tv Bloomberg Daybreak Asia Bloomberg November 24, 2016 6:00pm-8:01pm EST
>> emerging markets feel the heat as the dollar continues to likelyhen ahead of a federate hike. speculation about donald trump's alicies sends gold to nine-month low and silver into a bear market. more signs of stability in china. early indicators show the economy has remained on course month. air asia, lifted by swelling fares, more passengers and cheap
fuel. this is bloomberg daybreak asia. herejust after 7:00 a.m. in hong kong on this friday morning. today.to talk about all about doar dominance, with u.s. markets closed for the thanksgiving holiday. watching, em, asia in particular, after that brutal sell-off that we saw. at some taking a look reupy,currencies of the talk about arts. we'll hear from asia's president, as the auction house to hold its first-ever sale of western art masterpieces here in hong kong. at half past 8:00 or half past 11 if you're joining us from sydney. phillips chairman and c.e.o. be joining us as the company gets set for its atugural hong kong sale, half past 1:00 for folks out in sydney. in on how asian
markets are trading. slightlyeem to be positive for now. >> that's surprising, given that the markets that are open right australia and new zealand, are trading in the green. but we have to keep in mind that it has been a brutal day for assets. market we've seen spectator laition on the federal reserve interest and that's just pushed all emerging markets' currencies and equities mum much lower. closed onu.s. is thanksgiving holiday. eye on those minors out there, because we're now bank thatom deutsche tinto has room for a buyback next year.
increased dairy sales. exports up 13%. right now it seems to be all about the dollar story, what the u.s. is doing and what everyone else is doing. so we're seeing this emerging market currencies taking a beating. take a look at the turkish right drop to record lows. it even fell despite the fact hikedhe central bank rates in order to halt this slide. we have the same story rupi,on for the indian which is also falling to record lows. it's been almost 3%. philippine peso also dropped to 50 per dollar, for the first time in eight years. in the last session, it traded
94. we'll see what all of these currencies do as they start trading again in a few hours. comes to the commodities sphere, it seems like we're seeing a tale of two when it comes to andprecious metalling metals industrial metals. >> take a look at gold, because since trump'sing election victory. we've seen actually gold and just react to global politics. take a look at this chart, sawuse after brexit, we that we -- this surge in metals, we saw them flock to safe havens. then after the u.s. presidential election with trump's plans to revitalize growth, boost spending not to mention that there is a plan to speculation that they will go ahead and pull the trigger. metalss led to pressure
lower. now we have silver just in bear territory. it's falling 20% since that august low. forfferent story, though, base metals. take a look at copper, because pastd quite a month in the month. copper,his surge for which is about more than 20% in the past month. it's now headed for the biggest monthly gain in a decade. remember, copper is always -- is usually seen as a barometer of global health. has aeople even saying it ph.d. on the world's health or the world economy, just because good at predicting what's happened with the global economy. metalsow seeing base such as copper rallying right now. >> thank you. look at globala headlines. >> opec has turned its attention
as theyand russia finally won iraq support for production cuts. we're told the cartel has meetings ahead of wednesday's summit in vienna tore members will be asked lower output by 9,000 barrels a day. iran insists it wants to raise production to presanction levels while russia says it's prepared cut.eeze output but not million credit facility to a joint venture in brazil. 19 people were killed a little year ago when a dam at the mine clapsed. was swampeding area in a wave of toxic sludge. remediation,ry out a stabilization work and support operations. is taking a regional trade view as soon as possible with obama-inspired bhp seen as a nonstarter. they will work on an agreement.
will enablehina freer and more convenient global trade. an asiawide for pack -- pakistan says it's making progress under china's silk road plan. about three quarters of the 46 in ann investment are advanced stage of implementation. the money has been set aside to railways, ports and highways, in a bid to boost trade across central asia. has played down security concerns around the project. global news, 24 hours a day, by more than 26 hun than 2600 journalists, this is bloomberg. >> early indicators for november only stability but even a slight pickup in some areas of the economy. been looking at the evidence so far. this despite the fact that the government is trying to cool this property market. what are these early gauges
telling us? >> early indicators show stability. it's a very passive way of solid the economy is on ground. it remains stable. that's a pretty good thing. of people talkot about the bifurcation of the economy, between the old and new. there are actually many speeds and many different areas of the drilly, so we need to down and look at many different ways. i would categorize it as kind of different areas we need to look at. the old and new economy and there's big companies and small companies. all have different scenarios. chinalook at the satellite manufacturing image index. san francisco-based space no. it uses a commercial satellite monitor activities across thousands of industrial facilities in china. a five-year to high. it is such an early indicator that this data here hasn't even updated yet. so what we're seeing here is the reading for october.
a five-yearards high. we've now gotten the most latest data. has now been updated. for some reason, the chart is showing it's not a five-year high. guarantee you, i went back and tracked every single number. is a five-year high. reading above 50 indicates expansion. pmi's,se both of those the official one and also the private sector one, are also at highs.r so that's manufacturing. let's look at the china business sentiment indicator. really looking at large companies. month, in 53.1 this the early indicator, from 52.2 surveys of based on executives at listed companies, large, listed companies in shen zen.nd that is indicating a bit of a drop. wonky.are but a senior economist says the companies remain optimistic about production, demand and their financial standing.
wedon't have the charts but can run video. in the steel sector, we're seeing confidence as well. the s&p global index soring to 59.37. on higher prices that we've seen the chinese. selling more steel. strong orders. economicsthe world gauge of sales manager confidence held steady at 51.2. improvement on the subsector, on consumers. >> interesting to see the surge in metals. it's very much about the china as well. we'll be talking about the to small enterprises. what is the sentiment like? veryviously see divergence. >> you get less advantage for medium-sized enterprises. mediume seeing small to sized enterprises, especially exporters, as trade is ramping
with trump's election. there's confidence issues there to medium sized enterprises. inair asia returned a profit the third quarter, listed by higher fares and more passengers. the biggest discount carrier also benefited from aircraft leasing. we have the numbers. how strong was the quarter for air asia? >> well, the numbers show a new lease on life. coming in at $79 million. load factor at 87%. a six-point increase from the same period last year. number. and they expect another record quarter ahead.he he's talking 90%. talk about ambitious. helped was cheap oil. crude tumbled 22%, helping the expenses.ve in fuel typically is the highest cost for airlines.
