tv Daybreak Asia Bloomberg September 4, 2016 7:00pm-9:01pm EDT
let's look at how things are shaping up. new zealand, training flat. the kiwi dollar looking like this. we are counting down to the open's in australia, japan, and korea. a turnaround in most commodities in the last session. gold and oil bouncing. we have a big week for australian stocks. from glenndecision stevens at the rba before second-quarter gdp. they are not expected to move off rates at a record low of 1.5%. the previous quote on the asx 200 down, the aussie dollar looking like this. this is how japan is looking.
, akei futures looking flat little upside at the moment. hhighs,off its intraday .10% there. a public holiday in india, no trading in that market today. g 20 winding, the down in china, world leaders warned of a populist backlash against trade threatening the fragile global recovery. good to have you. tell us about these warning shots that are being fired. good morning. makers are growing increasingly concerned about the protectionist mood around the world, and that every chance they got at the g-20, they voiced those concerns.
oecdke to the head of the and the btl, and they were warning about the consequences from this sort of protectionism. take a listen. a trade is no longer locomotive of growth. lagging likeally surprise whyo no the world economy is only growing at 3%, even below the rate of growth pre-crisis. general is a positive for the country. you cannot deal with those forces of unemployment with anti-trade measures. you would be shooting yourself in the foot. wto also telling me that the trade outlook for this year bright.t was not right her
to pay heede will to the populist sentiment, but find ways to spur their economies. there was some tension between the u.s. delegation arriving and security officials in china. as soon as president obama touched down, we saw confrontations between the u.s. delegation and chinese security officials when air force one touchdown. there was nobody to greet president obama. the lower plane from end of his jet and then officials were confronted by chinese security, berating reporters. in short, it was a total mess. from whatsurprising we have seen during the last couple of days. security has been very, very tight, and despite the fact that
city is a ghost city, no cars, no people anywhere, it is taking journalists and delegations hours to move around the city in what would usually take a few minutes. person from the official delegation from the middle east telling me that he asked the security of his hotel whether he was in jail because he was not allowed to leave the premises, and then he was told yes, you are in jail, so you can imagine the tight security all over the city. uneventful bilateral between the u.s. and china. they didn't join the paris climate agreement and pledged to do their best to boost that and bring it into force. all eyes today are on a sitdown between the japanese president and the chinese president at a time of tensions over
territorial disputes. not to be overshadowed by some of the tonsils we have seen on the security front. ahnill get more from shery a little bit later in the show. thank you for coming on for us. let's get to first word news now in singapore. debt nearing a level that may trigger a downgrade, moody's was $115 billion at the end of march. any sustained rise above 5.5 could mean a downward revision. softbank's $32 billion purchase of arm holdings is set to add to its debt load. -- angelaerkel merkel's christian democrats were beaten by the immigration alternative for germany. the vote is seen as a backlash against her open border refugee
policy. the social democrats won the election, but the other party came second. she faces a national vote next year, and the result highlights growing public unhappiness with her policy. has called the u.k. to lay out its plan for departure from the eu soon, otherwise banks and pharmaceuticals based in the company may leave -- country may leave. a statement says japanese litters may consider relocating if the single passporting system is lost. it warned that pharmaceuticals companies could shifted to the eu once the departure has been finalized. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thank you so much. samsung has given itself two weeks to start replacing galaxy note sevens after deciding to
recall millions of its smartphones. it seems that samsung has realized time is of the essence. juliette: yes. things, consumers don't have patience, particularly early adopters waiting for this to come onto the market. also, it is about brand. samsung had to move early. it has managed to fend off other android carriers and makers in the region, but there was demand coming for its note seven, so if they failed to recover from the recall, they risk being just another player in the market. be worse asould not apple is about to release iphone seven. samsung announced the recall after the bell. that then reports batteries are overheating and catching fire. we are hearing reports from the bely that samsung could now
withdrawing. we understand that the recall came from the top, the head of the mobile division, saying the recall is very heartbreaking. it is difficult for me to specifically comment on the loss. i can say that it is a large amount that is a pain to me as well. nevertheless, we have made this decision because our customer safety is the most important issue to us. we know the reputational damage is significant, but what about the financial ramifications? about $1 billion. samsung has predicted it will make 20.6 billion dollars this year, so less than 5% of that. it is unclear whether these costs will be shouldered by samsung, but they are really trying to get in front and protect their brand. still ahead, two months
haidi: you are looking at monday morning in tokyo. asia's first major market to open this morning. japanese futures looking like this, some upside. we are waiting for the boj's governor kuroda to speak later in tokyo about further policy. let's get a quick check of the lettuce business flash -- latest
business flash headlines. a 32% chance the fed will move at its september meeting, down from 34% ahead of payroll data. created 151 thousand jobs last month, less than forecast. rba governor glenn stevens hoping his final policy meeting , forecasting no change to australia's benchmark interest rate. the rba is expected all the record low 1.5%. it has cut twice over the past four months. traders are pricing in a 50% chance of further easing by years in as they wait and see if the fed will hike this month. the parent company of peugeot and citroen will open an suv factory in china this week. it will have the capacity to produce 300,000 vehicles a year.
