tv Bloomberg Daybreak Asia Bloomberg January 17, 2017 7:00pm-8:01pm EST
daybreak asia live from bloomberg's headquarters. it is just after 8:00 a.m. in hong kong. : as we have been talking about, them markets are rattled by prayer -- by president donald trump's view of the dollar being too strong. a lot happening in asia, awaiting the decision by the korean court on an arrest warrant for the samsung executive. >> we will get more on developments from the samsung front. also, xi jinping takes the stage he didn't say trump's name but it was a clear signal that this was agains protectionism. it is all about globalization. we will see if that has affect on the asian markets. let's have a look at
markets right now. very interesting, because certainly, we woke up this morning, we had massive moves in the currency markets. we are tracing a little bit, the dollar dropping the most and's july, the pound surging. hit, of these levels we two hours back, are retracing slightly. have a look at what we are seeing right now. , the biggest drop since the day after the brexit vote in europe. 124,ound sterling back to 2.9% stronger compared to yesterday. gold continues to be up. an analysis that takes us back to two months back. the reflation trade, has it ended? conflicting advice here. blackrock says it is a minor bump in the road.
morgan stanley says it may have ended. it could and violently. at the moment, yields on the u.s. 10 year, 2.33%, not a big change. japan, down about roughly, what are we looking at? 771.th of 1%, 18,000 that comes back to have strong the yen has become since yesterday. day moving 50 average. 18,550 there. 200 points, 1.4%. the drop we have seen from the close on friday has taken us so close. down for a third straight day, the worst-performing major market across g 10 so far this week. 550 roughly speaking as what we are talking about. the 10 year yield, five basis points, unchanged.
other markets trading, australia 6/10 of 1%, the banks got hit in europe carrying over to the u.s. and asia-pif. 50, the kiwi dollar was the biggest gainer. across the index, 2072. the south korean won seeing 1% gains, 1163 is your level. >> thanks, david. that was a look at how the markets are trading. watching samsung in particular. haidi: australia's government says it doesn't rule out resuming the search for missing malaysian airlines light mh 370 if it receives credible new information. on tuesday, australia, china, and malaysia called off the
two-year underwater search. the boeing triple seven disappeared with 239 people on board. the airline says the search may take on a more desk-based format. i'll come shares slumping, accused of forcing apple to use lower licensing fees. the biggest maker of semiconductors receipt -- revealed an investigation in 2014. qualcomm says the case is flawed and based on misconceptions. last month, south korea find it $880 million, describing its practices as monopolistic. to faceauthority is due court after a judge decides on a arrest warrant.
he is accused of bribery and embezzlement in the influence peddling scandal that has seen the president impeached. a decision is expected in the early hours arrest of thursday. hsbc says investors need to lower expectations for bank profitability. a 10% return on equity is as good as universal lenders can do. he spoke to bloomberg editor in chief john at the world economic forum. >> once we get clarity on what the actual quantum is, the cost of equity comes down. how on earth can you get r.o.e.'s of 12, 13%? you probably have a banking ours,, for a bank like the cost of equity around eight, r.o.e. of 10, dividend yield of 4-5%, trading at one or two times. that is kind of your framework. >> global news 24 hours a day, journalists and analysts. this is bloomberg.