air asia pretty much upbeat about prospects. as the digital carrier. assays 2017 will be exciting it plans to boost its wi-fi services. see how air asia shares have been doing. performance, 110% up year to date. 68% in therk tumbled same period. tracked onurs we bloomberg have a buy or hold recommendation on it. interesting to see that air asia is making more money by onsing out its aircraft than ticket sales. tell us more about that. >> you know what? you're spot-on. is aeasing business lucrative business for air asia. it makes more money from that else.nything it consistently loses money on seat sales. it doesn't make enough, even from baggage fees or in-flight meals, duty-free services.
asia hasthat air buying power. 575 planes from airbus, about 400 yet to be delivered. air asia is airbus's signal largest airline customer, sway inignificant negotiations of a price. manyair asia has too planes on itsalance sheet, it sells its planes, leases them back, then makes a premium of its own purchase price as income. sounds very clever, right? and it makes more money doing this than from flying its planes. but in a surprise move, tony fernandez says he may sell the assing unit as soon december. the golden goose may be no more. asia's profits may now be in question. >> plenty of questions to ask there later on. thank you. air asia group c.e.o. will join to run through those results and look at the future. 9:00, hong kong
>> quick check on the latest hems. to ease up have room on its buying program. yields ease liquidity concerns. even consideray postponing a decision on extending qe. the chief has publicly maintained a stance, but the meeting on december 8 will consider the sustainability of the programs. >> turkey unexpectedly raised rates for the first time in years, after the lira's
plunge to a record low. oneral bank increased the week repo rate to 8%. lira initially rebounded but resumed its fall about an hour aboutthe news on concern the bank's independence and next month's meeting of the federal reserve. suppliers, said to be nearlyo a bailout, worth $900 million. the company may issue preferred shares to raise cash from the network corporate in investors.largest investigate a decade dollar is at high, which means bad news for gold investors. the consequences of donald trump's plans to revitalize growths. says globalst interest rates will be a main driver of global prices. george.ing in
he's usually based in london but joins us here in our hong kong studio. great to have you here. so, first of all, i want to get soough why everyone got gold wrong, after the election. i think everybody was saying that, you know, if trump was to seeo win, we're going prices surge. we're now well below 1200. what went wrong? >> i think it changed. was quite conciliatory in his acceptance speech. and since then, the focus has entirely on america and trump. our belief is as things come down, as he's inaugurated next year, we should get a rate rise in december. there we see a lot of uncertainty, partly caused by trump's election. year.a bit like last gold traded quite softly into the rate rise in december of last year. saw it take off again in
january. we couldpotentially see a similar path this year. >> you mentioned about the federate hike. yields back above the two-year hike. trump seems to be swimming in so than draining it right now. will bouillon do? >> we will see it trade sideways, as people price that into the market. but i think, as i say, the focus u.s.een entirely on the once we're through that, as we get into the new year, i think people will look around the rest of the world. we see a lot of uncertainty in europe. anween now and then we have italian learn dumb that might -- may cause that issues. it could focus people away from the states in what's happening in the rest of the world. >> still uncertainty with opec. seemss the final push p.
like russia and iraq appear to be warming up at least to some output cuts. what iran does at this point? >> fundamentally, we would say moving intos deficit and going to be rebalancing next year. we're seeing stocks starting to finally. therefore, really whatever opec says and does, we think the will rebalance next year and oil prices actually need to to prevent deficits in the following years. of course what they say next be important and the market will react to it. but i think, once the noise has we see an oil market moving into deficit and we see year. moving up next >> that's interesting, because we spoke to the executive director yesterday. of signaled a little bit of volatility ahead. beyond you have to look this opec deal, because he says if there is a cut and we see oil back above $60, shale producers will start pumping again and this could put on pricesressure
within nine to 12 months. do you see that as a likely scenario here? >> first of all, you have to have oil prices up to get that reaction. you don't think we're going to get to 60? >> i think we could push up that high. that will promote more shale. oileed quite a lot of shale to keep this market going into severe deficits, because we don't see a lot of growth in the world. not only is the demand growth of 1% a year, but you've got to replace around 5% of production in a year, which is the decline rate. of oilneed to grow a lot production every year, just to maintain the balance. >> okay. dollar, asabout the well as commodities, very closely here. to let george see kind of this dollar strength really continuing through. direction.one commodities alongside of that. talkingy and i were about this. focusing on metals,
the industrial, when it comes to copper, iron, ore, those prices to go through. some saying this is kind of overshot at this point. well? see that as >> there's been a major move in industrial metals. your previous segment discussed, really this started way before trump was elected. market,alk to the you've seen a real pickup in chinese demand from september. stum lus started -- stimulus started last year. seeingdata shows, we're a much stronger chinese recovery than people were expecting. >> so it could be more about china than trump? >> certainly. of demand for many of these metals. it's much more about china. smallk there's been a trump effect, which has got people quite excited, but fundamentally we've broken into ranges, for copper particularly, because of the chinese resurgence. plans forout the donald trump, truly in dollars in infrastructure, a far cry
from what china is doing. >> there's a lot of doubt about how much trump can really do. and copper demand is a fraction of what it is in chiern, when china, when you look at american demand. china is still key when it comes to industrial metals. i think there's definitely renewed confidence in china and we're seeing that in those prices. >> really great to have you here in hong kong. >> up next, why japanese turning aseem to be deaf ear to the inflation pledge. ♪
consumer spending. of thatstory here ahead inflation story, in just a couple minutes. what's going on here? cuts, ithose price would seem that retailers aren't really buying what the bank of japan is attempting here when it comes to that inflation pledge, preferring instead to entice shoppers. we have the likes of a marketer slashing prices of its branded prices. set to make 556 items cheaper with discounts of over a third on some. and others continu contemplating rechecking prices. retailers are getting more savvy to that budget-conscious consumer. joornthis strategy has fielded country'sr the second-largest clothing chain. they told bloomberg earlier this smiling, they're because of the results that toy're seeing when it comes sales. on the other hand, others are
not smiling so much, seeing a a backlash from that budget-conscious consumer, cheaperg to bring back products. you can expect cheaper prices on japan.helves in >> this is kind of a hurdle, when it comes to shaking that the inflationary mind-set of japanese shoppers and consumers. >> it was back in september, they attempted to ree reinforces pledge. but without business owners playing ball, that's going to be a tougher task. alongside falling retail prices, it's going to be stagnating wages. data out of japan. consumer prices in october expected to fall, an eighth month of decline. >> we'll see how a trump presidency can shake up things for japan. send., kind of a god just ahead, we're going to find out if japan's dpi edged its way back into both territory.