underl also make vehicles a name as part of a joint venture. sales in china truck 19% in the first half of this year. let's take a look at some of then's we will be watching in asia this week shaping the trading week. the circus of world leaders moves from china to laos. president obama will attend talks and what is expected to be his last major meeting and asia before he leaves. regional stability will top the agenda with leaders emphasizing the potential threat to growth and global trade. moving ahead, an indication of how a stronger yen is affect in japan's economy on thursday. gdp is forecast to have grown 0.2% last quarter from the previous three months. there are growing questions about the accuracy of gdp and
japan's ruling liberal democratic party is expected to reassess how the data is compiled. governoroming rba speaking at an asian development bank conference ahead of officially taking over at the austrian central bank later this month. he has served as deputy governor since 2012 and is seen as an inflation targeter. governor glenn stevens is holding his final meeting this tuesday, seen to keep that benchmark at 1.5%. let's ask my next guest what he's expecting from this statement. great to have you. swan song, largely expected to keep rates on hold, but what are we looking for in terms of guidance? see the markets looking for any guidance around how to balance the housing market
risks, which seemed to be getting stronger with stronger activity and prices picking up. thisis against deflationary policy causing central banks globally a load of headaches. to guidance around how balance those priorities will be key tomorrow. haidi: i want to have a look at the nonfarms on friday, markets seem to be stuck in a rut. september being a live event off the table? look, september is still alive, but the probability is no greater than a third. it might have crept up towards 50% after janet yellen's comments, but despite the fact that payroll is only one number, it is a big number. to sustainoing underlying inflation, it needs to come from the labor market. you don't have concrete evidence that the labor market is picking which isr the fed,
, has taken markets into a stable arena. we are looking at december hopefully. seei: what would we need to for a move in december, or is it likely that if we get some poor that,rints leading up to 2017 is looking like a greater likelihood? look, that is entirely possible. what we seem to need is not just a run of news which the fed thinks is consistent with tightening. that seems to be activity data and enough on the inflation leading indicators to make it confident about the inflation side, but you need to get them in a lead up to a meeting. every time we go through a soft patch and data or right now, where the evidence is mixed,
there are enough risks globally, that is enough to stay the fed's hand. to get the fed to move, it is tough. haidi: one of the risks we are watching for is that china's stabilization story. pmi not a huge indicator that moves markets, but is the rebalancing stabilization, but underlying what isstill looking at happening? >> the leveraging question and the timing around that unambiguously is still the biggest question for china and the global economy, but that also restructuring in the economy, you are seeing it across the advanced world as well, where service related sectors are doing pretty well and manufacturing or business investment related sectors are inng poorly, so the pm eyes
the nonmanufacturing space are pretty important. we know manufacturing has been soft lately, and bond yields have come down a lot as a consequence. i think some stability in the nonmanufacturing pmi is what i would expect today will at least give us some comfort that in underlying terms that economies are still doing ok even though there are headwinds on the manufacturing side. are waiting for governor corroded to speak in tokyo later today, japan gdp, what more can they do in terms of what is left in the policy toolbox that they can reach for? >> look, it is tough. the boj moving in january when markets were under stress and they had no identifiable impact on the trends at all. the yen strengthened and the nikkei continued to selloff. at the moment, equity markets globally have been better, the dollar-yen --
vote counting has gone on through the night in hong kong's latest test of anti-china feeling. voters turned out in record , the firstelect since the occupied protest when protesters clashed with police. when do we expect to see results? rosalind: over the course of the morning. ballot counters have their work cut out. 58% of the electric -- electorate turned out. polls closed at 10:30 p.m. on --day, but there is reports
various reports reporting people were queuing until after 2:00 am to cast their votes. last elections and 2012, we have seen clashes over whether hong kong is getting the high degree of autonomy promised from china. we saw the protest of 2014, where protesters were blocking roads for more than 10 weeks. the underlying issues are still there, increased composition from mainland chinese workers, and the economy slowing, a seven-year low, 1.2% last year. with record turnouts, it looks like more want to have their voice heard in this election. impact ist kind of this expected to have on how hong kong is run? rosalind: it can be easier or harder for hong kong's chief
executive. the opposition needs one third of seats to block changes in the law going through. currently, the pro-establishment camp has $.43 -- 43 seats. last year, there was a proposal on how the chief executive election works. haidi: that's right. this is leading up to the big one. how is this expected to affect the chief executive election next march? rosalind: he or she will be told why a committee -- will be elected by a committee. to approval byt beijing, so what protesters wanted in 2014 was open elections, and this is why last year's proposal was stopped. it would have allowed hong kong voters to choose from a handful of candidates affected by
beijing. there is no vote given to the hong kong people at all. it will be voted for by that block of people affected that did bring you the latest results from that weekend vote as they become available in hong kong. chinese currency data has suggested the yuan could resume its depreciation trend once the g-20 is over. we have more on that. this thinking that china has been managing the currency ahead of a major event. >> do they intervene? yes, probably. that is where analysts are looking at the possible distortions from the intervention on that fixing rate. because of those distortions, they are looking at the intraday volumes to gauge sentiment right now.
the pattern, we can bring up into the bloomberg terminal, a chart that shows the pattern showing pent-up selling pressure , perhaps the two months of calm could iend. are seeing data showing any time the central bank has strengthened its yuan fixing by more than .3%, you erase those gains on larger than average falla was. -- average volumes. cut by when fixings were the same amount, trading volumes subdued. i want to give you these three examples. , they aredots there following similar patterns. when the yuan fixing was , the yuan on august 3
erased all the intraday advanced good we got similar patents on those other days. each of these occasions, the next days fixing was cut by at least .3%. great detective work there. g 20 is winding down. get included into the reserve basket on october 1. pushing increasingly for internationalization of the currency and don't want the outflows to exacerbate depreciation. they want to continue this manage slowdown. moree fed goes aggressively than anticipated and data in the coming quarter is much weaker than expected for china, that could exacerbate outflows. haidi: we will be watching that. softbank's debt
haidi: it is 7:30 a.m. here in hong kong. 30 minutes away from the major marketing -- markets opening across the region. the first word news. g-20 leaders have been warned about the risks of protectionism. wto, they all say trade is suffering which poses a greater threat to the global economy. christine lagarde noted an undercurrent. said more than 1000
protectionist measures have been passed since the financial crisis. newglobal recall of samsung note seven smartphone is not going to be cheap. estimates say the decision to replace all of the 2.5 million devices shipped so far may top a billion dollars. some of the phones have batteries that can catch fire and explode. worseming could not be with an iphone seven due to be launched later this week. the estimated cost is a heartbreaking. electionong's first since the pro-democracy protests of two years ago. -- beating the previous record set in 2004. the election is said to test the new activists who are demanding a sharper break with china and more establishment politicians calling for --.
