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tv   Asia Edge  Bloomberg  September 13, 2016 12:00am-1:01am EDT

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>> the rebound lives on in the asian pacific, though it has run out of steam in japan. hong kong stocks rise the most in months. traders see less of a chance of a rate hike. the fed is urging patience, saying there is no need to rush. saidl sales rose and july's slip was a hiccup.
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anna: the collapse could be the industry's lehman moment. welcome to the program. it is 5:00 in london and i am anna edwards. anie: and i'm angie lau. welcome to "bloomberg markets." you side, the u.s. markets reacted to one fed governor sounding more hawkish on friday. from brainerd, who is a dove, ahead of this silent period. and she moved the markets as well. anna: the markets where primed to find out how dovish she would be. will she stick to that script and she kind of did, didn't she? some of that is wearing off in the asian session a little bit, isn't it?
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when we look at the u.s. future picture, it looks a little bit less bright. so, let's listen to what brainerd had to say, talking about less urgency than others at the fed, and talking about the need for patience. the extent that the effect on inflation of further gradual tightening and labor market conditions is likely to be moderate and gradual, the case to tighten policy preemptively is less compelling. anna: making the case therefore patience. -- making the case there for patience. it seems the fed might be on her side. heir investors are urging t fellow investors not to make all of their decisions based on the bloomberg work function. the markets are really making up from the doldrums in recent days. angie: that is certainly true.
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you know what is waking up as well? volatility. i want to show you my bloomberg right now, where we have a chart lynch,e b of a merrill the global stress financial index. i want you to note on the far right, that huge spike we circled in red. that is a one-day move as volatility awakens. volatility, you could say back surged on. markets, friday by the most since august of last year. a tightran out of trading range. let's get more on the markets in this region. said,er: angie, as anna we have pulled back a little bit from the relief rally with a earlier in the session. we can see some weakness coming
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through in japan. it has been fluctuating between positive and negative territory, but the stronger yen is impacting the japanese market, down by .1% in the afternoon session. australia is only up by .1%, despite a gain of .7% on the open, and the fact of course, that we did have better than expected data out of china. and you can see all of this red here. either of the markets that were closed during the holiday. so, coming back online, and you can see that catch up selling coming through, following through from the big sell off we saw in this region on monday. the hope that we would see a little bit more of the rally has faded, that we still can't the hang gains on hant seng, up by .8%. career,a little bit -- a little bit more supported by
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the fact that we do have samsung rebounding. i wanted to show you bonds because gilt growth came through after lael brainard co spoke. we saw this big rally coming through in stocks. why aren't we seeing it as well in u.s. treasuries? we don't see much coming through in the japanese bond market either. also, an interesting story on the bloomberg. yield hunters are becoming the hunted. japan's debt has lost 9% during the last quarter. we still see negative yields there. and oif i could look at the dollar-yen, we can still see a lot of weakness on the back of lael brainard's comments. up by .1% there, angie. angie: thank you for that. well, the other big story we are following, the chinese economy
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is showing increasing signs of perking up with the latest data. it shows that july could have been a hiccup. is that the case? >> final think so. the numbers did dip lower than expected. all the three numbers beat expectations. let's run through them quickly and then get into the reasons why. production rose thre three numbt expectations. 6.6% in august and we were expecting 6.2%. there has been a deceleration of factory output. the monthly average was 9.6% growth and in 2014, 8.2%. now, we are back up to an average in the first eight months of the year of 8.2%. retail sales, a key barometer of
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consumer appetite, better than expected in august, 10.6%. we expected 10.2%, and that was the same number as july. the floor has been placed there, as you can see. investment, the same as july, 10.1%. economistsrd hsbc talking about how the economy is bottoming out. talk to us about the property sector because a property rebound has underpinned this recovery to some extent. what have we learned there. >> it absolutely has, and some of the accommodative policies have helped to see that recovery, lifting up restrictions on mortgages and one cities have
