Skip to main content

tv   Daybreak Asia  Bloomberg  September 5, 2016 7:00pm-9:01pm EDT

7:00 pm
♪ >> obama cancels talks after the philippine leader says he will swear at him. saudi arabia says there is no current need for an output freeze as iran prepares to step up production. anjin sending fleets to safe boards prevent the cargo from being seized. we are live in hong kong where it is just 7:00.
7:01 pm
let's get straight to the asian markets. a bit of a meandering start? dull: it is going to be a start to the day. look at what happened in europe, not the most convincing. arrange this. putting everything together, flipping to asia, new zealand seeing a little bit of decline. -- closed, actually -- by the way. can we get the futures board up? when you look at japan, the last quote, just below 17,000. 1%. 6/10 of you are looking at marginal declines across tokyo.
7:02 pm
day whenonday was a the u.s. dollar was off. london opened, the u.s. dollar managing to recoup some of the losses. australian dollar is well up. when you look at the dollar and the yen, we were north of 104 yesterday. all of that being said, we are very much flat. have a look where we are for oil prices. some price action expected there. we will talk more about all you with juliet in a moment. there is the spike between russia and saudi.
7:03 pm
45 u.s. dollars per barrel. let me just and on the bond price. and this is one of the boards that we usually used to pick out which class stands out. in this case, we are looking at one quarter. everything in the center has been below. -- jgbright, jgb bonds yields, rather. -0.3%. down to about right there, we are close to getting above zero area in other -- this graphic is one to watch today. it is on its longest losing streak and over nine years. get the latest
7:04 pm
results on this bond auction. at these levels, i would be surprised to see if the bid to cover is a little bit lower than that. is, we are in for a wild ride. haidi: president obama has canceled a meeting with his philippine counterpart. that decision was made after roderigo to tear to a lashed out for interfering in the philippines. let's get to over southeast asia correspondent for more. this is another step back for obama on his last trip to asia? reporter: a diplomatic setback.
7:05 pm
it is rare for obama to cancel the meeting with the world leader that you can see why. by reporterssked how he would explain to obama the war on drugs which has prompted international criticism. more than 2000 have died since his presidency. duterte replied, using a string of expletives -- taking lesson. >> ima president of a sovereign state. we have long ceased to be [indiscernible] nobody but nobody -- you must be respectful. do not just throw away questions and statements. haslinda: this would have been the first meeting since duterte
7:06 pm
rose to power. the u.s. did not get any reason for the scheduling change but here is obama's response. >> i just heard about some of this but i have seen the colorful statements in the past. guy.ly, he is a colorful haslinda: a colorful guy. [laughter] haidi: indeed. all seriousness, what does this mean for the relationship between washington and manila? it is pretty unclear what it means. the two countries our long-standing allies. the philippines rely on the u.s. for backing them in territorial disputes. as part of obama's rebalancing
7:07 pm
in asia, the u.s. will deploy troops to counter the aggression from china. perhaps the spat comes down to the inexperience of duterte diplomatically. this meeting is after all his first international debut and he is known for being tough talking, part of the reason why he won the hearts of filipinos who are tired of rising crime -- rising crime. haidi: let's get over to more first world news aired reporter: g-20 leaders have used all available measures to boost growth while of voting competitive currency devaluation after the summit and hangzhou. the summit highlighted the increasing threat of protectionism and an accompanying backlash against trade. >> the meetings took place
7:08 pm
against the landscape of a growth that has been too low for too long and for to view. ande must be more growth growth must be more inclusive. shinzo abe reiterating the call for clarity over the plan for the u.k. to leave the eu hangzhoueresa may in insipid the extent of japanese investment in the u.k. is dependent on access to the single market. shinzo abe was the only one demanding more clarity. president reiterated that he things was a mistake. he says that it is in everybody 's interest to have better coordination on tax policies. tax avoidance was part of the discussion amongst world leaders in hangzhou.
7:09 pm
obama did not name the eu said there are risks to acting unilaterally and that some decisions may leave the u.s. treasury shortchanged. this is bloomberg. a little prices back somewhat after talks between russia and saudi arabia at the g-20 summit. fell short of agreeing on a freeze. we have been following the story. this was a significant announcement? a significant announcement that seemed to excite investors and disappoint them. you can see that track in the contracts. inyou look at the contract particular, look at that statistic that came through. saudi oil and
7:10 pm
minister was meeting with his russian counterpart. we saw that contract start to pair up. the saudi energy minister saying he was optimistic to meet later this month in algiers. his russian counterpart saying they are doing everything they can to ease market volatility. opec has welcomed the talks at the g-20 saying that others should support their agreement. the uae and kuwaiti oil ministers have come out saying they did support the agreement on the they have not agreed on an output freeze. saying that his decision not to have a freeze on self-defeating for opec and does little to address the supply. time, majore same
7:11 pm
players are talking about a supply freeze. absolutely. iran had international sanctions lifted earlier this year. they are now saying that they could raise the production to 4 million barrels a day. these comments signal that any deal between producers in in italy a meeting may actually have to accommodate more supply from iran because they are likely to flood the oil market even further. the persian gulf states are looking to retain their market share after sanctions were .ifted earlier this year we'll market stability is really impossible without an agreement between saudi and russia and it was a they have not agreed to an output freeze. haidi: that will only continue leading up to the meeting in algiers. jin comes up han
7:12 pm
with a plan for stopping its vessels from being seized. ♪
7:13 pm
7:14 pm
japanese futures are looking flat after talks that the boj may overhaul its policy toolbox, to cut rates deeper into the negative as opposed to further bond purchases. talks to offer to bayer.
