tv Bloomberg Markets Asia Bloomberg November 27, 2016 8:00pm-11:01pm EST
♪ rishaad: it is 9:00 a.m. in singapore. i am rishaad salamat in hong kong. this is "bloomberg markets: asia." ♪ rishaad: taking stock, the hong kong-shenzhen link will start after a two-year delay. china quietly raising borrowing costs, moving away from monetary stimulus. cash crisis deepens in india, but the prime minister says thing should improve.
the stakes are raised in tabcorp with reports tatts a major player may enter the game. 30 minutes away from the start have atrading day, let's look at what is happening. haidi: it is all about the oil patch as we head into ministersns, oil flying to russia for talks, saudi arabia saying a supply cut may not be necessary. that has taken some wind out of the recent rally in crude. wti falling over 4% friday, extending losses. we are holding above $45 a barrel, but just. , 46t looking similar, off
tilde $.67, so it is about the energy space. if we do get that supply cut announced and the details come through, markets have priced it in. if you look at where we are sitting three months out, we've come off that rally built-in after we started hearing about these potential supply cuts. this is what we are looking at in terms of the broader markets, a mixed picture, but the wind taken out of japanese equities. the nikkei 225 close to session lows. the topix snapping its streak of gains on account of that stronger yen. the dollar index giving up gains, taking the pressure off asian emerging-market currencies, but that is what is weighing on sentiment in tokyo. , political storms
gathering after protests. elsewhere, weakness from malaysia. tie one up by .2% as well. , this isrrency space what the yen is looking like, taking risk sentiment out of the market, a decline when it comes to dollar-yen by .8%. we were of days ago, looking at that 114 handle. that is what is driving the markets. if you take out the yen story, is back to oil. we will look at the risk picture, gold rebounding, an as we get1% there some risk taken off the table with opec talks. , china data,speak pmi, expected to slow.
india's gdp numbers for the third quarter, so a lot of that built into this week. rishaad: let's have a look at first word news headlines. here is sophie kamaruddin. sophie: prophet at chinese companies accelerated. industrial profits rose just under 2% in october. the recovery comes amid steady if slow economic growth. the death of fidel castro has prompted questions about the u.s.-cuba fothaw. president obama offered condolences to the castro family. donald trump tore into the leader, echoing campaign promises to demand a better deal for the u.s. and cuba. castro's funeral will be
saturday. pressure mounting on korea's president with one of the biggest public protest. protesters claim one million people gathered to declare should be arrested. the demonstration came amid calls for her to bnp jd for peddling influence and allowing a business friend undo access to government. an opinion poll has good news for prime minister shinzo abe. support for the ruling liberal democratic party at 60%. it revealed nearly nine out of 10 people surveyed say there is no need to pay more for u.s. military troops in japan. more than half of post cooperation with russia. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: right, china making
another move to opening up its financial markets with next monday, the launch date for the chin chin-hong kong stock connect. we are having a look. it has to have been two years in the making. the date has now been announced as december 5. investors have been looking ahead to the second link into and out of china. like the shanghai link, this opens up the market for investors coming in. stocksre a lot of tech and health care stocks that some called the new economy, so different from elsewhere where you might see blue-chip stocks. these capital says shenzhen
named a window on china's domestic opportunities, seen as immune from u.s. politics. daily trading limits are the same. if you want to buy into shenzhen , access to any stock in the exchange index, and also the small and mid-cap innovation index come a value of more than 6 billion yuan, and any dual listed companies. stages, hongal kong saying that access to the small cap gauge will be restricted to institutional investors. tends to be quite volatile, quite a few retail investors, so they tended to make trading choppy. rishaad: yes.
we have seen that, haven't we? just one way of china opening up its capital markets. what else has been going on? msciind: in june, the rejected adding shares, saying there were barriers to international investors. tohave seen china committed this move to open up its markets. in february, it removed limits on foreign involvement in the china interbank bond market. september, institutional investors mainland asset allocations were scrapped, so gradual moves towards opening up the market. this is seen as another move. however, the shanghai link hasn't perhaps been as popular as authorities hoped. it rarely reaches the daily quotas imposed on it. there is downward pressure on the yen, some more flows coming
southbound into hong kong. analysts expect active southbound trading in small and s, and also this weaker yuan. rishaad: thank you for that. china hiking borrowing costs operations,e pboc selective tightening that reinforces the view that beijing has moved away from monetary stimulus. our corporate finance reporters having a look at how this all works. >> good morning. instead of doing a broad-based interest rate beenase, the pboc has lengthening the terms of the open market operations. they think cutting down the seven day reverse repo operation , so now injecting funds by
using 14 day and 28 day contracts. that has increased funding costs, of that's how the pboc effectively tight and 25 basis points in the money market rate. allowingessentially the liquidity to go down a little bit here. the point when naturally we have an economy that is not all together that convincing? is to cut point leverage in china's financial markets, especially the bond market. so, thereast year or has been a huge buildup and leverage in china's bond market because the yields have been declining, so investors have been using leverage to boost their returns. has realized how dangerous this is to china's financial health. that is why they are increasing the funding costs to discourage financial institutions for the
use of leverage. investors have been wondering what is going to happen to the potentialt with a deleveraging. bond prices are likely to come down and the returns next year as well. if you look at the chart of aaa rated bonds, three-year, 10 year over government bonds, there is a jump in yield spread of 14 basis points this month, the biggest monthly jump since april. we also saw some signs of strength in china's bond market, two defaults this month, so next year will be a tougher year for chinese bond investors. rishaad: thank you very much for that. on inn what is going china later. j.p. morgan telling us about the pace of reforms and the impact on chinese markets. two key guest is sees risks to a smooth presidential transition in the u.s. that
rishaad: this is "bloomberg markets: asia". thank you for joining us. let's look at how you would characterize what has been happening with records being set virtually every day when it comes to u.s. equities and this tremendous run in japan as well. the run in japan is interesting because the yen graph shows tremendous capital into the u.s. dollar. that can only be a positive because it is a great enhancement to exports from japan. it probably means the equity
market in japan has upside. , it is aof abenomics boost because it might be inflationary, but it is a policy easing by default, so the japanese market is naturally rejoicing. rishaad: absolutely. the government pension fund, a great story on that, they have benefited from what is going on with the election of mr. trump. do you see it caring on? carrying on? but we have to remind clients that this is not a universal boost for all asset classes. if you're holding listed property and infrastructure and believe there is going to be fiscally driven infrastructure spending from the united states and that will be entirely borrowed, you have to recognize there is stress there for things like infrastructure and listed property, things that rely on borrowed money, but in general it is a big positive for
markets. rishaad: yes, absolutely, the point is you can invest in japan, but you will get whipsawed by the currency. you will be likely losing outcome is a how do you protect yourself? think you do hedge yourself that easily, but one and just thing anecdote i will share with you from a meeting with the head of challenger is challenger annuity business in australia is broadening its reach into japan because the number of japanese investors are looking for pension revenue streams that are not yen-denominated, and they're coming to this part of the world for those streams, so challenger gives them the challenge of broadening out those pensions and doing twenty-year annuities for its clients, just one of export from australia to japan, a financial services export, and the exports from
australia apart from the commodities are in a number of services, and we have seen the benefit from countries like japan looking southward. it is a great time for our on thebusinesses services -- 40 strain businesses on the services side. rishaad: a bit of news coming in at the moment, a stronger fixing today, 6.90. the trendspeaking, has only been in one direction. it is just another pause as we head towards that seven handle? , and obviously we will probably get there. is toallenge for the pboc keep interest rates where they are. six months ago, we thought they would be cutting by now, but they cannot because of the flow into the u.s. dollar. given that they hold 8% of the
is one ofet, china several countries losing ground to a stronger u.s. dollar. this trend will not change, but makes it an incumbent upon china to continue to keep rates where they are and transition to a service is a economy as neatly as possible, and they have done a good job so far. rishaad: with the dollar move, equity move, and bond yields, hasn't everything, that too far too fast? yes, and we need a rest. we need currency markets to stabilize, because a falling u.s. dollar or rising u.s. dollar, which ever it is, if it happens too quickly, it destabilizes trade. if we can hold and let equity markets consolidate, it would be a better outcome, because we have not seen legislation on infrastructure spending go to congress yet here it yes, it will pass, and may pass quickly,