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seen some price gains as well. we had those interest rate cuts. the central bank has held off from further easing, but th onee seen some price gains as well. weose six interest rate cuts have finally worked into the property market. there could be -- but those fixed interest rate cuts have finally worked into the property market. there could be some signs of this. i have a few comments here. the chief economist, raymond, saying this is a decent set of numbers that continues to reinforce the message of economic stabilization. but then we have david from brookings saying, the authorities are walking a fine line between enough stimulus to achieve that 6.5% growth target, but not so much that risks build up alarmingly. if there is too much of a rebound, they will take away the punch bowl. saying,, anna overheating in the housing market has become a serious concern. anna: thank you, stephen. hsbc says the key question will
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be around how the stimulus is removed from markets. now, let's see how markets have been reacting to what we have heard out of china. julia sally has the analysis. reporter: we're watching three markets for reaction. australia, china, and here in hong kong. not a lot of conviction is coming through, particularly in shanghai and australia. beatte the fact it did expectations. we can see more weakness on the shanghai market, down by .2%. i wanted to show you three interesting stock moves. these are three companies that have made their trading debuts today, and they have all his the daily limit. we are still seeing a lot of appetite for ipo's coming into the china market. beijing advanced digital, the
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tech company, and a chemical manufacturer. three very separate industries, and all doing very well. that is one bright spot in the china market. here in hong kong, we are up by .8%. however, we have to remember that this market locked closed 4% during the selloff on monday. when the numbers did come through, we did see an initial spike from the aussi, and that is represented here by this move that we saw there. that was a better picture for the aussi dollar, but it hasn't started to give back again from the losses at the beginning of the session. so, we see dollar strength there, that we can't the dollar weakness against other currencies. -- though we can see the dollar weakness against other currencies. anna: checking in on the first word headlines now from around
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the world. reporter: china's savings bank is in line to be the world's biggest ipo this year. planning to list on september 28 and have already found cornerstone investors in china should building, age and a group, and shanghai -- h&a group, and shanghai port. them toe allows h conduct key laser printing technology. as part of the agreement, samsung has committed to purchase $300 million worth of hp shares on the open market after the acquisition is completed. hp closed almost 3% up. worth $3.2 billion will join two companies. bolsters theon
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sale of more automotive components. this includes some i conductors and hybrid and electric vehicles. semiis includes some automatic conductors and hybrid and electric vehicles. sites the korean regulator, saying it is not certain they will be able to raise funding from the airline at all. million was4 approved, but only after hanjin handed over a stake in the beach terminal. it is a huge, huge nuclear markk. -- nuclear mark. reporter: global news 24 hours a day, powered by 2600 journalists in more than 120 countries around the world.
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this is bloomberg. angie: still aheaqd on "bloomberg markets," changing the rules. the international debut. more on that later on in the show, but coming up next, shopping for a good deal. we will take a look at the opportunities in the u.k. retail market. this is bloomberg. ♪
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angie: welcome back. you are watching bloomberg. i'm angie lau in hong kong. anna: and i'm anna edwards in london. singapore's global logistic robert he is is expanding its portfolio into real estate with a purchase of more than $1 billion a warehouses. dealxpects to complete a
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in december. the remainder of the buildings are in development. glp is the second-largest owner of u.s. industrial real estate. barclays' ceo has a warning about the u.s. election, saying both candidates have views on free trade that could hurt the global economy. he did not name hillary clinton or donald trump, but that rhetoric that questions globalization would have significant long-term effects. he noted the u.k.'s brexit vote, which demonstrated resistance to globalization. the property market in the u.k. could still be in shock from the brexit vote. the average value of a home just rose .1% last month, the same pace as in july. prices are about 4% higher than a year earlier, the weakest increase in some three years.