7:15 pm
it would create the world's biggest producer of pesticides. monsanto previously rejected a bid saying it was an adequate. sources tell bloomberg citic is searching for a purchase. stock market turmoil putting pressure on [inaudible] a&a may claim compensation from rolls-royce with regard to the dreamliner's. ana make them compensation from rolls-royce with regard to dreamliners. ana is changing the turbine blades on all rolls-royce
7:16 pm
engines. let's check into the markets. asian stocks looking mixed. melbourne isw from the market analyst from ing. seen --ly that we have there's relief rally following the payroll numbers, how much risk are we setting up for? i think that is the issue. vote, wake of the brexit when you are using that as an input into the discount rate that you price long-duration assets such as equities, that in stocksive surge
7:17 pm
globally. now we are seeing a reversal of that. u.k. yields are heading up. we have also been seeing some interesting moves on the japanese bond market. a lot of speculation moving around what the boj may announce later this month and whether that will lead to less pressure on the longer end of the yield curve. worry foractually a the massive rally we have seen in equities in the most highly overvalued equity markets like the s&p 500. haidi: you have talked about the post-brings it bounce. it has been surprising. what does that tell us about the aftermath of the vote? it was quite surprising but it goes to show how much the current investor psyche is
7:18 pm
driven by bad news and good news. yard there is a couple of other things in play. there is this real question funds arether active worth the money. due to that, a lot of funders are keen to defend their returns this year. there was a very strong incentive for fund managers to make sure that they are benchmarking looks reasonable. if you assume that the fed is going to have to raise in december, we heard that this is really disturbing the markets, this idea that you and if a going to see a policy reversal which seems to be the trading
7:19 pm
approach. what do you like in this environment? for one, when you have central banks really straining at the bounds of what can be accomplished with monetary policy, we have seen increased speculation around fiscal intervention, it turns like helicopter drop money. in that scenario, the material space does look compelling. a lot of material stocks are still relatively undervalued. particularly lucky commodity prices. if what we are hearing turns out to be true, that the doj will overhaul its policy to cut rates, reining in bond purchases, how does that inform
7:20 pm
what you go into? obviously, negative rates so far has been very bad for for interest margins but it sounds like a boj is speculating that they can start a policy where the longer end of the curve is higher with the shorter and is in negative territory. in that scenario, you actually don't undermined the financing of the banking system and the insurance system. is possible is a question but that seems to be the direction they are moving. haidi: i want to move on to australia. what would you be looking for in terms of guidance? that: i mean, we know
7:21 pm
major changes to the interest policies are happening today. the minutes from the meeting last month had a noticeable emphasis about their concerns about china, much more concern than you are seeing in other central banks. he does have a very in-depth china team. they are starting to show warning signs about the economy there. more exploitation on those concerns would be quite interesting because that is australia's largest trade partner. it has a huge effect on how the dollar trades in australia. i know this is something that you look at closely. what temperature are you getting ?n the ground in australia we have had some high-profile deals being halted. what are you feeling at the
7:22 pm
moment? , it has been a very interesting time. earlier in the year, the rejection of the kidman bidding they'reland -- obviously needs to be more discussion about what investing laws should look like in we need to make it clear to the chinese what they can and cannot invest in. the way we are running it has not been good for investing. we need to come to some more clear decision-making. australia is a country that needs foreign capital so we have to make the rules clear-cut. people should know ahead of time with of a have a chance of getting approval or not. haidi: they are vulnerable
7:23 pm
whether they like it or not. .hank you . next, the tech giant becomes china's most valuable company. ♪
7:24 pm
7:25 pm
♪ and --tens becoming china's top company. it is a private company over taking the top spot which has traditionally been ostracized by state owned enterprises. you really have traditional industries suffering in the northeast provinces but the
7:26 pm
technology sector is being -- if you look at last year, contributed more than half of the output for the first time. drewrms of conception, the more than 70% of the growth. there is this idea that this is happening because the .overnment is allowing it to reporter: some of the largest ofding and also in terms callouts -- [indiscernible] they responded local governments responded by announcing 2.2 trillion yuan. that top entrepreneurs
7:27 pm
in the internet sector will be the targets. makingwhere is tencent the bulk of its money? reporter: more than 50% of the company is driven by mobile gaming. what investors are excited about is the potential to monetize mobile gaming and advertising. it is content strategy. hollywood movies, m&a, local television. -- anime, local television. down. australian futures the australian dollars seeing a little bit of strength. take a look at japan. the yen falling flat.
7:28 pm
not a lot of direction from the u.s. which is on holiday. next, we are live in sydney. ♪
7:29 pm
7:30 pm
we are 30 minutes away from markets opening across the region. you are watching "daybreak asia." let's get straight to first world news. juliette: president obama has canceled a meeting with the philippine leader after duterte swore and demanded respect. washington is concerned about human rights abuses in the filipino war on drugs. .uterte was due to meet obama
7:31 pm
oil -- saudi says there is no need to freeze output. end, saudi arabia and russia pledged to cooperate on prices without offering any concrete details. iran says it is prepared to step up production ahead of informal opec talks in algiers. iran said it could reach 4 million barrels per day. overtaking china mobile to become asia's most valuable company. shares rising more than 4% on monday. it is included among the world's public companies. shares jumped fourfold in the last four years. global news 24 hours a day
7:32 pm
powered by more than 2600 journalists and analysts, this is bloomberg. haidi: let's check on the markets in the asia-pacific. new zealand is the only one trading at the minute. the kiwi dollar looking like this. we are also counting down to the opening in sydney, tokyo, and .orea futures in australia indicating they will be off for tenths of 1%. dollar is up by about 1/10 of 1%. nikkei futuresn, off by 0.5%. the yen, pretty directionless. compared to the dollar, it has been a little lackluster this morning.
7:33 pm
commodities, crude oil pairing. an initial surge of 5%. over saudi arabia and russia discussing the freeze although we did not get those details. the dollar weakening against most currencies following friday's payroll number but the dollar index is looking pretty flat. take a look at the pound. reaction from indicating a strong level. the pound really recovering although giving back from earlier gains. it is the end of an era in australia as glenn stevens posts his final policy meeting. the cash rate is expected to remain unchanged.
7:34 pm
we have had a couple of moves already this year. let's look at what we are expecting. we are not expecting fireworks? no.rter: all 26 economists surveyed said we will see the reserves stay on hold. the same opinion for october, as well. the prevailing wisdom this time around says to wait for the fed. pressure can be taken off the australian dollar. that will solve one of the problems for the reserve bank of australia. the australian dollar could rise if the fed remains dovish. it is his last meeting.