but we cannot assume that taxation legislation and infrastructure spending will sail through congress, even with the majority. rishaad: food for thought. right, let's tell you about the business flash headlines. oh cbc's purchase of barclays wealth management divisions in hong kong and singapore, now priced, 30% below estimates. it will increase the thing of singapore's asset base to more than $75 billion, letting it compete more equally with rivals. fined $1.3has been million for paying undue profits to its owner family. the fair trade commission says korean air sent profits to two profity transferring
less commission and overpaying for outsourced and services. the report has been sent to prosecutors for consideration. korean air declining to comment. looked on's apartment stepping up a demands with new strikes this week. day action ended sunday, but pilots on short-haul flights will walk out tuesday, and all pilot start work on wednesday. a live stanza chief executive says the airline can't survive -- a lufthansa chief executive says the airline can survive. .ndia sets aside more reserves lenders have accumulated $75 billion after prime minister narendra modi band 500 and 1000 rupee notes. with a temporary cash reserve ratio to absorb some of that money. next, reports saying the tabcorp
tabcorp on the up in sydney, word that a competitor might try to gatecrashed the deal with tatts. what would this mean for tabcorp 's plans? >> it might mean time for a new plan. it was going pretty well when tabcorp bought a 10% stake in tatts to head off other interest. tabcorp was to create a pan-austrian bedding agency with the merger. we have this report from the u.k. daily mail that led br
adbrokes is preparing an offer. the market responding pretty well. tabcorp shares were up strongly, now up 2%. tatts up about 1% as well. analyst with views on this, for example, citibank saying this bid could appease any concerns held by regulators over having them tie up. bedoes warn that this could an "difficult bite due to the size of tabcorp." rishaad: thank you. some other stories making headlines, phillips taking on ge and siemens for a share of the lucrative health care solutions
market. the company says the medical software market could grow twice as fast. it is saying that it will help interpretation of data from scans. holiday shoppers spending less so for black friday weekend and last year, another sign that american consumers are relet and discounting,out including online and off-line purposes. shoppers been an average of 289 dollars over the weekend, $10 less than 2015. a third of consumers said their purchases were on sale. of the campaign to take the u.k. at of the european union have rejected a plan by boe governor mark carney to negotiate a transition for companies. brexit leader called for an "
clear, clean, and simple approach." animated musical film has topped the north american box office, raking in $55 million. the film outperformed three , the biggesteases thanksgiving debut since 1980 to, although it missed ticket sales estimates. on when itt is going comes to the trading day, japan-south korea, on the way down, nikkei two a stellar , sydni looking like this, as well as wellington. it is a falling market story when it comes to the asx, a fraction lower. new zealand, the opposite direction. this is what we have for the hong kong start of the trading
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rishaad: you are back with "bloomberg markets: asia". . having a look at futures contracts in hong kong, a flat start to the session. nikkeillar run in the and japanese equities is shuttering a little bit to a halt. looking at that and opec this week, that meeting taking place. i guessed a bit later suggesting if we get a deal, oil spikes to $55 to $60 a barrel. if we don't, $30. below theishing, well
1200 level, still slightly higher this morning. trading day is upon us when it comes to hong kong and shanghai. we are having a look at a stronger fix for the yuan this morning. haidi: slightly stronger, unsurprisingly, a little bit of a pullback in the dollar index. the bloomberg dollar index weaker for a second day. as we look ahead to more data from the u.s., the future trajectory will be informed of what the fed does next. , 6.9348, still looking at a record low at the moment when it comes to the offshore renminbi. we had the device ration and august last year. we have come a long way since then, but we had this bout of
windnbi weakness, some coming off the u.s. dollar, reflected when it comes to the chinese currency. we are seeing this play out when it comes to the yen, falling by 1%, the most we have seen since november 9. thear-yen, that is narrative driving the risk off sentiment we are seeing across the region, particularly tokyo stocks. 112 when it comes to the yen there. we're are looking at the fx space, some pressure off the emergingean won and market currencies. the other part of the story is oil, watching opec. comments coming through from saudi arabia saying that it is not needed at all, so some optimism out of the oil patch,
declines for wti and brand. just quickly, the dollar index looking like this, at a pullback of .4 percent, playing out in terms of the movements in fx in asia. lookseater china open like this, upside by .3%, some good industrial profits, coming in at an acceleration over the previous month. coming in on thursday, expected to weaken, but shows that general trend of stabilization. like .5%,stocks up but a week future when it goes into a week that is heavy when it comes to even risks. rishaad: right, first word news headlines. shenzhen-hong kong stock an will start on december 5. regulators announced the biggest
monthly decline for the yuan since august 2014. the link arrives two years after the hong kong-shanghai connect. many technology companies are listed in shenzhen. china has tightened monetary conditions in recent weeks without an official announcement. an analysis of transactions ckows the pboc has cut ba instead-day operations, injecting more funds through 14 day and 28 day contracts. the move is seen as a sign of selective tightening. monthsl the most in two amid increasing doubt that opec will reach an agreement this week in fee in a. producers non-opec monday were canceled after saudi arabia pulled out. instead, the cartel has called a meeting to resolve its own differences, including whether
iran and iraq are willing to cut production. russia is also reluctant to cut. shopper spent less over black friday week in the last year. in another sign that american consumers are reluctant to spend without deep discounts, online and off-line purchases, shopper 280 nineaverage of dollars, $10 less than 2015. more than a third of consumers said all purchases were on sale, a threefold jump. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: right, i look at indian prime minister narendra modi using his monthly radio address to assure people that cash crisis engulfing the country caused by with a drawing high denomination notes, he says it will end soon. has more.aruddin
he is confident. he has a 50 day window. sophie: despite the chaos we are seeing, lines that banks, he's saying that it will succeed and that the country will see the benefits soon. he is holding steadfast to his steadfast to his plan. recall that holders of those notes have until december 30 to exchange them. we are halfway through the transition. . 86% of notes are out of circulation. we are seeing a ramp-up. rishaad: 86%? that shows you how much of a reliance the economy had on these transactions. indian banks are ramping up their holdings of deposits. tos has prompted the rbi introduce measures to manage
this liquidity. rishaad: what are these temporary measures? sophie: enter mental cash reserve ratio, lenders have to set aside more deposits as reserves. review these measures. the concern is with rising liquidity, this could stoke inflation and harm financial stability. india is a $2 trillion economy. this move, some have described it as harsh. there is reaction in the bond yields, the benchmark 10 year, set for the biggest drop since april 2009. we have yet to understand the full extent of the political and economic impact of this shock. rishaad: thank you. watch this space, i suppose. sophie kamaruddin looking at this huge cash crisis in india. right, one of the world's most conservative investors has found an unlikely ally in one of its most flamboyant politicians.
we are talking donald trump. japan'sa look at how giant government pension fund could get a helping hand from the president-elect. conservative gpi f, and donald is helping the fund in two ways. this $2 trillion fund has half of its investment overseas, so it is getting a boost from the u.s. global equities market as well as the weaker yen, so the trump rally has helped to weaken the yen by 10% over the past gpif benefiting from that. is one of the biggest investors in japanese stocks, and we saw the topix rally into a bull market this year after a terrible year for japanese
investors and gpif. rishaad: tell me what has been going on over the last year for this funded. there have been changes? f decided to/bond holdings and double equity investment in 2014. since then, japanese shares have been doing very badly, so we saw them lose $52 billion and one quarter, and for several quarters they have been doing poorly. this has caused outrage among politicians and the general public, especially the opposition party who have been saying that shinzo abe has pushed them into taking on riskier investments, and since an, they have been losing trillions. will be two bank orders somewhat of a relief for gpif. that's just it, isn't it? will it stop the criticism that
we have seen the last few weeks? says they focus on the short term. as shares have been rallying, whether it will continue into next year is debatable. a lot of people are saying japanese equities are rallying high, but we need to see effort from japan to boost growth rather than this foreign aspect, the trump rally and the weaker yen, so whether they can benefit from its new investment strategy remains to be seen. rishaad: thank you. it is early days for a big data and china. it economists think it could reshape financial markets. great to have you here. this data?rating what is being done with it? there are so many sources, and that's what makes it so much of
a challenge. >> 700 million chinese citizens online, everything from shopping isjob search to finance increasingly taking place on the internet, and that teens for firms like baidu, alibaba, tencent, there is a huge opportunity to collect that online activity. they are creating -- tracking theaidu number of people going to industrial sites. , jd.com,on, alibaba tracking online and off-line purchases, telling us about consumption. the structure of the chinese economy, a big data company tracking the amount of new economy activity, high tech, search and development services, and estimating how fast s is growing.