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the decision to leave the eu is adding pressure to a market already feeling the pressure is of a tax increase. -- feeling the pressure of a tax increase. angie: was focus on the retail property sector in the u.k. because our next guest says the sector is looking quite good. let's bring in the head of u.k. retail at the largest publicly property brokerage. it looks like investors are still feeling good about the property market. havendon has a safe quality about it. we have already seen large investors focusing on london retail and the core retail market, specifically. so, about 60% of our market is over perceseas. angie: how much of that is underpinned by retail
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consumers flocking to london to buy goods from those luxury areres, or how much of it is these retail leaders who want to have a stake in london? >> retailers want to make money and that has been the case during the recent time. i think what we have seen most recently is a lot of retailer did nasties perhaps -- retailer ownsties, buying their investments. its urse, the sterling and 10 year loans currently, is a touristsction for flocking to london. so, it is both the domestic
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tourist and the overseas tourist. anna: a lot has been written about how we are in the middle phony war post the vote. we have not actually brexit-ed. it is difficult to talk about what the u.k. economy will look like in the future because we don't know some of the things. is there a sense that the u.k. market is holding up at the moment, but could still be vulnerable? >> they could be vulnerable. the lowest level of unemployment the 1970's.nce people are shopping and they are shopping in numbers. there might be a lag, but currently, it is business as usual. weumber of the retailers represent are looking to expand their market.
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toailers whoar are new areon and the u.k. expanding. a good take -- it could take three to four years until we know what the brexit will look like. anna: how much is being driven opportunistically, if you like, by the weakness in the pound? >> we certainly have spikes and there was a spike in february before brexit, if you remember when boris johnson stated he was going to be supporting the brexiteers, and we saw the movement dramatically improve the market sentiment for this region. they have certainly seen it post brexit, although there has not been the distress in my sector, the london retail market, that people were anticipating. is still very much has the safe globaluality is the capital is looking for.
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we have had rental growth. theon retail will be one of successful stories in the short term because of the weakening of sterling. people are buying a lot more watches, i think it is up 12% to 14%. anna: it is time to invest, pun intended. but as you say, a lot of investor sentiment, they are feeling robust about real estate. and as we know, it is about location, location, location. so, where are the hot spots? >> there are headwinds around retailers and there is a lot of development coming into london. the biggest and most exciting project in my business life is the elizabeth rail opening, which comes online shortly and which will dramatically improve some of the established areas of london. some of the other areas of london will also benefit. businessa lot of the
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districts investing heavily in the core london areas. it is important to the london economy. i think the shoppers will continue to come, even without brexit. globallyinterest rates are still pretty low, many people are asking questions about how long interest rates are going to remain so low globally. if we do see a general drift higher, how does that change the investment story within the u.k. retail assets? >> i think it will change fo. the capital market volumesi in the u.k. are down some 30% to are but in london, we actually about where we were last year with interest rates rising. long outcomee the people crave, there is still quite a big point of difference
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for most investors. interest rates where they are now, i think inflation for retailers is more dynamic and as i said, other headwins about valuations, that could impact us in the short to medium term. moment, it ishe still quite a benign market for us. anna: thank you very much, phill cann. we look at another look at the u.k. inflation a little bit later today. bankg up, china's central resumes the use of a 28 day lending period. details of that story, next. ♪
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k ofrter: the people's bannk o
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china injected funds for the first time since february. they have not done this since february, but they are doing it now. that is interesting. it is all about the timing, though. >> one reason is we have holidays coming up in china, which i am sure we are all looking forward to end these 28 they reverse repo contracts should help smooth the volatility. the pboc ise trying to curb shorter-term funding. reporter: we did see funding costs in hong kong surge the most in seven months yesterday. we really had a big move here. could it be that pboc? >> that as a people are suspecting. any onlooker is going to find
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that trend very familiar. we saw them doing the same thing in january. now, we have another fed hike down the horizon. pboc doesms like the want to act at this moment. angie: what is a tighter liquidity scenario do to equities? >> is always bad news for equities. it seems like china is ready to sacrifice the equity market to stabilize their currency. and you know, defending their currency usually means you cannot also have aggressive easing movies, like cuts to the benchmark lending rate. so, that is definitely what people are looking at right now. angie: that is why they call it a tri-lemma. thank you, the latest moves in
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moon ahead of the autumn festival. this is bloomberg. ♪
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angie: it is 1:30 in tokyo as we watch japanese shares fall. we are entering the last nine minutes of trading there. .09%.right now, just down the top stories on "bloomberg markets." china's economy showed signs of rebounding after july's pickup. the factory numbers came in stronger than estimated.
