tv Bloomberg Markets Asia Bloomberg March 1, 2017 8:00pm-9:01pm EST
>> 9:00 a.m. in hong kong, 8:00 p.m. in new york. this is "bloomberg markets: asia ." ♪ a rate hike is even more likely this month is another top fed official sees a positive picture at home and abroad. unpredictable australia again, trade remains positive, but smaller than forecasted. snapchat valued at $10 billion. a set of we had ahead of
the asian trading day getting underway, dow hitting 21,000 finally. s&p seeing its biggest gain figure, all on these expectations we will see march move from the fed. all sorts of action in the asian trading session. japan punching through aching resistance level. the question is whether hong kong market will join in on the party. malaysia and singapore getting online. what -- let's check in on the markets. >> let's take a look at this chart on the terminal. japanese benchmarks in poll position with the nikkei 225 and topics tracking the dow's rise, this as the yen trades at a two-year high, a 50 month high
potential with little resistance in its way. let's look elsewhere in the region. korean shares also rising 8/10th of 1%. factory output rising 3.2% on a monthly basis. over in australia, index up over 1%. thanks and miners -- banks and miners following their australian counterparts. report of china curbing output of steel and aluminum to reduce pollution. a ceo contact potential move a game changer for the industry. south 32 has been raised to buy. elsewhere in the region, we are seeing malaysia, singapore, and taiwan joining that rally as we
kick off this thursday. host: umkc needed another reminder -- in case you needed another reminder of commodities in store. the aussie dollar seems trades coming in much weaker than expected. we thought that it was a given. australian data surprises again. numbers, $1.3t billion for the month, almost one third of what we were expecting. $3.8 billion was the expectation. number -- november was a revised number as well. a look at the other data. imports rose 4%, exports fell 3%. if we want another illustration of the importance of china, exports to china fell to $7.6 billion in january. to $4.5 coal: pullback
billion. iron ore, just 5.3 billion in january. everything really pulled back. the analysis pulling in to why this happened. perhaps chinese new year was a factor. 20 opinions coming out as to why -- plentyof opinion of opinions as to why that coming out. >> let's get the first word news in hong kong. management shakeup at bridgewater associates for the second time in a year. the billionaire grappling with succession at the largest hedge fund. he will step down is interim ceo, but extends as co-chief investor. john rubenstein, one of the graders of the ipod, -- creators of the ipod spending 10
months as ceo. ipod shares will be $17 each, getting snap in market value of $20 billion. snap is the first technology company to go public in the u.s. in what is the biggest social media offering since twitter. stock will offer trading thursday under the name snap. china revenue tripling last year, more than $1 billion. mainland accounted more than 15% of tesla's $7 billion revenue last year. charging concerns caps on revenue fall one third a year later. elon musk says china can become tesla's biggest market. kyoto news says airbag maker takata may file for bankruptcy after splitting it healthy business unit into a new company. takta and one of its potential suitors have declined to comment.
it's for the products are linked to at least 70 deaths worldwide, triggering the world's biggest safety auto legal. global news powered by 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪ >> the possibility of a fed reserve rate hike at the march 15 meeting is looking more like a probability as yet another tough at official joining the chorus, saying it is time to move. that time is getting closer. we have our bloomberg global and policy economics editor here with us. the president of the new york frank -- new york said, san francisco joining in as well. a day later we are hearing the same sentiment. they are all on message. >> a chorus, and they seem to be singing the same tune.
it is the perfect setting up. a federal reserve board governor -- she has been in the more doveish camp. some say we can move slowly to get the economy in the right direction. suddenly she seems to be saying that an interest rate could be coming soon. it has many people thinking march 90. >> we are closing in on full employment. inflation is moving gradually toward our target. fourth growth is on solid footing. risks to the -- all told, it will be appropriate soon to remove additional accommodation continuing on a gradual path. >> this gains more significant because the speech comes one day after president of the new york fed gave an interview. he said there is a more compelling case for a rate hike.
