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tv   Bloomberg Markets Asia  Bloomberg  January 5, 2017 8:00pm-10:01pm EST

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>> 9 a.m. in singapore, midday in sydney. 8:00 in the evening in new york. bloomberg asia's headquarters in hong kong. this is "bloomberg markets." ♪ samsung lifting the entire -- it wasn't burned by the inflammatory note seven issue in the last quarter. donald trump locks ones with china saying it will retaliate if the tycoon launches a new trade war.
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the message received and understood after a rival came in for some criticism. we've got this surge when it comes to the chinese currency, the yuan. forward, the employment report all-important for the federal reserve. all of this to be digested. >> that drop in treasury yields, about 2.34. we seen a lot of movement on friday. this is ahead of the jobs report later on tonight. markets here across the asia-pacific. we're looking at a mixed basket. i do want to know that a lot of these markets are session highs or session lows. that, we watch it every
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day. that,ason i'm mentioning have a look at the offshore. a big spike down yesterday. are seeing the weakness push up to about 6.8%. hit 100%ight rate yesterday. closed 60%. look at where it is. i checked, it was 105% on the overnight deposits. the overnight deposit grid for all here in hong kong. 5500 basis points. other things and want to mention, the trade deal.
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7335, just about flat on that currency. a verythis considered interesting session and it looks like it will get more interesting. haidi? things to memory chips operating $7.8 billion. mitigating the fallout from the decision to stop the most profitable desires. into an issue that cost the company more than $6 billion. a judge has ordered for top banks to pay for manipulating currency market. they pleaded guilty.
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it is best to turn if those responsible, if any money is back. may have $26 billion bid. bloomberg in las vegas, ahead of business development, peggy johnson says the deal is proving to be successful. it is going on very smoothly. we are just starting to engage with the team and looking forward to a variety of new opportunities. we now get to work closely with jeff and his management team.
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>> down about .8%. the company began the latest carmaker to be criticized by president-elect donald trump. they would take his you into account when planning the next move. global news powered by more than 2600 and analyst across 120 countries. this is bloomberg. chinarces telling me that is prepared to step up scrutiny of u.s. companies should the incoming president eight night a trade war. the beijing bureau chief joins us now. the new country increase even before he takes office? salvo in be the second
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what a trade war may look like. even before he was elected, president-elect trump was making threats to impose tariffs on china. up to 45%. and now we're hearing that china is preparing some moves in retaliation if that were to occur. some of the things we are our taxand may consider investigations on well-known u.s. companies for anti-dumping probes. also, antitrust probes. these are u.s. companies that have operations here that are in the agriculture pharmaceutical technology and other consumer goods. this could all ramp up very if the president starts
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a trade war when he begins office. the point is, what are people saying to you about how far this is likely to go? >> it's important to note that these are contingency plans. u.s.thing happens on the side, the chinese side will probably do nothing as well. but these are preparations because of the heated rhetoric that has happened so far. it may all go away or escalate even further. you can expect things to ramp up quite quickly. note the twot to economies are very closely linked and tied together. tariffs terrorists -- on one, it will hurt both sides.
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thehat are we hearing from trump campaign? nothing backard from either side, officially. something that we haven't heard anything on the trump side. he tweets at all hours of the day. at any point, we could hear some response from him via twitter. >> right. the yuan could be suffering from an extended new year hangover. we have the surgeon borrowing costs. it was an ethics squeeze.
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bangkok.as in >> following the last 2.5 or three sessions. quick,ring up really hong kong up to last check 105%. it you have it right here, i believe. this is the correlation to last year. >> it is not indicative. so.6% or hopefully, we can. right into the bloomberg terminal. it's up to 105.
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>> it is absolutely astonishing. >> as we've got now, this move up we can see the difference. what they're trying to do is as we learn bloomberg news that they've ordered state owned , they were going to boost the yuan. they really want to stem that. it trump also might be on the verge of day one later this month, he could label china a currency manipulator.
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they are preventing it. it's what china has. >> is it tomorrow? >> they are burning to these reserves. the estimate is that the number likely fell by $31 billion when china defended the yuan in december. right above that children -- that three-year mark.
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about what isyou also coming up on the show. we are talking about the company that will adapt to a donald trump white house, but no plans for a new factory. the interview later this hour. and about the yuan getting markets.
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x a quick check of the business headlines. close to a $10 billion deal. 2016, a deal to sell 75 upgraded to the leasing division. discounts invariably
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do apply. 525,000 vehicles. it is a popular suv by contrast. cadillac passing 100,008 all sales. abu dhabi is the latest name to be linked with global tech funds. to $15 billion. the vision fund said to close later this month. it is capped at $100 billion.
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they'll losses for a third day after reaching a 14 year high. the yuan rebound will help alleviate concerns about capital outflows. let's bring in the market analyst. massive moves there. >> absolutely. over 1800 points. based on what happened, the central bank. >> i have to break this news to you. this is incredible. this is amazing we are getting out of the bbo c. was 86, the six yesterday
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61, 93 fenn. surprise. huge it probably reflects the market. >> going forward, that is what we have done in optional markets. it something that's not going to happen in one setting. >> we also talk about the funding. the liquidity. it is the most since 2005. .9%.
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something like 595 billion yuan net and open market operations. this is deliberate. no doubt about it. would you agree? >> it looks like a shot to me. the freezing liquidity in the markets. they have no choice but to buy back the markets to close their condition. looking at what going on here as well. it is essentially deja vu, isn't it? it was this time last year.
