tv Bloomberg Markets Asia Bloomberg January 11, 2017 9:00pm-10:01pm EST
1mdb investigation. jakarta the latest to start its session, a mixed bag, but a flat picture and hong kong. the strength of the yen playing out in tokyo. here is sophie. and that yen strength and dragging on japanese shares, the nikkei 225 mostly red, the health care segment seeing the biggest drop, 2.5%, japanese pharma stocks are following the route in u.s. health care companies given trump's comments on pricing and the industry not being competitive enough. drugmaker,'s biggest set to expand its u.s. footprint . some other equities on the nikkei in the red, family mart
, but this isnes not working right now. thee can see perhaps on bigger map here, we can see what's going on with the nikkei two to five, japanese shares down .8%, family mart showing what is happening with the retail space as retailers struggle with softening consumer demand. some poor results posted overnight, and later this afternoon, fast retailing and others. thehe region, gains on kospi, the shanghai composite higher. , shares other red spot and wellington down 10%, materials lifting the story on the asx 200.
the big theme is what is happening with that dollar drop, lower for a second day. as we started off, that yen strengthening. well, our top story, thank you very much indeed for that, sophie. being questioned as part of this bribery investigation in golfing the country. it has already brought down the president there. the tentacles reaching further and further. lee has been question before, but this is the first time brought in by the special prosecutor's office. this raises the possibility he could be arrested. when he arrived this morning, he apologized to koreans, saying basically, apologizing for not being able to show better behavior in this case.
he is the vice-chairman and that de facto head of samsung group. we are expecting he will stay at the special prosecutor's office until friday morning. -- is part of rishaad: staying at the prosecutor's office? of thatis all part bribery investigation looking into whether samsung and other conglomerates made payments to owned by a close friend of president park geun-hye. case, did samsung provide support to this friend of the president? have helped with the merger that went ahead and
made it easier for lee to increase influence over the company. an activist shareholder was against the move and said it would cement the founding families control at the expense of shareholders. investigators asked parliament to file a complaint against lee for perjury during the parliamentary testimony. he and eight other table heads were grilled by lawmakers last month. was presentedt pc to reporters, and prosecutors believe that one email from it indicates that funds were given from samsung. looked: ok, of course he like he was a shoe in, didn't he? it, impactor does the secession there, the head of samsung group?
son ofd: he is the only the current chairman of samsung group, an ailing man who has not been well for the last couple of years. lee has been groomed for this job. forung has been planning him to take over as chairman for some years now. this throws this all out the window, especially if he is .rrested the what options are there? they could install one of his , put a caretaker in from outside the family, but the family could still control the boardroom behind the scenes. if it is unclear what will happen to him after this questioning. rishaad: right, thank you very much indeed for that. right, let's get you to the , and congressuse
anyway, and of course it is time to get these appointees appointed. let's get more first word news from sydney from haidi lun. haidi: secretary of state nominee rex tillerson faced questions, including russian hacking, tensions and asia, and the need for global u.s. leadership. he said moscow was a danger to america but refused to call president putin a war criminal for actions in syria. he also said beijing cannot use disputed islands in the south china sea, and that the world once a strong united states. in thechieve stability 21st century, american leadership must not only be renewed, it must be asserted. we have many advantages on which to build, our alliances are durable, and our allies are looking for a return of our leadership. volkswagen has taken that
step towards resolving the emissions scandal, pleading guilty in the u.s. and agreeing to pay a $4.3 billion fine. prosecutors announced charges against five executives in germany. using falseto statements and at structuring inquiries when authorities grew suspicious of emissions levels. >> to be clear, volkswagen new of these problems, and when regulators express concerns, volkswagen obfuscated, denied, and ultimately lied. india's central bank has refused to offer specific details of the ban on high denomination bills as questions are asked about who took the controversial decision. hoursws came out three before it was announced live prime minister modi, however, the bank declined to offer more information for national
security reasons. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: thanks. donald trump confronting two of biggest political challenges. he says he won't divest from his company, but also answered unsubstantial claims that russia has information about him. >> something like that should never have been written. it should never have been had. it should certainly never have been released. beenad: ramy inocencio has following this what was the biggest take away? ramy: the things that raised eyebrows was donald trump finally admitted that russia could indeed be behind the hacking of the democratic party committees emails as well as the intent to her democrat hillary clinton during the u.s. election.