7:35 pm
he would be the last person to say that it has been exciting. what has been his legacy? exciting is not really part of the legacy. he calls himself the most boring man in sydney. .t had been an exciting time he oversaw the widening of mining investment. era ofhave an underemployment and weak inflation. now, he has a very difficult situation with the cash rate very, very low. the surface but there is an issue with underemployment in australia and he doesn't seem to be getting help on the policy side of things. being a central banker,
7:36 pm
it has to be a challenging job. steady track record. he does face a very tough prospect. he has a cash rate of 1.5%. the rba itself says rate cuts lose their effectiveness. a.is likely to be one of the things they are looking at is the possible balance sheet expansion. in an extreme scenario, they might look at intervention. 2017 going to be a very interesting year.
7:37 pm
haidi: we will get back to you later. stopping vessels from being seized, trying to find ways to offload the cargo stock in its ships. rosalind has been looking at this. rosalind: a lot of pushing from south korea. hanjin shipping is going to file for a stay of assets in 43 countries. the chairman of the regulator says the group can take responsibility for the chaos in
7:38 pm
take more action. 61 containers have had operations disrupted. this.re concerned about it could take as many days -- as many as 30 days to get to rotterdam. with all of these delays, they are talking about how they can get into stores around the world. the south korean government is concentrating on easing issues. their finance minister says they are trying to get cargo unloaded from hanjin ships on to other ships or to be sent over land but it is not intend to use public funding to prop up the company. hanjin resumed trading on monday after being suspended for a few days. 30%, ending at 14%
7:39 pm
lower in the end. stuff --quite a lot of just in time for the lead up to the holiday season. same time, some port operators refusing to accept hanjin chips. the south korean government is trying to get some hanjin ships into ports where they would be more willing to take them. , --es like singapore, pusan busan, hamburg. they could be more willing to accept the ships. [indiscernible] with the holiday season coming they may be willing to give up a bit of help to do this. no details about how.
7:40 pm
they are speculating about financial help. engine does have some vessels -- hanjin does have vessels that are worth quite a bit money. it also has container ships worth $1.4 billion. raiseey may be able to some money from those. they would need a buyer, though. [indiscernible] one purchaser says they have considered buying some of hanjin's assets. haidi: you do have the eagles and the hawks circling there. we will be tracking the story as hanjin starts trading today. next, ipo fever is back.
7:41 pm
we will discuss the outlook. this is bloomberg. ♪
7:42 pm
7:43 pm
we are counting down to the opening of the markets this morning. japanese futures looking unchanged coming off of those earlier indicators of the lower open. let's check on the latest business headlines. general motors has settled cases that were said for trial over faulty ignition switches. one suit was dropped. with other disagreement, three have been settled. they still face hundreds of claims for deaths and injuries
7:44 pm
related to recalls. the to a trust is liquidating -- trust is liquidating a hedge fund. investors are pushing back amidst poor performance volatile markets. $25 billion have been pulled .rom hedge funds globally everbright security stepping up extension in hong kong with several hires from competitors. they include the head of investment banking. they have also recently attracted people from boj and china construction bank. they have added 10 executives since may. market for ipo's is the hottest it has ever been.
7:45 pm
soared. stocks have david has more top performers. david: if i remember properly, the last time we saw something similar was 10 years ago when just about everything listed went up. virtually every company that has .one public has done just that up over 40%. have a look at some of the names here. what is the first one? new trend international. weeks.er the last 2.5 they are based out of shenzhen, 205 employees. it manages online gaming worldwide -- also based out of shenzhen. iga device; dr. -- giga device,
7:46 pm
semiconductor. look at that. 240% -- not quite up to par. right?you get the point, we could go on and on. just about -- again -- this is -- regardless of what they did. design.landscaping again, 10%. flip the boards, let's have a look at the other three -- there we go. i think the first -- chart and let's have a look at the last chart
7:47 pm
here which shows the last three. there we go. again, back to my point. expensive matter how or cheap the ipo was priced for what sector they were in, they were a surefire guarantee, 44% on the first day if you got an allocation. you cannot blame some people for thinking that it is a bubble. haidi: a nice portfolio there if you were holding and all of those companies. chief chinaow is a strategist. is anything surprise you anymore? i have been monitoring this since two thousand 14. ipo stocks have done tremendously well. the performance is actually
7:48 pm
going to be larger this year. i think the reason is because, this year it is difficult to make money. the environment is complicated. very few people can understand it. with all of this money in china, they are chasing opportunity in the ipo sector and that is why they have done particularly well. the macro situation is complicated but within china, you have the additional layer of the government. this is the perfect storm. guest: that is right. they believe all of the new ipo stocks -- when the prevailing market valuation for many of these times.es is even 40-60 there is a variation cap between
7:49 pm
the ipo stock in the prevailing market multiples, and there is a markup after the ipo. i think we are actually slowing down in terms of opening our capable market. capital markets -- we're actually seeing this ever since the shenzhen -- enx we are seeing the valuation premium decreasing. that is a huge narrowing of the valuation. going back to what you said, china making less progress when it comes to the pace of realization? guest: that is right. i think that because of the undere currency -- it is
7:50 pm
quite a bit of depreciation pressure. even with the shenzhen connect and the shanghai connect program, they share the total quota -- the money going into the hong kong market remains in the loop. -- the moneyold it has to go back into asian markets. it is still continuing the loop so it is not effectively going away after -- haidi: you look at that haphazardly -- landscaping? very difficult to see any sort of link between them. do you see over the next six months that we are going to get larger deals? guest: what we are seeing is getting smaller and actually, the smaller the size, the better the quality, because there is so much money. i think going forward, it is
7:51 pm