>> it is 7:30 friday morning in hong kong. a live look out of tokyo, morning.palace this futures up slightly about a fifth of 1%. 18,410 this morning. figures just crossing the bloomberg. this is the core inflation, excluding fresh food, year on year, for the month of 0.4%.r, falling 1%, in line10 of for the core. prices gain 2/10 of
1%. more positive, i guess you could say, for prices from the month prior here. weakerly we have the yen. stable oil prices, that is do seeng the pressure we in japan. let's get reaction on the markets this morning. here's shery. >> japan ice inflation outlook may not look too great. the eight consecutive month it's been in the red. when it comes to the stock been anthat's incredible rally. all of that because of that yen weakness. right now we're seeing the yen strengthening. we are also seeing a bit of strength just because of the dollar rally taking a breather. so right now, the yen still at 113 spots. quite a weak level considering where it was earlier in the year. let's take a look at futures for equity market the
has been on a tear recently. it was gaining for the past six sessions. to -- future close zone looking like they could fall a bit. 1%.'re down 1/10 of but as i said, this is after with the nikkei market. it fell in the last session. weakening for the past two sessions. chinese futures also in the green right now, although the market there lacked clear direction in the last trading session. >> so, shery, how about the ear markets that are trading in the session? >> well, right now, we are in the green. asian stocks, at least for the week, we are headed for a weekly gain. unchanged for the moment. miners.an eye on
the trade deficit data showing narrowed on daily sales. >> shery, thank you so much. now from more reaction martin schultz, senior economist. martin, good to see you. in october, obviously, it seems time agoe a long before that u.s. election with a surprising win from donald trump. the fiduciary close to certainty, pretty much certain it could be raising rates in december. does this all mean for the path to 2% for japan? >> seems like a different world now. we had the huge trump rally in between. now a much weaker yen. held inflation, to change quite a bit. areave stabilization and we having -- the rally right now. thatn be rather sure you're talking about deflation in japan next year. it won't be really the main
topic and it won't be the main thing for the bank of japan anymore. >> the wild card still seems to be the yen. gap with the u.s. that's pointing to more weakness yen.he but yen could surge. what is your outlook for the currency right now? >> well, we have these major long-term trend of getting the after they shifted things quite a bit. but now the anchor for all the currencies in asia, the dollar is using. that is really the most significant point. change inve to expectation for interest rates. one of the bigger problems was remained sot rates low. they remained in negative anomaly., clearly an the bank of japan will -- now it deal with all these fluctuations in liquidity, while the expectation is
for a stronger dollar. is a dollar positive, a yen negative, and that helps japan.in >> is it mostly just dollar strength, mostly on trump when yen, or will they do something that the boj did, the latest weapon when it comes to this bond bazooka? able to going to be continue to calm yields for the 10-year jjb? >> it is the situation that has really shifted, not just the dollar strength. otherwise the yen would be just declining in line with the euro. we are seeing is a shift in the overall outlook and overall outlook. in the u.s., the federal reserve likely to react to more fiscal spending with a bit more of restriction. interests higher rates. while the bank of japan promised
to anchor interest rates and they will be a able to keep tht for at least a while. that means much lower rates in japan, keeping their rates lower japan, with stronger rates in the u.s. impact on thean situation in asia. i think we are seeing a very environment for japanese stocks and businesses right now. >> shifting awayrom the domestic side of things, i want talk about trade, because obviously we've been talking meeting with from donald trump in new york earlier. japan should still ratify the t.p.p. and that trump pledged to withdraw from it. can t.p.p. carry on without the u.s.? >> i don't think so. but all this talk about trade, huge trade agreement, on the pacific side and also with mean this is very old
school thinking. u.s. is an investor in the and that is the most important point. investment will be supported by the trump government, so we can they will bee that at least retain on trade. the most important point is u.s.ng investment into the this is where japanese companies are integrated in the supply chain. u.s., they have big investors. they will be attracted by more by infrastructure, and this is what is driving stocks and businesses right now. >> there's also a concern that if there is no t.p.p., martin, kindchina could actually of fill that trade vacuum and be leader of global trade. i mean, japan is not going to be happy about that. seem like they're going to be warming up to beijing when it comes to that outlook. >> no. there is a lot of strategic thinking being involved over the next, say, six months, because the situation has really changed
in asia. is not a majore trade or currency war with asia think ise in unlikely because china integrates allhe supply chains in asia, so having the support if there is area, significant situation with the u.s. we have a situation where, when further,is pulling out old ideas, it is being supported. is focusing on that right now. it is an old idea coming from all thisere japan has weight behind it. with t.p.p. out of the picture, we have more trade agreements, investment agreements on the agenda in asia. asiais very positive for actually. more integration for japan and as well.ld be positive i'm looking forward to all this reshuffling. you.eat to have have a great weekend!
>> many currencies are kraiding multiyear trading at lows as the rush to the dollar accelerates, being driven by expectation that president-elect trump will boost u.s. spending and inflation. and the rupee and the lira tumbled thursday. the philippine dollar, for the first time in eight years. airasia swung to profit in the revenuearter, with growth. net income was $79 million with factor at 87%. a six-point jump from the same period last year. biggest budget carrier also benefited from a 22% fueltion in its average costs and it made more from its sideline of leasing out its aircraft. at least 74 workers were killed when a power plant collapsed in eastern china. part of a tower crumbled.