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>> i think this movement will have shot and long-term impacts of the markets. entering into the market in the near term and it is going to hold and be strong temporarily. but in the long-term, i think this action is a setback after liberalization of the currency in a very long-term. enough, there are various curves. as if peoplek would be taking their money out. it is pretty rapidly.
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>> the individuals, foreign investments. will removek they those measures in the short-term. the next three to six months, i think 7.0 is going to be a offshore.g thing for it is not easily broken through in the next three to six months. >> we saw at launching at 5%. could we see that and perhaps it resumes the trajectory we have been witnessing? >> we will see how the market is always correct. it will continue the
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depreciation against the u.s. dollar. >> for this story, it does remain a large extent. of peopleoss the bows shorting the yuan, isn't it? >> over the last two days, it has been kicked out of the market. >> we've talked a lot more than that but this amazing and epic move is front and center. the trade numbers say about that. it is a rare recession.
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>> we are back. you are watching "bloomberg markets." this time, november trade numbers ahead of estimates. let's take a look at this and give us a break down, heidi. much better than expected. heidi: yeah, always a surprise when it comes to these numbers that come from the statistics bureau in australia. the first major data released from the new year. that trade balance jumping back in november. it's the first trade surplus we have seen since march of 2014. we were expecting a strong narrowing of the trade deficit. we got through.
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it was import values that state flat. the trade surplus. in terms of what was driving, it's really a sharp increase in commodities. the back of his very robust recovery. a little bit of time when it comes to the value of nonmonetary gold exports. all and, a really strong report.
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as well as the blowout. >> that is the upside. it is as much as .1%. against the dollar, 6.8 255 the figure. that's what we have right now. this is what we're missing. one move there.
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samsung leading estimates. the look into the figures. this is bloomberg. ♪
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show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. shanghai markets, at the top of the agenda are these moves by chinese currency, both onshore and offshore. that pbo six coming through. it's quite something, isn't it? >> it really is. let's put it in the context. yes, it was a massive strengthening if you compare those two numbers, per se. -- yesterday of 693, a fixed yesterday of 686. it is not surprising, because
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you have this massive drop in the u.s. dollar against the chinese currency. where it wast to yesterday, obviously it will get headlines like this. is theing said, that objective assessment, sort of like how it is on the surface. what does it mean? this, youfixing like get a big spike in things like the high court, things like deposit rates. if you are a short seller, with a short position on the yuan, you are banging your head on the wall. your tears will get a lot more better tonight when you look at your book. offshore renminbi, you have a weakening. biggest drop in six months, big deal. that andeave it at flush the story out later on,
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but it is really about singling from the pboc. let's look at the opening from the chinese cash market. shanghai and hong kong. kong at the moment is leading these gains across the asia-pacific. have a look at the top three in bottom three. producers seeing a very decent session right now. volatility of the banks. let's break it down for you. the hang seng, let's have a look. way, since we are talking about this, this is really about samsung. we will talk more about that. the hang seng, let me look for that for you. there we go. let's break it down. up. is every single market you have the banks, brokerages, and you have the insurers, very decent session. sense, thereyou a we go.
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it's really going to be interesting to see how the markets react, especially in the equity market. traders,ng to hurt the but what does it mean for the banks and funding? that's another story we will touch on. rish. david, thanks for that. looking at all the moves taking place when it comes to the session thus far. let's take you to the first word news headlines. here is heidi bang. president-elect donald trump is happy to speak loudly, and now he has received an equally straightforward message and return. china is said to be ready to scrutinize american companies if the tycoon launches a new trade war. sources say beijing's options include subjecting well-known oppression, chinese or scaling back on government purchases of u.s. goods. says property prices in the city will rise this year, despite attempts to rein them
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in. the increase will be small, not outrageous. november, prices were raised 15% for residential purchases. the curves initially sent stock tumbling. malaysia's troubled one mdb fund has appointed a new auditor almost one year after deloitte said it planned to resign. a local unit of parker randall is taking on the role. deloitte declined to say why a gave up the job last year, but that 2013 2014 should not be relied on after u.s. prosecutors account -- announced more than 3.5 billion dollars were misappropriated during those years. and india's central bank is counting illegal notes to eliminate accounting errors after it is said that almost the entire amount of withdrawn bills had been deposited. consumers have returned $220 billion worth of repair notes, 97% of the outlawed high
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denomination bills. the government had estimated that about 1/3 would be undeclared to escape the tax net. day,l news 24 hours a powered by journalists and analysts in more than 120 countries, i'm haidi lun. this is bloomberg. rish. caps on's stocks came in ahead of estimates in the last quarter. burnamsung note 7 did not the bottom line much at all. here,p prices did help but what is going on in the mobile business? a lot ofhe question people have. what is the situation there? these were preliminary results, so we will get the file numbers later this month. and as far as the survey we have done here at bloomberg, the indications are for a recovery
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in the mobile business. operating profit is expected to return to about 2.3 trillion one, up from about 100 billion in the prior period, mainly due to samsung's existing lineup of phones, the f7 edge, etc. three of those kind of carried the weight for the note 7 debacle, which as we all know caught fire and was subsequently taken out of production. rishaad: the point is, what can we really expect out of the , the result of the investigation? what about the new models? two things to keep an eye on. after all that drama last year, we still don't actually know what really caused those fires and those exploding phones. samsung has invested a lot of time and money on an investigation as to the root cause. we are hearing an announcement on that could come at any time,
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inwe are ready for that, and some ways that will answer a lot of questions about what decision samsung took that led to this situation. we are also injuring another new phone cycle for samsung. the s eight will be coming out within a few months. that hopefully will signal a new start for the company in its mobile phone division. is supposed to be even more fans to. ai will be a big part of it. it is going to have curved screens. that will dominate headlines once we know what happened with the note 7. rishaad: what about some of the broader challenges in a broader context for samsung? reporter: the one thing to keep an eye on is we are in the middle of a major leadership succession there. is building up his
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control of the company. but it is coming at a very precarious time. the presidential corruption scandal and south korea has also impacted samsung. they have already been investigated or had their offices raided by prosecutors twice. we are still on the lookout to going further action is to be taken in terms of what role samsung electronics or the in the might have corruption scandal. that is another x factor to keep your eye on. at least until we see the final earnings result. have a look at goods and commodities prices. lot going on generally at the moment when it comes to commodities. avon trade is moving to the other side by 6/10 of 1%.