asia, top story in chinese president xi jinping has called on government and business leaders to reject trade wars and protectionism. tom, he has the details. no one is a winner in the trade wars. that came from a communist leader. >> such is the topsy-turvy world we live in. this is the first speech at the world economic forum by a chinese president, and xi laid out a robust defense of globalization, saying it shouldn't be blamed for the economic anxiety around the world, saying there needs to be better governance and business leaders and politician should focus on closing wealth gaps .round the world this was his first public rebuttal of trumps a parent threats to -- a parent threats
to tackle trade. he didn't name the president-elect in the speech. lawsrsuing protectionist is locking oneself in a dark rain may beind and kept outside. areurght d air -- so light and air. no one will emerge as the winner in a trade war. officialer chinese tells bloomberg that the speech highlighted that chinese leaders are not underestimating the threat of a trade war between china and the u.s. >> how is the speech going to be looked upon him the world stage, and also back home in china? for g zhang ping himself, he has been trying to raise his
jinping has been trying to raise his profile. he gave a speech at the united nations, and now this speech at the economic forum along with 80 business delegates from china. he is trying to project an image of strength, i -- a visionary leader. the congress -- the communist happens later this year. the apparent retreat from the as al stage leaves china bastion of stability. when you look at trump, brexit, european elections, that opens the door and gives the chinese leadership an opportunity to reshape the global infrastructure. the have the aa ib bank, infrastructure initiative they are trying to push forward. this gives china's leaders an opportunity, they have strong of 2016,or the ye
the numbers coming out on friday. that gives leaders the confidence to take a step up on the world stage. >> tom, thank you. another speech, u.k. prime minister theresa may pushing for a clean break from the eu in her clearest vision yet. she pledged to quit the single market and seek a customs agreement. kathleen is here with more on what she outlines. peopler over six months, are wondering what the u.k. would settle for. theresa may supported brexit. would she give ground on immigration, that kind of thing? a look at the four freedoms in a different way, capital goods, movee, and services to around the eu. she has made it clear, immigration is more important than maintaining the trade deal. she is ready for the u.k. to exit. >> i want to be clear, what i am
membershipannot mean in the single market. european leaders have said many times that membership means accepting the four freedoms of goods, capital, services, and people. eu, with af the member of the single market, complying with the eu regulations that implement those freedoms without having a vote on what those rules and regulations are. >> what theresa may is saying is what we -- what we want is an agreement about trade and trade area with a-t common external tariff. she wants to maintain terror free, action lessee eu trade, -- eu trade, have a transition phase when banks could phase in new roles, and she is looking forward to the u.k. not having to send huge
payments to the eu budget. she says it would be a punitive deal where the eu tries to and tries tok. leaving,e others from that would become limitless to the eu. she is trying to say, you have to make a deal with us. betty: what doesn't mean for trade and inflation? >> it is probably already having trade, thebut with area with the most to lose in brexit, let's jump into bloomberg now and take a look at bars.art showing us blue britain relies on the eu for 40% of its global trade. that compares with 10%, another thang region, but far less
what britain is selling to the rest of the world. britain buys a lot from the eu and they probably have some leverage here. the question of inflation gets even more important as we look at what happened in the latest that i, because the k. inflationjued to 1.6 year over december from 1.2. 3490 one, you can see the white line, that is inflation moving up. input costs because of the falling pound rising their fastest since 2011, the inflation rate is getting closer to the target. what will happen? if inflation keeps rising, and some think it could go to 3% year-over-year, what happens at the economy slows down because of the loss of trade? it is more complicated for the bank of england. looks like the hard brexit is coming regardless. yvonne: thanks, kathleen. plenty of comment on brexit at dev us. -- at davos.
>> if you don't already have a , youean subsidiary bank really have to work out whether you will go to dublin or paris or frankfurt, then you have to plan for the worst and hope for the best. i think it is clear that the european relationship will be status quote minus. not as good as it was. i think they can negotiate many things, but it is important for britain to step aside and renegotiate with the rest of the world their relationships on trade and financial services. since the europeans are in an election, almost to the end of the year, it is probably good for britain to do it parallel but focus at the start for the end of the year on foreign relations. >> it with be devastating. -- it would be devastating. this is not about making forecasts that some frightening, this is all based on information bank -- based on the bank of england and very clear economic
♪ >> taking a look at live pictures out of soul -- out of seoul, this is lee jae-yong arriving at the special prosecutor's office. we saw him earlier this morning as he was awaiting the fate from -- whether the allegations about whether these arrest warrants are valid. we are waiting for him to enter the court. with the final proceedings, i shouldn't say final, for the final proceedings to get underway. we will bring you comments as they come in. ty: we will take questions as he arrives. another day, another stock market divided by comments by trump.