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retail sales were up, and also exceeded expectations. the numbers built on other data including better than expected trade figures and the factory gauge. anna: china's coastal savings bank is lining up to be the biggest ipo this year. onis planning to list september 28 and has already found cornerstone investors in china shipbuilding and shanghai ports. angie: the chances of a september rate hikechina shipbui have slid to 22% after fed governor lael brainard said there is no rush to tighten. she urged patience on inflation and jobs. the jpmorgan ceo says the fed needs to maintain credibility and now is the time to raise rates. well, the savings bank of china
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is seeking more than $8 million o, which could be the biggest in the world this year. this is a huge offer. reporter: we have been waiting for this over the last few haves as regulatory moves occurred. this is what we know. it is potentially up to an $8.1 billion ipo, the biggest of the year. we are looking at shares $4.68 to $5.18. portsncludes shanghai and china shipbuilding. interesting thing is, this is not one of the big four of big five banks we often speak of when it comes to china, but it is the fifth-largest bank with
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regards to assets. it has over 40,000 branches in its network with roughly 500 million clients. this is really a servicing of the rural population. you are talking about smaller cities. towns, tier pricing, it is expected on september 20 and we are expecting that listing to start trading on september 28. we are looking at bank of america, jp morgan, chase, and morgan stanley as the joint sponsors. anna: the bank has clearly been on something of a capital binge then lately. the ipo is only part of their fundraising effort. >> the question is, wyhy?
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they have recently gotten regulatory approval. it is an endeavor to try to close the capital gap, when you compare it to its competitors. this chart shows this gap that exists between the bank of communications, a similarly sized lender. postal savings bank has a capital ratio of 10.6%, above the regulatory minimum. but that number gets raised to 10.5%, and so, it will fall short. it is trying to shore up its balance sheet to have more of a buffer. another reason is asset quality. some of these chinese bankers have been trying to reign in risk weighted assets, but when it comes to a savings bank, they are going in the other direction. we know that risk weighted assets could lead to bad debt,
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something the bank wants to avoid. you can see the gradual rising when it comes to risk weighted a assets. it doesr risk really, have the most branches in china. with that, comes the increased risk of fraud and theft with of those 40,000 plus branches in the country. you can see why it is bolstering its defense. at the end of the day, it is pretty much a pure savings bank, one of the most conservative lenders. the idea is that hopefully, it thects some interest into market in hong kong, which has been sluggish so far. anna: thank you. not a bank we talk about every day. checking in on the first word headlights from around the world now. reporter: malaysia is looking to spend $1 billion over the next five yearsto refurbish its airports. the terminal will need an
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upgrade soon, along with others that have grown beyond capacity. the upgrades are likely to benefit regional airlines, including air asia. a billionaire might be looking to back out of malaysia's biggest theater chain. he is seeking a buyer for goldenscreen cinemas. his group has already seen first round bids for the business which has 350 million digital screens across malaysia and vietnam. agreed tors have combine the two companies. vedanta is helping the move will help them complete with bigger movers. the move is expected in march. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. anna? anna: samsung is recouping some
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after itsses in biggest loss four years. the heire giving apparent a bigger role. what do you see? reporter: we are now hearing from samsung that the co-vice chairman will be nominated to the board after shareholders vote. and he will be given a more strategic involvement in decision-making, including being more involved in mma. he has been quite involved with the samsung and has been helping to run the business since his father had a heart attack back in 2014. he is considered more global minded than his father. he has been credited with creating partnerships with both apple and google. this is a signal that apple
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needs strong leadership in the midst of uncertainty. this of course come after samsung saw the biggest two day decline since 2008. to powere cautioned down their note-7's. today, samsung is rebounding and we are seeing a strong surge in their stocks. hp, also saying, they will be buying samsung's printer business. anna: anybody who lost money over the last couple days will be pleased to see that rebound. the billionaire chairman himself lost $1.2 billion in just two days. how damaging has this news about the note-7 been for samsung? >> samsung has had to recall 2.5 million phones they shipped out before the recall. that is expected to cost $1 billion. still has tot
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deal with of the recall crisis, but you have to put this into perspective. the chairman lost that amount of money, but remember, samsung is a huge company. they make about $175 billion in revenue each year. this loss, or this estimate cost, is just about two days worth of revenue. even after the $22 billion loss, $186 market value at about billion, morphing the market value of many korean firirms combined. before the problems with the analysts have said samsung was seeing recovery. anna: that is a reminder of the sheer scalef of samsung's giant
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quality. japan'se are watching electronics, agreeing to purchase the u.s. chipmaker, a deal worth $3.2 billion. $22.50 aering share for intersil, a 14% premium. they plan to pay cash on hand. renesas has got a lot of cash. why is it not using this cash to make the acquisition? this is one of the ways it is going to do it. a gets -- it gets half of its annual revenue from this sector. the deal can boost profits by $170 million each year by combining research. there is minimal overlap.