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a move higher suggests that prices are rising elsewhere, and that is after years of being in a malaise. policymakers are stressing about deflation, however, whether it is actually recovering from the great recession is another weston. with us asia economics correspondent. is our asian economics correspondent. thingnecessarily a good that everybody is shouting about here? reporter: we are in a better position than where we were. the central banks have been desperate for inflation in money to parts of the world, maybe less for the emerging world. now we are seeing traction in prices. we are seeing eurozone expectations fascinate 2013. we have seen ppi pickup in china
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for the first time in three years. we have seen a pickup in demand in places like america as well. higher prices generate demand on the factory floor, and it generates higher wages, all in theory. that's where we are right now. it is a relative pace. we are not heading towards deflation anymore. we are having slow inflation, not a bad thing. rishaad: a lot of people are saying be cautious, watch out for the rebound we are seeing. seen how the dollar rally is, at least for now. anna: -- reporter: you should not get excited yet, because there are risks. first of all, the base effect. the base effect will wash out as we go through the new year if
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commodities hold the reins we are in right now. are significant risks in global growth in global demand. we have risks in the u.s., which direction trump will go. trade with china is suggested to slow global growth. the u.k. brexit is ongoing. more risks like that around the world. again, this inflation recovery is not necessarily based on underlying fundamentals. there is still a disconnect, and that is not expected to go away anytime soon. what about inflation? you mentioned that can be one of the reasons we go up in 2017, but what else? reporter: the president-elect trump agenda is all about lower taxes, lower to spending, less regulation.
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going by the textbook, that might use demand for imports around the world, and that is a good thing. oil prices might hold range, a positive for economies like japan. there are indicators that inflation could keep traction, but at the same time there are plenty of risks as well. that's why we are quite cautious on inflation going into 2017. rishaad: my goodness, you did not bring up the jobs report. thanks. coming up, hear more from carlos himself. ♪
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rishaad: apple has said new year's day was the most -- was there busiest day ever. the company joint $240 million
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from purchases that day. why? pokemon go was the most downloaded app worldwide in 2016. super mario run was among the top 10 with 40 million downloads. into 2017ading preparing for a new political fight, this time in new york city. it is holding the first public hearing on its request for more information on the activities of right healing drivers. uber is challenging world changes in december that would require all dispatchers to provide the eight request and off,of each drop describing it as an invasion of customer privacy. sears is dropping its craftsman brand as it tries to raise money. it is the company's third fundraising effort in the past three weeks. their kenmore appliance brands may be the next thing on the
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chopping block. sears is also closing 150 stores. sources telling us that donald trump is still opposed to the megamerger between time warner and at&t. the president-elect is said they consider it a bad deal that would concentrate power too much in the media industry. the merger would combine america's biggest television and internet providers with one of the largest creators of content. trump blasted the deal during the campaign, but it is not clear how he feels that. carlos down has a word for mexico bashing donald trump. message received and understood, speaking at the cen in las vegas. he told us how he will adapt to the new presidency. but weroduce and mexico, produce a lot in the united states. just wanted to remind you we are the largest manufacturing said in the u.s.
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640 thousand cars, the largest plant in all of america. we are happy in the u.s., and we know our capacity. there want to tell you is is a new administration coming that will probably have new policies being implemented. we are business people and will adapt to the new policy, and our strategy will take this into consideration. reporter: what does that mean, exactly yeah cap >> -- exactly? >> it means that additional capacity in north america will take in the consideration the policies that will be prevailing in the united states and mexico and canada. beenr the policies have laughed at. this was an agreement signed between the free markets, and we adapt to the policies. if there is a new agreement or no agreement at all, we will adapt to this position. what is important? that rules be implemented for everybody. as it stands now,
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clearly he has targeted mexico. you are saying if you were bad capacity, it would the in the u.s. or canada? >> again, i don't want to preempt on what is going to be decided when the new administration will be in position, but i can tell you movese will not make any before understanding what will be the policy of the new administration. this is the second largest market in the world for car markets. obviously, when the president of the united states says something, everybody -- microsoft is shaking up its effort to keep up with rivals like google and apple when it comes to auto technology. it is selling cars with a new set of programs and services. company's business development chief, ae johnson, at the same show in las vegas. >> today we are announcing
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microsoft connected video -- connected vehicle platform. it is a set of cloud-based tools that are going to empower the automakers to develop their own differentiated, and car connected experiences. by 2020, something like 90% of all the vehicles on the road are going to be connected, so it is a great opportunity to work with them. by 2020: do you think there will be automated driving on the road? libby all driverless cars by then? by 2020, 90% of all the vehicles on the road will be connected. this presents a great opportunity for us to work with the automakers as they create their own customized in car experiences. reporter: how is the division of data occurring between microsoft and the auto companies? some of these carmakers have been very wary of apple, of google owning the data in the car. what sort of agreement do you
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have in place? arerom our perspective, we not going to be building our own autonomous self driving cars, but we are in the business of producing software that we believe will enable the car companies to reach their goals and ambitions in this space. clearly there is a lot of new entrants, and many of them has turned to us as a partner. we won't be competing with them on that front, and we have the tools they can use to really engage with some of these complex new technologies that they are dealing with as they go through their digital transformation, things like artificial intelligence. haven combine data that we with data that they have and reason across the whole body of data to come up with new customer insights that will bring some pretty exciting new opportunities for the consumers