that was the only thing donald trump conceded. he decided to go on the offense with one of his favorite targets, people like you and me, people in the news industry, and he did this through his favorite medium, and that would be through twitter. so let's check out his quote on that. ,asically he was saying that lambasting the fake news out aree and saying there crooked opponents trying to belittle his victory. he also lambasted the intelligence agencies here, claiming they leaked this so-called fake news. he said they took one last shot at him before he becomes president in nine days pretty also posted a question, are we living in nazi germany? out with guns blazing, some of his targets, pushing back against the idea that he had anything to do with these rumors, unsubstantiated reports, the deal with russia.
as for conflicts of interest, a lot of criticism he has come into, people saying what he has done is effectively meaningless because he could have done more to distance himself. he has about 500 companies and more than 20 countries, totaling something like $3.6 andion or so, so he said, this is true, that he does not have to do anything, but because he should do something that he has going to do it. take a listen. >> i could actually run my business and run government at the same time. i don't like the way that looks, but i would be able to do that if i wanted to. you can't do that in any other capacity, but as a president, i could run the trump organization, great, great company, and i could run the company. i would do a very good job. need he said he does not
to do anything, but is going to do something to it what are those exactly? step down he will from all positions at trump organization. he says the business will be placed in a trust, and the trust managed by his sons. he also says most importantly that he will not divest ownership in the organization. this has a lot of people saying this is probably the worst thing that he is not going to be doing. theattorney said selling company would exacerbate conflicts of interest for a number of reasons. his hotel will donate profits from foreign governments to the u.s. treasury, donating, which is quite interesting. he said he won't be informed of any deals the trump organization does overseas, and if it does anything domestically, it will go through a rigorous vetting process of which he will not be part of. rishaad: thank you very much
you are back with bloomberg markets as we look at the business flash headlines. a consortium to bid for the warehouse operations of global logistic properties, speaking with banks and partners about an offer for this company. it has a market value of more than $8 billion. p will have offers by early next month.
japan's top retailers, earnings falling. both of these for the third quarter, stagnant wages prompting people to not spend much money. on japan's retail sector later, fast retailing and others reporting after the close. southeast asia's most viable startup is said to have picked goldman sachs to lead its ipo. it is said to be looking to raise $1 billion and is considering a listing in the u.s.. if the offer goes through, it would be the largest tech ipo out of southeast asia. right, a quick check of commodities, gold, brent, copper. there we go. a snapshot of what is happening. gold on the way up.
getting up to the 1200 level there. our next guest says the road for commodities will be a bumpy one. he is normally based in frankfurt, but with us now. , ice we talked last time can't see how many twists and turns have occurred for the metals complex. it is probably one of the most difficult asset classes to get a grip on. >> all the commodities in fact, but last year, it was a good one from the forecasters point of view because most of the moves were more or less logical. last year, one year ago, the oil price was trading below $30, and our forecast of $50 plus -- rishaad: a lot of people were thinking $20 and sub $20. >> definitely it was logical.