all but three of the people working on the plant died. two were injured. is missing.on china suffered several fatal recently, accidents blamed on corruption and pressure to boost production, and the slowing economy. seven buildings in welington after the recent earthquake, the city will pull down three properties it owns while the privately owned office block, and an apartment are also unsafe. the 7.8 magnitude quake in new onland's south island november 14 has been followed by aftershocks. global news 24 hours a day, powered by more than 2600 analysts in more than 120 countries. this is bloomberg. >> up next, we'll speak to the c.e.o. about earnings and its latest acquisition. ♪
>> china's biggest online travel company closed more than 2% down despite beating estimates in the third quarter. shares have fallen nearly 12% year. they followed up the results buyingws that they're sky scanner, to become more of a global player. now withcuss all that the c.e.o., joining us live from shanghai. jane, really great to have you. talk about the sky scanner deal, because it feems like they are -- seems like they are going global now. this time, it's a u.k. tech unicorn. why, first, sky scanner. is verycanner's team strong here. and we have a very strong footprint on online booking, so
we believe the two teams have to achieve, if we can combine our strengths together. who is this latest acquisition a getting, new customers or is this a strategy to help chinese abroad, or is it more about the back end technology? it's techni driven, more on the front end, comparisons. price we have a very strong technical on the back end to fulfill the orders for the customers. so combining the strengths on technology, we will be able good product to customers globally. skyscanner is very good. hopefully it's a better product. we'll be able to reach a wider to serve more customers
globally. market isernational kind of a different animal, right? than yourompetitive home market in china. c trip remains largely unknown. the process here? what type of integration or ctripies do you see with and skyscanner to really kind of image?our global >> sure. first in domestic china. we already have more than 40% of the market share for tickets here. and then our business is the priority. there are 1.2 million people traveling around the world. sure ourd to make and platform better support our customer. this skyscanner will enable us to achieve that goal. the third one is people around the world will also be very in taking flights,
flights into china, asia, so can do inething we the future with our partnership skyscanner. >> i want to talk about your future prospects. you mentioned the future. the stocks.out ctrip has been down some 15% in the past month. expecting the fourth quarter to be quite strong, i think a 70% growth. for 2017? how are you going to match this kind of growth here when this that you've done this year, and the effects of this merger begin to fade? 2017 to 2020, our trajectory will still keep very strong. 1.2 to 1.4et to trillion by 2020 still remains very strong. that will give us a rate somewhere around 30% year over year growth. and we stand by our guidance.
by your guidance? it's been a busy year for you. you merged with a company, stake in india's company, got a slice of china eastern airlines. any more plans? >> yes. a very disciplined strategy in terms of investment. needs to be, it focusing on travel-related business. at secondly, we only look the leaders in each vertical. and we're only interested in investing in number one or number two in each vertical. thethe third one is evaluation also needs to be reasonable. so these are the three principles that we have always adhered to in terms of different targets. and going forward, the at willnt we're looking enable us to expand our business expand our product coverage quickly.
the advantages time to market. >> jane, great to have you. c.e.o., joining us live from shanghai. congratulations on the new role. take a check on the latest business headlines. with theng block pricesese share quadrupling. on october 28ted at just 1.70. back in august, the vietnamese said it wanted to sell it's stake in habeco. johnson & johnson may be looking buy a swiss drug maker for $17 billion. sources say the company has made offer for actelion. well, actelion has been a takeover target for a year and opts to remain independent. it may now be more open to a sale at a sufficient
premium. c.e.o. at chrysler has described trump's election as a the autoger for industry. he said the president-elect's a,tements about nafta were quote, big issue was the impact on operations on mexico and canada. could incur cost cost if the trump administration acts to a levy on imported vehicles. game certainly is a changer, mainly because i think there are a number of conditions in the u.s. that are not yet spelled out. him during his campaign. and i think the president-elect statements about how he sees trade. that's a big issue, because of is way in which nafta configured. and the implication it has on the industrial footprint. >> coming up, fighting for recognition. exchange,nese stock some see as a remnant of a bygone era, is trying to stay in game. this is bloomberg. ♪
>> welcome back. you're watching bloomberg daybreak asia. the c.e.o. warned the airline must hold its nerve and facedown striking pilots if it is to survive. have beenf flights cancelled as industrial action day.ds into a fourth he says that if they cave in, they would have no future. dayairline says that each of strike is costing more than $10 million. failed to persuade a course to block the action. the biggest version of the a350 has made its first flight. a potential death knell for the jumbo jet. jet. the airbus a350 seats 366 passengers. 44 fewer than the venable 747. it relies heavily on composite construction.
so-called twin jets are now the stay of long haul flights. talks to said to be in buy another company. footprint in giant high growth middle east markets. more than 1.5 million products online. they had initially planned to nearly 30%. at neither company has commented. a second class action suit has filed against samsung over flammable smartphone. nearly 1900 more owners have taken action, bringing the total nearly 2400. each is demanding the equivalent $420 compensation for being inconvenienced. 7 owners whose phones actually caught fire have filed separate lawsuits. china's conglomerate has been on
global intersection spree, resulting in a negative rating on its debt. company'so the founder about the concerns over leverage and comparisons with buffet and his company, hathaway. >> i'm over 40 but he's over 80. institutions, we're a much younger company, so it's pointless to compare ourselves. however, we can learn from him and look at what he was doing 30, 40 years ago. but we will follow our own strategy, one step at a time. has also been a year where they have said you're 2016.to deleverage in but by june, we're seeing the thanor equity was higher it was in december. my question is, why is that, and pressure on the company to spin off some of your assets?
ratios, with leverage lower isn't necessarily better. our overall strategy is maintaining reasonable leverage reducing financing costs and matching the duration of our assets with our liabilities. our borrowing costs have declined substantially compared to the last year. theerms of liabilities, proportion of short-term debt will decrease while long-term debt will increase. thirdly, we'll diversify financing to both domestic and overseas markets. we will reach our target of rating tor credit investment grade from the comprehensive efforts i earlier. >> that was the chairman and international,n speaking to tom mckenzie. stock exchange relatively traders,o global fighting for its life in japan. back to 1949. it was a vibrant trading floor heyday. but tokyo's increasing dominance
has led to their fighting for scraps now. here.give us a background >> good morning. so it was 1949. was the post-war mccarthy-led era of reconstructing japan. also nearly established these local exchanges. the infrastructure wasn't great in the country. it was pretty devastated, so it companiesese local and the local investors to be able to trade stocks. height, around 1960, when the regional economies were perg, theress were -- prospering, there were about eight exchanges across japan. turned over about 30% of trading in japan with the remaining 70% in tokyo. but since then, the regional economies have been declining. aging.ulation is and people are flooding to live in tokyo. so these regional borders have just been closing down, one
after the other, or merging. is a phenomenon occurring throughout the world as well, not just japan. >> you're seeing that thi is playing out all around the world. to combate they doing this decline? >> well, one of the things that is increaseng to do the number of ipo's. so they're basically tolding the of these executives, .eaching them how but a lot of these companies, eventually they move on to trade the stock exchange. i, of course, isk that as much as they want to increase the number of investors, because liquidity is so low, it's really hard to trade on exchange. had one guy say sometimes he has to wait hours for his stocks price. it's a very steep uphill better for the exchange. of theainly a sign times. thank you.
