is you get your next reading for the cpi or inflation numbers at the end of july. it could well be that this quarterly movement we had last time was a rogue number, but i think it is 50-50 at this stage whether you would cut again. angie: inflation, deflation, whatever you want to call it, that is what they are facing, and we are also going to see what kind of talks happened in the march meeting when they released their meeting minutes at 7:50. what will you be watching for? alan: we actually were expecting and cutuse some more qe their rates again. we will be looking to see why they didn't do it. we think the economy is really struggling. we will just wait and see. 50-50, but we did think they would give some more stimulus, and we think
ultimately they will give more stimulus in the months ahead, although the timing is difficult, and that is what you will be looking in the minutes to see. angie: it surprised a lot of people. what do you think of the global tone of the markets right now? the markets globally are much more settled than they were at the beginning of the year. basically when i look at growth momentum, what i am seeing is an economy globally that is not getting any worse but is not getting any better. roundabout 2.75%. we are significantly lower than the imf, which said 3.25%. we are more bearish. we are not seeing any sign of an increase in momentum. the international organizations have still got to raise -- r osy-colored glasses in terms of
angie: welcome back. you are watching "first up." australia is officially in election mode, entering its lungs campaign in decades. the vote will see all seats in both houses of parliament up for grabs for the first time in 30 years. let's get over to paul allen in sydney. if the prime minister had called this vote a few months ago, the government probably would have had a sure bet for election, but now it's much closer. that's right, angie. when malcolm turnbull took the
job of tony abbott last september, voters had high hopes for what he might achieve, but none of it eventuated. a former prime minister said political capital eventually goes, so you have to make sure you spend it on something worthwhile. malcolm turnbull never really spent his at all on the promised reforms were any economic measures he sought to bring in. to be fair, it was going to be pretty difficult, because the senate is dominated by micro parties. it's hard to pass legislation. now.is why we have this both houses are up for grabs, and the hopes is the coalition would retake the government, and hopefully this time, with a more compliant senate. that is the theory anyway. angie: what of the latest opinion polls? paul: it's 50-50 if you look at the opinion polls, but that doesn't really paint the picture for you.
the system isn't proportional. school first past the post. you have to win it seat by seat. take a look at this chart, and it illustrates the struggle the opposition labor party faces. they need to win at least 19 seats to regain the government, and you have to ask yourself, are there 19 marginal seats in the country? that's going to be tough. despite all the problems, malcolm turnbull remains politically very popular when compared to the opposition leader bill shorten. bill shorten was involved in the downfalls of both former prime ministers kevin rudd and his successor julia gillard. be government doubtless will reminding voters of his history, but we will be hearing much more about that over the next 55 days. by australian standards, that's a very long election campaign. it is the longest since 1966. angie: you are going to have fun, paul. coming up, digging deep.
angie:angie: it is 8:30 and tokyo, and in 20 minutes from now, we are going to find out what policymakers at the boj when they kept rates unchanged, no stimulus, and surprise the world. we are 30 minutes away from the open of trading there, south korea, and australia. you are watching "first up. "china is showing signs of stabilization after its first back-to-back in in foreign reserves in two years. exports rose modestly in yuan terms despite falling in dollar terms.
april's numbers follow a much more promising set of data whent rates unchanged, no stimulus, and surprise the world. in march, which were likely exaggerated by the lunar new year holiday. polls are open in the philippines, as 50 million voters vote for a new president as well as officials at national and local levels. the presidential favorite is rodrigo duterte with three's and surveys giving him 33% of the vote ahead of senator grace poe. duterte's tough stance on crime has been criticized by human rights groups. arabia's oil minister says he will maintain the kingdom's oil policy and key production at near record levels to defend market share. the chairman of saudi aramco will succeed the veteran who led the kingdom's oil policy for 21 years. despite crude prices being held
down, saudi arabia could exceed its record output. powered by over 2400 journalists in 150 bureaus around the world, this is bloomberg news. let's check in on markets in the asia-pacific. we've got new zealand shares down one third of 1%. happened after foreign reserves in china grew back to back for the first time in a long time. we are also counting down to the opens in australia and korea. futures in australia, looking like this, dropping about 20 points. a stronger aussie dollar, as well. let's go over to japan, checking futures trading in chicago, pointing to a higher open, and that weaker yen helping to boost that sentiment. we are also going to wait for the boj minutes. that comes out about 10 minutes ahead of the open there, so the