the price moves were logical because oil wasn't performing anymore as a political instrument. it was trading on demand and supply another things that no normally analysts can grip on. this year will be bumpy and difficult to forecast. rishaad: you did not take zinc last year? >> we did. especially what happened after the trump election was surprising to us, and we think it was too much optimism already priced in. we think it makes sense to take a step back and wait for the prices to come back, too much optimism priced in right now. rishaad: why did we get this herd mentality after the third quarter? it was all about the reflation
trade essentially. >> at the moment, you see this lation hiking up the cost of metals and for structure linked, but the rest of the sector is getting encouraged. i think we need to put it into perspective. china is making up over 50% of world demand in copper, so any slowdown would have much larger impact on copper or industrial metals than any pick up in activity in the u.s. this will take months for this activity to pick up. that's why it makes sense to be contrarian on metals, oil, and growth as well. oil, investors are overly optimistic. on gold, they are pricing in too
much pessimism right now. i see headwinds, but also potential for higher prices. rishaad: but what about dollar strength? persists and the dollar strengthens further from here, you control throw away your predictions and start again? because we are saying it is already priced in. i looking at the perception of the market and how much is priced in already, and right now, there are three hikes priced in, everybody expects the euro to fall below parity this year. -- soect equity markets all this is priced in and this is why the gold prices not belowg at 1300 plus, but $1200. during this year, we will have to scrap many expectations and probably if trump under delivers, we are likely to go
higher than 1300 for gold. it was price for perfection almost, wasn't it? let's talk about oil. the lubricant of the global economy. huge move really taking place, especially when they have that deal together cutting output. now the thing is that people will cheat, on top of that, capped fore we are shale producers. where do you go with it? >> i think we are going down. there are many reasons. first, opec will yet again overpromise and under deliver. we will get cheating from opec. we will get false information from opec. to get thet going cuts promised by the likes of russia and kazakhstan, which are likely to high production this year, contrary to what they promise to opec.
above $50, u.s. oil production will kick in, so i am looking for production to barrels above 9 million , which is already high production for u.s. production, so share will recover while opec will not cut by as much as lots of, so there is potential and a lot of room for disappointment this year, and when you are looking at the positioning and the perception of the market, it is overly optimistic. wti, brent, if you add up the net long positions, it is never as high as it is now. there is room for disappointment because it is a herd mentality. rishaad: five seconds, where is oil, brent, wti going to be in six months? >> $45 would be my guess. rishaad: thank you very much indeed. commerzbank visiting us in hong
mostad: the world's tightly manage currency, but yuan investors think we will see an exchange rate solely determined by market forces. ,e look at the reasons, and ok present the case for the free-floating of the yuan. >> it might sound crazy, but there is a case for it. china has been fighting gravity and had to deplete reserves and keep conditions tighter than they would to defend the exchange rate, which is not a great idea when you have a slowing economy.
the free-floating will not be that bad, china has massive foreign reserves, a large trade surplus, and inflation is low, so why don't you just let it go? rishaad: of course, but is there anyone seriously contemplating that could happen? surveys of strategists, positioning in the options market, it is not the base case right now. after all, we know china tends to take things step-by-step. it is a bit of a crazy idea and that it is highly risky and you do not know what will happen. you could get a knee-jerk tumble exacerbating outflows and causing panic and if the reaction to the august 20 15 devaluation is any indication, this will shock global markets. ?ishaad: right, for the defense what is the other alternative? just continue
muddling through as we have seen done in the past. what china has been doing is that it has prioritized stability in the exchange rate and continued intervention and tighten capital controls, so that is the market base case right now to see china continue doing that. rishaad: thank you so much for that. we shall see, free float this year? people are quite dubious of that. anyway, that is what we have at the moment in terms of the yuan and whether it floats or not this year. we are turning down at the moment, this is what we have come a hang seng off .1%, a little bit of a lower move there at the moment. taipei,at seoul, korea, the other direction, a mixed bag essentially here. there we go. that psychologically important 3000 level there. coming up, donald trump's pick