[inaudible] -- investors are gearing up for a fresh trading this week. let us take a look at the early signals. feels like aks and risk on monday. let me recap what asia is waking up to. wall street, 151,000. strong enough. that is a key take away. we are looking at equities underway. yields are on their way out. the dollar is relatively strong still. that is what happened on wall street. a massive session in europe especially when you look at london. 2.2%. this risk on sentiment carries into the middle east. we will talk more about oil in a moment. looking at asia -- one market is open.
when you look at dollar-yen. that will be a key driver. new zealand up ever so slightly. back to 104. that should help japan out of the gates. looking at futures. for thecations are nikkei 225 to be out of the gates. sydney, -- k at data.ch as far as echo are still looking at a decent amount of gains likely early this monday. look atet us take a commodities. we are expecting that story to play out when it comes to the equity space today. are there specific ones you will be tracking closely today? david: we are looking at oil and
the reason i am talking about that you have is russia and saudi arabia agreeing in principle to keep prices stable. these are the two biggest oil producers in the world. there is no deal yet but there is a change in tone. the other commodity i am watching is nickel. the story here and it is on the website as well is that the philippines -- the top mining company there saying we could see supplies out of the country dropping by as much as 30% this year. the country is the biggest producer and exporter of nickel. the government has been cracking down on miners. and we are expecting the results of august to be made public later this week. governor kuroda is speaking later today in tokyo. where are we at in this selloff
across japanese bonds? there has been no let up so far. david: it has been quite bad. the yields are back to levels of last march. massive selloff last week. watch the 30 year. that is where we have seen the most amount of strain across the japanese bond space. up 10 basis points, 13 basis points for the japanese 30 year yield. haidi: thank you. we will see how that plays out when the tokyo and sydney markets open. he 20 leaders have been warned against the -- shery ahn is with us where things are winding down. tell us about these pretty dire warnings. policy makers are using every chance they get here at the g-20 to warn about the negative impact of
protectionism. ims christine lagarde warning about the outlook for growth this year and urging corporate leaders to lobby governments to keep things up. the canadian trade minister telling me the same thing. about in ride to worry this environment. a central theme here. another key topic being discussed, monetary policies along with fiscal ones. whether governments are doing enough. i spoke with the oecd secretary-general and asked him if governments are doing enough to avoid what people are calling the low growth trap. take a listen. today, a much greater awareness of the fact thisone way to get out of very mediocre and undesirable outlook for economic growth is to use what we call the fiscal
asce and spend more as long that expenditure is done on investments which are carefully chosen which will have a big multiplier affect which will create and detonate better productivity and which after growing through a timeframe of more public expense, will generate a lower debt to gdp ratio. shery: who is doing the fiscal side correctly? japan,a, the u.s., canada -- just to name a few. the u.k. itself which is using the fiscal space that they have, they can actually move ahead. shery: how does brexit complicate this low growth environment? it indeed.icates
i am on the record, april 27, the london school of economics saying this will have severe cost and consequences mostly for the british. it is turning out to be exactly like that. but it is also having impact on uncertainty in general because, you know, the u.k. is a large economy, a g-20 economy 87 economy but it also has to do with the broader concept of europe. what kinds of deals are being struck with europe going forward including the negotiations with the u.s.? which become more complicated when one important interlocutor like the u.k. is no longer going to be conceivably a member of the eu after 2019. the -- so this adds uncertainty. the last thing we need in this difficult context. is theresa may's
first global summit. major global summit as prime minister of the u.k. it is important for her to set the ground of the uk's global role post-brexit. she did mention on her way here that she had some doubts about key promises made by members of her cabinet who were campaigning for brexit including ape it's a-based immigration system and leading in a single market. here in china, she is dealing with tom anger from the chinese government. she delayed the approval of key chinese investments in her country. shery ahn, at the g-20 summit winding down. we will check back with you. -- nearing abt is level that may trigger moody to
downgrade its rating. what is the main concern when it comes to moody's? reporter: good morning. i think the main concern is the debt level has spiked in the last few years and the acquisition arm of the u.k. has pushed to the level where debt itearnings -- moody expects to be at a level above where they are comfortable. they 5.5 is a level where actually have a downward trigger where they start to look at that figure and if it is sustained over a long while, it could result in a ratings action. billion -- that is not insubstantial. how does samsung go back to servicing that? it is a huge number.