bill dudley is a special central bank president because he always votes. as part of the triumvirate with janet yellen, these are key voices. economists had already started moving their forecast from may and june hikes toward march after dudley's speech. look at the rate hike on work. world interest-rate projections on bloomberg. take a look at that now, because they have shot up. the right icons yesterday were at-- rate hike odds were before percent. before they were at 64%, now at 80%. 6347. this is the blue line. the decembere is
picture over the course of 2016, the end of the year boom. the odds stayed there. blue line moving rapidly. it seems to be that the fed is sending a message and the markets are responding. had: does the data we have support the move? >> we were waiting for the fed's beige book, their anecdotal survey across the country. it was more of a team report. fed sees modest growth and subdued reflation. ismid have the manufacturing index, a important pmi manufacturing index. it is up to 57% in february. that is a strong reading. the key fed inflation gauge seems to be stalled. looking at #28 -- this in slater is the blue line.
the core is the white line. 1.9 is a hair's breath away from the target. the court is at 1.7. this is from our bloomberg intelligence team. it bears consideration. they are talking about the consumer and spending report. it includes the inflation number i just showed you. spending was below forecast, up 0.2%. they say inflation is cutting into household income. that could curb first quarter gdp. they don't see an increase until the fed knows what is happening. they are sticking to a second quarter call. that would put us closer to june. host: it is interesting. we did not get the specifics we were expecting or hoping from president trump in his address
to congress. those that had the element of certainty in terms of what the fed can do? >> there is uncertainty over fiscal policy. that is no surprise after the speech of donald trump to congress. a lot of economist study the budget -- it is unlikely you will get any impact from trump fiscal steps until early 2018. you think that is not driving the fact. jpmorgan is sticking with its call for a may hike, not a march hike. all the more reason we are going to listen so closely to what janet yellen and vice chair stan fischer will say at a conference in chicago on friday. if they are talking about hikes being appropriate soon, i wonder if those odds will shoot up even higher than they have this week so far.
host: it has been incredible, but we still have take said speakers to round out just a reminder of some of the big interviews later today on bloomberg. at 10:00 -- at 10 minutes past 11:00 we are joined by ceo tom think. then we are joined by the code ceo of -- 2:45 p.m. if you are watching in hong kong. still ahead, property research company say china's interest in foreign real estate will shift to asian markets. we will hear from the firm's executive director. up net, a reaction to the surprising trait numbers from
host: a quick check of business flash headlines. itso! ended inquiries to 2016 security breach saying it's board was uninformed. there is no evidence that information was intentionally suppressed. the board will not give any bonuses for 2016 and 17. the yahoo! chief counsel has resigned. minetrike at bhp's copper has turned violent with 3 minors injured with clashes with police. miners blocked the pan american highway north of san diego. unions demanding a pay rise and bonuses. negotiations have stalled, but a court has ruled that bhp must pay each worker two point $5,000
in extra compensation. with the world second larger copper mine to resume partial operations, a mining indonesia will supply to a domestic smelter, although exports remain disputed over the government. the london metal exchange rising over $6,000. that is up more than 9% on the year. let's get back to one of our top stories, the latest unpredictable data from australia. the aussie dollar is extending losses after the trade surplus. still a surplus, but much weaker than expected. joining us is then corp. chief economist from sydney. a surprise for everyone. what i'm more interested is what the long-term growth trajectory would be. so much of it is fueled by the commodities rebound. >> your perspective is right.