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private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. 1029 a.m. in hong kong. i'm haidi lun with first word headlines. questioned by prosecutors investigating korea's undue influence can look has taken down the president. he was expected to be summoned, but has been named a suspect. prosecutors want to know whether samsung and other companies make payments to a confident of park geun-hye in exchange for political favors. surging, volume doubling. the shipper is asia's best-performing stock this year, 270%.some
bloomberg data showing strong foreign interest with overseas investors snapping up $217 million in shares. hsbc will pay $45 million to settle a price-fixing case in the u.s.. in accord results the bank the case. the case was heard in the u.s. district court in manhattan. month, hsbc, j.p. morgan chase, and one other bank were find in the eu for rating. aviation is about to mark the end of an era with the iconic jumbo jet planning to make his last fight in the u.s. utilized it 747 a final time, retiring the plane ahead of schedule. many carriers have relied on the jumbo since his debut in the
1970's, but demand has slumped. it is ready to end production. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: right, let's have a on. at what is going japan on his lunch break or let's get to sophie kamaruddin. energy and materials stocks leading the gains, but health care down 1.5 percent, the biggest drag in asia. we are seeing that play out in japanese stocks, down .9% heading into that lunch break. one downhe likes of the drop among drug makers. this is trump saying the
industry needs more competitive pricing. japanese farmer players are exposed to the u.s. it is japan's biggest drugmaker. retailers feeling the pinch and japan. elsewhere, the kospi up .25%, the week won, investors looking past the scandal. hong kong down, but holding near a two-month high. casino stocks leading that drop, and lenovo a top performer after the slowdown in pc shipments abating somewhat in the fourth quarter. lenovo is the world's biggest pc maker, followed by hp and dell. the yenoing on with given that dollars story today, stronger for a fourth day. the dollar had been on a back foot as trumps briefing left much to be desired.
another commodity in focus, oil $52, holding onto its biggest gain in six weeks after a government report showed that u.s. refiners would set a record amount of crude last week. thank you very much indeed, sophie. right, we have been hearing about donald trump, making hair headlines today. it does seem rex tillerson once a stronger u.s. presence in asia , essentially to did her beijing. it seems like they are crossing swords already. that china's expansion into the south china sea and the reclamation work and reportedly, allegedly, putting some sort of weapons they are. he says it is illegal according
to rex tillerson, that the designate to be secretary of state. he says it was a can to what russia did and annexing crimea, words that will not go down well in beijing or to the people of china. he was asked what action the united states should take against china and how forceful they should be, and this is his versus in cancer. >> we will have to send china a clear signal that first, the island building stops, and second, your access to those islands will not be allowed. he went on to say that the united states needs to reaffirm its commitment to taiwan. however, said he is not aware of any plans to question the one-china policy. among others, i will run through some of the points in asia and china, criticize china for stealing intellectual property. he said they are also human rights violators.
he is not opposed to the tpp, a stone of president obama's pivot to asia, however shares some concerns, and also he said the u.s. should review climate change records, another hallmark cooperation between obama and the chinese. rishaad: north korea not mentioned at all. >> i haven't yet. rishaad: did he say much about it? >> he did. he said that is a way china and the u.s. could bridge differences if the chinese help bring in the nuclear ambitions of north korea. thever, this comes after south korean defense ministry put out and security white paper saying pyongyang has made considerable progress on nuclear weapons. tillerson basically said the u.s. could no longer accept china's empty promises on north he says,d north korea, could be a way for china and the
u.s. to ridge the divide. a lot will come across his desk if he does indeed get confirmed and become secretary of state. with the uss carl vinson, nimitz from san diego now being deployed to the western pacific, in addition to the uss the chinesen, and aircraft carrier making moves in the tie when he straight just the other day. rishaad: china's decision to slap tariffs on an ethanol byproduct could cut $2 billion from america's agricultural sector. , kenzie has been following this one for a spirit what is the story? it is a pointed reminder of the pressure points that china can need osha to on u.s. trade, tariffs that have been slapped grains. distillers