markets will be able to react to that. up itsrabia has shaken cabinet, naming a new central banker and oil minister. the news was a lift for investors, ending the worst street for gulf stocks in two months. we've got juliette saly watching this story. it seems that the markets finally agreed that saudi is making efforts to reduce its dependence on oil to. stocks in the gulf cooperation council ended their longest losing streak since march. if you look at this index, you can see that stocks were actually up by 0.4% on front -- on sunday. that was ending their longest losing streak. they had been down for six sessions in a row, their longest losing streak since march. we saw a re-add-based stocks leading the charge saudi industries,, saudi
the biggest gainers. if we have a look at another share index in saudi arabia, it rose by as much as 1.2% during sunday's trade before losing some of that momentum and closing 2/10 of one thing percent higher. that was actually its second session. 112 stocks closed higher. during the intraday session, you can see there was that big gain, up by as much as 1.2%. you can also see why investors appear to be happy that there has finally been some move coming through from saudi arabia, that they appear to be walking the walk, not just talking the talk. this chart actually shows how correlateudi stocks with the oil price. the blue line is the crude brent price. you can see that they very much have been tracking one another. this is since the start of the
year, and they are basically in close correlation. analysts we have spoken to welcome this change in cabinet, saying the new minister who is will aramco's chairman allow saudi arabia to tap into more its mineral resources and not just depend on oil. there were more than 50 royal decrees issued over the weekend. this boosted markets around the middle east, and dubai stocks posted their first gain in seven sessions. some good gains coming through in saudi arabia, but also around the gcc. angie: thanks so much. rise is creating quite a headache for japanese policymakers, but one indicator suggests it could soon reverse course. hasn's bond buying program blown the monetary base out to levels that some investors say can only lead to yen weakness. we've got haidi lun here for a closer look. has gone know that boj
on this massive monetary expansion plan with this record bond-buying purchase, and it is starting to be felt when you look at the monetary supply. toan's money supply is close overtaking the u.s. in some sense, this is building up to be a signal for yen weakness, and we know this relentlessly strong yen trajectory, it still up 11 byng 1% against the dollar. this has been a headache for kuroda. this is what we are looking at. we are calling this the soros chart. george soros in 1996 did predict that if you had this kind of extraordinary monetary base expansion, what you are going to see, he said, was two years of yen weakness. 1998, we had the yen tumbling against the dollar. the white line here is japan
versus the u.s. monetary base ratio, which had been moving in quite an extra in a way as the boj continues to go on these bond-buying purchases. we are looking at the possibility it could outstrip the u.s. monetary base as soon as this month. gdp.already 77% of nominal that is up 31% from one kuroda started stimulus -- when kuroda started stimulus. we heard from the chief investment officer for japan at ubs, and he said, we are looking at yen strength at the moment, but given this expanding monetary base, it's hard to imagine we won't see a weaker yen. he also said the boj is doing everything it can. all of this depends on what happens to the dollar. we were hoping for big beat in nonfarm payrolls friday, didn't get that. that divergence in monetary policy needs to happen for the yen to start coming down. at least it's probably
staying on hold for the federal rate rise -- at least that's the speculation. rio tinto's is taking a long-term view of copper as it launches a $5 billion pension to its massive mine in mongolia. rio says output will increase in four years time when the copper market is expected to be in deficit. had a checkered recent history with its expansion hit by a series of delays. julie avatar reports on the mine's importance to the country's prospects. julie: there was a time not too long ago when it seemed this moment might never happen. now memories of delays, disagreements, and deadlocks have been swept aside. work to unlock the lion share of the value is set to start within months. rio's ceo acknowledged it had been an effort to get to this point. >> this marks the culmination of
many, many years of hard work, some blood, some sweat, and maybe a few tears. julie: this was a largely symbolic event. mongolia's prime minister assured those gathered that the project's problems were firmly in the past. the ultimateee is business project starting today. this project will no longer be a target applicable rhetoric but will be a begin of mongolia's growth. : it's by far the biggest project ever undertaken in mongolia. the imports of the mine in the country's economy cannot be overstated. the multibillion-dollar expansion is also a huge bet on the long-term prospects of copper. >> the long-term needs for copper remain strong. expected to start when copper markets will be in deficit, which is a good piece of news. >> around the middle of the next
decade, the mine is expected to produce more than 500,000 tons of copper a year. that would make it the third-largest copper mine in the world. i think it's a very important opportunity for rio tinto to expand their presence in copper .nd begin to minimize coulde complete, the mine account for almost one third of mongolia's gdp, but that is a long way away for a country facing challenges. bloomberg tv, mongolia. angie: let's get more on this with bloomberg's david stringer. david, how significant will this expansion be on a global scale, and how important is it to rio? good morning.