a slumping dollar and a resurgent pound. n has the latest. it is wild and crazy. the dollar got smoked. we haven't seen the end of the volatility. trump's comments that the dollar is already strong caused some traders to become confused. dollar against you want? -- against the yuan? both of those are showing the trajectory, the dollar, very strong by any standard. btv #92, we heard kathleen talk about the pound going higher. theresa may laid out a plan. stronger rebounded than expected. you can see the size of the move on the right-hand side. big moves and currency. let's go into the fact that trump has shown he can move the
market. his comments included a few slaps at china, referring to their keeping their currency down, being responsible for the stronger dollar. down across the board, earnings underway, the trump inflation fading.t it seems to be the big movers were the banks. they also got hammered in part due to all that is going on with concern about trump comments. for the banks, as you mentioned, it looks like investors were pretty rattled. what happened? sell it out.oubt, some traders and investors may have taken money off the table. if you look at how the financials have done, let's go back to bloomberg. #btv 5352, financials have done well. up from 28%. if you go into the be tk bank
index, you will see that it has come off. down some 3.5%. we also had morgan stanley in the spotlight. they were up significantly before the open on their earnings and felt with the group, as well. morgan stanley told us they are optimistic about 2017 bond trading, revenues surged by more than double. bank, talk about deutsche they completed a seven to -- a $7.2 billion settlement. the ceput out a noe, this has been a painful process for .eutsche ba they officially did it today. plus dollars, 4 billion dollars will be relief to homeowners. the ceo says hopefully deutsche bank puts this behind them. plus>> thank you.
the dollar fell heavily across the board on tuesday with sterling leading the charge against it. of's bring in john, head asset management. perfect time to have you here to talk about the dollar move. you don't typically hear presidents or president-elect's talking about currency. is this a big deal? >> as we know, donald trump is quite off-the-cuff in terms of the remarks he makes. usually of the dollar, the u.s. government tries to talk the dollar up just to keep confidence in it. it is a little unprecedented, but i think it fits with everything he has been saying in terms of wanting to boost the u.s. economy, potentially at the 'xpense of some of the u.s. trading partners. it is a reasonable deal. i do not think it is a big deal. i do not think it will
necessarily change anything over the medium-term, but it reinforces the view that he is uncomfortable with the u.s.'s trade relationship with china. >> could he put a cap on where the dollar goes? is this just focus on china? >> i think it part of a package where he thinks the u.s. economy and u.s. manufacture have had a raw deal over the last 20 years or so. he is trying to change that through a mixture of domestic tax and regulatory policy group potentially trade policy, and the rhetoric. -- through rhetoric. i think you would like to limit the rise in the dollar. -- he would like to limit the rise in the dollar. a lot of his policies appear on the face to be relatively supportive for the dollar. we will have to wait and see. >> stick what us, we will go to a quick break. -- stick with us, we will go to a quick break.
♪ discussionntinue our with john, the head of multi-asset income and asset management. alluded to this before the break, but that is a big question among investors, where do you find yields, articulately in this volatile environment and the uncertnty, even in the u.s.? where do you find yields these days? >> you've got to look a little harder. we are cautious that the direction of travel for the global economy is not necessarily help all for a lot of bond markets. we think the global economy is in the process of accelerating and inflation is picking up at the margin. that is more challenging for
many bond markets. you have to be more selective in fixed income, you have to look for areas where maybe they are a little more isolated from the sort of general global trends. actually, on a currency hedge basis, and partly on a non-hedge basis, we think there are interesting markets within the emerging-market universe, places ine brazil, potentially geneva, russia, where maybe the interest rate is at a different point. within developing markets, there are high-yielding markets. on the government side, places like new zealand where you can earn a reasonable nominal yield, we are less excited about corporate debt. that has run quite hard last year, and the yield premium looks less exciting. we look outside traditional fixed incomes. of good yieldty opportunities in equities, where you can not only earn a reasonable yield but you have ,pside in terms of growth