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they spendthe times their vehicles, which for many of us who have long commutes, time we can use to be more productive in the future as we where werd the world are headed where we are fully autonomous. anywhere along that spectrum, we to give thehere, car manufacturers the tools to produce those experiences. dude -- caroline: who do you see as your key competitors in the space? individualssee any as having the same breath of assets we have in this space. we have assets like productivity that we can bring together with our personal assistant, together with our deep knowledge of artificial intelligence, and combining that all through a newected fashion using our
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connected vehicle platform. we feel very good about our position here, and we feel we are uniquely positioned to help the automakers reach their goals. thosed: coming up, all-important payroll numbers, which are due later on friday. what can we expect? ♪
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rishaad: the federal reserve made headlines when its december meeting minutes revealed concerns that the u.s. could boost inflation. kathleen hays joins us with a look at these traders seizing on the pullback in private jobs growth through the latest payroll report could show weakness. what are the economists saying? the economists are saying that the adp private jobs report
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-- adp is an online provider of with access tos millions of workers' data, and they compile their online report. it is very closely watched, because it is kind of a tracker. what he did in december is that to 150 3000, the forecast was 170 thousand. it is not unusual for adp to diverge from the government number. that's what i want to stress. traders seemed to make a lot of this on thursday. it rattled the bond market. let's jump into the bloomberg. thewhite line, that is payroll report. the blue line is the adp. you can tell that they brought it in the same direction. there are big divergences as you go along between those two numbers, so we are not putting much emphasis on that. the interesting point that
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economists raised is the extent that this is a legitimate read on jobs, it maybe because the entire labor market is running out of skilled workers. we see that a lot more than other concerns we are seeing about a stronger economy and what it will mean for inflation. let's put this latest market data into perspective and have a look at one that really matters at the end of the day. that is the friday report, but jobs report out on the first friday of every month. reporter: we are going to start before.t payrolls it was 178,000 in november, so that would be a welcome number. as for unemployment, it is seen rising just 1/10 of 1% to 4.7%. fuel moreat will about under inflation stirring up inflation. bloomberg,k into the
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you will see unemployment was down to 4.6% in 2007 before the recession, 10% in 2009, and now it is back to 4.6%. this is one big reason why the fed is concerned about the labor market. let's look at another measure of unemployment. the purple line is the one we just looked at, but now let's look at u6. in includes people so discouraged at finding a job, they have dropped out of the labor markets. it is people working part time because they cannot find a full-time job. someone say that is the measure of labor market plaque, rish. rishaad: thank you very much. we've got to take a break, but just to take a look at what is going on right now, because there is a bit about the yuan, a bit about the chinese currency , the biggest strengthening fix since 2005. but we will be checking out
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♪ almost 10:00 a.m. in singapore, 1:00 p.m. in sydney, and 9:00 on thursday evening in new york city. i am rishaad salamat coming to you from bloomberg headquarters in hong kong. this is "bloomberg markets: asia." ♪ rishaad: surprising strength, the yuan fixing raised by the most since 2005. trump locks horns with china and japan, beijing says it will retaliate if the tycoon launches a trade war.
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samsung was not burned by the inflammatory note 7 last quarter. at the trading day, dominated by the foreign exchange markets, dollar weakness, yuan extraordinary moves their onshore and offshore , but also equity markets in play as ever. here is sophie. looking in the equity markets, a mixed picture. jakarta joining the fray, weaker than counterparts. hang seng seeing a rise. the nikkein weakness 225. strength in the yen. fast retailing topping the afteres, falling 5.7%
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posting a drop in same-store sales in japan. region, the the kospi up. korean air, earlier a big share sale news of a plan. the big picture story on the kospi was samsung. a lift to consumer , samsungment, up .4% beating earnings estimates this morning solidly given what we had in the fourth quarter. samsung now up 1.4%. that takes story of course is what is going on with the yuan. the offshore yuan extending losses, falling .8%. china set the daily fixing stronger by .9%, the most since 2005, this as the pboc continues
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its battle against short-sellers. the dollar deposit rate in hong kong spiking 105%, now backpedaling, falling below 50%, now 40%. as we told you earlier, policy telling markets that there will a1 way depreciation for the currency and the surgeon borrowing costs echoing last january, which marked the beginning of a rally. rishaad: thank you very much indeed. sophie kamaruddin there. story, theo that currency had a lot of affairs out there, and they probably have a headache this morning, and a new year's hangover as well. a record today rally and in evoking memories of last year, deja vu. >> if you have not gotten out of
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your short positions by now -- rishaad:, well clearly the authorities in china sending a message. >> they are trying to prop up the yuan and send a message that if you are going to bet against the pboc, that is a bad that. onshore yuan had depreciated 7% against the dollar and 2016, and that led short-sellers to place their bets on further depreciation, but the pboc and the authorities in china are having nothing to do with that. they are saying we will maintain the yuan stronger than seven to the dollar, a threshold. rishaad: tell us about this. >> this is the overnight deposit rate in hong kong for the offshore. it had reached 105% earlier. rishaad: we were talking about that an hour ago. >> it has come down the bit, but
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we have seen the offshore rate on a three-day rally now, along for ahe cny as well, up third day in a row against the u.s. dollar. in singapore, and fx strategist said this is a classic case of a consensus trade lowing of at the start of the new year. we saw the short squeeze -- rishaad: that is the offshore. look where we have come from. >> it is giving back those gains a little bit right now, but from the overall message the authorities in china is we will not tolerate it. since,: relentless, well, what? april or thereabouts, weakness for the yuan. >> what does this mean for the yuan? a short-term or long-term trend?