-- how fast that is growing. rishaad: how different is this in china than elsewhere? beenrstly, china has quicker to get online than other countries. there is a larger percentage of the chinese population with the smartphone than japan, so the opportunity is greater. that as anfactor is emerging economy, there are gaps in china's official data coverage. big data by providing more granular data is helping to fill some of those gaps. about the efficacy of the data? can we trust it? >> our view is that more data is editor than less data. it is early days. most of these data points don't have a longtime series. the people producing them will be working through some glitches, so were not putting 100% confidence in any of the but we think for
higher market when it comes to greater china, hong kong, shenzhen, and shanghai. some risk aversion ahead of that opec meeting in vienna. 3%.m china holdings up over back, breakingng that trend. in gm china raised to buy from hold. melco reduced as well. we are also watching the chinese banks. we have a story, we crunched of the numbers of bloomberg. it looks like the pboc has done some stealth tightening.
they are putting money through these 14-day and 28-day operations. one analyst saying this is tantamount to a 25 basis point rate hike, so a little bit of tightening going on quite late -- quietly. to thewhen it comes banks, bank of china, a-shares listed in hong kong, now over 1%. china's construction bank and ic bc seeing some gains as well. downside when it comes to tokyo markets, but a nice picture when it comes to hong kong and greater china. rishaad: thank you very much indeed. right, the long-awaited but much delayed hong kong-shenzhen stock connect will start next monday, december 5. let's discuss the latest move to open china's financial markets with j.p. morgan asset management.
a long time coming here. people are comparing it with shanghai and the stock connect there. the thing is people are saying this one could be the real deal. what is your view? of the shenzhen connect, more growth companies, dynamic natures, so attractiveness to investors will be different. this is perspective, important in terms of china's liberalization of the capital markets. eyes,ity short-term or probably no substantial increase in liquidity, but over the medium to long term, they will do better in terms of the improvements. shanghai as well. rishaad: what it does is give
the hong kong investor a few and view and entry into the new economy. >> the initial bet for the china stocks is only available to institutional investors. retail investors are exposed to , asmedium-size companies compared to bigger cap names. investor,he hong kong shenzhen dealing with a market that is driven by retail investors. with that, comes all sorts of --gers comic volatility dangers given the volatility we have seen. we look at the shenzhen earnings story, much better than shanghai.
.0% the investor will be more exposed to growth opportunity, but volatility will be much higher, so the investor has to be more careful. rishaad: has an asset manager, what have you witnessed? are people interested in this? >> people are interested in the better quality growth names. chin jin more opportunity on the there are moret startups. twoay be exposed to volatility in terms of earnings and valuations. it is still trading at decent valuation. for obvious reasons of course. , what about corporate earnings? what you seeing in china with
the companies you have been looking at? are they better and what is happening with the economy at large? >> we see corporate earnings improving, the recovery of prices. i think the trend will continue for next quarter. more challenges in terms of the real estate and automobile side because of the strong growth momentum this year. in terms of the consumer sectors , there will be some kind of positive capitalists -- catalyst because were seeing improving cpi. rishaad: so, sector rotation? >> this year, quality, earnings valuation. next year, there will be more diversions in terms of the sectors. rishaad: what about fixed income? definitely some liquidity withdrawal,
technicians are putting the final touches to a one ton capsule connected to a giant helium balloon, designed to climb to near space, 20 kilometers above sea level. the company behind the project has lofty ambitions. it was to commercialize space travel by 2020. first though, they have to test the flight controls. you have probably heard about monkeys and dogs sent into space, but this will be transporting this little guy. asit is hailed by some china's elon musk. he wants to make space travel accessible to as many people as possible. hy designing a craft wit reusable parts, he hopes to keep
tickets under $100,000 per person. >> if you go by rocket or other either be ant will up or down crazy process, which is difficult. it ise want to develop is just like taking a space elevator. of tale withons china's bid to compete in a space race with the u.s., russia, india, and japan. country aims to build and operate its first playstation by 2022. it wants to send an astronaut to the moon by 2025, and an on-demand vehicle on mars. in october, china sent to ashen knots into orbit for china's longest mission yet.
-- sent two astronauts into orbit for china's longest mission yet. is still frontier dangerous, and a long way off. half an hour after lunch and 12 kilometers above the earth, systems failed. the mission was aborted, and the fate of its crew is sadly unknown. right, let's have a look at the trading day. hong kong, shanghai, there we go. moving up 3/10 of 1%. we did have weakness when it came to the japanese markets, triple digits losses, .6% lower, this yen moved to the upside against the dollar after recent weakness, helping exporters to depress the market over there. .3% lower on the asx 200. in the next hour of "bloomberg
rishaad: almost 10:00 a.m. in hong kong, 1:00 p.m. in sydney, 9:00 p.m. in new york city. i am rishaad salamat. ♪ rishaad: oil sliding ahead of opec talks. saudi arabia hinting that there may be no need for production cuts. gold gains for a second day. to farhat prices fell too fast. the missing link, the hong kong-shenzhen stock connect
starts next week after a two-year delay. andorp pursuit of tatts reports of a british player entering the fray. taking another move to setting up financial markets with more openness. authorities setting next monday as the launch date for the shenzhen-hong kong stock connect. it has been a long time coming. >> it has. investors have been looking for to the second link into and out of china. it offers opportunities to invest in technology stocks and health care. saying the shenzhen names are a window on china domestic opportunities seen as immune from u.s. politics. dailys have the same
limits as the shanghai connect, 13 billion yuan northward, southbound, 10.5 billion yuan. for investors, buying into shenzhen, this is what they can access, any stock in the shenzhen stock exchange component index and the small and mid-cap innovation index with a market value of more than 6 billion yuan, and any company do listed in should and shen and hong kong. for the initial stages, shares gauge on the small cap will be restricted to institutional investors. it offers an opportunity to go into shenzhen, but chin chin is one of those that can be quite volatile, quite a few retail investors, trading choppy.
this year, lost 7.9%. last year, it gained more than 60%. otherd: there have been moves by china to open up its markets. this is the latest one essentially. china has come under criticism for restricting the flow of money out of the country or making it difficult for investors to get into china. in june, msci said it declined to add shares to its benchmark because they perceived barriers to foreign investors trying to get into china, so that was one of the reasons why it rejected that move, but china has been seen to be making some steps towards making the markets more accessible. in february, they removed limits on investment in the interbank pond market. bloomberg reported the restrictions on q3 asset allocations had been scrapped, so with this second connect, we
will see access into china, but also we have seen that for the shanghai-hong kong connect, allocations, quotas weren't necessarily reached every day. not be as popular as authorities have hoped. you are seeing strong southbound , coming into hong kong. analysts are expecting interest in hong kong listed small caps and midsized on widening valuation gaps and the weaker currency playing a part as well. rishaad: thank you very much. this is the other big story today. the speculation surrounding opec , oil could be volatile as the body makes a last-ditch approach to making output cuts. toy are meeting in vienna finalize terms, whatever they are. let's get more.