inflation remains a distant dream in japan with the boj's target out of reach. emerging markets feel the heat as the dollar continues to strengthen before a likely fed rate hike. more signs of stability in china. the economy has remained on course this month. profit asia is back to with swelling fares, more passengers come and achievcheap
fuel. this is the second hour of "bloomberg daybreak: asia." it is just after 8:00 a.m. here on this friday morning. it is continuing with the stronger dollar story. brutal currencies. we do see stocks pretty positive here as we wrap up the trading. stocks are fluctuating between gains and losses this morning, but for the week we will see a weekly gain. that is coming after four weeks of losses for the asian regional benchmark. take a look at the nikkei because it is now gaining for a seventh consecutive session, up .3%. we have a lot of data to digest in the asian region with trade numbers out of new zealand. japan is coming out with its consumer prices and showing that core cpi fell 0.4% on year,
in line with estimates, but an eighth consecutive month of deflation for japan. at least when it comes to the equity market, japan is on a t ear. quickly, coming to the bloomberg. take a look at this chart. you are about to see that the nikkei just went into the bear market in february. that was after the bank of japan took interest rates negative. four months later we had brexit, another setback. they are very close to their whereven point 2016, we could see the nikkei on a positive note, just rallying on that yen weakening against the dollar. it will bethough, mostly a story of the dollar again and how this is affecting emerging-market currencies, especially currencies in asia,
given we are not getting any market cues from wall street as the u.s. is on holiday. still, we have some data out. new zealand is up, .2%. they just announce their trade deficit narrowed due to daily sales with daily exports rising 13% on year. not a lot of movement for the asx 200. still, take a look at miners, because we can see a surge in metals. not a lot of movement since that fall in the last session. yvonne: and seems like it is one direction when it comes to the dollar. what should be watching out for in the currency space in asia? >> it looked like these days it is all about the dollar story on one hand, and what all the other currencies are doing on the other hand. take a look at the turkish lira, because it dropped to record lows despite the fact that the central bank cut their key rate, 8.5%.ed their key rate to
they wanted to hol this ault this weakness in the lira. they saw a little bit of a gain after that move, but again, the lira continues to weaken and is now trading at 3.46. so, emerging-market currencies are expected to see a lot of pressure as we see that dollar rally, including the peso and the indian rupee. enke a look at the japanese y because it is halting three days of weakness. do keep an eye on these currencies as they will set the wave for trading in the rest of the region. yvonne: let's stick to japan now. cpi extended its longest losing streak in five years with the key gauge of prices falling 0.5% in october. let's bring in ryan fowler, joining us live from tokyo.
what is the take away here from today's data? can we say anything from the trend? >> i think i agree with what martin schulz said earlier on the program. a lot of pieces are coming into place now for japan. so, start with the yen. over the last three weeks, if you look at the decline in percentage terms, that is the biggest, steepest decline in a three-week period going back two decades. and then we have oil prices. we are poised now for a deal, at least a freeze, and possibly even a cut. that is good for oil prices. even before that, the year on year negative affect coming from oil was set to dissipate from here anyway. it is fair to say that the prices declining in japan have pretty much bottomed out. that does not mean they are poised to shoot through the roof, but i think the deflationary trend has peaked out and it will turn a corner from here.
yvonne: it certainly has softened, as martin schulz would say. what kind of behaviors are we seeing in the micro economies? are there any indications of price expectations changing there? >> it is largely a mixed bag. a lot of japanese retail companies had cut prices on everything from donuts to dinner jackets and shoes and shirts. that is a bad sign. that is partly their attempt to retain market shares in a nation with a dwindling pool of consumers. on the other hand, if you look at the jobless rate, it is at the lowest rate in two decades and minimum wage is increasing. there was a data series 10 days ago that was broadly overlooked. in the july and september period, the aggregate amount of wages paid in japan, total compensation paid during the quarter rose 3% on year, the steepest pace since 1996.
at some point, that money will filter back into this economy and support prices. that is also good news. we are as he mentioned, not shooting out of the roof, but what does this mean in terms of the boj's pursuit of sustained inflation around 2%? >> 2% around fiscal year 2018. it is unclear if mr. kuroda is thinking about april 2018 or march 2019, probably march 2019. i think mr. kuroda, from a long time back has been playing the long game here. he knows that a lot of the factors that have been affecting prices truly are temporary and s, currency,e overseas demand, and emerging markets. i think he has been right to guess that some point, these factors are going to ease. i don't know if he ever really will get to 2%, but i think it is a waiting game from here to
see what happens in energy markets, overseas economies, after the fed starts hiking rat es, and what that does to the dollar-yen. but i think we will be moving in the right direction next year and when mr. kuroda finishes his term he will at least be able to say that he managed to get them moving in the right direction. yvonne: perhaps you might have to thank donald trump for that as well. thank you. now let's get to the first word news. turned itspec has attention to iran and russia. the cartel has a scheduled meetings ahead of vienna, where members will be asked to lower output by 900,000 barrels a day. iran still wants to raise production to presage and levels , while russia is prepared to freeze output, but not cut. billitonlliton -- bhp will provide a $150 million
credit facility for a joint venture in brazil. 19 people were killed a little over a year ago when the mine collapsed. the surrounding area was swamped in a way that -- in a wave of toxic sludge. china is taking a regional trade deal as soon as possible with the obama-inspired ttp seen as a nonstarter. commerce officials says china will work with nations in an agreement. fora will enable ports more convenient global trade. this follows donald trump's election victory, which dashed hopes for the tpp. pakistan says it is missing progress. the development minister says about 3/4 of the $46 billion investment are in an advanced stage of implementation. the money has been set aside to
build railways and to boost trade across central asia and to the west. pakistan has played down security concerns around the project. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. this is bloomberg. yvonne: thank you. air asia returned to profit in the third quarter. they had higher fares and more passengers. the region's biggest discount carrier benefit from lower fuel costs and aircraft leasing. let's bring in has haslinda amin. this paints a similar picture to what we saw with air asia x. how strong was the quarter for air asia? haslinda: it seemed like the stars have aligned. net income, $79 million. this rose from one year ago. they are expecting even better q4. they are looking at securing a
90% load. apart from that, oil helped a lot. it tumbled 22%, meeting lower fuel expenses and fuel is the biggest cost for any airline. looking ahead, air asia is bullish. it is positioning itself as a digital carrier. 2017 will be exciting. it plans to boost in-flight wi-fi services, entertainment, which it says will translate to more income. investors are indeed, buying in on the story. take a look at how airaisa shares have been dreading. with% surge year to date, 20 of 22 analysts on bloomberg recommending to buy it. high at theng moment. yvonne: it is interesting to see they are making money by leasing out the aircrafts.