potentially a little bit of property. there are lots of opportunities, you have to be more selective and less fixed income focused than in the past. >> i want to point out in the chart we have your that shows some of the safer yielding assets, like u.s. treasury's or looking at the s&p dividend yield, if you take into inflation, they are essentially yielding about half a percentage point, if that. is there any point, it is not attractive now but at any point they could be attractive, these safer assets? >> i think so. we may have got to the end of a 35 year bond boom market. yet, we areaps not in a repricing environment where a higher nominal growth environment means that yields should be somewhat higher. officials interest rates should rise in the u.s. and may not ease further elsewhere. it is a repricing, going from
♪ it is 8:30 in singapore, half an hour away from the open of trading. the singapore dollar 14178thened overnight, against the dollar. continuing to see how the dollar ways in after donald trump's the dollar is too strong. betty: you are watching bloomberg. deutsche bank will pay $7.2 billion to settle its handling of mortgage-backed securities. the deal with the justice
department includes a $3.1 billion civil penalty and $4.1 billion in relief to homeowners. loretta lynch said it should go to -- it contributed directly to the financial crisis. they had a record low in november. haveai motors and kia become the latest automakers to announce plans to invest in the u.s. ony will spend $3.1 billion factories and r&d over the next five years. they said they have no plans to shift american jobs to recently opened production lines in mexico. hyundai says it expects donald trump to boost the u.s. economy, leading to increased demand for cars. russia's president says he doesn't believe u.s. president-elect donald trump hired prostitutes in russia, calling the reports nonsense. vladimir putin says the claims were concocted by people with no
moral boundaries. the allegations were a memo shown to trump and president obama by u.s. intelligence. >> these stories are clearly fake. visited moscow, i don't remember when he came here, a couple years ago, he wasn't a politician. we didn't even know about his potical ambitions. oft a businessman, one america's wealthy people. do they think that our special services are hunting for every u.s. billionaire? of course not. it is absolute nonsense. haidi: chelsea manning will be freed from prison in may after president obama commuted her sentence for leaking classified material. in 2010 andarrested sentenced to 35 years for passing military files and diplomatic cables to wikileaks. the decision allows for her early release but does not amount to a pardon.
global news 24 hours a day in more than 120 countries. this is bloomberg. markets lower this morning when it comes to stocks. how things are shaping up in the region. david joins us from singapore. down is i think the way to describe it. asia is extending the global reduction of risk exposure. have a look at the four benchmarks open. be,n, topics 1500, the cost if youhave -- the kospi, had to pick a market with the most selling pressure, i would think japan. australia, 60 percent of stocks. it could be worse. the banks getting hit, but gold-mining stocks, cause her a solid rally in gold well , whenof 12.20 per ounce
you look at japan it is more broad-based. terms of as sharp in magnitude, but we are talking 85% of stocks over in japan on the way down. roughly.5, 18,700 headed towards that level. split between which stocks are heavier. hasme point out what happened in currency markets. this morning, fairly extensive moves in india. a big drop in the u.s. dollar. the dollar index, biggest drop in's july. i won't get into details, but we are seeing a partial retracement , those of those extremes levels or movements we saw overnight. 113.ollar-yen, i have seen one or two notes .rom analysts saying 113
we fell below that. it will be hard to get above that. a lot will depend on the dollar. -- 1.24. 124 the chp, roughly at that level right now on dollar. before i go, let's look at the other currencies. cnh ahead of the fixing, that will be a big adjustment. that is done -- down to the strong u.s. dollar. expect a strong adjustment in that fix coming from the pboc coming out in 45 minutes. south korean won, one-month high. the ringgit and the aussie dollar at these levels. david.thanks, netflix is building a world of binge watchers. me, too. it is doubling down on original shows while expanding its
international footprint. they will release fourth-quarter results on wednesday in the u.s. here's a look at netflix by the numbers. >> self-confessed binge watchers here. netflix turn the media on its shows.ith original the strategy comes at a huge cost. it must guarantee it is sustainable in the face of competition by the likes of amazon. for net -- for netflix, it is about subscriber numbers. they added over three point 5 million streaming customers, topping estimates in the u.s. and internationally. that brings the subscribers to 47 million in the states and 39 million around the world. netflix is turning to international markets for growth, 40% of sales in the third quarter are generated overseas versus just 16% two years ago. on the chart, you can see how