there has been a flurry of activity ahead of that meeting. now, all sorts of conflicting headlines. what do we know? >> absolutely. dayy was supposed to be a where opec members were going to meet with non-opec members like tosia, who opec wants conscript into this output cut. that has been scrapped. now it will just be opec members meeting trying to iron out there'd differences. -- their differences. the latest report is algeria's venezuela's, he and oil minister are taking a trip to russia to meet their, so who knows what will, back, but there is all kinds of different activity going on. rishaad: after pushing for cut,s for a production
saudi arabia expecting prices to stabilize next year, even without one. what is this signaling exactly? >> that's a great question. it is signaling two different things. it is signaling two different things. one, there is a little bit of a signaling to the market to be calm, that saudi arabia does not want to see the market react to any lack of agreement on wednesday as a catastrophic event with oil prices crashing. they want to prepare the market for that. secondly, it is part of a bigger picture that everyone is seeing, over the last two years oil production has been falling outside opec. growing.s been if you look at the general trend lines of supply and demand, we should see some price strengthen next year regardless of what opec does. there is a little bit of politicking, but taking a look at the facts and a picture
stuff. rishaad: oil prices dropping in the last few days over the possibility of a deal looking less certain. what happens if opec cannot get on the same page as other members and work out a deal? also, can they get a deal sorted out with russia at the same time? >> if they can manage to pull together and do a deal, we will see prices jump. there are a lot of speculative shorts in the market who will have to cover fast if there is a sizable cut in production, and because of the oil prices dropping, there is more room to run up now. , thee longer run, a cut biggest beneficiaries will be whereec members, america, companies have reduced the cost of production and will be able to hedge production for all of
2018 at higher prices. will be the ones who see a little bit of a boost from any kind of price rally thanks to saudi arabia's and russia's actions, if it happens. rishaad: thank you a lot for that, the latest on what could happen when it comes to opec and the oil price. right, first word news headlines. here is sophie kamaruddin. china has tighten monetary conditions without an official announcement. analysis of transactions showed the pboc had cut back on a seven day market operation, instead injecting more funds -dayugh 14-day and 28 contracts. a new opinion poll has good news for japanese prime minister , support for the ruling liberal democratic party at 60% for the first time since
october 2013. it revealed nine out of 10 people surveyed say there is no need to pay more for u.s. military troops for japan. more than half oppose cooperation with russia. the pressure is mounting on korea's president, with one of the biggest public protests in the country's history. organizers claim one million people gathered to demand she be arrested. police say 260,000 turned up. the demonstration came amid calls for her being impeached for peddling influence and allowing a business friend undo access to government. holiday shopper spent less over black friday than last year in another sign american consumers are reluctant to spend without the discounts. online and off-line purchases, shopper spent an average of 280 nine dollars over the four-day weekend, $10 less than 2015. more than a third of consumers said their purse just were on sale, a threefold jump from last
year. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ,ishaad: right, looking ahead online retailers gearing up for cyber monday after a disappointing black friday weekend. next, warnings that oil could see $30 a barrel depending on the outcome of this week's opec meeting. this is bloomberg. ♪
yen, the nikkei having its first loss in 12 sessions. , but ite coming through had been in strong bull market territory. energy players weighing on the asx 200, down .3%. hong kong, energy players under pressure. very solid buying from casino stocks. , alsochina up by 2.4% positive gains on the shanghai market in early trade, up by .5% , so a mixed picture for asian equities. what we are focusing on is the movement in bonds and the currency space. weakness pushing the emerging-market currencies higher, led by the south korean won, up by .7%.
,f you look at the 14 day rsi it hit a level of 81 last week. dollar washowing the in overbought territory, so that's why were seeing some strength into these emerging-market currencies. .3%,ffshore renminbi up by and the onshore yuan rising to the highest level since november dollar, up 5.25%. the bond market, australian bonds leading the decline -- the leading declines, six point 9% return on the 10 year all strain bond, some movement in the 10 year japanese note as well. a different picture, oil the focus of the week, but dollar weakness playing into equities and bond markets today. growing skepticism over
the ability of opec countries to reach an agreement on out what cuts. deal is guest police if not reached, oil could sink to $30 a barrel. he is in singapore. tell us about this. saying $55 to $60 if they get a deal. so what gives? it's coming against this back suggestingdi arabia no deal needed because oil will be stable and going up in the new year. is a bit of that the negotiating position on the part of saudi arabia, a clumsy one. they seem to be circling and sitting out there positions. days will be very frantic. if they don't put a deal
together, there will be a global excess of supply, and i don't see oil staying above $40. i can see a mass run for the door and oil trade down to $30. on the upside, i agree, because that will bring shale back online and massive hedging from those guys into the futures market. hedging from those guys into the futures market. if we do get a deal, the next thing out will be whether they stick to it and whether shale will reenter the market. howaad: it is interesting shale has become the swing producing element of the oil weart, adding a ceiling to oil goes, but no deal will be worth the paper it is written on if russia is not in it as well. it.hat is exactly they have been talking with russia as well. russia has played its cards close, but the feeling i get from what they are saying in the media is they are not interested
in cutting production. they will freeze production. i suspect that given that they had floated the ruble, the fiscal break even as now lower than a lot of the opec members, so it is quite a strong negotiating position. it does not need to be cutting output. it out to market, the cost is lower than these legacy opec countries that have u.s. dollar pegs. rishaad: let's move to the other elements this week, more political risk in the pipeline, that all important election taking place concerning italy. a lot of people have been pointing to the risks inherent there. what do you make of it? been talking about this referendum until after the u.s. election, and then everybody is rubbing their hands and getting worried about things. i think it will be a close-run
thing. resign ornzi has to not, we will see another wave of we have seeng that with brexit and the u.s. presidential elections. may movement of discontent rear its ugly head again this weekend, but the bigger note will be next year when we have federal elections in germany, france, and the netherlands. they should be looking over their shoulders carefully as well because storm clouds could be gathering for a lot of politicians in europe next year as well. rishaad: indeed. a yes vote for constitutional reform in italy, that is seen as positive for some. and what way could it represent systemic shift or risks when it comes to markets and investor sentiment? you have hit the nail
on the head by sentiment here it i don't inc. it represents a -- amatic -- i don't sentiment. i don't think it represents a systematic risk. means it only stays in its status quo of staying nation. -- of stagnation. the whole reason is to get reforms through the door, which is proving impossible with the system as is, so it would be negative for italy in respect that it would continue in its slow declining deflationary dissent, but systematically, i don't think it changes the bigger picture at all. the bigger picture will be next year during federal elections. rishaad: let's look at sentiment in terms of market. question you are currently confronted with when it comes to this rally in new york to all-time highs there?
we have seen japanese equities on a tear. can this go on or is it time for a gut check? >> i would like to see a reality check. although the markets have priced hikes,onths worth of fed a huge bounce of trump reflation and infrastructure spending, we have yet to see a single policy, 's office yet.mp he does not get the keys until january 20. on the other hand, it is hard to stand in front of sentiment when it's running at you like a freight train come up but perhaps the market needs to take a deep breath here. overve a lot of even risks the next week or so and into next year. we may well have got ahead of ourselves. the most often asked question is
can the dollar rally continue. my answer is yes, but we might have to have a correction first. i believe we have now seen the absolute bows in u.s. interest rates, and the cost of capital will no longer be 0% in the world. rishaad: it is all about the reflation trade sending yields up. did equity investors realize these yields would have an impact rather than being pumped up by pierce sentiment? -- by pure sentiment? >> that is the question i ask myself the most, when our equities going to rebalance. bond yields can't keep rising and equities rising at the same time. in an environment where there is little to no noticeable growth? reality mustage
bite with equities and we will down in u.s.ion equities. i think that will be once mr. trump takes office and his policies become clearer. rishaad: what is your view with emerging markets, the money being taken out of them, and wind does money start coming back in? is it a good time to be going back in? >> no, i think it emerging markets are like catching a falling knife at the moment. i think that people have not quite priced in the efax or implications -- affects or implications of yields in the higher cost of capital. a lot of emerging markets are running dollar pegs, so there will be tightening monetary have highthey offshore barring or current account deficits, the cost will increase substantially.
emerging markets will have a 2017 andr to start less donald trump starts labeling them all currency manipulators. rishaad: thank you very much indeed. >> cheers. rishaad: coming up, shares of tabcorp jumping on speculation of yet another big name bitter attracted. we are headed to sydney for the details. that is next. ♪
reevaluation of that plan. it was all going along nicely win tabcorp announced a 10% stake in tatts, aimed at heading off this. were pursuingtts merger toion dollar make a pan-australian gambling the abilitying them to take on their rivals. into that makes ladbrokes mix enteredhat ladbrokes, so the plan out the window. .he market warming to the news there has been some analysis about this development. appeaseing it could
concerns about that tie up between tabcorp and tatts, but it could be a difficult light for ladbrokes due to the size. foraad: thank you so much that. let's move along and look at some business flash headlines. pilots stepping up pay demands with new strikes this week. pilots on short-haul flights will walk out tuesday, and all pilots stopped work wednesday. it has led to thousands of flights being canceled. the chief executive said the airline cannot survive if the caves in to demands. millionir fined 1.3 dollars for paying undue profits to its owner family. korean air sent profits to two units by transferring profits less commission and overpaying for outsourced to services. the report has been sent to prosecutors for consideration.