the sounds we are talking about are enormous. thate have to remember softbank is a huge company. it creates about 20 billion in earnings each year. besides that, the billionaire founder is stressed that they have all of these unrealized profits that they could cash in potentially if they needed. they have about ¥9 trillion in unrealized profits in those holdings. the president has said we are almost debt-free because if we cashed in, it would be all good. haidi: to be fair, is moody's alone in raising concerns over softbank? reporter: there is i suppose -- they are selling bonds again this month, this week on the ninth. those bonds are complicated in the sense that s&p, and at least
one of the local rating agency is giving an equity credit. the long-term debt. the s&p will give a 50% equity credit. different tothis moody's. haidi: we will continue to watch that story. great to have you from tokyo. bloomberg's corporate finance reporter there joining us from tokyo. negative outlooks continue to make the headlines. the next guest expects 2016 to be a year of record downgrades. coming up next. this is bloomberg. ♪
first market open of this morning. you were looking at the iconic sydney opera house. a beautiful day in sydney. -- 0.7% after expectations that the fed moving in september were there dampen by the nonfarm payroll numbers. the rbatocks -- meeting, the last one headed by glenn's evens before he steps down as well as gdp numbers for the second quarter coming through later this week. let us get a check of the latest business flash headlines. haslinda: uk's business lobby has said there is still an outlook for the economy. the confederation of british industry's expects to see some deterioration in growth. it cautions that this comes after the debate continues on how the brexit may affect the economy.
a 10 month high in august and the manufacturing index has also recovered. india's central bank governor has stepped down leaving with this passing wish. that the r.b.i. remain a strong and independent bank. multiple layers of scrutiny from entities that do not have technical understanding will only hurt its decision-making. he oversaw the biggest overhaul in the bank's history including pressuring lenders to reveal their bad debt. the initial challenge for a will be to tackle accelerating inflation and a slowdown in growth. municationace to lost a third of its value after it was destroyed in last week's spacex explosion. theing questions about plans that failed with the chinese investor.
haidi: we were talking downgrades. 2016 will be a record year for downgrades. -- 20 downgrades for the whole of 2011. joining us now from singapore is james. have you. not a record that you want to see or set but since you guys made it this statement a month or so ago in july, have things improved or deteriorated? certainly have not improved. we are into september and we are at 20 downgrades for the year so far so we have matched what we saw in 2011 and that was our previous high. we have another 21 sovereigns on negative outlook right now though we well surpass 2011.
one thing that is quite different from 2011 is that at that time, most of the downgrades were in advanced economies. this year, it is quite different in that the rating pressure is in emerging markets. most of the downgrades so far and most of the negative outlooks that we have in place right now are in emerging markets. it is different from 2011. haidi: if you were to pull together a team on what is causing the acceleration of downgrades for pms, is there a consistent themes? china?hain up -- like or is it the impact of commodity prices? is there a pattern? or twoif there were one reasons that were consistent across different emerging markets, i think we would have to site two. one is the stronger dollar.
that changed a little in 2016. the strength of the dollar has a clear impact on emerging-market ratings. there is a strong historical correlation between the dollar and emerging-market ratings. the other correlation is commodity prices. market is aerging commodity exporter, china is an ,mporter, india is an importer but on balance, emerging markets are net exporters of commodities. when commodity prices go down and the dollar goes up it is a double whammy for emerging markets. -- those were the two most important factors driving the ratings lower and we are still seeing the hangover from that. weaker public finance. in our assessment, we are judging the policy response to that. those are the things most important. haidi: if and when the fed does finally move, do you see a shock
on these emerging markets? pushing back. trajectory --the a little bit of a window to get their finances in order. james: it is interesting because we have looked historically at the relationship between what the fed does and what happens in the emerging markets, especially from the ratings perspective -- it is not as clear-cut as when the dollar appreciates. raised and the impact on emerging markets and their ratings are not as clear. what does tend to happen is capital flows in and out of emerging markets change with investors procession -- globalrs impression of wrist. there could be some external funding pressure on sovereigns that are reliant or have been external funding needs including turkey and brazil.
from our perspective, in a broader context, it is more important what the dollar does then what u.s. rates do. haidi: we have been talking a lot about the goings on at the g-20 and one of the headlines has been the warning that protectionism amongst other things continues to threaten global trade. you see the deterioration of trade volumes and agreements given that we have right said, the rhetoric from the u.s. elections, will that be a significant factor in your decision-making when it comes to some of these economies? james: it could very well be and it will depend on whether the rhetoric turns into actual policy because -- we have had this sense for some time, the better part of 18-24 months that the resurgence of protectionist
rhetoric has been mounting. we have heard more and more of it from policymakers but we had isbut what we have not seen much policy action to follow up on that. i suppose you could say it is almost inevitable when you have week growth at home and there are concerns about in the polities not only in advanced economies but in emerging markets as well. the easy reaction to that is to blame foreigners. blame the imports that are coming into the country. we have seen this heightened rhetoric on protectionism but we have not seen policy follow-through. policy if there were follow-through, given the weak volumes in terms of trade globally, that the potential he be a cause of concern going forward, definitely. haidi: we will talk a little bit more on that. james, please stay with us. we will be focusing on the brexit affect and how the u.k. exit from the eu will play out
haidi: let us get back to our conversation with james. thank you for staying with us. we were talking about going tonism -- is it impact global trade. i want to talk specifically about brexit. the house view is that this will be the first domino to fall when it comes to potential downgrades and negative impact. james: we have -- it has already taken a negative action. we downgraded it immediately after the referendum vote and we still have a negative outlook on it. it is not so much the growth -- come a lot oflook analysts have suggested that everything still looks fine but i think it is far too early to suggest that we know
definitively what the growth impact on the u.k. will be. our stance is that the growth will be weaker and in the absence of a boost to the export sector or the trade sector more generally from a weaker pound, we probably would see recession in the u.k. domestic demand is going to be primarilywe think, investments and that feeds through into public finances. has changed its projection going forward and moved away from the objective of having a balance in terms of the public sector net borrowing number by 2019. they have walked away from that but we do not know with the new fiscal policy is going to be. we will be looking to the autumn statement which comes out in november or december to find out what the new governments of object gives are in that respect. the public finances are really in -- of interest to us. haidi: in europe, it is also the
political story playing out as well. james: very much. we are seeing polarization and fragmentation around europe. that is in virtually every country. anti-eu sentiment as well. our expectation is that all of those trends will probably be enhanced going forward. we saw some german elections over the weekend which raised some eyebrows as well. there is plenty to be concerned about on the political front in europe. and the overall public enthusiasm for greater european integration seems to be fading. brexit will add to that as well. there are some concerns about european integration for sure. haidi: thank you so much for joining us. talking about the downgrades, record downgrades globally. we are moments away from asia's
♪ angie: talking trade, the g 20 warns protectionism is holding back the global economy. $1 billion fix, samsung's recall won't come cheap. voters turn out in record numbers and hong kong's latest test of anti-china sentiment. liveis "daybreak asia" from bloomberg's asian headquarters. ,pening bells across the region
investors have reason to be bullish on equities. david is taking a look at the open. how is it looking? david: you look at futures indicating gains, a massive day for equities on friday. you have a decent bid for oil. above 104.back india is closed today for a public holiday. cominge private pmis out. to're looking at the price see if it is supportive of what we will get. ,n friday, the jobs report 151,000. it's complicated.