as you have heard, it really is a huge and significant project for rio tinto. work will begin on this underground expansion of the mine. work on that expansion will begin at the end of this year. by 2027, the mine should rank as the third-largest copper mine in the world, second only to the ands of escondido in chile grasp are in indonesia. rio tinto is for they joint ventures on both of those mines, as well. copper is seen as final for the future of growth for rio tinto. as we heard in that package, currently iron ore is their top earner. it accounted for about 60% of earnings in the last four years. with iron ore, prices are expected to stagnate. they are looking at materials like copper to be a real driver for growth. .hey are looking at materials
whatopper in particular, the equation is for rio, they see long-term demand from things like power grid utilization across asia, and they see demand being driven by the growing middle classes across the emerging economies as people want things like washing machines and air conditioners. that is great news for copper. those appliances need plenty of metal. that is the kind of demand that rio sees the mine able to help. angie: china's imports fell last month, and the metal side's biggest weekly lost since 2014 last week. david: i guess this is what you mean by a countercyclical investment. copper producers, companies like rio, they are very up front.
they see copper being in surplus for the next couple of years, and that will continue to weigh on prices. copper had a-- terrible week last week. data showed that chinese numbers decreased in april. it's all about the long-term story. demand will is that rise that will be added to by dwindling supply from these aging mega-mines across south america, as it gets harder to exploit those mines with a lack of new projects. the supply-side will contract, and the likes of rio, freeport, and other huge copper producers, they see the copper market back into deficit. what rio thinks is that the mine will be perfectly placed to meet that supply deficit. angie: david stringer, thanks for that. let's take a look at what else we are following for you this morning. here is stephen engle. stephen: honda may pullback more than 20 million cars globally as the fallout from the lethal
airbags scandal widens. says honda isws" planning additional recalls that could cost $2 billion, and that follows takata being order to replace 40 million devices. the japanese government is making home visits and will start a direct mail campaign to urge car owners to have their vehicles fixed. toshiba's next president will come from within the company despite the fallout from its accounting scandal. the current vice president will replace the interim leader after a shareholders meeting in moon -- in june. adr, tumbling 4% on the news. singapore's biggest banks could join forces to combat money laundering. they are considering sharing information on perspective clients at a newly traded registry. the banks would use the information when deciding
whether to approve new applications for accounts. singapore froze several bank accounts in an investigation into malaysia's estate fund. disney's new shanghai theme park is proving popular even before its official opening. the company held a trial run ahead of next month's launch and pulled and thousands of fans. disney kicked off some operations for a limited number of guests ahead of the park's june 16 opening. it's hoping the $5 billion resort will help you tap into china's growing middle class. that was a look at some of the stories making headlines. i am stephen engle. angie: coming up, 54 million voters head to the polls as the philippines chooses a new leader. we are going to discuss the issues at stake. that's coming up. ♪
we've got our southeast asian correspondent haslinda amin in manila. haslinda: a country at a crossroads. will decidepeople on a president to lead the country for the next six years. at stake, a 6% gdp. whether or not the company -- country builds on that momentum. .et's get insight from richard there is a sense that there's a growing antiestablishment sentiment among the voters. what is your take? richard: if you look at the breakdown of the vote, 30% is going for the protest vote, and this is embodied by the support duterte.mayor if you look at the reform voters, it's basically 40% split between two candidates. it would be an exaggeration to say the whole electorate is in
an antiestablishment mode. you only need to get 20% or 30% of a protest vote to have a completely different result. duterte has been leading in terms of the popularity polls. will that translate to actual votes? the last survey put him in a double digits lead over other candidates. the challenge for duterte to translate the excitement he got on the campaign trail to actual votes, turnout is a big issue. if you look at him, one of his is that 60% to 80% of people are willing to vote for him. machinery is another issue. other candidates have better machinery. there's also the possibility that a lot of people are sick --
, butxcited about duterte come election day, they might change to another candidate. grace poe is the best person who can benefit from a last-minute change among the duterte su pporters and others. lead may not1% necessarily translate to a victory. angie: needless to say , duterte has been controversial. he is a self-confessed womanizer, self-confessed killer. is there a sense he could rein in those views if he becomes president? >> there is a pragmatic streak in duterte. i'm going to be president, i am going to put the best advisors around me. in the third presidential debate, we saw a more pragmatic person. the concern for a lot of people is, he had 20 years of experience as a manager.