>> it is 10:29 a.m. in hong kong. withsophie kamaruddin first word headlines. and increasing doubt opec will reach an agreement, producers meetings were canceled after saudi arabia pulled out. the cartel has called for a meeting to resolve differences, including whether iran and iraq are willing to cut production. amid signs itg felt too far, too fast. demand for the precious metal took a hit after the u.s. presidential election and donald trump's pledge to boost spending.
gold has tumbled 6% this month as investors price in a 100% probability that the fed will raise rates next month. the long-delayed hong kong-shenzhen stock connect starts next monday. regulators announced the date amid the yuan's biggest a klein since august 2015. the link arrives two years after the hong kong shanghai connect. yany chinese technolog companies are listed in shenzhen. trump launched a 12 hour twitter offensive, saying he won the popular vote if millions who voted illegally are removed. there are recounts in three battleground states. said that is fraudulent and called his critics "crybabies." global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. well, this is
"bloomberg markets: asia". . a mixed picture in asian markets. moving higher, chinese stocks listed in hong kong hating for a five-week high lead by solid moves in railway stocks. c doingailway and crr well in hong kong. will finally see that hong kong-shenzhen link come online, so hong kong exchanges higher by .7%. up by 1.4 percent heading into the lunch break. some fairly solid support from the gold players today, safe haven assets back in play as oil falls and the dollar weakens.
elsewhere, and mixed picture, the nikkei down by .1%, the first the first of klein we have indexn the broader topix in 12 sessions. quite a bit of weakness from some of these companies that have in showing signs of being in overbought territory. australiallback in led by declines in the energy players, off by .4%. the philippines weaker, even though we have heard from the philippine minister saying -- the budget chief, saying they are comfortable with the peso at this level. in shanghai, some gains today, up by .5%, a number of state owned companies hitting the daily 10% limit. a lot of movement in these companies, likely to get up boost in terms of commodity and infrastructure spending.
the bond market, the australian 10 year note lead the gains in bonds, yields falling, down by , and basis points to 2.69% movement in the japanese 10 year note as well. china has been quietly hiking borrowing costs through pboc operations and selective tightening, reinforcing the view that beijing is moving away from monetary stimulus. it is about these repose and how they do them. -- repo and how they do them. >> instead accusing a broad-based interest rate hike, they are lengthening the terms of the market operation, specifically cutting the usage of seven-day repo and injecting funds into the money market by using 28 day and 14 day contracts. that is longer-term funding,
meaning higher costs and how the pboc raised to 25 basis points in the money market rate. rishaad: will policy makers when you have an economy that is a little wobbly? tothe point here is not target the economy. trying to cut leverage in china's financial markets, especially the bond markets. therehe past year or so, is a huge buildup and leverage because the yields are coming down and investors want to boost returns. this is not good for the economy, and the pboc has realize that. that's why they are increasing the cost for financial institutions and banks. rishaad: how does it affect the bond market? >> investors are wondering. with the deleveraging happening soon, the bond prices will likely come down, and also returns will likely come down as well next year.
if you look at the chart of aaa rated corporate bonds oh-fer government bonds, you will see the yield spread has jumped 14 basis points this month. that will be the biggest jump in seven months. we are seeing of their signs of stress in the corporate bond market, such as two defaults this month. see, bond investors will have a tougher time next year. right, we will see how that works out. thank you very much indeed. right, early days for big data and china, but economists think it could reshape the world's second-biggest economy. we have more on this. which companies are generating this big data, and tell us how they actually do it and what they do with it and what sort of picture it all builds up? that the big data is coming from the big companies.
that means alibaba and by do aido here. it involves maps, search engine queries, all kinds of things. this has been bundled together into new indicators that can track specific parts of the consumer economy. baidu has found ways to track people at apple stores. iphone, youa new can get a sense of whether there is new interest in that phone. even industrial and consumer sectors. entertainment option people are watching our karaoke bars. you can find out when people are ride to ther didi
karaoke bar and get a sense of how well the industry is doing compared to restaurants with the rest of the consumer economy. rishaad: what is different about china? >> that's an important question. along history of investors being skeptical about the official data, and the other part is that some of the official data is not complete. the labor market is part of that. the employment rate has been calculated on a typical survey-based method, so there's not the same level of granular detail we are accustomed to, so the indicators can help fill the gap and add to what we know. one of the interesting ways people are doing that is a location-based thing.
you can track employment by tracking people going to office parks or manufacturing facilities by tracking the mobile phone. track 2000-3000 different industrial parks or technology parks and get a sense of employment, that can be a real indicator of how the labor market is doing in various industries in specific regions. rishaad: can we trust these new indicators? can we trust big data overall? >> you can trust it in the sense that the numbers are coming straight from what people are putting into their shopping carts online or what kind of searches are being done for products, and you can get big numbers for auto sales for example, but generally what economists like is the old school, long-term economic numbers that go back for decades , and so for policymakers, this
might be interesting as an addition to the data they already have, but for making policy and making high-level decisions, it's not the same kind of thing because it does not have that long history that economists and policymakers like to have. rishaad: right, well, thank you very much indeed for that. looking at the impact of big data. next, will cyber monday succeed where black friday failed? that is ahead. this is bloomberg. ♪
fund. it could get a helping hand from a mysterious source there. we are talking donald trump. >> exactly. we never would have expected that trump which should -- would be such a good friend for gpif, but he has boosted japanese shares. japanese shares were one of the world's worst performers this year, but they have managed to enter a bull market thanks to donald trump over the past month, so that is helpful for allocatedh has 25% for japanese shares. another way it is helping gpif is that it has helped to lower the yen and boost u.s. and global shares as well. invests a must of their $1.2 trillion abroad. it has been a double hit for gpif. rishaad: what has been going on
over the last year at this fund? there have been changes in structure and its investment capabilities. >> yes, it has been a tough year for gpif. towards the end of 2014, they reshuffled their portfolio and cut their bond holdings in double their allocation to equities, which at that time was seen as a risky move. since then, we have seen japanese shares fall. global markets had a difficult time at the beginning of the have beenpif criticized for taking the country's pension money and putting it in risky investments. the opposition party has accused shinzo abe of gambling away the pension fund. gpif has been trying to get people to understand. time, look over a long
there has been profit, but they are coming back into quarterly returns again, which should be able to provide some relief for fend that maybe they can off this criticism for a little while. , weaad: right, the thing is have seen of late how well the fund is doing given the rally. is it likely to stop this criticism? have beenalysts saying that with donald trump in the weaker yen outlook for tight monetary policy in the u.s., the yen should continue to weak income us are japanese shares will be recovering from now on, willhere are the bears who say japan needs to get into long-term, sustainable economic growth in a demand-based economy. in that sense, gpif, it's too early to say whether they will do well.