the global growth rate, the orange line, out places -- outpaces the u.s. they are tracking your revenue split. a major factor in overseas growth's original programming, since they own the global rights. 450 five scripted originals were telecast last year, 1/5, the yellow slice, were on streaming -- like were on netflix. a bigger piece of the pie compared to five years ago. the original content comes with a higher price tag than reruns, as netflix's catalog has been cut in half its costs have billion inpping $5 2016. whatever happens, netflix will be a stock to watch. its share price is moved over 15 percent on average. you can see the swings on this
chart. while the price of content climbs, weill see if netflix can keep the subscriber growth going. afterl see that wednesday's u.s. closing ballot. yvonne: coming up, u.s. companies operating in china, many slowing down investments. we will talk to the american chamber of commerce in china. this is bloomberg. ♪
♪ >> this is daybreak asia. hsbc says china could prove a big growth area in 2017 despite concerns over global trade and a slowdown in the economy. bloomberg'se to editor in chief at the world economic forum in davos. >> i think china will increasingly take a bigger role in asia-pacific, so i think that
the extent to which the u.s. sign tpp and the extent to which alternative multinational trade agreements will be put in place in asia, i think that will summit china's dominant role in asia-pacific. , think for a bank like h sbc although global trade will slow, increase in intra-regional asian trade will grow. china i think will take an increasingly dominant role in regional trade agreements in asia-pacific. , my way of world thinking will evolve into big regional trading blocs. we make it less global trade, but we will get bigger regional trading blocs. eu, and nafta is something president trump indicated he wants to revisit. i was in mexico last week. china, it is
strange to think of the chinese as the apostles of globalization. >> i agree. it is a change from what we have expected. it is consistent with beijing's going out policy, the stage of economic and political development of china that it should be looking to play a greater role on the world stage. in fact, if you think about it, 4-6 years ago, we were lamenting the fact that china had a big economic role to play but was in setting up another areas in terms of foreign policy and engaging in global issues. it is what a number of us were .alling for years ago >> that was our exclusive interview with the hsbc ceo in davos. a check of the latest business headlines, indonesian cookware and appliance maker has hired
make an ipo. they could sell shares this year. on is seeing increasing demand. indonesian ipo's rose 18% to $1 billion in volume. >> sources tell bloomberg diageo is considering raising stakes in a liquor maker. holding 35%rently of united and the full market value. united shares fell more than 25% in the last 12 months. >> revlon stepping up marketing as it aims to hit $5 billion in sales in five years. it ought elizabeth arden last year, but revlon says it makes sense to invest internally. revlon is focusing on its fragrances, and
the fate of samsung's vice-chairman will be decided wednesday when a court decides whether to approve prosecutors' request for an arrest warrant. stephen engle joins us. what do the next two hours hold for jay y. lee? >> his immediate fate is at stake. this is the first time the head or major executive at a korean company has had the special prosecutor's office issue an arrest warrant and a judge, a single judge, will hear the argument from the prosecutors over the next couple hours, starting at 10:30 local time, 9:30 hong kong. , in the last five or 10 minutes, came out of the back garage here to the central prosecutor's office to a scrum
of reporters, including us. he is on his way now to the court, 15 minutes away from here . the hearing begins within the hour at the bottom of the next hour. again, a single judge will year the arguments on whether to remand mr. lee to custody, to put him in jail, or send him home. for hisack or white immediate fate. of course, this does not seal his fate. he would still face trial if he is indeed sent to prison and those charges go forward in the rosecution here in seoul. >> what happens if the court approves the arrest warrant? >> he will be remanded immediately to jail. thidoes not necessarily seal his fate as far as running the company, and if he is
eventually, again, if he is hisicted, keep in mind, father was twice convicted of various charges. he never went off to prison. there is a palpable sense of discontent and anger in korea as the business as usual practice of the mix between politics and criminal activity in business is coming to the forefront, especially with the recent impeachment of president park. there are connections to this case, and people are sick and tired and fed up. we are hearing from people who want eventually, this man to face justice, if he is found guilty of these crimes of embezzlement and bribery. >> samsung stock is down. just marginally right now. what are the implications for the company, and who could ultimately lead the company? >> that is the big question.