he will not be able to do that president. if he does the same micromanaging type of governance, that might be a recipe for disaster. there is a perception, especially among the current president, that he is a dictator in the making. maybe that perception has no basis in reality, but the fact that there is such a perception, that means the counter-duterte movement is already growing, and that may create a chain reaction. i don't think that necessarily bodes well. haslinda: there is a lot of speculation that there could be violence should he come to power. are there valid reasons to believe in that? >> without a doubt, this has been the most polarized election in the philippines in recent history. the ideological war is extreme between the current establishment and the duterte camp. does not is if duterte
win this election, whether legitimately or due to election irregularity, what will he do? this was such a polarized election. there's a high expectation that duterte will win. will his camp except any other person? that would be a recipe for a contentious few months. it's much moreay than continuity versus change. richard: i think this is an election about the gains of the past six years. or is the philippines going to go back? of a continuity candidate is -- [indiscernible] the challenge is to take the philippines from the shore plan to the high plan, but there is a high risk the philippines will be bogged down in the shore plan after the elections. loses, duterte wins or
there is a high risk of contentious politics. haslinda: we have to leave it with. you heard it there. it's a closely contested race, stake.ot is at we are at one of the polling stations, one of 37,000 across the philippines. 54 million voters and maybe 35% of them are expected to turn out. voting started at 5:00 this morning -- rather, 6:00 this morning, and will end at 5:00 p.m. later. angie: we've got breaking news right now out of japan. the boj has just released its minutes from the march meeting where boj members say the economy is continuing to recover gradually. as you will remember, this was a very controversial meeting, in that the boj did absolutely nothing. these minutes are being closely watched. most say they will continue easing on tell 2% inflation is
stable, and most boj members, not all, say they will take additional steps if needed. minutes from the last monetary policy meeting and march where the boj did nothing, but still there's an affirmation that the economy is continuing to recover slightly, and they will continue easing until 2% inflation is stable. coming up, find out why one japanese manufacturer has failed to put a brake on its losses. that is coming up next on "first up." ♪
and disc brakes. it comes through with a full-year net loss of nine tying ¥.5 billion -- y19.5 billion. that is well below its forecast. most analysts think it's a long term gain even though it has lost 36% of its value. we have zero buys and zero holds. it will come under pressure today, but analysts are looking for long-term gain. haidi: the kospi has only gained about 3%. it's up about 3 -- 13%. it had a huge mess on first-quarter profit. we were looking for 271,000,000,000. also a bit of a downside.
angie: oil rises strongly. saudi arabia announces changes at the top. china shows new signs of stability. exports remain positive in april, leaving a surplus of $45 billion. the philippines chooses a new president to lead an economy the world bank describes as asia's rising tiger. ."lcome to "first up i am angie lau coming to live from our asian headquarters in hong kong and streaming on your mobile and bloomberg.com.
it is a new trading week, and investors will be hoping for summer spite after regional stocks posted their worst weekly loss since february. will friday's positive session on wall street help things in asia? juliette: we are certainly hoping that will be the case. this is the picture we woke up followingrday morning good gains coming in on wall street. the payroll number did miss what analysts were expecting, but then of course, there was speculation that we won't see a lift off in june. the dow jones and s&p 500 all have a good session in spite of a choppy session coming through in europe. the asia index, up to bring -- 2/10 of one thing percent -- 1%. just having a look at the open coming through.
as you mentioned come it was a pretty terrible week for asian investors, but japan has opened higher by 6/10 of 1%. we are still seeing some weakness in korea with the kospi down 2/10 of 1%. in australia, and election called over the weekend. that had been widely factored in. it shouldn't have too much of an impact on the market. only about one third of stocks opened up there. a game were signaling today. we will wait to see how the rest of the market opens up.a little bit of weakness in early trades 0.25%.land down by just having a look at some of the currency movement, we have been seeing a little bit more weakness coming through in the japanese yen. about 0.2 5% or that is good news for japanese equities at the moment.
the aussie dollar though, coming back. that election was widely factored into market sentiment. it is up just slightly 1/10 of one thing percent. -- of 1%. the korean won is stronger in the early session, 1176 against the dollar. a new trading week, angie. we are hoping things will be better than last week when we had that big slump coming through on the regional index. this week, it's the first time in two weeks that japan will be open for every single trading day, and it's looking like a positive start the trading week. angie: thanks, juliette. the latest trade data from china points to more stabilization of the chinese economy, but signs are modest. stephen engle is here. let's start with imports and exports. stephen: the recovery is definitely modest at best. let's bring up the exports, and we can see that in yuan terms,
it picked up a little bit. in dollar terms, it was down. depreciated. things get flattened out. exports, this was an anomaly. this was coming out of the holiday. these three months usually are skewed quite drastically every year. we look at april and see, what is it going to do going forward? 4.1% up is an encouraging sign. change the page, and we can see in dollar terms it was down, down 1.8%. still a little too early to say. i believe the chinese government knows that this is not going to be in export-driven recovery. eqiang said, the recovery faces downward pressure, and we should target employment and incomes. and looknge the page at imports.