like they keep saying, it is a long-term fund, but we are likely to see quite a bit of gyrations in its investment returns over the next couple of years. thank you very much indeed joining us from tokyo. right, early numbers out of black friday showing people spend less. ofs is the traditional start the christmas shopping season and puts a focus on cyber monday. su keenan has more from new york. black friday data shows that there continues to be a shift towards online shopping, and that this holiday season got off to more of a lamp than a running start. there were 2% more shoppers out there according to the latest data, but most of them were focused on discounts. we are told they spent less than last year. if you talk to the ceo of target, it is all good. >> i am very optimistic about
the consumer and economy. it is a great time to be a consumer in the u.s. the overall gdp growth is solid and will continue to expand. we are seeing a good movement in employment, low interest rates, low inflation, and certainly in food, deflation. >> going into the bloomberg, you ,ill see a picture of the trend fewer purchases, cheaper buys, a theme for the 2016 holiday shopping season. the real indicator will be the final tally for the cyber monday 100 22 million shoppers are expected in total. quickly to the economic data expected this week, a big focus on this because of the upcoming fed meaning, where there is a 100% expectation that the fed will raise rates. the latest data is expected to ,eaffirm with payrolls growing
spending forecast for october, spending and income rose, and economists will get confirmation st growth, but the biggest data will be cyber monday. we are learning from comscore that $1 billion is expected, $2.5 billion in desktop sales, rising 9.4% over the prior year with sales expected to hit $3.36 billion. could this mean more brick-and-mortar stores shut down? take a listen. dramatically overstore d. the fastest-growing area is online. >> he does have a positive note,
rishaad: you are watching "bloomberg markets: asia". china spending billions of dollars on its space program. it is not really a state led effort. entrepreneurs are getting in and investing. as tom mackenzie reports, this is a story for the future. china'se in a desert, private space ambitions are taking flight. technicians putting the final touches to a one ton capsule called traveler 2, connected to a giant helium balloon designed to climb to near space, 20 kilometers above sea level. the company behind the project has lofty ambitions. it wants to commercialize travel
by 2020. first, they have to test flight controls, capsule-two-control communications and the life support systems. >> the traveler 2 will be transporting this little guy, a two-inch terrapin. >> it is held by some as china's elon musk. he wants to make space travel accessible to as many people as possible, and by designing a craft with reusable hearts, he helps to keep tickets below $100,000 per person. >> our goal is to make normal people to go to near space. if you go by rocket or some other technology, you will either give you a crazy speeding up or crazy dropping down process, which is very difficult for a lot of people. what we want to develop is that it goes smoothly, just like
taking a space elevator. ambitions does dovetail with china's ambition to compete in the space race with u.s., russia, india, and japan. build andy aims to operate its first space station by 2022. it wants to send an astronaut to the moon by 2025, and land an on-demand vehicle on mars. october, china sent two astronauts into orbit for china's longest mission yet. though a private company, it is backed by state money. the final frontier is still dangerous, and a long way off. atf an hour after launch and 12 kilometers above the earth, the systems failed in the mission aborted, and the fate of its turtle crew is sadly unknown. well, the indian prime
minister narendra modi as been using his monthly radio address to assure people that the cash crisis caused by the withdrawal of high denomination notes will soon ease. sophie kamaruddin is with me with a look. why is he so confident that this will soon be over with? he wanted to reassure the nation that this is working. he is urging traders to use technology. that it takesat at least 50 days for this transition to go through. usingned on sunday that bank accounts to recycle money is cautioned against. we are halfway through the transition, and 86% of notes is
out of circulation. it has flooded the banking system, prompting the reserve bank of india to put in measures to handle excess liquidity. rishaad: what are the measures exactly? incremental cash reserve ratio. lenders have to set aside more deposits for reserves. the rbiing this gives time and is a cheaper and more .lexible measure others are calling the move harsh and expecting a negative reaction in bonds. so far this month, the benchmark 10 year yield has fallen 56 basis points. all in all, prime minister modi is confident, but the true economic and political impact has yet to be seen. rishaad: it is 50 days, isn't
it? he expects everything to be back to normal. >> yes, when he announced this plan, 50 days would take us through december. the holders of those notes have until december 30 two exchange for fresh notes. rishaad: there you have it. thank you very much indeed for that. at markets andok other stories we are following. a former french prime minister leading the republican party in the next presidential election. he beat another former prime minister in a primary vote, supporters preferring his tough economic reforms and, supporters preferring his tough economic reforms and traditional french bayous. -- french values. leaders of the campaign to take the u.k. at of the european union have rejected a plan by mark carney to negotiate a
transition for british companies. reports saying mark carney has ways for companies to remain in the single market for two years after brexit. the brexit leader called for an "clear, clean, and simple approach." oil prices weighing on asian equities. let's have a look at what is going on. we will have the big stories. angie: it seems to be all about oil and the asian markets today. energy producers in the markets today. is monetary stimulus policy over at the pboc? we will find out. ♪
things should improve soon. reports a major british player may enter the game. >> welcome to " bloomberg markets, middle east." it is all about oil ahead of that opec meeting. >> a lot of wrangling going on. >> local newspapers reporting ofments from the minister saudi arabia saying, hey, we might not even need a cut. >> imagine what the markets will do if that happens. this function. we are seeing gains across our safe havens. bond yields getting a little more and the likes of gold of session highs at 1% after being so badly been up ever sense that trump election victory. we has seen the pressure coming
off asian currencies. we are also seeing the r&d assisting with a little strong today. that is come with that fall off of the chinese currency. it is all about the yen. safe haven demands for the yen and pullback in the u.s. dollar falling back for the second day. that 112wing below handle. we are sitting at 114 on friday. that is weighing on the future when it comes to equities in japan. we do have gains coming through from the shanghai-shenzhen. downtrends we are seeing as a result of the yen and will practice. we are seeing risk aversion head of the opec to her and some key through thating will see what kind of news we will get from the fed.
done deal, but what happens and 2017 given there so much event risk ahead. gold and silver gaining. these commodities rally in china continues still. four and 4/10 of 1%. everything from garlic to glass seeing these gains. looking at another speculative bubble, certainly you are seeing money being channeled elsewhere. >> the long delayed hong kong-shenzhen connection will happen on december 5. this announced since the biggest monday declined since the evaluation in august 2015. many chinese technology
companies are listed in shenzhen. a new opinion poll has some good news for japanese prime minister shinzo abe. these yet a survey shows approval for the liberal ruling democratic party at 60% for the first time since 2015. is no needys there to pay more for u.s. military troops in japan. most also oppose cooperation with russia over the coral islands. one of the biggest public protests in the history of soul. people gathered in seoul to demand president park's arrest. this comes along with calls of her impeachment because she let a business friend get undue access to government. nine people have been arrested after a fatal power collapse in
shaanxi province. -- china of the people has suffered a series of major industrial accidents recently claimed on corruption, disregard to safety and slowing production. local news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. been quietly hiking borrowing costs from pboc operations. still tightening or still stimulus. our correspondent has more on this. this is exactly the word. selected tightening. is lengthening the terms of monetary operations. basically, they are cutting the
use of seven-day reserves -- seven-day reverse repose. that is increasing the funding costs. has increasedoc the money market rates by 25 basis points. >> they are also driving yields, but why would policymakers change monetary conditions and now when some say the economy has been wobbly. >> the target is not on the economy, it is more on cutting , especially in the bond markets. over the past year or so, there's been a huge buildup of leverage in the fixed income markets because it yields have come down significantly. usey managers need to leverage to this return and that is not good. realized they had to control the situation. by increasing the funding costs, they are decreasing the use of
leverage. >> a counterintuitive move in the bond market. even other hasn't been significant easing on yields, st how does this still -- ealth market ease? >> fund managers are saying it will come down. ofyou look at the chart government bonds over government bonds, the yield spread has jumped this month already. the biggest jump in about seven months. thee are signs of stress in corporate bond markets. we is seen to default alone this month. next or will not be good for bond fund managers. year will not be good for bond fund managers. >> the price of oil is front and center. it could be volatile as opec
make that last push to make a deal on outward cuts. >> the meeting is happening monday to try to finalize terms. let's get some more analysis. dan, there has been a flurry of activity ahead of the meeting. what is the latest? be aday was supposed to meeting between opec and no n-opec members. a couple of days ago saudi arabia pulled out and now the meeting has been canceled. opec is hunkering down with its own members to resolve their differences before they try to bring in other members. minister hasancial put together this plan to cut production. this weightless minister are having a clean design meeting in russia today.
sign meeting in russia today. they are trying to figure out how everyone is going to come together on wednesday. >> he is the key protagonist when it comes to push for these production cuts. prices will thinks stabilize without a cut. is this managing expectations, what does this single best signal? >> saudi arabia is trying to do two things. they are looking at the immediate impact of wednesday's meeting on the oil market. to come to anable agreement, they don't want people rushing towards the low. they are trying to manage expectation. they are saying what everyone else in the oil market is saying, look at the picture. production has
fallen while demand has been growing. that means that next year we will see some fundamental recalibration in the oil market that should we stabilize prices. hard data analysis that they are doing. right now happening is all prices have fallen over the past couple of days. a deal beginning to look less certain. what is going to happen if opec can get on the same page and work out a deal on wednesday? , whate been pessimistic about the optimistic side of the operation? it is a great question. specifically, because oil prices have been falling, there is more room for them to ship up if we can get any kind of strong commitment to cutting through -- non-opece members. if you get old prices up in the 60's or so, the iea said they
expect shale to just of them. shale drillers with -- jewelers would take their market share. you have this worst-case scenario of oil going up a lot and opec selling less. >> for more on that let's go to juliet. we are seeing safe haven assets grow today. >> years in gold, bonds, the japanese yen all strengthening. the u.s. dollar index down 0.7%. at this function on the bloomberg, it was at a level of 81. that is showing signs of being in overboard territory. one of its highest level since march of 2015. we see some weakness coming back
into the dollar. it is sending all of these currencies high. one --anese yen back by up by one. that is the weakest the dollar has been against the japanese yen since november the ninth. philippine-peso is that 15 level low. from the budget manager, they are quite comfortable at that level. just a little bit stronger there at 48.50. the u.s. dollar falling as much as half of 1%. it is now by -- it is now down zero .3%. you are seeing these currencies doing well and the gold price being pushed higher. up 0.8%. >> thanks, jewels.