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so, intersil products include things like semi conductors, which manage hydro-electric vehicles. it it has customers, like nuovo. it would broaden the reach of renesas. the ceo says it will take four or five years to realize, but they are pleased about this acquisition. angie: it looks like that renesas is finally turning things around. >> it has been working on it. it has lost money before this during the previous five years. wasut 500 billion yen o lost. this sector is fast-growing, making chips for computers and for mobile phones.
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according to bloomberg intelligence, the average contains $346 of chip content. the premium cars can contain about $1000 of chip content. the renesas ceo took office in june. he has been trying to turn things around and look outside of the box in many respects. for example, they are looking at r&d outside of japan, which once was unheard of. but now they are looking in places like vietnam, china, and asia. he says it is more important than manufacturing costs. so, they are looking overseas for that. also, it would be a way to reduce the department costs as well.\ -- as well. looking to, we are
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signs of stability in china. investment and retail sales beat estimates, but will be trend continue? we will look at data from credit agricole, up next. this is bloomberg. ♪
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anna: welcome back. you are watching "bloomberg markets." in london.rdna edwards angie: and i'm angie lau. julia is encouraged by the strength in numbers. >> what happened in july, we had this blip in infrastructure investment, which to be fair, is understandable. but then everybody got distracted by the fact that july ay's numberst tod should show we are still on track for the bottoming out of the economy's activity and price.
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data should continue to hold up. angie: david expects china will teady before stud befor it takes on reserve status . >> these is a priority of china. it does not mean it will depreciate the u.s. dollar. but it is going to be extremely stable. the dollar has depreciated already by 7%. it is quite helpful to the chinese economy. angie: the pboc's actions are not the only thing investors are watching. currentpected that the emerging-market rally will continue for a number of reasons. factors that have driven the strength of the emerging-market this year have been a weakening
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u.s. dollar, low yields, and a continuing belief that we won't see an increase in rates from the fed. therefore, yes, we do think that will be slowing down, however, assuming the fed does hold up raising rates in september, and assuming the u.s. stella does not significantly strengthen -- does not significantly strengthen, we have a positive view on equities in the latin american region and emerging-market debt across the board. angie: that was the word from asia. anna: let's stick with that china theme, then. china is on a stable footing, perhaps. let's bring in the senior economist and strategist from credit agricole. great to have the on the program. are you encouraged by what you see in the chinese data? what excites you most? >> i am absolutely encouraged because it is very clear that
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the growth momentum picked up in august. the economy continues to stabilize. the government is on target to achieve its annual objective. ehe most exciting part is th private sector spending on long-term projects. it accelerated after slowing for much of the year. because the private sector accounts for a large part of the investments. pick up pace, china would have to spend more public money to stimulate growth. now, it can rest a little bit easier. anna: if private sector investors are gaining confidence , is that raise questions about when the government starts to withdraw some of the stimulus they have been putting into the markets? what is the time horizon on that story? >> they will be no withdrawal of stimulus, even if the private sector picks up pace. the matter what it does, -- no
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matter what it does, it cannot achieve the growth target without support. the objective of 6.5% growth is so much ahead of the potential that stimulus will continue to be necessary for years to come. angie: it is very optimistic that we are seeing small and medium private investors and companies feeling optimistic and investing, but why? is it because they are feeling optimistic, or is it because they now have access to cash? >> i believe it is too early to say that business has really improved. the data is not clear enough. managedclear, they have to stabilize asset prices and the demand in the economy to a level that gives hope to the private sector. and in this kind of environment,
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they feel a little bit more peace in terms of their investments now. angie: you know, we also saw the injection of 28 day reverse repos, to try to inject a longer horizon liquidity into the market ahead of the autumn moon festival, and golden week is coming up in october. c ishis a sign that the pbo listening to the market and trying to figure out the minutia of what the market is asking for? >> it is a sign of concern regarding the onshore markets and liquidity. even onshore, things are a little bit tighter than they were earlier in the year. primarily, because in our estimate, the ratio has declined. the central bank is boosting liquidity through a variety of means, which put a lot of cash into the market.