and yet, he is thinking about selling the leasing business. why is that? somethinghat is not you hear much of, but yes, the leasing business is moneymaking. it makes more money than anything else. it often loses money on seat sales. it is not making a from baggage fees, in-flight meals, and of course, duty-free. but it has its buying power, and it has capitalized on that. airasia waiting for orders to be delivered. it has ordered 575 planes from airbus, with about 400 yet to be delivered. airasia has had great marketing power when negotiating prices. think discounts. but it finds it sells with too many planes on its balance sheet. it sells and then leases them back. it makes the premium off of it s buying price.
they might sell the leasing unit and that could happen as soon as december. no more golden goose. we do not know the reasoning, but it could create $1 billion. yvonne: he will have to ask him that question. fernandez joins us later on to run through those esults and look at the future. 12:30. company'sd, the appetite for acquisitions. plus, our next guest says the biggest market risk is to misinterpret short-term volatility. this is bloomberg. ♪
the latest business -- let's check on the latest business flash headlines. there is urgency among officials to buy more bonds. some members might even consider postponing a decision on extending qe, but the ecb chief has publicly maintained a dovish stance. the meeting on december 8 will have to consider the sustainability of the program. turkey unexpectedly raised rates for the first time in nearly three years as the lira plunged to a record low. overnight, lending rates change to 8.5%. the lira initially rebounded, but resumed its fall one hour after the news. a pursuit any takeover deal on the australian takeover company. they have entered a cash settled equity swap with an unidentified
investment bank for 170 million tabcorp shares. the deal last month might not be completed until the middle of next year because of antitrust concerns. our next guest says now is the time of opportunities. europeants purchasing equities. we will talk about the opportunities later. i want to talk about the dollar strength we have seen. we have seen the dollar at a 13 year high. we have seen this move up in yields. how much more can we see on this upward trend? the market isge, adjusting extremely quickly over the next one year at least. that means it is tough to the --t room for opportunities tough to give us room for opportunities.
the martic strengthens, the less the fed -- the more it strengthens, the less the fed will tighten. and that to prevent, is ok, there is a recovery, but you do not want it to be hurt by a strong u.s. dollar. yvonne: what about inflation? >> it is picking up. levels are quite high. year on year, the inflation numbers look quite high, but over a longer period of time, inflation will not see a massive combat. they will actually have some let's ability whether they want to accelerate or not. during the meantime, a strong u.s. dollars gritting opportunities. clearly, the weak yen is pushing investors to add more equity. we do not see the same thing out of europe, where the weak euro is positive news. that is because the political environment in europe is still
unclear with the italian referendum. the ecb, you just mentioned. that?: should we buy into >> we definitely should. if you look at the latest pmi, it is externally strong, about 54. we have not seen yet the euro's positive impact. europe is going to be a big beneficiary. but the fed will see the u.s. dollar going crazy. they might actually slow down the pace next year. we mentioned how we can't really misinterpret these short-term currency moves. what do you mean by that? are you talking about the em space? miniis
-tantrum similar to what we have seen in 2000 and? ?-- in 2008 >> there is a lot of corporate debt and sovereign debt. so now, if the fed is tightening, this creates a situation out of some countries. that is why we would expect actually, the pressure to carry on. those currencies might continue to weaken. in india, the situation is also worsened. havee: every guest that i had, i have talked about india and everybody says, we are very bullish. and now, things have changed quite a bit. is it mostly because of these cash currencythis
crunch thing? >> when you speak to corporate's is in india, they cannot really tell you the impact. it is the execution. >> it is difficult to implement. at the same time, you have to do this quite quickly and quite sharply, and decidedly. we would not criticize the way it is being done, but it is time to digest it. the feedback from corporate is we will have to wait another few months before we get the full impact. as an investor, you can be smarter it is the execution. >> than corporates themselves on the ground. that is where the market will because she is. yvonne: what about the asset classes? is it still equities? >> you have to stay with equities because next year you will see energy and financial stocks outperforming further. you will see this trend really picking up. this is going to define it because the yield curve is actually steepening again and
that is positive to the financial sector. these sectors will push the benchmarks higher. so, you want to stay with equities. yvonne: what do you focus most on with donald trump's policy and trade? >> corporate taxes are very important. and you can see that being employed across the road. in france, some of the new programs talk about corporate tax cuts, which is positive to the liquidity side. i in many countrie around the world -- in many countries around the world, you have infrastructure spending. those infrastructures are creating inflation. then, he will see where you have to invest. yvonne: very quickly, the fed is likely to raise rates, the boj is angering 10 year yields at 10%. feed do? be ththe
>> they will have to follow the fed, which is a tightening trend. the ecb might lose its policy, but the corporate are doing very well. and it will accelerate, thanks to the weak euro. yvonne: david gaud, great to have you. coming up, more signs of stability in china's economy. we take a look at the latest indicators. this is bloomberg. ♪
indicators. a lot of people do not talk about the two speed economy, but there is also the larger enterprises versus the smaller to medium-sized enterprises. let's look at the china satellite manufacturing index from november, pricing actually to a five-year high to 51.4. the chart looks a little bit wonky because it actually is a five-year high. the bar on the right does not quite the past what we are seeing, but it is a five-year high. it uses commercial satellite imagery to monitor activity across thousand seven dust real facilities in china, a little commercial espionage. it is a san francisco-based company space, though. they put out this guage. let's move on to the mmi china business sentiment indicator. it rose to 53.1 from 52.2.