welcome back. this is "bloomberg markets: asia." >> chris western says member nations do know what is at stake. you have to believe that the opec know the risks that are involved. they have seen enough case studies to understand that if they don't get something together it will hurt their budgets going forward. that is something they will be working to push really closely.
we've seen the venezuelan oil minister and the algerian oil minister trying to be the architects and push this along. they know what is at stake. they are trying to limit the downside thing, it is a likely scenario. mutation is key to the market. higher oil prices nor -- are not necessarily right for opec. >> is around with the long-term prospect is. we are not talking about oil going back to $100 a barrel. more likely we are likely to see oil prices averaging around that did you five dollars average into 2017 and 2018. those have their cost basis at risk levels can make money. it is below $55 a barrel. you might see some production going on stream. we don't see that as a
significant impact on the supply-demand dynamic. fixing after a. of -- after a time of currency weakness. our correspondent says the pboc is on track to maintain rates. >> the challenge for the pboc is to keep interest rates where they are. they cannot cut interest rates now because of the flood into the u.s. dollar. because they hold a percent of internationale monetary fund, china is one of several countries losing ground to a much stronger u.s. dollar. this does not change. it makes it incumbent among china to keep rates where they are and to transition into a services economy as quickly as possible. >> that is the word from asia. >> china has been hiking and
borrowing on costs. are we talking about, essentially, the shift drum 10 and a 25m 7 to rate still -- stealth hike. in thee is stealth markets and in military hardware. what is happening is the chinese authorities are very worried about the debt position. it doesn't seem sensible to increase rates in this situation. the chinese economy has not been doing that well. it is not necessarily going to affect borrowing that much. it is a signal to the market saying, there is a lot of leverage out there. and they are trying to slow it
in a bit. >> it signals for you that there is a danger out there on government policy levels they are addressing right now. what is that mean for investors when you take a look at the bond market and try to find some sensibility there >> --. markets like the bonds has done pretty well. it is probably the same in china. it looks like there is room in the equity markets. 25 basis points is not going to affect the equity markets. if the chinese investors are forced to move and look at other gongs then maybe they will to equities. there is a possibility there. we may see a pickup in equities. a lot of the other indicators look a bit week. >> we are talking about china's great ball of speculative money rolling into commodities.
>> is that garlic bulb? >> you see this rotation if you go to equities, to properties, to commodities. to tea. this is how it works in china. >> that is how it works elsewhere. it is still a very young investment economy. indeed, if you're looking at bubbles around the world. these things happen in europe 200 years ago. that is not to say china is going that way, but it is in a stage of its development in the investment market. there is no pension fund market as we would see in the u.s. >> you think that will be impacted for this relief chinese presented to
mom and pop investors with the hong kong-shenzhen? i think there is a key point about the connect and i think it is the way for the future. this is how stock markets will link together. they'll have to join trading. -- tradingd traded with london, we would go almost 24 hours. will we have less traffic here in hong kong as a result? >> is just another vehicle. is a useful tool for investors in the future. >> i am liking your time. i'm going to point it out. very dramatic, shall we say. >> coming up next, we are sticking to the plan. that hismodi saying plan will work out.
>> welcome back. this is "bloomberg markets: asia." has been fined about $1.3 million for paying undue profits to its owning family. sent prophets the two units owned life the -- by the cho family. air has declined to comment. mitsubishi is to recall 25,000 from decemberina 9. the recall involves 20,000 suvs built between 2010 and 2012. 4000 cars will be recalled in march over defective airbags.
ocbc's purchase of barclays hong kong management in singapore and the final offer is based on 1.7% of asset. is letting it compete with rivals. indian prime minister narendra modi has used his monthly radio address to assure sed by the cash prices cau the withdrawal of high denomination notes will be used. -- eased. predict thek anyone consequences of this in real sure the modi remains chaos will stop.
at atms.e seen lines dollar bills have been dried up on the street. modi saying that he is confident that there will be benefits to the economy. he is trying to transition into a cashless society. he says he recognizes there are difficulties that it is something that he thinks is a practical move. he said it will take at least 50 will take at least 50 days to get through. people have until december 30 to exchange the notes for freshness. they are halfway through the transition. and 86 -- through the transition period. there is excessive banking liquidity which has prompted the r.b.i. to place temporary measures to address this. >> more of a dragging and
screaming into a cashless, digital economy. kind of measures are we talking about the central bank taking? >> lenders have to set aside more dispositive -- more deposits and reserves. this buys r.b.i. time to drain over 10 trillion rupees from the banking system and it is a cheaper and more flexible measure than other tools they could use like issuing bonds are using the reverse repo window. bond yields falling 26 basis points. set for the biggest drop since april 2009. the economic and political effect will continue to be seen. >> how confident is everybody .lse in modi thank you for that.
♪ sophie kamaruddin. talks between non-opec producers were canceled after saudi arabia pulled out today. they have called another internal meeting to resolve differences, whether iran and iraq are willing to cut production. china has effectively tighten monetary conditions this week. the pboc has cut back on its seven-day open market operations.
the move is seen as another sign of collective tightening. president-elect donald trump has claimed without evidence that the general election sold fraudulent voting. -- saul fraudulent voting. campaign byed the trump appointments -- opponents for the recount. trump called his critics "crybabies." global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> thanks for that. what a difference a couple of days make. it seems like we are taking a breathed are -- a breather from this trump trade. now focusing on opec. it to juliet with
more market action. chinate: we are seeing h-shares move towards a five-week high. a lot of positive upside from these railway companies. up china has been on a tear, 5% on a broker upgrade from hsbc. honk count -- hong kong , that shinji and-hong kong connect comes on next monday. nnon up, and gold stocks doing quite well. in focus isssets the dollar weakens. the overall market picture, the nikkei coming back and paring some losses, now down by .6%.
in negativetopix territory, snapping an 11 day winning streak. ,olid support from hang seng sands china looking really good, so casinos well bid. the shanghai market is doing into its lunchs break, up .5%, infrastructure companies doing quite well there as well, similar to the h-share index for these railway companies. the kospi higher by .4%, won strength, leading emerging-market currencies higher on dollar weakness. elsewhere, mixed movement across southeast asian markets. thank you for that. china has taken another move towards opening up its financial markets, setting next monday has
the launch date for the shenzhen-hong kong stock connect. october, supposed be then the previous year. it is finally here. does open up different offerings to investors. will they be excited? rosalind: possibly. shenzhen has a lot of tech socks -- stocks, health companies, areas some are calling china's new economy, and potentially more exciting then traditional stocks offered elsewhere. time coming, long two years since the shanghai-hong kong connect started up. investors started looking to this one. between now and then, there has been a lot of exciting times on the chinese stock markets, a lot of volatility, so definitely things have calmed down a little bit and it is seen as a good
time to start up this connect. one analyst says the shenzhen names are a window on new opportunities. the daily trading limit for both shanghai and shenzhen stock connect will be 13 billion yuan, $1.9 billion. .1.5 billion southbound investors buying into shenzhen get access to any stock in the component index and the shenzhen stock exchange small and mid-cap innovation index with a market value greater than 6 billion now hong kong saying that those who want to get access to the small cap gauge is restricted to institutional investors. we all know the shenzhen composite is pretty volatile. by more than 60%
last year, but this year, down 7.8% partly because it has so many retail investors on it. >> it caps off a big year for market reform for china. rosalind: we did see china trying to open up its markets. stocksclined to add it to its indices, saying it sees barriers to overseas investors trying to get into china, but china has been making sun moves. in february, a removed the limits on foreign investments in the interbank bond market. way totest move, another access china's markets, but so shanghai-honghe kong stock connect, investors
say they rarely reached the daily limits on what can be d, but there has been heavier southbound flow. expecting additional outbound trading. increases the likelihood to include a-shares. australian gaming company tabcorp rising on news that a leading british name may try to gatecrash its plan to tie up with tatts. let's get over to paul allen. who are we talking about and what does it mean? , it means tabcorp's there will have to be a new plan. tabcorp secured a 10% stake in
tatts last week to head off anyone else, the first step into this $4.5 billion planned merger thaten tabcorp and tatts would create this pan-or strain betting company to take on competitors like william hill and ladbrokes, and it is ladbrokes that seems to be crashing this party. ladbrokes is hiring advisers to prepare an offer for tabcorp. ladbrokes tried this three years ago, a joint venture with tabcorp. that got knocked back. tabcorp up 2.3% right now. tatts also up. there has been analysis in the past few hours. couldport saying this bid appease the competition regulator in australia that might otherwise had concerns
about that all-austrian tire. citi also thinks this may be an "difficult bite." >> thank you for that. is early days for big data in china, but economists think it could reshape the way economists view the second world largest economy. thatff, which countries companies are generating this data, and what are they doing with it? the main sources for the big a lot of are alibaba, good information coming in on consumer purchases in real time, and also sources of data are search engine queries and maps. here in china that means one du, so this is a big
collection of data across a fore of real-time trackers not just purchases, but the economy in general, including employment and other things they can help us round out the vision of what the economy looks like here in china. it is always a different case when you're talking about china. you are the things looking at that are different when it comes to china? >> china is a special case. investors have sometimes been skeptical of the official data. in the official data, there is a weak spot with labor market data, so that is one key area where we are able to get some finer reads on what is happening with employment and across different industries and regions and stuff like that, but there has always been a long-term search for alternative indicators, even a decade ago.