that has represented weak domestic demand. in yuan terms, down 5.7%. not as bad as previous months. let's change the page. in dollar terms, it was down 11%. 18 months in a row for the yuan terms down for imports. still fairly weak domestic demand. toie: interesting exports hong kong -- stephen: over invoicing, under invoicing. creative paperwork. angie: we saw foreign reserves in china expanded first on back to back since -- stephen: june of 2014. look how incremental it is. trillion,e chart, 3.9 and in the chinese started depreciating. there were outflows. they have burned through a lot of the reserves, but it has stabilized. and february, 3.2, 3.21,
3.22. incrementally. angie: the weaker yuan helps. stephen: absolutely. the pboc on friday, reiterating it wants to keep the yuan stable, and it has done it. yuan-dollarat the t, this is as flat as a pancake. the veneer is they have kept the yuan stable, but if you change the page, against 13 other currencies, the currency actually is down. a lot of that has to do with the strength we have seen in the yen and the euro and overall dollar weakness. what the yuan hast, this is as a pancake. the veneer done his track the dollar weakness on par. angie: polling is underway in the philippines with voters choosing a new president, as well as lawmakers at national and local levels. on the presidency, and the selection is arguably the most important in 30 years.
we've got southeast asian correspondent reporting live in manila, haslinda. what is at stake for us? haslinda: the stakes are very high. the philippines are no longer the sick man of asia. they are considered are rising tiger economy, 6% average growth over the past eight years. lots of challenges ahead. we know that 26% of the economy still lived below the poverty line. distribution has been pretty uneven. take a look at infrastructure. the traffic congestion in manila, it's outrageous. it took me an hour and 40 minutes to get from the airport to the hotel, which should take just a few minutes. lots of challenges still for the upcoming president, and so far, indications are such that it is more about personality as opposed to policies. that is what is worrying the investment community.
the winner in popularity polls te, aderigo duter self-confessed womanizer and self-confessed killer. he said his way of getting rid of crime in the country is to kill 100,000 criminals when he comes to power and feed them to the fish in the bay of manila. such sentiment, such abuse have unnerved the investment community. also a leading candidate is grace poe, a senator in her first term, seen as someone without executive experience. she is controversial because she took up u.s. citizenship not too long ago and then became a filipino. her loyalty to the country is in question. filipinos will have to decide who best will lead the country. a lot is at stake, whether the
country gains momentum or takes two steps back. angie: really close. how safe are these elections? have we seen election-linked violence? traditionally, the philippines has seen violence related to elections. that has been happening throughout the years. for this particular election, we have a mayor candidate in the south of the country being killed while sleeping, and he was killed by 10 men in his own home. back in 2008, 58 people were massacred linked to the election campaign. in 2013, during the midterm elections, we saw 70 people had been killed. there is a tradition of violence in the country. policies,lacks gun weak law-enforcement, but also politicians traditionally have
the roads paved by armies. data from the police suggest that crime rose 50% last year. that has become an issue in this election. for that, watching the election for us in the philippines from her position live at a polling station in manila. checking other headlines for you, the commonwealth bank of australia has declared on unaudited third quarter cash profit of 2.3 billion aussie dollar's. that is $1.7 billion. the bank joined its competitors in imposing higher charges on bad debt. charges rose to 427 million aussie dollars. indication of the challenge that lenders are facing. checking shares at the aussie open, the commonwealth bank is down 9/10 of 1%. honda said it has not confirmed the number of new airbag recalls
it might order despite "the nikkei news" citing the figure at over 20 million vehicles run the world. honda recalls could cost about $2 billion an follows to cut the being forced to replace 40 million devices. the japanese government is making home visits to urge car owners to have their vehicles fixed. toshiba's next president will come from within the company despite the fallout from its accounting scandal. the current senior vice president will replace the interim leader after a shareholders meeting in june. the vice president says he intends to narrow toshiba's operation. crude is on the rise this morning with fires cutting production in canada and the announcement of a new oil minister in saudi arabia. rent crude oil, 46.13.