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last year, what this squeeze did is triggered an appreciation of 5%. rishaad: again, it is the liquidity. i have the year-long chart. we were looking at it as well. guys, if you can bring that up here it well, there we go. that is the situation. >> we had a 5% appreciation against the dollar. it turned out to be a medium-term lift, two months. similar thing this time around. most traders and analysts are saying that the depreciation trend will likely continue. rishaad: all right, we are talking about fx reserves as well. we have those numbers out tomorrow. $3 trillion. how much money have they been spending to defend the yuan? bloombergng to a survey, $31 billion in december.
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that still keeps it above the $3 trillion threshold, coming from they a year or so ago that have burned through a lot of their foreign exchange in defense of the yuan, and that is the mountain that has window. rishaad: ignore 2012 at the bottom there. >> this is a five-year chart. rishaad: it should say that on the left-hand side. >> it's wrong. basically, we are expecting it to stay above $3 trillion by the butof 2016, a few days ago, again, inevitable if they will continue to defend the yuan and outflows mounting, they will have to burn down to about 2.9 train dollars. -- $2.9 trillion. rishaad: let's catch up with some first word news headlines. australia has had its
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first trade surplus in three years as exports climbed 8%. higher chinese demand for iron ore and coal boosted prices. in little change from a month ago. australia's trade performance is closely correlated to demand from china for infrastructure and property. a u.s. judge has ordered four banks to pay 2.5 billion dollars for manipulating the currency market and urge prosecutors to pursue the people involved. the four banks pleaded guilty in 2015 to rigging fx rates. conduct would be best detergent those responsible are not only fired, but any money they make is taken back. after it became the latest carmaker to be criticized by donald trump. he has threatened to impose an oldies if toyota pushes ahead
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with plans to build the toyota corolla in mexico. he tweeted, no way. ill that in the u.s. or pay a big order tax. for yoda already makes corollas in mississippi. sources tell as that donald trump is still opposed to the megamerger between time warner and at&t. the president-elect considers it a bad deal that would concentrate power too much in the media industry. the merger would combine the against pay tv and internet provider with one of the largest creators of content. duringlasted the deal his campaign, but it is not clear if he will demand a review. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: thank you very much indeed. sources telling bloomberg that china is prepared to step up its crude and he of u.s. companies should the end coming eight
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night a trade war. our bureau chief joins us now. tension between the two countries increasing, upping the ante even before trump takes office, so what is the latest? know, less than three weeks to go before the inauguration day. the chinese are apprehensive about which trump will be an alt when he takes over. as a candidate, he made some inflammatory remarks about stealing jobs from americans and manipulating the currency and playing unfair in trade, and he has threatened tariffs up to 45%. so the chinese started by saying called and was congratulatory and said we have to have an arrangement. hassome of the rhetoric
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continued and they are preparing counter moves just in case. one of those is to scrutinize u.s. companies. they are considering, we are taxing, doing investigations, anti-dumping probes, as well as anti-trust probes, so these are some of the things that could happen if when donald trump takes office he proceeds with some of the threats he espoused as a candidate. is, you know,oint this is even before he has been elected and sworn in. how far is this likely to go here? difficult thing. both sides can get caught up in the rhetoric. the official line from china has been very cooperative and we will wait and see what happens, but in the media, some of the .ommentary also quite pointed the global times says the commerce ministry has flowers of
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trust but big sticks hidden inside the door, they both wait for americans. course thatanger of this tit-for-tat arrangement spirals of little bit out of control and both sides get caught up in the rhetoric, that they didn't feel they have to follow through on, and as the two largest economies in the world whose businesses are closely interlinked, this can have a global impact if they follow through on all of these threats. rishaad: the point is what are we hearing now from donald trump's team? >> on this particular announcement or not announcement, but our report have on sources, so far we not heard from the trump camp. i don't think that will last long, because he is prone to respond to provocations, and so
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as we know, he likes to send out tweets at all hours of the day. it is very likely we will hear from him at some point and be watching the twitter account for mr. trump. thank you very much indeed joining us from beijing, looking at what we have coming up, how to pour a glass of one without pulling the court. a company that is making that a reality. next, s&p global ratings having a new report on the link between spreads and ratings. ♪
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check of theick business flash headlines, a second day of headlines out of boeing, close to a $10 billion , a customer with an 92 73 seven least
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max planes. boeing reported a busy and 22016, with the deal to sell 75 upgraded aircraft to ge's leasing division. discounts do normally apply there. staying with aviation, korean air has fallen to its lowest level on plans to sell 22 million shares. $380arrier aiming to raise million from the sale and would use the proceeds for working capital. the new shares are priced at the equivalent of $17, with the amount finalized at the end of next month. general motors seeing diverting fortunes in china. , falling formping 14% tod year, down 525,000 vehicles. it is down to a lack of a popular suv in their portfolio.