you can look at railcar traffic, electricity, bank loans, so this is a more modern evolution of that when we couldn't -- can ink into tracking locations people's phones to determine who ,s going to apple stores karaoke bars, getting real sense of where people want to be, or if they are pulling back and slowing their purchases of big-ticket items like cars and appliances and things like that. really big data stuff here. it really boils down to the ability to analyze that. can we trust these new indicators as a result? >> you can trust it in the sense that it is new, very finely tuned to certain parts of the economy. generally economists and policymakers are looking for data that goes back many years
so they can talk about strong economy-week economy, so economists don't want to go for the new indicators, even if they are good in promising, so in aat sense they are not panacea, if you will, but this thing where you can take government data on employment in various industries and supplement that i looking at where people are working, you can use the data to look at who is working in industrial parks and manufacturing parks and high-technology businesses. it gives you an addition to the official beta. >> thank you for that. well, coming up -- trumpsident-elect donald has taken to twitter to cast doubt on the popular vote and cry fraud. we will discuss that and the rest of the day's top stories next. this is bloomberg. ♪
>> welcome back. this is "bloomberg markets: asia." i am angie lau. >> i am haidi lun. lufthansa pilot stepping up paid to man's with new strikes. the four-day action ended on sunday, but pilots on short-haul flights will walk out on tuesday, and all pilots on wednesday. thousands of flights canceled, and the ceo says the airline cannot survive if it caves in to demands. electric's bill for cleaning up the fukushima plant could be more than $175 billion. estimates come from the ministry of industry, which say the cost with compensation and decommissioning continues to rise. the plant was devastated in march 2011.
tremors last week did not cause any new damage. its pollution up fight by requiring dirty industries to track and limit the damage they do to the environment. ampanies will have to have so-called pollution license. with powerwill start plants and papermaking industries, but will apply across all sectors eventually. >> welcome back. joining me at our guest is richard harris. in our fashion segment that we ,all our group discussion pointing to your very lovely time here. we are not even into december yet. >> it is a time to rally, isn't it? >> your ahead of the curve. we are seeing the markets do
well. justody was accusing me now because i was saying hillary was going to win, but of being wrong, and i did say the market would go up. it's good to be right for the wrong reasons. where you have to change or tie if we see a correction soon? >> you are opening yourself to risk on that. >> i know. you might as well throw the dice out there. it is a bet. >> santa rally, short-term horizons, but what about long-term and the brand-new year? >> i think what has happened is the election held a lot of things back. there is some growth. now brexit is not a problem.
couple ofs to have a quarters where it has flattened out. so things don't seem too bad. it does look as if equities were due for a move. they have had a move, and may will continue if the economics continues to do quite well, regardless of interest rate rises, which are small and pathetic anyway, and regardless of even the bond markets. it might start to go south. >> the fact that you predicted ,he same outcome with hillary it speaks to the tenuous nests and the fundamentals of this rally, that perhaps investors have created a narrative and are now drinking the kool-aid. we talk about the trump trade, the santa rally. are we all going to -- >> some say the election is rigged, but donald, you won it.
you can't be a chump all the time. some things -- >> she started accusing. >> that is what he is responding to. >> i think the greens called for the recount. >> he is accusing clinton. >> really some things are best left unsaid. rp are we going to see a sha downturn. from a bound to get this new president at some point. will we see the markets react to that? or is it a trend that were likely to continue? i suspect it will continue. i'm worried looking long-term because the debt picture looks bad. you made the point of this not being fundamental. that is right. if you look at the economic fundamentals we hold so dear, the pound goes down, but
inflation has not sort. the yen is a strong currency, why? because the economy is in such a mess. so there is a real issue with economic fundamentals. looking further out, the picture is quite perish, but you typically don't have a big crash unless you have a rally first, so we need to get into territory where the markets are looking to be more expensive, then possibly we may have a black swan event that will knock things over. moment that at the were likely to have the santa rally continue into the new year before we see a pullback, and pullbacks there will be. >> what about the dollar? >> i feel everyone has bought it and it is just about there. were going to have situations like the trumpet victory, and there are other theents that may make
dollar stronger. if you look at the charts going back to the 1980's, the dollar looks like it is in a secular decline. be a continuation of the strategy of searching for yield? >> i think that's what the markets will try to do. i think that game is over, but a think markets will continue to search for yield, maybe emerging markets where you are getting yields that almost look positive , but it seems to meet the straight yield game is over. people will make the turn more likely in equities. >> you will have to go back to work again. >> unless you everything at the right time. >> it is all about timing. >> you mean this is it work? >> it doesn't feel like it. >> how can it be so bad? >> 2017, you think it's going to
be a continued search for yield, but, you know, there could be some very interesting movements and the equity markets. which sectors do you like? >> what hasn't happened in the last 3-4 years is the bull market phase has not then that long, then they pull back, pullback, which is good for bull markets because they like to have that pullback to move on ford, and there will be rotation within that. if we see a more stented bull market, we could see rotation into the emerging markets, because after all the money tends to be braver. athink we are likely to see rotation between markets, some money out of the main markets, u.s. and europe, moving into the emerging markets, so i think early next year that that sort of rotation may occur. within markets, we will see a
rotation. >> for christmas, some more ties. >> just in case. >> we have to work on next year. >> the blocks one. >> will get him a black swan type. >> very good. thank you for that. gearing up for space. we look at what some chinese entrepreneurs are doing in the race to make space travel more accessible. stay right there. this is bloomberg. ♪
invest in this space race as tom mackenzie reports. desert, china's private space ambitions are taking flight. technicians are putting the to a tensions -- touches one ton cap so-called traveler 2 connected to a helium balloon. it is designed to climb 20 kilometers above sea level. the company behind the project has lofty and divisions. it wants to commercialize space travel by 2020 here it first though, they have to test the flight controls, caps on to control communications -- capsule to control communications and life support systems. be be traveler 2 will
transporting a two inch terrapin. >> he is hailed as some has china's elon musk. he wants to make near space travel as accessible to as many people as possible. designing a capsule with reusable parts, he hopes to keep tickets below $100,000 per person. >> our goal is to make normal people to go to near space. if you go pi rockets or other technologies, you will either give you a crazy going up or dropping down process, which is very difficult for normal people to go. what we want to develop is that like taking a space elevator. withs ambitions dovetail china's bid to compete and a space race with the u.s., russia, and india and japan. the country aims to build and operate its first space station by 2022. it wants to send and asked her not to the moon by 2025 and land
unmanned vehicle on mars. to ashber, china sent and lots into orbit for china's longest mission yet. astronauts into orbit for china's longest issue yet. the final frontier is still dangerous, and a long way off. alf an hour after lunch and 12 kilometers above the earth, systems failed. the mission was aborted, and the fate of its turtle crew is sadly unknown. that was tom mackenzie reporting. let's check shares of state-owned bank in india falling after the rbi tries to step in with cash controls. , punjabnk of india national bank, near lows, falling in the red.