yields on the way up, the dollar stronger as well, equities on the way up, which is why we are seeing gains across the asia-pacific markets. let's talk about currencies. dollar-yen back above 104. giving back a little bit. let's have a look at a one-day chart. it is still much weaker compared to friday. as far as yields, have a look at where we are. last week, it was a horrible time to the long jgb's. negative three basis points. yield line chart , back to march levels. that is the actual yield over the past three months. the other story we have been following is the re-open of han
jin shipping. this one is tanking out of the gates, 30%. receivership last week. 25, that is the deadline for them to come up with a plan. wall street journal reporting that hanjin shipping filed for u.s. bankruptcy protection. have a look at this graphic. meantime, it does have time to shore up its cash by selling its fleet here it in case you are in the market for a bulk carrier,
$307 million. that hyundai merchants marine was likely to buy those vessels. haidi: our top story. the g summit winding down in china. to be specific. inrry and is with us hangzhou. tell us more about these warnings. policymakers are quite worried. the g 20 form to urge governments and businesses to do whatever they can in order to keep goods flowing across borders. wtooke to the head of the and canadian trade minister. about thewarned
impact of protectionism and talked about some of the misunderstandings about trade. take a listen. >> a lot of people say trade brings about unemployment, and particularly in the developed economies and mature economies. that is plain wrong. trade accounts for a small percentage of the unemployment in those countries. more than 80% of unemployment comes from innovation or increase productivity. against innovation or productivity, but that is the reality. ministero me as trade that is so important is that we really have to be rethinking how we think about international trade. it is not just for the big multinational companies. trade is about finding ways for small and medium-sized companies to get direct access to consumers around the world. we have heard here at this g-20
a lot of talk, and i think it is right we are talking about it, about the protectionist sentiment, which is really sweeping the world. the canadian trade minister saying it was right to worry about protectionism in this environment, and also saying canada as long -- along with many others are very worried about the growing anti-trade rhetoric out of the u.s. during the presidential elections. haidi: perhaps overshadowing even the bilateral's. them was tension between on the ground in china. shery: it was messy from the get-go. we saw some confrontation when air force one was touching down. he was not greeted.
top u.s. officials were confronted by chinese security, who were berating reporters. to be honest from what we have seen and the last couple of days, this is not surprising. movement has been heavily restrict it, not only for media here in hangzhou, but official tak delegations. it is not surprising given this is china's largest gathering of world leaders. they did have an event full bilateral. they did join the paris climate agreement and discussed everything from steel overcapacity from china as well as north korea and cyber security. lot on this last day. we will get more a little bit later on in the show. get to first word news.
counting is underway and hong kong's first election since the pro-democracy protests two years ago. reached 58%, beating the previous record set in 2004. the election will test the appeal of new anti-china activists demanding a sharper break with china and establishment politicians for calling for resignations. stepped downn sunday and left with a parting remain at the rbi strong and independent bank. he says entities that don't have technical understanding will only hurt the decision-making. he oversaw the biggest overhaul in the banks history, switching to inflation targeting and pressuring lenders to reveal
their debt. the initial challenge for his becessor, urjit patel, will inflation and slowing growth. japan has called upon the u.k. to lay out the plan for its the parts are from the eu soon. otherwise, banks and pharmaceuticals based in the country may leave. a statement from the foreign ministry's website said japanese lenders may consider relocating if the single passporting system this loss. it also warned that pharmaceuticals companies in particular could shift to the eu once the uk's departure had been finalized. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thank you for that. the early seoul, korea session. samsung down following the news of a global recall of its galaxy note 7 smartphone.
samsung is moving quickly to protect its reputation. that after thed bell on friday, giving everyone the weekend to digest of this. i think that's why were not seeing so much downward pressure on samsung. this is the company to provide 70% of batteries to the galaxy note 7, believed to be behind these faults, catching fire in three instances, explosions. n downwarde pressure on samsung. it is trying to get on top of this recall, but it is working behind the eight ball because they were trying to get out ahead of the iphone seven and retain dominance in the smartphone market. we know consumers only have so much patience. many want to be early adopters. there is concern that if people are getting frustrated with samsung, they may instead go to the iphone.