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by contrast, you excels up 19%, selling 1.2 million cars, gm's rest selling brand in china. at the same time, cattle like managed to sell 100,000 cars for the first time last year. the latest name to be linked to softbank's global tech fun. it may commit 15 billion dollars to the project. the soft bank vision fund is set to close later this month. it is capped at $100 billion. there has yet to be a decision on whether joining the fund or how much it might commit. the chinese currency this morning, the central bank as well. the pboc strengthening the fixing since the most since 2005. fastest climbed at its
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rate against the greenback thursday, and this expected to some relief to a currency plagued by capital outflows. s&p global ratings, tell us what you are making of it from your perspective here. obviously chinese corporate's have done a lot cross-border. we estimate 6% or 7% of that is in foreign borrowing, mainly the the dollar, so every time dollar strengthens, for example, last year, we mentioned the renminbi has gone down 6% or 7% against the dollar, so working out the math, that is 50 basis points in terms of additional costs for chinese corporate's. you did mention people speculating about the renminbi
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depreciating further. some of these are corporates fearing it could depreciate , soher, buying u.s. dollars causing the depreciation they were trying to avoid. unfortunately this is contributing to the currency situation. rishaad: so what does that tell us about the state of chinese corporates? obviously while the bond market and the banking market has become much more developed, still in terms of comparison with the u.s., the markets are not that deep and broad. in the u.s., you usually have a fixed rate, then you swap, and you are covered. it is hard to do it in developing markets, so some of the companies tend to leave u.s. dollar exposure there, and when the currency begins to
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strengthen against the u.s. dollar, they try to cover it, and when they cover it they create the situation the government is trying to avoid. rishaad: it becomes a vicious circle, doesn't it? >> exactly. mind, ifwith that in you look at what the credit spread and indeed how that at the moment, this is the most important thing you look at, and from a corporate perspective, where are you seeing the most stress now? >> right, very much in terms of the top global credit risks, and that is repricing of risks, both in stocks, equity, currencies, and the bond markets. long time,, for a many investors have gone with a , but this for longer is beginning to unravel and
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credit spreads are creeping up. we even saw in china last year when the spreads also crept up. .his is our concern credit spreads to amended by investors. we have seen this in china, particularly towards the end of last year, so this will stress the credit quality, corporates, interest rates, so that is something we are watching very closely. muchad: it depends on how you are leveraged at the end of the day, isn't it, and that is the key here. you can have credit spreads blowout, but it is contingent on how much you have been that, right? >> exactly. the china corporate credit depending on how you manage it 180% of gdp.5% to
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that is massive. the imf has been warning that this rate of growth and high leverage cannot continue and makes it particularly sensitive to any increase in credit rates. all end?how will it how will 2017 be different from 2016 in your view? it is going to be choppy. there will be spot fires put out by the regulators pretty much the fed calls at considerable uncertainty, particularly with the new u.s. administration coming in and the tension with china. we will have to watch that. credit growth is expected to slow slightly in china, but still with momentum, but we expect more defaults throughout the year, so it will be a quite interesting year. rishaad: have a fabulous weekend.
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s&p global there in melbourne. samsung surprise fourth-quarter results, we will have a look at how that note 7 smartphone disaster hit the bottom line. ♪
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rishaad: well, we have samsung rising quite strongly, 2% up at the moment, beating the thinking out there. preliminary results showing the note 7 fiasco did not burn the bottom line too much at all. hi chip prices helping, but what we want to know is what is going on here when it comes to the mobile business. what is the situation there? towell, the key thing remember as that these are preliminary earnings.
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we will get the final numbers later this month. the picture emerging so far is a recovery, the worst of the note 7 debacle came in the prior pe riod. the latest quarter, analysts and bloomberg polls show sam songs mobile division is on track for an operating profit of about 2.3 from 100won, up billion. we are seeing at least some last year.om so what doght, but about these phones here? we have an ongoing investigation, and perhaps some new clues on how they turn this around with new models? >> you are right.
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there is an investigation. samsung has not told us what exactly the cause of these phones were in terms of overheating, catching fire, and in some incidents exploding. timehave spent a lot of and money looking into the root cause. actually, some sort of disclosure or announcement or four report on that is due almost any time. it is imminent, so we will bring that to you. further out, we are entering a new flagship phone cycle, that being the galaxy s series by samsung. the new model will be coming out sometime this spring. you can expected to have a lot of new technology. one of the key features will be artificial intelligence that will look sleeker, single glass design and curved edges, so that is one thing to keep an i on.
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rishaad: thank you very much indeed. ,aking a look at samsung preliminary results, a huge beat there. next, all strays back to the future trade numbers. ♪
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is 10:29 a.m. in hong kong and beijing. i am rishaad salamat with first word headlines. china is warning donald trump he " bigbe met with an" stick if he initiates a trade war. the article coming after trump as hisobert lighthizer trade representative. chief secretary says the ambassador to so, korea has been recalled over a statute regarding women used as sex slaves. e was unveiled last
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week. talks on foreign exchange swaps have also been suspended over the monument, which he says violates the the and a convention. says property prices still have room to improve. he said prices will increase a little bit, but want be outrages. it want be outrages. they are already outrages. hong kong raising the stamp duty to 15%. is 10:30 a.m. in beijing. this is the picture at the moment. it is the city again choking under a blanket of small. the u.s. embassy air quality standard reading 314. to put that into context him a that is 12 times above the internationally accepted danger level.