al-falih says he intends to protect market share. we are going to get more from ramsey. what does this mean for the markets? >> it was kind of telegraph to before. salman has become a rising force in the kingdom. al-falihppointed khaled al-naimi who has been there for two decades, possibly one of the most powerful people in the oil industry. anything he would say in the past could move prices, skyrocketing or plummeting. basically this appointment is going to be sustaining the policies the saudis already had, keeping will production at higher levels driving out higher cost producers. seen prices come down to
a 12-year low earlier this year, which has pushed out some production. it seems that this move will solidify that stance that aramco has. angie: if the man changes, does anything else change? said, it kind of takes a lot of questions out. there was little bit of doubt going into the meeting in delhi earlier this year about whether or not saudi arabia would agree to an output freeze. there seems to be some hint that might happen. prince mohammed has made it clear they would need iran, and that became one of the sticking points at the end. the deal fell apart. falih, it seems they will be heartening that line and basically being able to sustain production. angie: how does this affect prices short and long-term? ramsey: in the short-term, it might give a bear-ish tinge to prices, but as we have seen
since they lead this policy of they have production, come back 60% since then as production in the u.s. has been driven out, as high cost producers have cut back. if they sustain this and it drives out some production, it's going to tighten the market, and we might see prices rise. thanks for that. coming up next, ubs is betting on two rate hikes at the fed. hear more from its global economist coming up next on "first up." ♪
angie: 8:16 in hong kong. here are the stories making headlines. the wildfires in canada's oilsands region have knocked out more than one million barrels a day of production and are threatening to spread to neighboring saskatchewan. at least 80,000 people have left their homes in the town of fort mcmurray, further damaging an
economy suffering from cheap oil. canada's biggest energy company suncor and phillips 66 have pulled workers out of the danger area. north korean leader kim jong-il and has told the party congress he would not order a nuclear first strike. he told delegates that the north is a responsible state and would only use such weapons if attacked. kim announced a five-year economic plan, north korea's first since 1980. it is intended to revive a stagnant economy and improve agriculture and light manufacturing. he called for better relations with the outside world. authorities have asked interpol to issue an arrest notice for tycoon mallya. he is said to go about $1.4 billion connected to his defunct kingfisher airlines. india has asked the british government to extradite him for failing to address his creditors. mallya denies being a defaulter
and says he intends to pay up. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. central-bank policy, the strength of the yen, and a potential brexit are the discussions happening at a ubs summit in asia underway in hong kong, and one of the speakers is the bank's senior economist, paul donovan. there's a lot of clients no doubt wondering, what is the state of the world, especially when it comes to the fed after a really weak jobs report? paul: there are a couple of things. we've got to bear in mind most data is revised significantly these days, and most data is revised up. strong of, not that an indication. we are seeing very strong jobs growth leading in the past a stronger wage growth. that means, i think, we are going to see inflation pressures
building. core inflation in the states is about its 20-year average. this is not a low-inflation environment. i think the federal reserve needs to act. angie: ubs is calling for two hikes this year. paul: as indeed is the federal reserve itself. we believe we will see a hike in september and another one in december. that is in the context of rising inflation, a labor market for skilled and semiskilled labor that remains tight, and growth that is accelerating. angie: probably also asking about boj. why didn't they act? we heard this morning from on a terry policy minutes that they did intend to. paul: i think there is a desire to see what the effect of the earlier easing is going to do. negative interest rates are dangerous. it's not really a monetary policy. it's a fiscal policy. it's a tax on the banking system, savers.
we have to be careful about how we handle that sort of thing. there is also a valid case for not weakening the yen too far. bear in mind japan has the highest inflation expectations of the developed oecd countries. inflation expectations are 3.5%, 4%. they don't want to raise expectations further by weakening the yen and raising import prices. that could do damage. angie: what do you expect to see from kuroda? paul: i think kuroda is in a difficult position. he doesn't want to go too far, but abe's approval rating hasn't been very high. there's possibly an election this summer. i think he will be under pressure. i suspect we will see a focus on quantitative policy measures more than negative rates. they don't want to tax the banks to aggressively. angie: expanding the asset purchase program? paul: absolutely. angie: maybe buying more etf's.
paul: they are going to have to look at doing something that is going to surprise the markets. maybe more equity, something like that. pboc, we are seeing a little bit of stabilization. still, so much weakness. that doesn't look too bad when it comes to fx reserves. paul: one of the problems we've got, of course, is because we are only looking at the stock of reserves, we don't know how much is going in and going out. the change in the stock is not quite the same thing as the flow. we've got all sorts of valuation problems around currency movements. i think the pboc is relatively happy. the capital controls are taking effect. we are not seeing significant retail capital outflow. they are happy with what they've got in terms of the currency, and they are expanding credit to expand the economy. long-term, i don't think this is
a good thing at all. angie: buzz is growing about a possible brexit. what do thin client and investors should be focusing on? paul: the whole issue of the u.k. referendum, the first thing is, when it comes to the vote, turnout is going to be very important. most opinion polls show that with a higher turnout, you are more likely to get the u.k. staying in. in this regard, the mayoral election in london saw an increase in turnout on the election five years ago. that's important because london is showing that it is politically engaged, and london is overwhelmingly the most pro-eu part of the u.k. economy. the second thing i would stress is that most of the analysis i have seen, including the government's own analysis, assumes that if the u.k. leaves, nothing changes in europe. that is nonsense. if the u.k. leaves, the balance shift, and i would
argue that economic policy in europe in the event of a u.k. shall wed become more, say, southern european in its flavor. germany would lose an important allyon economic policy, an that has supported free market reforms, and that would change the tenor of policy in the european union. angie: paul donovan, very good to see you. coming up next, how the currency markets may offer clues to the outcome of the u.s. presidential election. all the details in your fx headlines, coming up next. ♪