difficult to say which way it is going to lead the eye would say, if you really bring out the now, ipos, which, i think, less and less -- because much of the chinese economy -- [indiscernible] the bigger ipo is coming into the hong kong market. they are coming to be listed in hong kong. with the domestication market, i would say that the smaller sized deal is still the dominant trend. haidi: there is always a bubble of some sort when it comes to china. is this the latest one that you are worried about? guest: i wouldn't worry about it too much as long as they keep the market closed the case there is still a supply of 150 trillion you have so much money slashing around within the domestic chinese market chasing
7:52 pm
so few opportunities in these opportunities are so well defined and that is why they have less risk, to find returned, but then, the probability of getting an ipo start is decreasing. problem,n't that the though? to contain that risk, you put a lid on financial market liberalization. guest: that is right. it is probably holding dr. progress of the opening of our market. that is the cost that we are paying for having all of this spectacular gains. haidi: there is no easy way out, is there? next, the electric car battery market and may not have as much power as manufacturers thought. ♪
7:53 pm
7:54 pm
♪ haidi: the rise of electric and hybrid cars is forcing
7:55 pm
manufacturers to ramp up battery production plans. david, you said that the risk in this is for the battery producers? what is not to like? it is attractive to be in a fast-growing market but it is also a dangerous market. batteryin lithium iron production is making a risk of that when the market is going to do, and what their competitors are going to do. that is pretty much business as usual in manufacturing but this is growing at double-digit rates . if your numbers are wrong by a few percentage points, you can end up with massive under capacity. or, overcapacity. too much manufacturing capacity and not enough demand. edison,f you ask sun
7:56 pm
they would probably have a word of warning. we have seen this before with solar. exactly. solar panels have had a fantastic run. output has risen massively. are far more adopted now than anybody would have thought but it has been a tough time to be a solar module producer. prices are down. as a result, if you are in the solar business, the climate makes it tough to me a company producing these. haidi: who do you see as the winners and losers in this year ago -- winners and losers? david: tesla and byd. they are not battery producers primarily, they produce the cars containing batteries. as the price of batteries
7:57 pm
plummet, that is probably good news for them. it wouldesla model s, probably cost $35,000 to build that. their forecast for the prices of rechargeable batteries -- you can see that going down to $11,000 in 2030. that is a massive reduction in price, making tesla competitive. the difficulty comes if you are elegy, company -- panasonic or lg, companies that primarily produce batteries. they have an opportunity to take advantage of this growth. it is a dangerous market. there is a gold rush going on for rechargeable batteries and when that happens, it is a great time to make a fortune but a great time to lose it, too.
7:58 pm
haidi: you have been warned. we are moments away from the opening of the markets in asia. we're also streaming live ♪
7:59 pm
8:00 pm
haidi: saudi arabia says there is no current need for a freeze as iran prepares to step up production even more. show some respect. talks after the filipino leader says he will swear at him. and, $.10 becomes asia's most valuable -- tencent becomes asia's most viable company, underlining the rise of private enterprise in china. welcome to "daybreak asia."
8:01 pm
let's get straight to the market here in the asia-pacific, where australia is coming online. the asx, here's what we are looking at the moment, pretty much flat at the moment. the aussie dollar ahead of the up just 0.1%. .7594. the rba is not expected to move interest rates. the nikkei is opening in a couple of -- is opening, in the first couple minutes of trade or so, down about 0.1%. the yen holding steady at 103. not a lot of direction, with the u.s. markets closed for labor day. we are seeing that not moving much when it comes to dollar-yen. in korea the kospi also just underway, dan 0.1%, tracking marginal losses -- down 0.1%,
8:02 pm
tracking marginal losses around the region. the won looking flat, in fact unchanged. brent is looking like this, up 1.7%. we had a pretty wild session of almost 5%surge on speculation saudi arabia and russia would agree on an output freeze. we have not had details on that. the dollar has weakened against most of its major peers after underwhelming nonfarm payrolls taking a, essentially september move from the fed more or less off the table. take a look at the pound, a big current -- mover in the currency space, hitting the strongest level in almost two months. sterling paring back initial gains, but this was in reaction to another piece of positive, beating data when it comes to the post-brexit period. pmi services jumping the most on record, playing into sterling.
8:03 pm
global oil prices have pared back somewhat after talks between saudi arabia and russia at the g-20 summit. they fell short of agreeing to a freeze. this was flagged as a significant agreement moment, but we did not get that. >> we fell for it again. you can see it reflected in the oil prices, particularly in the brent contract, a huge spike during intraday trade as saudi and russia said they had reached a significant announcement. then you can see investor disappointment as the crude price started to pare off during monday's session, with the saudi minister saying there was no need for a freeze right now, but was optimistic that a meeting later this month in algiers would lead to an agreement. the nymex contracts had an uptick, with investors hoping for a freeze. we are seeing more gains coming through. remember, wall street close on monday, so they didn't get a
8:04 pm
chance. they are both looking for ways the crudelatility in oil markets but they did not give any plan on what they would do regarding prices. opec's secretary-general the crude welcomed the joint announcement from the two countries, saying that other oil producing company should support them. uae and kuwaiti ministers have said they will. all that they are trying to do is prevent the oil price from dropping. morgan stanley says that the freeze's impact could be self-defeating for impact -- opec and would do little to address oversupply. haidi: we are used to this rhetoric. the markets play into it every time. it's amazing. at the same time, we are getting hints of a potential output freeze on the table, and we also have iran saying they might flood the market even further. juliette: iran says they may start to pump 4 million barrels
8:05 pm
a day, up from the current 3.8, even though there has been oversupply in the market. looking at this chart, you can see the white line, the crude price over two years. the orange line is iran's crude estimate. looking a little gray. centernterline is -- the line is iran's crude estimate. they are trying to gain market share after the removal of international sanctions earlier this year. center line is iran'sthe oil market's , analysts say, is impossible without russia and saudi arabia accommodating, and the deal may have to accommodate oversupply from iran. haidi: and we will look forward to more jawboning when it comes to the comments from algiers. juliette saly with that story. president obama has canceled a planned meeting with his filipino counterpart at the asean summit today.