ddg's are a byproduct of the corn ethanol production process and used for livestock feed you'd they are important because in china, it is the number one market for u.s. exports of dbg'g. these tariffs pull up the drawbridge from the u.s. at a bad time. we have a chart that shows the price of this byproduct falling 38% since june of 2016, so certainly no welcome news for the producers of this bio product in the u.s. this is obscene the time when we have increased trade tensions between china and the u.s.. they do just remain tensions at the moment. what are the wider implications if this situation continues to worsen and gets into a
full-blown, well, trade war? agricultural exports from the u.s. to china have increased 200% in the last decade according to the usda. in terms of the value, $20.2 billion by the end of 2015. further pain as well because the chinese are looking at increasing tariffs on ethanol produced in the u.s. and to 30%,to china from 5% so no wonder the industry is looking to lobby trump to intervene. it is a two cited street. putting as currently case at the wto over what they say are subsidies for aluminum producers and china that are being shipped to the u.s., depressing prices in the u.s., so there are a number of trade disputes already playing out
between the u.s. and china, and this is before trump has taken office. rishaad: thank you. tom mackenzie there. a key question, just talking about it, part of this whole equation, the agricultural side of things, we caught up with the peterson institute president adam pose no who said his a trade war could do huge damage to the united states. >> if you are dealing with somebody who exists who is not going anywhere and trying to exist and is not going anywhere, you can't bully them and try to posture and say oh well i will make this thread. we have modeled what a trade were with china would look like, and it would put people out of work in las vegas in tourism, walmart, out of work in the production in ge, and the auto industry in the u.s.. the fact you could do more harm to china and the u.s. does not
mean it would not cause harm to the u.s. the last 40for years, presidents and american administrations have tried to convince china to behave, and usually that has worked. the other thing is that we're going into football playoffs season. trump loves football. you don't whine about the referees calls, whine about spy gate, one about tom brady being pulled out, you go out and win so that it is not up to the referee. and whatp is doing these people are proposing is taking america out of competition, whining to the referee, and pout. all that means is that you will forfeit the game. a football metaphor, you're killing my brain here. rex tillerson said in regards to china that the economic well-being of our nations is intertwined. that is different than the tweets we hear from donald trump. what is going to be the reality? remarks areis
perfectly reasonable. that's right. we gain from their benefits, they benefit from us, and it is good for the rest of the world, including the u.s.. what does that relationship look like that does make sense? >> you reach out to the chinese government who recognize this as a problem and, with a symbolic and substantive exchange at the g-20, which they were starting to do, which is when everybody takes steel capacity off-line. you come up with a world in which we know there is overcapacity and everybody has employment problems, so we try to make it that nobody gets more than their fair share. you can't do that by threatening. nerhaad: adam pose talking to us earlier. more coming up on south korea's influence peddling scandal, questions rise.
the yen has strengthened every day so far this week. the question is where the currency goes from here, and that is where the problem starts, because no one can agree. david, what is the thinking here then? funny aboutat is what is happening right now is first they can't agree, and second you look at how the dispersion of the forecast for the end of this year are. we are at 115, the median. the median is we don't change until the end of the year. the most bullish is 100, the most bearish is 128. the world would look completely
different at 100, everything would go down the toilet as far as japanese equities are concerned. this is how the forecasts look at the moment. when you look at the cost to protect against swings in the japanese yen, they have been creeping up slowly over the past few months. have a look at this chart. it shows implied volatility on the one year and goes back now mid or roughly about entering the third quarter of 2013. in other words, the cost to protect against the swings in the japanese yen have slowly crept up, which is interesting, because it is not just the move up in the cost of protection, but also where the move up has taken place. theou look across volatility curve, prices have gone up faster at the short end ifn the long end, a smile
you will, people hedging against short-term price swings because of where we are and the yen as a haven asset, given all that we have heard so far at the press conference, on and on. that said, it is the market positioned in a way that they will be protected if it starts to swing. david, let'st, have a look at this. we have seen the strength this week taking to a critical level , you did the fibonacci retracement analysis as well. tell us about that. david: right, you take it back five years and we get into the bloomberg chart, 4401. what it shows you is it shows you a few things, right, one of those occasions where dollar-yen