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must of northeastern china has been smothered since the beginning of the new year. there have been alerts for the young and elderly, warned to stay indoors. there we go. that is beijing. that is one of the countries we have covered at the moment was something like 2600 journalists. it is about the markets, the yuan, japan on the lunch break, seeing currently a bit of weakness there, and that is down strength, or should i say dollar weakness? sophie: i'm going to get into the yuan later. i want to touch on the equity space. you mentioned china warning, and trump and turn warning toyota. now down to percent after trump criticized toyota on twitter for building a new plant in mexico,
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threatening to slap a border tax on the automaker. we have seen other japanese automakers fall. they also have plants in mexico. on plansrlines falling to issue new shares, three brokerages cutting their rating on the stock today. 3 buys, for holds, and to sells. hynix rising. it announced plans to spend $2.6 billion to ramp up chip output. that story around semiconductors helping samsung today, delivering a beat when it came to earnings guidance. as 2.5%umping as much as the electronics giant was seen shaking off note 7 problems that plagued it in the third
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quarter. since then, samsung stock has climbed, and over 2016, we saw it rise 40%. i want to get back to the currency space, a big story what ,s going on with the yuan particularly the offshore rate. it is coming off the session low. it has then an interesting hour for the people's currency. they strengthen one parity to the most since 2005, and the overnight deposit rate hike to 105%, then coming back below 40%. rishaad: thank you very much. sophie kamaruddin there. let's took a look at aviation as boeing is reportedly close to a $10 billion in india with spice jet. why is spice looking to order
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these particular aircraft? it is basically to generate growth. they are the second largest budget carrier in india. the biggest is spending a lot of money buying more than 200 planes from airbus for needs to, so spicejet be puppets growth plans if they want to catch up. there areight, but concerns that the market in deed may have excess capacity. we have spice increasing, but indigo is doing the same thing too? well, the concern about overcapacity in india has been hurting the aviation industry there for quite a long time. because there is so much competition within india itself, there has been a price war, and we will probably see another price were right now in india.
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the other aspect if you look at india is the prospect of more overseas travel being allowed now that this new rule has been eased last year by the indian government, which will allow more carriers to offer more flights, and that's why we see singapore airlines and air asia setting up to tap that market. might ease offty with more airlines looking towards overseas for demand. rishaad: thank you very much indeed for that. now, let's get to some data out of australia. yes what? it was a surprise. -- guess what? it was a surprise. the november trade numbers came in ahead of estimates. this is way, way better than anticipated. we are used to getting surprises out of this environment when it comes to
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australia, the statistics bureau here, but this is a nice start for the new year, the first piece of data for 2017. we do see the ledger in black in november, the first trade plus since march 2014, and the largest trade surplus since february 2014, 31 consecutive months of deficit until november. inurplus of $1.2 billion seasonally adjusted terms, well above 550 million that had been expected by analysts, median expectation by analysts we had spoken to. it was the export number that boosted the export number that boosted that trade balance, 8% jump in exports, just over 30 billion dollars. in terms of breaking down that export number, it is driven by a pickup in shipments of commodities, key materials, raw materials to the major market in
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china. jumping by $1l billion, an increase of 26%. bouncing iron ore also , up 11% from october, so we are seeing this come in tandem with this robust recovery in prices commodities, and materials, particularly in the latter half of last year, and a lot of analysts are expecting that recovery to continue into the new year. this takes a bit off in terms of the pressure for what the rba needs to do going into that february meeting. rishaad: thank you very much indeed for that. actually, i have one more question. that is to do with the reserve bank there. they have been under pressure to do more.
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does that pressure go away now? haidi: yeah, a little bit. going into that february meeting, this does take some of the pressure off the central bank. remember that contraction in the bearisharter, gdp had economists saying australia could be setting up for its first technical recession since 1991, but this robust read when it comes to exports picking up and a better than expected forecast when it comes to chinese demand is so crucial when it comes to the australian economy, all of that painting a brighter future and the rba may be able to stand pat going into that meeting. rishaad: right, having a look at what is going on globally, goods and commodities rising after staying low for years. this should help for policymakers worried about inflation.
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asia economics correspondent is here. everybody is saying reflation, what a great thing it is, but is it? >> we are in a better place than we were. notes have been falling, good when you have growth slowing and hide debt levels. to betterces lead activity and drive wages higher and generally have a positive impact. inflation can be bad as well, but we are nowhere near that point yet. it is a positive outlook. we are seeing it in the u.s., the eurozone, also in china, where the factory gates pulled for the firston time in four years. it is all built on the back of rebounding commodities. rishaad: why should we be cautious here about the rebound? the base effect.
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the reason we have higher commodity prices, oil prices, and producer prices is because oil is coming off. that base effect is expected to wash through the system. is aroblem is that there disconnect. the price rebound is not necessarily driven by better aggregate demand. it is because prices are moving higher because they were week earlier. there are other risks. we don't know how trump will play out and how it will impact the world economy. we don't know how brexit will spillover and affect the eurozone. there are plenty of political risk that will stall the recovery. rishaad: there are a host of things that could be drivers here? >> absolutely. there are some fundamentals going on here. we are seeing significant
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stimulus and china, and there is no indication they will pull off the gas and rebuilding infrastructure, housing, because china wants to keep the economy stable in a year of change for them. there are expectations on trump, less taxes, more spending, less regulation. higher inflation in the u.s. spills over to the world as well. there are plenty of risks to keep inflation quiet for the time being. rishaad: thank you very much indeed. coming up, a chinese smartphone maker is preparing to enter the united states amid questions about it's funny wage in. we will hear from the chief finance officer of the company. ♪
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rishaad: a quick check of the
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latest business flash headlines. for a newring political fight. new york city is holding the first public hearing on its request for more information about the act remedies of right hailing drivers. is challenging rule changes proposed in december that would vehicleall prior dispatchers to provide the address and time of each drop off, describing it as an invasion of customer privacy. day would new year's be the app store's busiest day ever, generating $240 million and that one day alone, and that to $20elopers earn billion last year, up 40% year on year. why? reason is the one most downloaded apple worldwide. nintendo super mario run came in with a run towards the end of the year and among the top 10 with 40 million downloads.