8:06 pm
this came after rodriguez duterte lashed out at him for interfering. more drama on obama's last trip to asia. haslinda: with obama trying to convince asian leaders the trade deal, the tpp will be pushed through, this setback with a close treaty ally is something he doesn't need. you can totally see why he's snubbing duterte. in the lead up to the meeting, duterte was asked how he would explain to obama his war on drugs, which has printed widespread criticism given thousands of died since his presidency. duterte replied with a string of expletives in a stunning show of disrespect. >> i am the president of a sovereign state. seized --e long
8:07 pm
ceased to be a colony. i do not have any master but the philippine people. nobody, nobody. you must be respectful. do not just throw questions and statements. has linda: this would have been the first meeting between obama duterterte since swept to power in june. instead, obama will meet with the south korean president. here's what obama had to say. president obama: i just heard of some of this, but i have heard of some of those colorful statements in the past. clearly he is a colorful guy. haslinda: eight polite response -- a public response from obama to a tough talking duterte. haidi: colorful. seeing red maybe. in all seriousness, what does this mean for relationships between washington and manila? it is a crucial relationship.
8:08 pm
thawa: you can call it a of bilateral relations. they are long-standing allies. the philippines relies on the u.s. for backup in disputes, including in the south china sea. and the u.s. sees the philippines as a part of the rebalancing. the u.s. has intended to deploy troops in the philippines to counter aggression from china. this incident highlights challenges obama faces even as he prepares to leave office. we have a trade deal that may not be ratified, a china that is increasingly assertive, a defiant philippines, a disruption, not excepting a nice way to end your presidential term. [laughter] haidi: no, not a relaxing way, certainly. haslinda amin in singapore. let's get to the first word news. rosalind: g-20 leaders have pledged to use all measures to boost growth while avoiding
8:09 pm
competitive currency devaluations. they said members are determined to use all forms of fiscal and structural reforms. they highlighted increasing threat of protectionism and an accompanying backlash against trade. >> the meeting took place against a landscape of a growth too has been too low for long and for too few. there must be more growth, and growth must be more inclusive. : shinzo abe has reiterated a call for clarity over the u.k.'s plan to leave the eu. he told theresa may that investment in the u.k. is likely dependent on their access to the single market. abe was not the only one to demand more clarity. president obama reiterated that he thinks brexit was a mistake.
8:10 pm
barack obama said it is in everyone's interest to have better coordination on tax policies to avoid issues like apple's dispute with the european commission. tax avoidance was among the issues discussed at the g-20. eu, butd not name the said there are risks to acting unilaterally. global news 24 hours a day, powered by more than 2600 journalistss and analysts in 120 countries. i am rosalind chin. this is bloomberg. haidi: looking ahead, high-fashion for the rich and famous. we will be speaking to a chinese designer that has dressed the country's elite. and, japan is running at a time and needs to act fast. n analyst in a private banking next. ♪
8:11 pm
8:12 pm
haidi: a check of the latest
8:13 pm
business headlines. bayer has increased its bid for monsanto, now prepared to offer $127 per share, a 19% premium to monsanto's last close in new york. if the deal goes through, it would create the world's biggest producer of seeds and pesticides. in july monsanto rejected a $5 billion bid, saying that was inadequate. regulators in south korea say hanjin will seek orders in 43 vesselss to prevent from being seized. they said that its parent, should work with the shipping industry. they are working to avoid ships being seized. ana may file for compensation for faulty engines on the 787 dreamliner. the form of compensation has not
8:14 pm
been decided, but it might be future discounts instead of cash. 18 ana flights were canceled last month after they found corroded turbines on the planes. civic securities has considered selling earlier this year. the companye bought for $1.2 billion three years ago. sources say they are looking for a buyer. has struggled to integrate the two companies. thro bridges have been struggling as -- brokerages have in struggling as stock market turmoil puts pressure on commissions. markets are getting underway. what is going on? david: as futures were signaling earlier, haidi, not the most
8:15 pm
compelling session today without a lead from wall street. starting in australia, i guess it is more to the downside. financials a little lower, talking about 0.2%. resources one of the heavier sectors, heaviest weighted sector groups there, down 0.5%. have a look at the nikkei 225. a perfect split here. speaking, onoughly the way up,. dollar-yen has not budged from this time yesterday. above 104 at one point, and scaling back as the dollar managed to recoup some losses during asian trade. south korea, we are watching shares of hanjin shipping. onte a big move, by the way, dollar-won yesterday, down 1%, and we see further strength in the currency. have a look at oil prices. giving back some gains we saw yesterday. that is your contract for brent,
8:16 pm
47.50. dxy dollar index managing to 95.77.losses, and looking at cable at 1.33. now, we are watching the bond markets closely in japan, because a 30 year bond just opened up, for a ninth straight session. last time we put together a stretch this long was back in 2006, 10 years ago, so it is quite a painful run, if you will, across the 30-year. there's speculation the boj may ease up a little bit toward the longer end of the yield curve. we have an auction coming up today. should have results in about three hours, just over three hours from now. that's the result from the last one. would not be surprising to see it higher, given how high yields are at the moment. but if you get lower demand, buckle up. it's going to be interesting.
8:17 pm
but at least we have a yield curve in japan. a little higher,, of course on the longer and -- a little higher, of course, on the longer end. haidi: particularly interesting as the boj is planning to rein in purchases on the longer end of the curve. let's bring in our guest, a global strategist at societe generale. what does this story tell you? >> i think it means, first of all, that inflation expectations are coming down again. has been in japan since the beginning of the year. a pullback that is particularly worrying for the market -- bank of japan. that's why the market will scrutinize the boj meeting, -- duled on haidi: we have had several years
8:18 pm
of liquidity-driven, bad news is good news rallies. we saw that on friday with payrolls. how much are we setting up for here? there is an idea we will not see a policy reversal, even though we could still get a move from but maybe not in september, december? xavier: it is striking. the brexit has been pretty much digested by the markets. in september.ike the rally may still continue for a while. i think the latest micro readings are relatively mixed, but they are supportive of future economic growth across the globe. regarding asia, i think the biggest question is about japan, at this stage. haidi: you talk about brexit.