is headed back to one of the key retracement levels. movinge the 50 day average converging on the spot price of dollar-yen. we are closing in on the likes level, the 50 day moving average. nomura says we could be headed back towards 110. technicals have turned bearish this week on dollar-yen now that yen has strengthened for four straight days. fairly rudimentary analysis, you can see there is not much here, not much support 101 .5 twoto about or thereabouts. that is my rudimentary technical analysis. thank you for that. right, the fallout from park 's impeachment spreads,
lawmakers are looking into the country's public tension fund. we are learning about this fund and its role in the scandal. >> the national pension service is the world's third-largest pension fund, only behind japan and norway, about 550 trillion won. billion, and $450 their major shareholder and their major shareholder in samsung electronics, hyundai motor, lg displays come all the major korean blue chips. rishaad: they aren't act fitfully activists investors, aren't they? what is in store for the pension service as a result of what has been going on in this political scandal? npsrosecutors allege the has been involved in the
influence peddling scandal. opposition lawmakers are saying there needs to be changes in the makegemd tos it less susceptible to interference from politicians. rishaad: what is the likely would on the way the nps be investing in the future? >> it may help the nps achieve one of its goals, to reduce their reliance on domestic stocks. right now, they invest 150 overseas, 27% of their total assets. they want to increase that to 300 trillion won in the next five years or so. have more independence, it could mean less pressure to invest technically up to pursuing this goal of diversifying away from korea. rishaad: thank you very much. having to change
launching a $60 billion bond sale to fund construction of a bigger resort. have attracted attention from the united states for suspicious money flows. posted far more table revenue than the biggest casinos in macau. 16% afterlling by concerns about chinese authorities and how they may tighten their oversight of the crypto currency, the pboc saying the shanghai branch and onlineent conducted an exchan e bitcoin exchange. it hit an all-time high last week as it was seen as a safe haven. a former director jailed for assing inside information to plumber for cash and free work. stephen mcclatchy pleading guilty to offering merger tips
used to make 10 illegal trades worth around $55,000. the plumber pleaded guilty and work with prosecutors against stephen mcclatchy. right, singapore has jailed its first foreigner on charges linked to investigations into .ilitias investment fund 1mdb this wish national is the fifth person to be convicted, amounting to more than $1 billion. we thought this clampdown was going to be a short brief one, but it has had some legs, hasn't it? absolutely. singapore wants to take a strong stand, to take action to theerve its reputation as least corrupt nation in asia. is swiss national convicted jens fred sturzenegger, a branch
manager of falcon bank closed down since the event. charges, including failure to observe anti-money laundering rules. six countsguilty to and faces seven months in jail, a fine of $89,000. in court said he engaged persistent deceitful conduct in lying to the authorities, so no one getting spared here. this is singapore's biggest money laundering case, biggest investigation. bankers, the probe has gone to switzerland, hong kong, and even the u.s. the man at the center of the 1mdb
investigation, the man at the center of the investigation. what is the latest? >> he has said previously that as anle with 1mdb was informal consultant and maintained he has not broken any law, but if you go to the u.s., you know that it is going ahead with plans to seize his assets, a total of $1 billion allegedly acquired with funds siphoned jet, adb, a private stake in a hotel in new york were $380 million, and last judge tried angeles to intervene in the lawsuit. we know it would take a long time, but it will be settled. rishaad: nice one. i look at the latest on the 1mdb scandal. right, coming up, sherry and will update this on the big stories of the day so far.
it's: samsung, because vice-chairman right now being questioned by special prosecutors. would bepected that he questioned, but is now being identified as a suspect for a bribery case. we will talk about rex tillerson on how he both faulted china for failing to rein in north korea's nuclear program, but also said china is a valuable partner. we will talk about the deepening mystery in india over who took the unprecedented decision to bar high value notes. all of that is coming up on "bloomberg markets: asia". ♪
♪ >> from our studios in new york city, this is "charlie rose." charlie: mr. secretary, this journey, this part of your life is coming to an end. we talk about iran first. how do you view that now? is that a primary legacy for john kerry? secretary kerry: i don't think there's any one thing, if i can say respectfully, that is the legacy. i think the legacy is severalfold, to the degree that there is a legacy. tse