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they used medium term lending operations. all of that is helping insurers so there is enough cash in the system to continue the credit actions needed to achieve the growth target. anna: we have spoken to a lot of investors that are skeptical about the growth numbers they have seen reported by china. you are a little bit more confident perhaps in those numbers. what does this latest data do to the trajectory of those growth numbers for china? >> we believe the growth in china continues to slow, but gradually. it will never come back to the double-digits rate. the key point weber, is the celebration -- the key point however, is the growth in china is not too far from what was reported. people do not know enough about what is happening on the ground. there is so much proof to show the economy is strong.
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look at the volume of the imports, for instance, which are rising. this has to display real strength in the economy. angie: thank you very much, senior economist and strategist at credit agricole. coming up here on "bloomberg markets," switching focus. is the philippines turning its back on the united states and looking to china? we have analysis, next. this is bloomberg. ♪
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angie: welcome back. you are watching bloomberg. i'm angie lau in hong kong. anna: and i'm anna edwards. since taking office, the philippine president has not shied away from confrontation at home or abroad. he seemed to insult president continueilst vowing to
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his anti-drug crusade in the philippines. we are now joined on the program. daivid, you were at the summit. we have heard a lot about duterte. reporter: when i went in there, he was like a rock star. he was chased around by journalists. they wanted to know if he regrets the comment he had made about president obama. but the thing was, after h they left, he seems to be exhausted. and they are talking about hillary clinton's health. he missed a summit with the indians, and then one with the u.s., and the big family photo. the strange thing was, he did not return to the philippines after his spokesman said he had a migraine. he returned to the philippines and said he had missed the summit on purpose.
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he did not explain anything about the india summit or the photograph. what he has to say does not really add up. it really big the question about what this means for his efforts to play off of china and the united states. anna: what have we learned about the relationship between the philippines and the united states? he called on the u.s. special forces to leave. reporter: these are the special forces that are in the southern island of the philippines, driven by terrorism at the moment. these forces have been there since the early 2000's. it has nothing to do with the philippine forces, which are rotating through. it looks as if he is trying to use this as some sort of lever against the u.s. at the same time, he is saying good things about china. the risk is, he could
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potentially, because of a financial incentive from china, he could actually undermine this arbitration decision that came out heavily against china a couple of months ago. angie: david, could he undermine as well, u.s. relations? reporter: that is exactly it. the point is, the u.s. is trying to look very carefully at what he is trying to say, but he is very unpredictable. he called the philippine -- the american ambassador to the philippines, he called him "gay." he is constantly talking about, or referencing, the people who died during the colonial period. this is very destabilizing for the u.s. relationship, though the u.s. said they want to continue their relationship. angie: the rhetoric makes it harder. that is it for us on this edition of "bloomberg markets."
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anna: and i will be up at the top of the next hour and have all the stories from london. "countdown" is next. we continue to reevaluate the
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with ahe fed's governor dubbish tone before next week's policy decision. the chances of a september rate hike kleins -- climbs. inflation of on further gradual tightening and labor market conditions will be moderate and gradual. it is less compelling. anna: more signs of stability. the latest data out of china. interview, the most powerful woman in french politics talks brexit,


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