,his recall came from the top and the head of the mobile division said it is absolutely heartbreaking. for me toifficult specifically comment on the loss. i can say it is a large amount that is a pain to me as well. nevertheless, we have made this decision because our customer safety is the most important issue to us. we are looking at some damage to the brand, but we have any idea of the financial ramifications? >> the figure is about $1 billion. you have to remember that samsung itself had net forecast for the year $20.6 billion in revenue. we did the numbers and it looks like it is not half a days worth of revenue for samsung, so $1 billion not small money, but not really going to rent samsung too much. -- dent samsung too much.
economic daily coming through with a saying we believe that samsung is going to end its deal with samsung sdi. long-term, they think the impact will be minimal, samsung moving ahead to ensure safety for their customers. haidi: you can see the stock weathering the storm. ahead, our next guest says it will be a bumpy road ahead for the market this year. what should investors be looking out for? that is next. this is bloomberg. ♪
president obama will attend those talks in his last major meeting in asia before he leaves the white house. regional stability will be at the top of the agenda, with leaders emphasizing the threat to growth and global trade. an indicationet of how the stronger yen is affecting japan's economy on thursday. gdp forecast have grown 0.2% in the last quarter from the previous three months. there are growing questions about the accuracy of gdp. japan's ruling party is expected to reassess how that data is compiled. also on thursday, incoming rba anernor will be speaking at asian to element bank conference ahead of taking over the reins at the australian central-bank. he has served as deputy governor seen as012 and is an inflation targeter.
on the the markets, oil slide again as major producers agree, but offer scant details. by .7%,ude looking down holding at $46.52. withd have that meeting vladimir putin and saudi arabia, as well as talks with the iranian deputy oil minister, but no details. the dollar index is looking stable or flat at the moment after those nonfarm payrolls came in lower than expected on friday. at 104, yen, holding off intraday highs. this is the lowest level of the week since the end of july. my next guest says asia without
japan stocks look attractive in the medium-term. he is the vice president and senior investment strategist at c bank.bank -- ocb i want to talk about these nonfarm numbers that came moregh, taking september or less off the table, but what does it do for equities? u.s. asset prices are range bound for about 6-8 weeks now. short-term, it means the fed will likely hike rates in december, so the markets have breathing space. the markets have been waiting for the nonfarm payroll numbers and the fed meeting to see what the fed might do. with the nonfarm payroll numbers , it looks like an interest rate hike will not take place in september. since brexit, global equities
have rallied something like 10% or 11%. asian markets have done better. having done so well, i don't see markets going up another 5% or 10% in the short-term. it may tread water or head up slightly higher, but i don't see enough for it to go rolling ahead. but not too long, your note said. longer can we expect this to hold? >> absolutely. that is our view. if you look at global equities taste on the msci world index, it has appreciated 155 percent since the bottom in the first quarter of 2009. the markets have done exceptionally well. valuations are not extremely compelling. liquidity has been the main booster.
going forward, earnings has come through, growth has come through, but we are not seeing that happen. the global economies are net headed for recession, but growth and earnings are not spectacular, so we need to see those things come through before we are confident that equities have a another big leg up. yield,in this hunt for what do you like when it comes to equities in asia without japan? stockpicking.n to it's about bottom up stockpicking, but the forecast on yield is going to stay because our view is that given the structural situation, declining birth rate, low productivity, that means interest rates will be low in relative terms, so the hunt for yield will continue.
i think it is about stockpicking and being very selective, looking at companies with good balance sheets. it is not just stocks. markets that offer good yield will also be involved. haidi: right. in terms of china, we have pmi coming through, general stabilization is the story. markets a more interesting story given that we had the announcement of the shenzhen-hong kong stock connect. is that more enticing than when we were here last year when looking at china? >> you are right. offer somenect does possible stimulus factors, but if you look at the data out of china, it is rather mixed. official pmi numbers were quite decent, above market expectations. ownedcomprised of state
enterprises, which benefited from government stimulus. when you look at private sector pmi numbers, a composite of small and medium enterprises, they came in below expectations, so i think the private sector is not doing fantastically well in china. china is still in transformation and is not out of the woods yet. things can easily turn in china, as we have seen in the last 12-18 months. haidi: we won't have to leave it there. great to have you to kick off the trading week. alwa a pleasure. let's get a quick check of the latest business flash headlines. softbank's debt is nearing a level that may trigger a downgrade. moody's said it was 150 billion dollars at the end of march, five times earnings, and any sustained rise above five-and-a-half could mean a downward revision of its rating.
softbank's $32 billion purchase of arm holdings will add to its debt load. space communications lost a third of its value after its satellite was destroyed and last week's fire. shares of the company fell to their lowest in 10 years. the incident has raised questions about safe communications -- space communications plan sale to a chinese investor later -- chinese investor. breathe has don't scared off the competition for a second week at the top of the north american box office. 15.7 million dollars thanks to a better than expected labor day weekend, rounding off a disappointing summer for the studios. the light between the oceans was the only major new entry. failed to make the top 10.
ondi: vote counting has gone through the night in hong kong latest test of anti-china feelings. voters turned out in record numbers. the first election since the occupy protest two years ago that saw student protesters clash with police. we have been covering this. any indication of when we might expect results? see what waiting to the electoral commission will have to say. they do have a lot to do. came out tolectric cast their vote, 2.2 million votes, record turnout there.