it throws the succession plan into disarray. it is not unprecedented for the heads of these large companies to come back after prison and keep running their companies, even running the companies from prison, having their secretaries and business associates come visit them in prison. also, there has been talk that perhaps the head of samsung's semiconductor division, which provided the biggest chunk of their profit gain in the latest quarter, he could take over, or even the eldest daughter of the senior potentially be groomed. i would be unprecedented, as well, because we have not had a female head of a major company like samsung as the chairwoman, ever. this is an unprecedented case, although i like to say this is business as usual for korea incorporated. >> major, major happenings going
on. thank you so much, stephen engle. isk in davos, donald trump not attending the economic forum have beenmakers discussing the growing populist backlash that led to his election and elections around the world, and what his presidency may mean for business. >> i believe donald trump is especially focused on producing in america for americans, and we fit well into his business model. >> he is doing all the right things. he is talking about doing all the right angst, things that should probably have been done in the past. >> there is little that they need to adjust to get the economy from strength to strength. there are risks. if they refocus away from the economy to geopolitics and if there is international conflict, it will be negative. >> icy no reason to believe -- i see no reason to believe this
will be bad. we need to make our case and in athings will evolve positive way. >> if the construct around the economy changes, business as we lend to are more aggressive and that helps us grow loans and deposit. how it will be medicated overtime, there will be across all industry, which will be helpful for growth. >> though the president-elect gave davos a miss, we spoke to someone from his team. anthony joins us to discuss their plans. >> i think he is an interesting communication style. him, youend time with recognize what he is doing and understand his communication style. >> that is not working for these folks? >> these folks are used to a certain type of that and up
politically correct presentation yle. polically correct is the wro word, but it is more synthesized to be in art our chairwoman is designed to say a lot but not have anybody understand it. the president is designed to say andgs, but they are inert won't cause an issue. he has a more authentic, refreshing delivery system and i think people will appreciate that more when he is president. >> many people i have talked to thing thate one concerns them the most about the incoming administration is its policy towards china. marriott,rom officials from qualcomm and carlyle, these are serious people who i know you respect, they say they don't -- they say donald trump doesn't want to start a trade war with china. why get these guys worried? >> i'm not saying this is
correct, but my observation is that when people hear the words free trade, they think we have a current global free trade system. when you look at the trade deals , you find a trade deals are asymmetrical. goods and services low freely into the united states, but they are embargoed on the way out. know that i both there is a reason the united states and europe has taken a light touch approach to trade that is to give u.s. companies market access in china and in some cases, in the hope of seeing progress on human rights. the president-elect prepared to give that up? >> you held china to a dfent stanrd than you are holding the united states and europe. china is the second largest economy. 1.4 billion people. you basically said to me that they can embargo our goods and services and protect her i gots, but honestly, if
to china and buy something, i can own 49% of it. that is not the case and the other direction. i am trying to explain to you that china is the second-largest economy now. all the things we did to help china get there, we need some taxpayer,the american the american worker, the american middle class. i think americans find that refreshing. they want an advocate in chief, someone looking out for their interests. anthony,advisor speaking to bloomberg. time for a quick look at what is coming up in the next few hours on bloomberg. what are you watching? rishaad: a lot going on. davos, and of course we have the massive move by sterling, nearly 3%. theresa may made the speech outlining what her vision of brexit was. , lots ofmixed response
room to negotiate. some said she was living in fantasyland. a chief executive discusses what a global britain means for this part of the world in asia. countries can perhaps deepen bilateral relations at the british economy. in about an hour and 10 minutes, we are talking to chris from tv about what talking means in terms of the u.s. dollars. does it mean a buying opportunity, as we come near it? we haven't crossed over a psychological topic, it's psychological level. he will tell us his view on the oil price. pay, it is the largest low-cost carrier but it doesn't pay a dividend.
it could slough off its aircraft leasing business and institute a dividend. we will be talking about what we have been hearing from davos. back to you guys. >> we will talk you soon. thank you. after buying $11 billion worth of beer brands, a japanese group is prepared for more deals. they say they want to grow overseas business to one third of total sales as it looks to offset a flat market at home. live in tokyo. they are in for more acquisitions? it was surprising, when i was talking to them yesterday, they are looking for more deals. one thing yesterday that he led he spoke for the first time to media and i saw a huge picture painting of a bridge in
prague. he said, tt shows you his going abroad. i thought that was funny. he said you considers -- he is considering more deals overseas. he thinks overseas, the growth for japan's top-selling beer company, he said there are several possible candidates that they are studying right now. radar isose under our a company, they are showing interest on. beeranks on the japanese industry. plenty more to come. bloomberg are -- bloomberg markets: asia is up next. ♪