implemented by the investor. the bank of japan's bond-buying has nearly tripled its monetary base in just over three years. in dollar terms, it is highest 2006ive to the u.s. since at 96% despite japan's economy being about one quarter of the size. the market confidence in the yuan appears to of strengthened after the federal reserve signaled it will hold off on interest rate increases. china's currency has been moving in lockstep with the weakening dollar against its major peers, providing policymakers with some stability and exporters with a boost to earnings. the world's second-largest economy reported a modest stabilization and exports as the value of the yuan decrease. watch the currency markets for a clue as to who will win the u.s. s race.nt
shows that currency markets are often an early bellwether for investor concerns surrounding political risk with volatility gauges soaring ahead of scotland's vote to split from the u.k. and ahead of the potential brexit vote. let's check in on some of the currencies. i'm looking at this function, which basically shows you the top returns and the bottom returns of all the major currencies. you can see the south african rand is the strongest against the dollar. moody's affirming south africa's rating at baa 2. moody's,nment e-mailed saying it continues to demonstrate a determination to bring public finances under control. the aussie dollar, of course. [indiscernible]
ngie: crude prices are rising as those wildfires and spread to the main oil facility in canada. knocking out that one million facility. day that is 40% of the region's production. saudi arabia has named a new oil minister. expected to keep production at near record levels. further signsng of stabilization. modestly despite
falling in dollar terms. in dollarso fell terms down 11% to lead a trade surplus of more than $45 billion. in the philippines more than 50 million voters are choosing a new president. is thesidential favorite mayor who recent surveys give him 33% of the vote. senator with 22%. a tough stance on crime including the extrajudicial killing of suspects. let's check in with markets trading here in asia. nikkei 225 is climbing. more than 1%. after thetatement last of bank of japan meeting.
there are indications that there is room for easing. as they say it will be more stimulus until they get the stabilization of that inflation goal. got the australian equity market climbing one third of 1% on the heels of that rising price. australia is officially in election mode. will see all seats in both houses of congress up for grabs for the first time animals 30 years. it's going over to paul allen in sydney. if a private after had called this vote a few months ago the government would probably have been it assured that the now it is a lot closer. paul: that is right. he began a long honeymoon. with many voters who are very pleased to take action.
that honeymoon. has been squandered somewhat. the government was unable to push through the sort of taxation reform that it wanted to. that is mainly because the senate is divided. it is very difficult getting anything through that upper house. the balance of powers held by small parties. the ruling party has since been changed. on his malcolm turnbull way to visit the governor general and call an election. the government obviously hoping it gets reelected. with a more useful set of circumstances. angie: one of the latest polls issues jesting -- suggesting? paul: it is very very close. one poll shows the government one point behind. it is an proportional. you get elected based on the number of seats you win.
it is a first past the post system. the size of the challenge the opposition becomes pretty clear. they need to win at least 19 seats. in that respect the governing coalition is probably looking a good bet to win the election. that is why the bookies have the government installed as favorites to win. malcolm turnbull's personal popularity is still reasonably high. definitely high when compared to the opposition leader. the government will be reminding voters of his role in getting rid of both former prime minister's. angie: philip lowe has only just been named as the new royal bank of australia governor. he is going to succeed glenn stevens in september. may have to cut interest rates
to 1% or even less in the first few months. that is after the bank admitted it will probably miss its core inflation target for the year. now our coverage of the philippines. what is the mood like among the electorate? linda: apprehension. the investment community is watching carefully. at least over the past three weeks. it has been on the decline. the speculation that perhaps the center of the pitino government may not continue its fiscal prudence. is business community concerned.
what exactly are businesses looking for in this election? investors are looking at continuity. quite a success this last administration. for foreign investors. an average of $6 billion last two years. we are looking for an administration that will have continuity with those policies. almost seamless. securely and infrastructure. we will build on that. not everything has developed equally. the outgoing administration. linda: it is still lagging neighboring countries. done for the new government? the train we just heard outside.
that is a very short line. maybe that can be extended. catching up with vietnam and thailand and malaysia. 50 or 75 or even a hundred percent more than here. the answer is to reduce bureaucracy and improve infrastructure. business will benefit from more competition. there are only two companies providing internet service. it is very slow and expensive. like had more competitors singapore and hong kong in indonesia, that would benefit the country. there is long list of things that could be done.
the population is 104 million this year. and for the 600 million in the 10 southeast asian countries. that is a great demographic dividend. unlike thailand where the labor force is not available for what they need. unfortunately filipinos have been going abroad for quite a long time. the minimum wage here is somewhat higher than vietnam. the transpacific partnership,
there are 12 member countries. vietnam is involved. many more customers. mexico has trade agreements. it is looking toward becoming an auto manufacturer. nafta. the transpacific partnership will end the tariffs that are hampering exports. the first challenge i think is going to be infrastructure. economy hasf the produced much more demand on the roads and airports and seaports in the last two years we have
had more congestion here in than anywhere else. the airport here's bursting at the seams. we have very heavy traffic somewhat like bangkok 10 or 15 years ago or jakarta. that requires construction. particularly of light rail to move more people around by public transportation. i do know if they are sidelined. unless you are in those areas that are instructed. -- restricted. gdp growth is supposed to be 6.4%. economy that was recently predicted will be the size of the netherlands from 33 to 21st in the world by the year 2030. this economy is going to continue to grow.