again, said the 3.1, it looks like a dip, but it is an increase from october. the senior economist says the s remainremaiie optimistic. yvonne: just talking about the small to medium-sized enterprises, how are they faring against those larger conglomerates? >> some of the smaller companies in the new economy are doing ok, but the manufacturers do not necessarily get the lines of credit and bank loans. of pessimisma bit there any prospect of a trade deal with the united states. the weak yuan is not necessarily improving their confidence, and the confidence index has fallen. there are some headwinds. yvonne: stephen engle, thank
yvonne: it is 8:30 in singapore. industrial production numbers are coming through later this afternoon. we are expecting that to rise 1%. i'm yvonne man in hong kong. let's get to the first word news with has haslinda amin. haslinda: japan's consumer prices fell for the eighth straight month in october, underlining how distant the 2% inflation target remains. it is the longest streak of declines in five years. consumer prices, including fresh sales, fell.od consumer sentiment and retail
discounted. asia had revenue growth supported by passenger volume. million withs $79 the load factor at 87%, a six point jump from the same time last year. asia's biggest carrier also benefited from a 22% reduction in the average fuel costs, and it made more from leaving out its aircrafts. many emerging market currencies are trading at multi-year lows as the rush to the dollar accelerates, which is driven by the fact that donald trump should boost spending. the turkish lira tumbled on thursday cut, while the building philippine peso weakened. seven buildings faced demolition
after the recent earthquake and aftershocks. building,n apartment a cinema, and a parking structure. the 7.8 earthquake has been followed by more than 50 aftershocks of magnitude five or more. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. this is bloomberg. yvonne: we will look at how the asian markets are shaping up so far this morning. my a lot of direction with the u.s. -- not a lot of direction with the u.s. market closed for the holiday, but the dollar strength is weighing on ther region. >> what is clear right now is that if japan continues to surge, it is now rising for seven consecutive sessions. the nikkei is up 0.5%. the nikkei now, very near that
overbought level on the relative strength index. 69.62, veryg it at close to that 70 threshold. that, after seven days of gains and they have the highest level since january. industrials are leading the gains there. the yen is weakening for a third consecutive session. right now, not a lot of movement in the yen as the dollar has halted its rally. let's look at the stocks you should watch in japan. first of all, they just commented that they want 30% of their sales to come from overseas in the near future. the stock is down .4%. ines, they are up .3%. we are hearing they could buy back up to 1.9% of their shares. seika are down 1.5%,
though they are proceeding with a joint venture in india with another manufacturer. so, at least for now, not clear the direction in asian markets, but when it comes to japan, clear gains there. yvonne: what are you looking at? >> the commodities here right now is pretty interesting. first of all, we are seeing this diversion in precious metals. is not doingwti much, but for the week, we are headed for a second weekly gain after iraq's prime minister signaled that their country could be agreeing to trim output. we of course, have the focus now turning to iran and russia on what is to come with those supplied curves. the wti right now, 47.91. the precious metals space is
also interesting because gold continues to take a beating after the election victory of donald trump. we are seeing the speculation of a fed rate hike, and the dollar strength is just driving the gold right now. it is falling .1%. a completely different story with copper, which is surging about 20% this month. thank you. australia's consumer watchdog is accusing companies of attending to engage in cartel conduct. i know this is a case that happened about five years ago. what is being said about it now. this is being done on a consent basis. macquarie alland
agree on the facts that will be presented to the federal court. you have to cast your mind back to 2011. macquarie trader apparently communicated through the online chat rooms about daily submissions, which will be made to the association of banks in singapore, all in relation to the benchmark rate for the malaysian ringgit. obviously, they were discussing which submissions would be higher and which were going to be lower. now, the accc chairman said, as an reminder, that the australian laws apply to firms that carry a business in australia, regardless of where the conduct occurs. yvonne: the quality reaction from anz and macquarie? >> yeah, both of those banks, really taking this on the chin. anz is emitting to attended cartel conduct and will pay
a $9 million penalty. macquarie says the junior employee involved was sacked in 2012 and senior management had no idea that any of this was going on. macquarie will pay $6 million in costs, but both of those penalties will be decided by the federal court. macquariez and continue to fall this morning. japan sees core prices fall for an eighth straight month in october. retailers have yet to see any evidence that japan's plan to overshoot that target will actually happen. i will have to start booking my trip to tokyo with this cotton prices. reporter: we saw japan's core inflation falling .4% in october on year, marking longest streak of declines since 2011.
but that drop is easing. looking ahead, bank of japan is forecasting prices to fall .1%. we can see inflationary pressures somewhat being alleviated by those energy prices and a softer yen. martin schulz told you this morning that we are in stabilization mode, but that october data is underscoring the tough path facing policymakers to live japan out of the deflationary mindset. we can see that through consumer confidence, which growth, and of course, retailers cutting prices. yvonne: yes, the competition among retailers is fierce in japan. >> they want to hang onto the market share, or even grow their slice of the pridefuie. walmart, set to make 565 items cheaper with discounts up to 1/3 on some. this shows you that retailers are not buying the bank of japan's pledge to hit that inflation target,
preferring instead to attract that conscious consumer. we are seeing the strategy yield country'sr the second-largest clothing chain. the president told the bloomberg this week that he cannot stop smiling because they are selling so well given the prices that they have. on the other hand, not so much smiling, so they will be bringing back cheaper products. the likes ofs from mister donut, if you like donuts, that is. yvonne: i do. will be closed because of a bailout worth nearly $900 million. we live in tokyo with more on this. japan display and me this bailout? >> the short answer is they
don't have enough money to do the things they want to do. if you would remember, japan's company was rmed eight years ago. it was a good idea in the beginning. they needed money for the first couple of years and they cut costs and consolidated the business, but over the last three years, they have lost money. they have not been profitable for the last three years and it is not look like they will change. he competition from korean and chinese display makers is really tough and the prices have gone down. now they need more money to invest in the new screen technology that apple and a lot software makers are asking for. they need money to invest in the new factories, basically, which is why we are hearing about this additional funding. n?onne: what is the oed, the what is so special about oled,
and why the people expected to be the standard of the future? >> oled is fundamentally different. right now, this is my iphone 7. when i turn it on, there is a light find it that lights up the screen. oleds, it does not have this light. the screen itself produces the light to show images of stuff. that allows you to make this green foldable, or bendable. samsung already has a couple of oled screens on the market and they have bent around the edges. people have talked about how you can have a book smartphone that is bendable. if you have oled, and gives you more flexibility, basically. it also makes the phone thinner, and we know that tim cook likes thin things. his macbook pro, the recent one, is really thin. papple really wants greater flexibility. also, the screen themselves,
they are a little crisper in terms of colors. people are excited by the technology, but neither the japan display or sharp, they do not have these factories where they can build these oled screens. the problem is, for consumers that use smartphones, that means we will not have the technology sooner. iphone really does want it in its next generation of phones. next year will be the 10th anniversary of the iphone and apple really wanted something special. a spectacularnot product. they really want a lot of fireworks for next year. it really wants these oled screens, because it will give them the flexibility to create a different phone. now the question is, you can invest in the factories down the road. i bet you they will be able to produce oled screens and you and i can start using them.