8:19 pm
this very impressive set of numbers we have had since the vote came out has surprised a lot of people on the market. did we perhaps misread the indications of a brexit on the market? xavier: definitely. i think the market was extreme the concerned ahead of the brexit. there were commitments from central banks to provide as much liquidity as needed to mitigate the impact of the brexit. and emerging-market turnaround has started to take place, probably around the same time. we have seen pmi figures, you know, coming up in many countries, including the worst economies, like brazil, where we have started to see improvement. so growth on the manufacturing and service aside, emerging markets are doing better, rather good news for the market. haidi: you said this is coming
8:20 pm
down to a decisive moment for the bank of japan and governor kuroda. he said yesterday, he doesn't believe there's a limit to any of the three types of monetary easing they can do further on. what more can they do? it's very obvious, this inflationary mindset over decades is hard to change. xavier: probably the biggest question at this stage for the japanese is the right combination of fiscal stimulus and monetary policy stimulus. w the policy announced by mr. abe will be adopted by parliament in september. we think the combination of additional stimulus, and any kind of tweaks that can be added to the current, ongoing monetary easing, are a quite necessary measure to prop up not only inflation expectations, but also
8:21 pm
growth. growth has been relatively disappointing so far in japan. inhalf in 2015, -- we have 2015, a rather positive outcome, but we have come into a bit of disappointment regarding macro figures, especially gdp figures in japan. so more has to be done in order to prop up domestic demand, and himore has to be done on the monetary policy side to prop up inflation expectation and reassure markets that the boj will meet long-term inflation targets. haidi: what about china, at the moment? xavier: i think china is benefiting from what was decided late 2015. liquidity flowing into the economy, and the fact there was government spending increasing. all these factors are playing out, propping up gdp growth
8:22 pm
figures. the capital flows have been backed up so far, and there has been a consequent pressuring by the market. renewedtill expect economic klein at the end of this -- decline at the end of this year or the beginning of 2017. so we have a positive approach regarding chinese equity markets, but we are still cautious about the fact that lots of reforms have been announced that need to be advanced. haidi: in terms of what you are advising your clients at the moment, hedging against potential volatility in a low yield environment, you still like gold. you still think old-related stocks -- xavier: definitely. for two main reasons. the first one, the fact that real yields across the globe,
8:23 pm
especially in developed markets, including the u.s., are going to remain low. this is a key factor to support gold prices in the future. when you look at safe havens, we know the government bond markets in developed countries are extremely expensive. this is the case in the eurozone, and also in the u.s. so if you want to find some kind of safe haven, to balance out your portfolio, gold remains an asset of interest for investors. haidi: all right. finding safe havens, fighting some were to go in this really remarkable market we have seen. a pleasure having you with us, xavier denis from societe generale private banking, global strategist there. next, japanese mobile carriers may need to watch their backs as the nation's most popular messaging app launches its on phone service. this is bloomberg.
8:24 pm
8:25 pm
8:26 pm
popularapan's most mobile messaging app line has an out -- has added cell phone plans to its menu. why is a messaging app offering a mobile phone service? >> good morning. ofl, these days a lot services traditionally offered by telcos are now available from apps. for line, five dollars a month to get unlimited data for voice calls and messaging as long as you do it from inside the line app. unlike messenger, line is not a simple sms service. ecosystem, entire streaming video, music, and you can order a cab or even find a
8:27 pm
part-time job from inside the line app. if that's not enough, for 11 bucks they will throw an unlimited twitter and facebook. haidi: pretty appealing when you put it that way. this comes straight out of this year's biggest tech ipo. how does that fit in with their global tech strategy? juliette: you know -- pavel:, you know, line used to talk a big game about extending in latin america, the middle east, and since the ipo they have narrow the focus to the three countries where they are already dominant, japan, thailand, and taiwan, and including indonesia where millions of users will be buying new smartphones and downloading their first apps and choosing between messengers. so you can see this move as something of a defensive strategy, about user attention. because after all, line is up against monstrously large companies like facebook and
8:28 pm
wechat in china with one billion users, so there is a sense of a battle coming and then digging in. haidi: pavel, thanks so much for that. up next, tence cents is worth a whole lot more. mostnt's a coming china's viable company. ♪
8:29 pm
8:30 pm
haidi: it is 8:00 a.m. in singapore, looking like a very miserable, rainy day there in the lion city. we are half an hour away from the open of trade there. you are watching "daybreak asia." ♪ let's get straight to the first word news with juliette saly. obamate: president canceled a meeting with the philippines' leader. washington is concerned about human rights abuses in the philippines' war on drugs, with
8:31 pm
more than 140 people killed since duterte took office. duterte offered the president some rough -- blunt advice. : i am theduterte president of a sovereign state, and we have long ceased to be a colony. i don't have any master, except the philippine people. nobody, nobody. you must be respectful. do not just throw all your questions and statements. gainste: oil has pared after saudi arabia said there's currently no need to freeze output. crude earlier surged almost 5% ahead of what was billed as an important announcement. in the end, it turned out saudi tobia and russia agreed cooperate without offering concrete details. iran meanwhile said it disappear to ramp up production ahead of formal talks in
8:32 pm
algiers. the state oil company said they could pump 4 million barrels a day. tencent has overtaken china mobile to become asia's most viable company. shares rose 4%, swelling market value to over $256 billion. that edged then passed china mobile, putting them in the world's top 10. inres jumped fourfold roughly as many years. global news 24 hours a day, powered by 2600 journalists and analysts. i am juliette saly. this is bloomberg. haidi: let's take a quick look at how markets are trading in the asia-pacific, in the first half hour or so of trade. the nikkei 225 looking flat at the moment. the korean stocks are unchanged as well. city, one of the biggest -- sydney, one of the biggest
8:33 pm
losers in the region, down 0.4%. a little risk aversion ahead of the rbasydney, one of the bigget losers in the decision at 12:30g kong time. we are not expecting a move in the governor's last policy decision as rba governor after two rate cuts in the last four months. the rba is expected to hold, but look at further -- out further thedownside risk, pulling aussie dollar a little lower. libor todd dollar risks to the yuan. making it more difficult to service half $1 trillion of debt. robin joins us now. does this threaten the uneasy stability china has managed to build? robin: to put things in , chineseve, haidi. companies have an estimated $580 billion of debt. that is more than three times the fx reserves of mexico and double the fx reserves of
8:34 pm
russia. that is a problem. the more yuan depreciation there is, the dollar goes up and costs go up, forcing the pboc to take policy steps it did not necessarily want to take, like easing up capital controls. it cannot ease too much, because then you would see a flood of money leaving china. it is a definite risk to china's financial stability at least. -- could ituch really get much worse? should these companies try to service the debt while they can? robin: it is a vicious cycle. the more they try to repay dollar debt, the more the yuan is forced down, making the dollar debt more expensive. so as the fed prepares to raise interest rates, we had a bit of report last week that can provide a -- did not provide a clear direction.