the only question is how fast it will grow and can investors every year investor more along with the growth of the economy? those who are not here should continue to take a look at it. linda: thank you very much. 54 million eligible voters will be voting for the next president will govern the country. from a very noisy road in manila. angie: as vibrant as the economy there. we will be live in manila throughout the morning for insights about this crucial election. you will hear from first grade holdings president ceo. stay with us for that. quite a headache for japanese policymakers. it could reverse course. the bank of japan has lent the
monetary base out to levels that some investors will lead to .eakness in the yen we also have a policy minutes from the bank of japan coming out this morning. >> we call this the soros charge. he said when money supply expands that this type of pace you will have currency weakness. he predicted two years of weakening currency. that is exactly what we had during that. theening almost 30% against dollar. japan's money supply is close to overtaking that of the united states. given that thery japanese economy is just 25% as .arge as the u.s. economy
this is japan's monetary base relative to the united states. we're looking at the highest relativity in a decade. we have had this relentless strength in the yen. the chief investment officer says it is very difficult to imagine that we are not going to see this sort of expansion start to fall apart. also the chief fx strategist at mitsubishi is saying they are doing everything they can to bring the yen down. is crucial to get inflation under control and get economic growth back on track.
memories of the delays and disagreements have been put aside. ofocking the lions share copper's value. aknowledged it had been lengthy effort to get to this point. >> the culmination of many years of hard work. sweat, and some maybe a few tears. this was a largely symbolic event. the projects previous difficulties are now firmly in the past. that was the point they were trying to get across at this event. it is by far the biggest project ever undertaken in mongolia. the country's economy cannot be overstated. this multibillion-dollar expansion in all areas has an
effect on the long-term prospects for the price of copper. production is expected to start when copper markets will be in deficit. around the middle of the next decade. more thand to produce 5000 tons of copper per year. that would make it the third-largest copper mine in the world. is estimated that once complete the company will account for almost a third of mongolia's gdp. is still a long way away for country facing immediate challenges from collapsing budget revenues and a looming general election.
angie: donald trump has been speaking about taxes. seeing his biggest concern is giving the middle class a sizable break. strategy last his december acknowledged that things might change if he wins. he will have to discuss his plans in greater detail. he frequently shifted his economic proposals. saying he would not eliminate the national debt. the new mayor of london has promised to work for all communities in the city. it not only tolerates but celebrates diversity. a challenge to rising anti-muslim rhetoric from candidates like marine le pen and donald trump. the convicted drug lowered el
chapo has been transferred to a prison in northern mexico near the united states border. he was recaptured in february. kim jong-un has announced a new five-year plan, the first since the 1980's. but the focus on energy as well as agriculture and light manufacturing. the seventh party congress in pyongyang. tom: the old economy still dominates in north korea. vast factories churning out basic products like this copper cable maker in pyongyang.
the country exports some commodities that far fewer now that it's biggest trading has banned most imports. in line with united nations sanctions. it relies heavily on agriculture. in kelly gang there have been some notable changes. .n pyongyang a growing choice of shops and restaurants. we got to ride in the city taxi. operated by one of the government controlled camp firms. even the public transport system has seen some minor upgrades. we are inside the pyongyang metro. still relying on these very old german trains. south koreanoduced trains. in rather can swipe
than relying on paper tickets. of the more significant technological upgrade. shenyang's residence are average smartphone users. they can now choose from a number of different brands. store selling a phone supposedly produced here in north korea. it costs around $400. it has an android operating system and a host of apps including five versions of angry birds. things are not always what they seem. international calls are blocked on cell phones here. you can do isng on the government controlled intranet. angie: no sale. investors may not be shopping
equities look like this. oil gains as well. in south korea, the market is looking like this. down 1/5 of 1%. futures pointing to a higher open. welcome to the stock exchange. let's check in on whatever reporters are watching this morning. training is underway. -- trading is underway. haidi: it is a win for australia. not doing too badly. this is the company that makes brakes and have run out of money.
angie: investors are speeding up on break selling. they operate department stores and discount stores and south korea. they had a first-quarter operating report profit. looking for 273 billion. could've been a reduction from neutral. we will have the conference and south korea. that is the verdict from the stock exchange. our reporters are here. thanks guys. that is it for us on first up. trending business is coming next. rishaad: election will be
front and center. castillo about the investment implications of the outcome. he says the election is not a major risk factor for the economy. he is responsible for high net worth individuals. were they doing with their money? where are they saving the assets being allocated? backve is credible taking from the bank of china. as we look forward to the china open. ♪