yvonne: welcome back. you are watching "daybreak: asia." homes in london are now less affordable than ever as low rates allow buyers to borrow more. costs the annual city dweller 14.2 times their annual salary to just buy a property. that is more than twice the ratio for the u.k. as a whole. home prices in london have surged 86% since 2009 as new property stocks failed to meet
demands. ahe pursuit of beer has met stumbling block. the stocks reached the $.60.lent of fou the the emmys government wanted to sell the -- the vietnamese government wanted to sell the share in habeco. johnson and johnson might be looking to purchase a swiss drugmaker for $17 billion. an initial offer has been made for actelion. actelion has opted to remain independent, but sources say it might be more open to a sale at a sufficient premium. the head of th fiat chrysler has described donald trump's win a game changer.
marchionne said this could create a levy on imported vehicles. >> this really is a game changer. mainly, there are a number of conditions in the europe and u.s. that have not yet been figured out. i think the president elect made some statement about how he sees trade. that is a big issue. and the implications it has on the rest of the world. yvonne: let's talk about cars to art now. a growth slowed him and global instability -- a growth slowdown and global instability have been buthing on the market, auctioneers remain confident. let's get more now from rebecca
way, joining us now in a hong kong studio. let's talk about this. i mean, this is quite an exciting feat for you guys. why did this art sale takes a long in hong kong? >> over the last few years, we have seen very strong buying momentum coming out of asia. this year is the first time we are bringing top class pieces here to hong kong. it is not an option, just testing out the market. $250 millionhipped worth of art for the next five days. is it a conservative group? meliani was sold for $700 million alone. why are you holding back on supply? >> i think for a company to appeal to the masses, i think we
are still making sure there is a significant base. this is not for the mass market. also, this cannot go on for long if you only have a handful of clients. the clients travel extensively. they can go to new york or london to buy. there has to be a sustained a base of clients before we decide to move the category here. will bethis exhibition a nice way to test out bringing art to hong kong. this week we are having the whole autumn sale here. have asian oil paintings. isfact, the $250 million art on the weston art side. from $500,000 u.s.
to i would say, a $50 million piece. yvonne: you are basically bringing new york to asia. [laughter] >> yeah. yvonne: so, it is a global effort. talk about that because he mentioned that you are testing the waters about how much demand you will get from this part of the world. still a far cry from what we see in the states, but what is the potential in this part of the world? >> we see asia as being very dynamic, the asian buyers. so, not only content within the asian market. lot, as i said, to paris and london to see the museums. so, when it comes to our purchasing, they also -- when it comes to art purchasing, they also want to see what is going on. leading auction
house, we want to bring the best of the best to this region. this is how we came up with this innovative idea. yvonne: let's talk about christie's, because we have to talk about the weakening yen. how is that affecting demand? that could sometimes be a good thing. >> when the currency of one country goes down, people usually think, i want to cash in. but, actually, when the core relations between the depreciation of one currency and business is not really direct, our collection is more related to the accumulative assets. want to get your take because this is new territory for you because in march you added china to you rlinr line of responsibilities. in the mainland, you have a slowdown, the corruption campaign. what is your view here?
>> we just started in china more than 10 years ago. the options have been growing so much in the last 10 years with the local auction houses coming up very strong. christie's is quite new. we started auctioning in shanghai three years ago. we just opened our new beijing office. we see big potential in the future and china is very promising. yvonne: rebecca wei, great to have thyou. we will continue the art theme. the philips chairman will be joining us ahead of the first ev er hong kong art sale. coming up, will this year's black friday sales prompt shoppers to dig deep? we have a preview, next. this is bloomberg. ♪
yvonne: you are watching "daybreak: asia." today marks the start of the biggest holiday shopping season in the u.s. retailers are counting on black friday sales for a much-needed year end boost. we have more from new york. reporter: black friday, the u.s.'s biggest shopping day of the year and the start of the 2017 christmas and holiday
retail season is this friday, and it is a battle between revenue made in stores, versus revenue made online, and online is winning. last year was the first year when more americans shopped in physical storesical during the forur day thanksgiving weekend. you know, iconic stores like macy's, jcpenney's, and nordstrom's. this year, they are fighting back. this year, macy's is emphasizing exclusivity, close and fragrances -- clothes and fragrances only available in stores. nordstrom's has teamed up with j.crew to sell clothes at the department store. floor space has been devoted to rent the runway, but it will be tough to be amazon.com.
about 55% of americans surveyed said they plan to shop on the world's biggest e-commerce site for holiday gives, which is up 41% from two years ago. but it is expected to be a good retail year for the u.s. retailers could very well be in the black. the national retail federation has predicted you're on your sales growth of 3.6% to a record $665.8 billion. online retailers could see a jump of 7% in sales. this is being helped by interest rates, inflation, and unemployment, which are as low as economists could help. a situation, which is being dubbed the goldilocks economy. yvonne: before we go, let's take a look at the markets trading in the asian pacific. 5, the leader on the board. we had the longest ratstreak
since 2011. gainingdollar-yen is and continuing. the dollar will be weighing on em currencies throughout the morning. let's take a look at singapore. we see that futures are pretty flat right now. we will have plenty more still to come on bloomberg markets: asia. the singapore open is only minutes away. we are focusing on the dollar with the pboc fixed rate plunging for the eighth year in a row. this is bloomberg. ♪
yousef: it's 8 p.m. in new york city. this is bloomberg markets asia. asia-pacific stocks extend their first week of gain since mid-october. japan rising for 11 straight day, but there are no positives for the bank of japan. inflation remains a distant dream with a distant dream with the 2% target far out of reach.