8:35 pm
but the odds of a rate increase moreore than even -- are than even. that will drive the dollar higher and the yuan lower, making the cost of servicing that much worse. it is probably going to get worse. haidi: not the bearer of good news when it comes to the yuan. robin, thanks for coming on for us. it is the end of an era as rba governor glenn stevens hosts his final policy meeting. everybody is expecting him to keep the rate unchanged at 1.5%. allen is in sydney. we are not expecting fireworks. economists survey by bloomberg think the cash rate will stay at 1.5%, and at the moment the survey is the same
8:36 pm
for october as well. the prevailing wisdom seems to be to wait for the u.s. federal reserve and see what they do in september, because of course if the u.s. fed raises interest rates in the united states, that puts downward pressure on the aussie dollar. for thebattle won reserve bank of a strong without having to do anything. haidi: glenn stevens says he's not an exciting man, but it has been an exciting period, to be sure. what is his legacy? paul: 10 years in charge. 18 down.hanges, 12 up, he had a mining investment boom and the windup of the boom. in the global financial crisis, australia was one of few countries in the world to avoid dripping -- dipping into recession. that has been exciting times for the supper claimed most boring man in sydney, but his legacy is mixed. we have a very weak inflation
8:37 pm
and the cash rate is at record low levels, 1.5%, and a bit of an issue with underemployment as well. but to begacy in all, fair glenn stevens has not had much assistance at all from a paralyzed government. haidi: the deputy most boring man in australia, incoming governor phillip lowe, has a very tough job, very little and the nation left for him to work with. maybe down to 1%. the reserve bank has previously been below 1%. interest rate cuts tend to lose effectiveness, so maybe he has two shots left, philip lowe. we had a situation where bloomberg had a story about this a few weeks ago, maybe looking at unconventional measures to provide stimulus, possible balance sheet expansions. in an extreme scenario, maybe currency intervention as well. so philip lowe, not a lot of
8:38 pm
ammunition. might be considering some more unusual tactics in 2017. haidi: all right. we are getting that decision from the rba at 12:30 hong kong time. paul allen in sydney with a preview. tencent has overtaken china mobile to become the country's's most powerful company. asia's most valuable compan y, in fact, highlighting the importance of private enterprises. what is it, i guess, that this says about china? >> the significance for tencent an companies like alibaba -- because the top spot has traditionally been occupied by state-owned enterprises, and for many years these private companies were marginalized by soe's with cheap funding. you are seeing the dividing
8:39 pm
between traditional industries in the northeast provinces, rust belt industries really struggling to create growth, and a very vibrant economy in the internet sector, where most of the growth is coming from, the innovation and job hiring. haidi: has there been much of a reaction from this data? privatethe rise of industry has only happened because it has been allowed to. period ofthe longest time, the internet sector was pretty much left alone by soe's and seven wealth funds, which is ba gettingw aliba money from softbank, yahoo!. but now you see the national players coming in. the recent funding rounds for didi, playing a pivotal role in terms of providing resources and these companies as they compare to take over top spots in the economy for the next few
8:40 pm
years. haidi: china's largest company. where do they make their money? lulu: the bulk of the revenue is still coming from online gaming, games like league of legends and also crossfire. but the sector investors are most excited about right now is mobile gaming growth and advertising that has yet to be fully monetized. that's where they see the growth mostly coming from, and also this cross-platform entertainment strategy, pioneered by tony ma, the founder of tencent. haidi: all about that content. lulu chen, covering the story for us of tencent becoming the most valuable company in china. plotting a newin course to protect their ships from the storm of corporate receivership. that is next. this is bloomberg. ♪
8:41 pm
8:42 pm
haidi: let's take a look at the state of play when it comes to markets around the region. this is tokyo, with marginal
8:43 pm
gains, up 0.1% and the yen holding steady at the moment. not a lot of direction, given that we had u.s. markets closed for the labor day holiday. asx lookinghe sx -- like this, extending losses, down 0.4%. we are seeing a little risk aversion ahead of the rba decision at 12:30 hong kong time. the bank in australia not expected to move off the 1.5% record low when it comes to the cash rate. we had two cuts over four months already. this is also glenn stevens, the governor's last meeting at the helm. been asie dollar has little stronger ahead of that meeting. in seoul, kospi flat at the moment. asian shares have been mirroring the one-year high, but coming off of gains in what has been a pretty mixed early session so far. take a look at singapore, where
8:44 pm
trading starts in just over 15 minutes. it is a rainy, dreary day in singapore. if you are in bed, you may want to stay there. having said that, singapore futures are pointing to an upside of 0.3% when it comes to the straight times index. let's get the latest business flash headlines. general motors settled the last two film other cases set for trial over faulty ignition switches. gm was originally facing six suits that would set president on how others should proceed -- precedent on how others should proceed. of them, one was dropped, gm won two, and three have been settled. gm still faces hundreds of lawsuits for death and injury related to its 2014 recall. a takeoverding off claim from japan for $1.2 billion. say they are not allowed to pay the sum as the rbi declined
8:45 pm
approval. docomo is seeking compensation after tata failed to sign a buyout for a stake in one of its units. sumitomo mitsui trust is liquidating a hedge fund after poor performance. investment in the alpha fund fell to $10 million from a peak of $100 million in 2012. investors pushed back against performance in volatile markets. $25 billion have been pulled from hedge funds globally in the month of july. everbright securities is stepping ups expansion in hong kong -- stepping up its expansion in hong kong, including people from the likes of bank of china, citic, and china construction bank. the firm has added 10 senior
8:46 pm