polls were supposed to close at 10:30 p.m. on sunday, but we saw at least one local media publication reporting that some people at one polling station queuing until 2:00 a.m. to put in their votes. there is a lot of interest in these elections. elections int 2012, we have seen a lot of interests in what we would call the pro independence side of things. awareness of the politics of hong kong. i think high voter turnout is an -- how of how both grew pro-independence and pro-beijing sides want to get their voice heard. haidi: how does it impact the way hong kong is run in the longer-term? an impact onave
how easy it is for the chief executive to get his policies put through. egco is a 70 seat legislative council. a third ofion needs those seats in order to block any changes to the basic law, hong kong's charter. currently, the pro-democracy camp at 27 seats, and the proestablishment have 43 seats, so right now the pro-democracy camp has enough seats in leregco counsel to block legislation. that is the big one in march. >> that's right. it's not voted for by the general population. it's voted by a select group of people who are vetted by beijing. we will be waiting on
trade is suffering and poses a growing threat to the economy. more than 1000 protectionist measures have been passed since the financial crisis. u.s. agreed to cooperate. the global recall of samsung's smartphonenote 7 be cheap. estimates say the decision to replace all of the 2.5 million devices ship to so far may top $1 billion. some of the phones have batteries that can catch fire and explode. the timing could not be worse with the new iphone seven due to be launched later this week. samsung says the estimated cost is heartbreaking. south korea's biggest container shipping line is plunging after resuming trading in seoul, korea. jin's lenders have deemed
restructuring plans insufficient. financial troubles have stranded its vessels at sea and imports and disrupted supply chains of consumer goods ahead of the holiday season. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thank you. half an hour in, we have seen a lot of action across markets in asia in the early session. david is here to get us up to speed. david: we are looking at diversions when it comes to markets. games,looking at although japan has come off its highs, perhaps down to dollar-yen, way below 104. look at australia and south korea, we are pushing towards session highs. have a look at some of the big moves. health care providers,
, perhapsal downside related to the statement out of the austrian department of health saying they were aware that there was an increasing number of health care providers that were looking to increase their fees. itt they are saying is that will not be supported by legislation. what you can do is what is provided for within the law. we are seeing adverse reaction across markets. to the upside, a decent bid across gold-mining stocks. some of the precious metals, a decent bid as well. gold, silver, copper also bid up quite nicely. it is risk on his you can see. it's going to be a big week for nickel. have a look at prices right now. the philippines biggest producer exports outght see of the country drop as much as
30%. is reason this is important prices have been driven up substantially on supply concerns because of this ongoing audit and review from the philippine government on noncompliant minors. the result of that audit is due this thursday, something to keep in mind. see, nickel prices touched one year highs a few weeks back. stilln update, hanjin down 25%. receivership last week. it was accepted. the next date you want to watch out for is november 25, when management is scheduled to come out with a new revival plan on how to turn around the company. shares not exactly having the best time this monday. haidi: thank you. g-20 leaders have been warned of
a populist backlash against trade that could threaten the global economy. shery ahn is at the summit in hangzhou. tell us about the theme, the warning we have been hearing. it is not surprising we are seeing policymakers increasingly worried about these protectionist measures around the world. we are seeing the u.s.-led transpacific partnership trade deal fon faltering. everyone from the imf to the oecd to the wto are warning about these anti-trade measures having an impact on the global growth. head of the wto telling me that there are some misunderstandings about trade. take a listen. of people say that
trade brings about unemployment. particularly in the developed and more mature economies. that is just plain wrong. trade accounts for a small percentage of the unemployment in those countries. most of the unemployment, more , comes to innovation and increased productivity. nobody is against innovation or productivity, but that is the reality. the fact is that trade has a net effect of creating trade in stimulating the economy. however, it is no consolation for the person who lost their job because of that. what we need to do is ensure that there is proper training, proper education, more skills, because that is where the new jobs are in today's economy. china doing enough to meet its commitments when it joined the wto? >> china is a very important
member. inevitable that friction is going to come up when you are a country of that size of that importance in the trade world, but in general, china has been playing by the rules. when members feel that china is , it is challenged through consultations, dispute settlement procedures. it also complains about the measures and policies of others and plays by the rules. >> trade outlook this year? >> not bright. we are still looking at sluggish growth. we are still growing, but very, very low compared to what we had before the 2008 crisis. we are looking at trade in particular sub 3% growth.
we were growing at more than 5%, so this is not bright. hopefully, the numbers will continue to improve over time, but for that to happen, we need more coordinated effort in terms of economic growth. christine lagarde warned we could see the lowest growth year since the financial crisis. this is the second and final day of the summit. will see several close meetings along with a wrapup statement by president xi jinping. one closely watch meeting will be the summit between japan and china at a time of tensions because of territorial disputes. will be getting those updates as they become available. sherry and therefore is in hangzhou on that last day of the g-20 summit. russia and saudi arabia have agreed to ensure oil market stability. the world's two biggest crude
producers stopped short of outlining any details. in a rare interview, vladimir putin told bloomberg that everyone should be on the same page. if production was to be frozen, then everyone should do it, including iran. we understand iran is starting from a very low level related to sanctions against the country. i think that it would be correct to find some sort of compromise. energy markets editor aaron clark joins us now from tokyo. looking at the market reaction after saudi and russia have agreed to work together, what are we seeing here? said, saudi arabia's deputy crown prince and russian president vladimir putin met in
china at the g-20 summit. after the meeting, they said they would work together to ensure oil market stability. what they did not do is offer details. a lot of folks in the market had hoped they would agree to freeze ,roduction at current levels and basically that would help support prices, but we did not get any of those specifics. all they said was they would work together. you need the cooperation of saudi arabia and russia, but they did not offer any specifics. the market is disappointing, aroundfalling with wti $44 a barrel and brent around $46. haidi: the devil is always in the details with these statements. eatingtalking about oil and a bull market, but it is still sitting around that $45 a barrel level. what are some of the other
factors that are driving these fluctuations we are seeing in prices? oil roseou mentioned, into a bull market on august 18 and fluctuated quite a bit since then. the next few things people are looking at are the opec meeting later this month in algeria. there has been a lot of talk about a potential freeze on production. that would be bullish for prices, but we will have to see if opec can agree to that. iran is the wildcard. they are returning production to pre-sanction levels. they did not show up for the last meeting in april, where there was hope there would be a similar agreement, but that fell through. the other factors are the oversupply globally, and that is weighing on prices as well, not is why oil is still trading around $45 a barrel. haidi: moore jawboning to come in the coming days. thank you for taking us through that.