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estimates after luring more customers away from rivals with free video streaming and unlimited data plans. chiefng earlier, the executive said he was confident about the year ahead despite uncertainty over what a trump presidency will mean for a potential tie up with sprint. by sprintle provided and t-mobile together is something that has long been considered, and i do believe under a trump administration that there will be a different level of regulatory scrutiny, restructuring of consolidation, so i think it will be a fascinating year, but a great year to be a healthy, vibrant, growing plan. was china'somi biggest smartphone maker, but has fallen to number four. we asked the chief finance
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officer if it is time for xiaomi to change its focus. chinese companies in china, particularly in the smartphones space, have a unique advantage. almost all the smart phones are made in china, so we are close to the market, and there is no number one that the brands are chinese companies, so weaomi is one of them, will continue to capture this opportunity, and there is still room to grow if you think about companies that were in the market five years ago and the brands that are remaining. top 3-4 guys will continue to grow and when this market. >> my apologies for interrupting. we don't have a lot of time, but one thing top of mind for
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investors of xiaomi is the trouble you are having in china and how that is affecting your valuation. there are some reports or by you wish and has been cut in half because of your struggles in china. where does it stand now? round we raised was publicly announced a couple of years ago, and there has been no new funding rounds since. at the same time, the company's metrics are very robust and healthy. there is no need for us to go into the market for new funding. that, but youd haven't answered my question, which is where your valuation is. does your by uh and fall to a point where you need to pay back or compensate your shareholders? is there a point where that happens and are we near that? pointw, there is no such where we have to compensate and
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payback, and valuation for a private company is done by the last meaningful transaction, and for us, that was two years ago. anything else is basically speculation from the outside world. now bloomberg has been speaking to some other big names at that ces fair. one of the biggest deals last year was yahoo! and for rising. aol's tim armstrong says he hopes the deal closed despite the data breaches at yahoo! yahoo! deal is strategic towards our 20 20 goals. we are hopeful it were close. areas,ocess is in two one is the integration and strategy planning with the executive team at yahoo!, which has gone well and we have close relationships with them. rishaad: 2016 was another
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challenging year and the pc market, but hewlett-packard telling bloomberg that its priority is to remain a leader. we are veryis focused, and that is we want to win in commercial. in the commercial space, our goal is to be number one. that is where we have -- we are at 23%. i think we are in there appeared we would love to grow more, but most importantly we want to lead. rishaad: the last 12 months may have seen the release of some of the highest grossing movies ever, but they did not the long to paramount. the chairman told us how the studio can still turn things around. , itou make good movies turns. it eight hard. 't hard. the movie business is a simple business compared to the changes in the world. rishaad: coming up, cheers?
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how to enjoy a bottle of wine without opening it, and i do mean you can still drink it. ♪
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rishaad: this is "bloomberg markets: asia". has a devicet allowing you to serve wine
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without opening the bottle. let's meet the chief executive. tell us how it works. there we go. >> very simple. you take it and put it on the bottle, put the needle through ure cork, and then po wine. you have this small trigger, and the wine is going from inside the ball. rishaad: it won't react with the wine. >> exactly. then you remove it from the bottle and the cork will reseal. this doesn't work on orks, and you would not be doing it with a screwtop, would you? can you show us how it works and talk us through the process. ,> you put it on the device then you put it in here. rishaad: you don't have the device on at the moment? >> yet.
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rishaad: oh, it is in there. ok. it fills up quite rapidly. >> when you are done, just tilt ,ack of the bottle, remove it and this is where the magic happens. rishaad: that is genius. right. wine?s not mess with the >> exactly. now you can drink the wine the way you want, your wine, your way. this is where it is a game changer in the industry. , youll avoid any oxidation can get a glass of each. rishaad: i would normally finish the bottle. go point being here, you can to restaurants where they would be able to use this and give you a bigger selection of wines by
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the glass than normally? >> yes. we started in wineries and restaurants. it is a way to get access to an unlimited selection of wine. we have restaurants offering 800 wines by the glass. you can have amazing wine from around the world. rishaad: when you open a bottle, eathe, drinking it, decanting it. you don't change anything about the service. you just make a glass and wait. how about counterfeiting here? been takingple have wine, re-corking it, and taking the decent wine out. how do you get around that? you can't do it the other way
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then? you can have rubbish going in there at the end? ok, so it does not work the other way. you raised $60 million on this? >> last year, $15 million. for aear, $26 million, total of $50 million in the last four years. rishaad: what do you do next? you come to the market with it? year, we expanded from 15 countries to 50 countries. a fewned in hong kong months ago, and we still have a way to go. , and, china, australia when we started, we started in wineries and restaurants, and the next step is to give it to everyone like a coffee machine. rishaad: not cheap, are they?
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thank you for joining us. let's get to shery now. we continued talking about those dramatic moves in with the pboc strengthening the fixing the most since 2005, and it is all about charts. we will talk with a specialist that sees indicators suggesting the nikkei will retest previous levels. we will talk about anti-globalization moves and what that means for mercantile-based systems here in asia. all that is coming up here on "bloomberg markets: asia". ♪
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♪ announcer: from our studios in new york city, this is "charlie rose." charlie: we begin this evening with this, the new congress convened on tuesday, a tumultuous first day. house republicans reversed their plan to strip the house of ethics of its independence. the review came from president-elect trump who question why lawmakers were making it a priority. the focus today shifted to repealing obama care. vice president elect mike pence met with republicans to rally them for the fight. meanwhile president obama met , with democrats to discuss their strategy for presenting and preserving his signature legislative achievement.

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