executive since may, and plans to hire 10 more before the year is out. hanjin shipping shares are jumping in seoul this morning, up 21%. they fell at the end of trading alvingday by 14%, h losses yesterday after a report that its parent, hanjin, is discussing financial aid. what more do we know? what are the latest developments? thelind: the hanjin group, parent company, hanjin shipping, has been reported by "asia business daily" to be discussing and collateral with its main creditor. and we're seeing the south korean government and the ruling party agreed to offer about one billion won in low-interest yellen -- loans to hanjin shipping. they didn't cite anyone in their
8:47 pm
report. these two stories coming out are helping shares of hanjin higher. hanjin also reporting it will file for acid waivers in 43 countries to prevent vessels from being seized by creditors. that's according to the financial supervisor committee of south korea. been -- they have been putting pressure on hanjin group to take responsibility for the "chaos" caused to the shipping industry, pushing for action from hanjin's parent group. 79 ships have had operations disrupted, and it is peak shipment time ahead of christmas and the thanksgiving, holiday season. so there's quite a concern, to prevent future disruptions to the global supply chain. the finance minister of south korea says they are trying to get cargo unloaded from hanjin
8:48 pm
so they can be sent on other ships or overland, but at the time said they were not willing to use public funds. it sounds like they might be discussing that, making changes to that. world'se, hanjin's the seventh-largest carrier, and is a lot of stuff on ships waiting to be offloaded. we do have port operators that are refusing to accept them, so what happens to the goods on those ships? we have a function on the bloomberg. if you look at vmap, you can see where the ships are, exactly where the hanjin ships are located. some imports, some out -- in ports, some out to sea. there are some ports where ships are less likely to be stranded, including singapore, hamburg, and south korea. so shipping going to those areas could help to ease the most immediate bottlenecks.
8:49 pm
hanjin has some sizable assets which might help it at least on the financial side. we at a pie chart showing 63 vessels worth a total of $1.8 billion. container ships are a big part of that, worth $1.4 billion. they also have smaller ships and tankers as well. could beerchant marine a possible buyer for some of those assets, and have said they are considering buying some of those assets. the top lines at the moment are that hanjin group will help lookingaid, possibly, to korea developing bank to provide aid to hanjin shipping. and the ruling party is going to offer a 90 million u.s. dollars loan to hanjin shipping. haidi: some of the falters circling -- vultures circling
8:50 pm
potentially over assets up for grabs. we watch that stock, because it has been trading higher today, up 21% after falling 15% yesterday. coming up next, the business of high-fashion. we need to be top designer who has dressed the elite in china and abroad. this is bloomberg. ♪
8:51 pm
haidi: welcome back. you are watching "daybreak
8:52 pm
asia." despite the slowdown in china, the appetite for high-end fashion continues to grow, and many,t guest has dressed including the wife of premier keqianho shine -- li g and helen mirren. when you are addressing these elite people, what are their priorities? >> for me, there is no difference between the first ladies or a regular woman. for me, the most important thing is to bring out the beauty within them, to make them elegant, to make them look comfortable and beautiful, to look their best. of whoever principle i am making a design for. designingn you are and putting forward this brand, is it top of mind that you want
8:53 pm
to reflect -- project the chinese characteristics and history into the broader world? grace: it is. the main reason i returned to china in 2009 after working in new york for 15 years, i really the chinese voice heard in the fashion world. so i am really emphasizing how to bring tradition into modernity in the fashion world for the chinese. about respecting so much why china has not had its own made in china luxury label, do you think the time is now? and what are the elements that make a brand, a luxury brand, particularly chinese? grace: if you look at the history, i think china is the first powerhouse in the luxury field.
8:54 pm
we had a fashion industry 2000 years ago. i think luxury and refinement, or anything that is particularly beautiful, are in the dna of the chinese people, and we probably .ave some historical reasons i think the time is definitely coming. haidi: how much of a boost have you gotten, with a number of very high profile ladies wearing your clothes? we spoke about helen mirren, about the wife of premier li ke cited in media reports as a fan of your designs. how much does that help the business? grace: it might help. i wouldn't know. [laughter] really for me, all of my clients, very important people, i see them equally. of course, for some of them, they are representing a country, they are representing maybe,
8:55 pm
like, further own company or their brand. but for me, they are just women who want to look their best. and also for me, another reason is tory important for me bring out, to let the world know how chinese women look. haidi: has the slowdown in china, the pull back it comes to conspicuous spending, the crackdown on corruption, the extravagance, has that interrupted -- impacted your business? grace: not at all. i would say maybe in a sense it has actually helped us. comes down tok it branding, luxury brands, or spending money, into more looking for value. looking for what they really like.
8:56 pm
i think that's what we are representing. we are not a big brand. we are not well known, world-known brand, but we are representing what women really like to have. they look for things that are special, that they have never seen before, and really understand their needs. i think that's what we are representing. haidi: just quickly, what markets outside of china are you prioritizing right now? grace: europe, and maybe united states. even though i came from the united states, i had been there for 15 years, more importantly is europe. i think that chinese who live overseas are a very important market. i would say, one designer who would be very good at that, to understand chinese who live
8:57 pm
overseas -- haidi: i like your confidence. great to have you with us. grace chen. that is it for "daybreak asia." let's get to rish. what is on "trending business?" rishaad: we are talking about the balance or unbalance of the oil markets. and, some real global leaders coming through china, challenging the likes of alphabet. are chinese companies no longer copycats? that is "trending business" in the next two hours. ♪
8:58 pm
8:59 pm
9:00 pm
is "trending business." ♪ rishaad: taking a look at what we are watching. obama cancels talks with duterte after he used less than diplomatic language. another output for ease of speculation as saudi arabia says there is no need to cap oil production.

24 Views

info Stream Only

Uploaded by TV Archive on