look at some other headlines. saudi arabia says it will consider the tokyo stock exchange as a destination to list saudi aramco. cited, sayingre japan made the offer while the deputy crown prince was visiting tokyo. rba governor glenn stevens hosting his final policy meeting on tuesday, and economists are forecasting no change to the benchmark and just rate. hold at a expected to record low, following two cuts over the past four months. a 50%s are pricing in chance of further easing by year's end as they wait to see if the fed hikes this month. examples suggest that angela christianuling democrats were beaten by the anti-immigration afd party.
it is seen as a backlash against her open border refugee policy. local partners, the social democrats, when the election, and the afd came in second. vote nextkel faces of year with a growing public unhappiness with her policies. currency, china's rally short-lived? that is next. this is bloomberg. ♪
that there is more bearish pressure in the currency trade than what we are seeing. the currency has not depreciated the, zero .6% against dollar and august, but that data if we go into the bloomberg terminal, we can clearly see from traders intraday that there is a lot of selling pressure in the yuan because this data shows is fairly clearly that any time that pboc has strengthened its than .3%,g by more the currency erased those gains intraday on larger than average for humans. basically on days when fixings were cut by the same .3%, we sought trading blame subdued. that is saying that the relative calm in the currency markets right now could end after the g-20. the pattern suggests there is selling pressure. i want to mention these three
red dots, august 3, august 11, august 17. i will use august 3 as an example. it was when the pboc fixing strengthened 0.39%. immediately we saw the selling pressure build in. occasions, thee next day's was cut by 0.3%. distortionsotential caused by intervention with the fixing rate, if the pboc is trying to elevate the yuan, there are distortions. looking ateasingly intraday points and pressure to show perhaps a truer representation of traitor content. haidi: there you go you got a stronger yuan for your birthday. everybody will be looking to see what the fed does next. they probably want a more depreciationan
rather than sharp outflows. if the fed does tight and quicker or more aggressively, that could send signals for yuan pressure to sell. to keep it they want pretty stable and ahead of that inclusion on october 1. some headlines coming from the after president obama and xi jinping met. china says they have no basis for continued yuan depreciation. so they are talking again that they want stability in the exchange. traders are saying we see reason for weakness. haidi: the same rhetoric we have been hearing. the consensus estimate from analysts is for a 1% decline by the end of this year from this point onward. haidi: there you go. let's get a quick check of the business flash headlines. forese banks are making up
lost time as they seek to raise capital to tackle rising bad loans. lenders set up to acquired doing quit assets have been bolstering finances. last month, china civic announced plans to raise $6 billion. chinese banks strain finances with record first-half lending despite having the highest amount of bad debt in 11 years. business lobbyt says it there is still uncertainty over the economy following the decision to leave the eu. the confederation of british industry's is expecting to duration and growth. it comes as the debate continues over how brexit may affect the u.k. economy. the manufacturing index has also recovered. company of peugeot and citroen will open a new suv factory in southwest china this week. willroup says the plant
have the capacity to produce 300,000 vehicles the year. underl also make vehicles a local brand as part of its venture. than in china dropped more 19% in the first half of this year. softbank's debt is nearing a level that may trigger moody's to downgrade its rating. what is moody's about when it comes to softbank's debt? >> softbank is a huge company. they cover earnings of about $25 billion a year. that was the problem for moody's. their debt is $120 billion and rising. it is getting above a level which for moody's on their puts it into around where they have a downward driver.
level is sustained for a particular amount of time, you could see action. fair, $120 billion is a pretty formidable figure, so how can softbank address that? >> it is a huge amount of money. founder haveits often said that they think softbank is almost debt-free thesee it has all unrealized profits on assets, alibaba, etc. arm inrecently bought the u.k. for $32 billion. that closes today. it has unrealized profit of $90 billion. it earns about $20 billion and earnings. a lot of the earnings is used. it is not money they have available. there are different ways of
looking at this. basically they say they have enough earnings to cover the debt. haidi: right. , is the concern and sounding these warnings about softbank's growing ductile? about $3.5l sell billion of debt here in japan this week. selling, these bonds are complicated, long-duration bonds, 25-27 years. s&p have already said that they are going to allow softbank and , so they are counting some debt as equity. it means this debt is going to improve their debt profile for some companies. haidi: all right.
>> i think artificial intelligence is very important. the next field for internet is artificial intelligence. we started from pc-based 4-5rnet, then over the last years, it is pretty much mobile. now everyone has a smart phone. the next growth driver for internet will be artificial intelligence. counting a lot on that to promote baidu's next growth. >> it linked to that is autonomous vehicles. you have just received approval from california to test drive them on roads. for the buy do provide car market compared to global tech giants like apple and google? we have a number of
advantages. we have been doing mapping for more than a decade. autonomous driving relies on high definition maps, and we have the best technology for that. also, the chinese government is very friendly to self driving cars. they give us favorable terms. for example, they have a controlled area for us to test the self driving cars. we have invested in artificial intelligence technology for the past 10 years. heavily relycars on image recognition and computer vision. we are at the front of this kind of technology. our cars are making progress on most every day. we now have a permit to drive california roads. li there.in that is it for me on "daybreak