it can be volatile. the important point is that we are now in surplus. this is the third surplus in a row for the australian trade balance. if we expect global growth to continue to improve through 2017, that is a good export outlook for australia. i would not read too much into disappointment. exports are growing strongly. host: i want to bring up the chart on bloomberg. it doesn't matter which way you cut it. oil or commodity -- commodity prices, it is directly correlated. are we set up for a second coming of the mining boom? >> commodity prices are up 40% year on year. i don't think those moves can be sustained. global growth is improving. there is something there more
than sentiment. there is a turn in manufacturing. that will sustain commodity prices to an extent. we are seeing volume and prices working the same way. we will get a little bit of volatility. it won't all be one way. the aspect of the surplus, it wouldn't be bad if surplus rose provided there are capital imports, a sign is investment picking up. overall we are of the view that the environment for australian trade has improved. host: what do you make of this phenomenon of the narrowing of the tenure premium? >> the fed has tightened. we think they will go in march now. pricing is almost 100%. i think they would like to take advantage of that opportunity. he said his tightening sooner. -- the fed is tightening sooner. they could come up to australian
rates. the rbi is on hold this year. that is pretty much consensus. once it kicks into gear next year, maybe that differential widens out again. for now the central bank is tightening. that context makes sense for now. host: where do you see the u.s. dollar going? the verdict is out whether we will see a rise in the dollar index as we get a more hawkish fed. and by extension, where do you see the aussie? >> lot of market pricing hasa preempted. we have seen it in fun entities and to a lesser extent to the u.s. dollar. whether it can continue the momentum is another question. it is due for a little bit of a policy. as the fed titans it, it will gradually support the u.s. dollar. we think the aussie comes up
$.74 by the end of the year. a small depreciation. host: one of the previous guests made the comment, looking at real rates versus the pace of inflation, if that is lockstep, you may not see much of a move in the u.s. dollar. in terms of what the fed doesn't have and how it affects australia, do you see much of a headwind when it comes to the next? -- to the banks? >> i don't think so. performedshares have quite well lately. with an australian rate environment, probably lifting a little bit-- host: what about the amount of leverage? >> definitely it is an issue. if i was thinking about risk factors for the australian economy, household debt is one of them. we rate the rba commentary on
nonperforming lines. indicator ofeading stress in the household sector. nonperforming lines are pretty benign, quite low. they are very low levels. we would start getting concerned if we saw that metric rise. so far it has been quite the. -- quite benign. it should be ok in the household debt situation. host: sydney home prices are up 18%. it is phenomenal. after being in hong kong and thinking that is a crazy market. where do we go from here? do you see an easy soft landing, for all really looking at -- or are we looking at bubble proportions? steven: the current price growth is unsustainable. it is our expectation that price growth will fall. we don't have a soft landing.
this fundamentals are quite solid for australian housing. good population growth. we had a long period of under building. i think we have an oversupply issue. we have seen mortgage rate pricing. a fall, but not a collapse by any stretch. host: pleasure to have you on. coming up next, one of the world -- what do the world's biggest fund managers expect out of china this year? we hear from them up next. this is bloomberg. ♪
coming year. president xi jinping has sent china will continue to seek progress while continuing stability. stability always key. we have been talking with fund managers around the world. what have they been saying? >> there are bigger challenges posed by donald trump as north korea. what are we likely to see china open up more, becoming more market friendly? that is one of the big questions lingering over the fund managers. pimco sees a 15-20% chance. gdp will be cut the low 2.6%. the target could signal the government's commitment to reform. pimco thinks abandoning a target altogether would be better,
although that's unlikely. they see a base forecast of 5.5% per year. china will be reactive and try to be conciliatory when it comes to taiwan. china will see the risk of a trade were favoring a bigger -- trade war. with blackrock sitting more of the idea of consolidating power, reforms might move on faster. >> exactly. china will be focused on political stability, that is what blackrock thinks. to create a environment where a lot of hard work can be done. blackrock thinks they will be looking to political opportunities related to the commodity center, and favoring domestic companies rather than those dependent on international trade.
>> 9:29 a.m. in china, hong kong, counting down to the opening of markets there. you're looking at a beautiful day in hong kong with the fair's boat moving toward kowloon. the unsung is ready to join equities party kick started by the rally we had in europe and in the last -- in the u.s. dow hitting 20,000, and the s&p hitting its highs gain all year. we have hong kong and shanghai market opening up ahead of a risky horizon given the people's
conference envisioning. -- conference in beijing. we will look at the reforms coming from top policymakers in beijing. we are seeing a robust rally. let's get a look at what is driving some of the movement we are seeing in asia. andjie: looking at shanghai hong kong coming on, they are joining this rally, this party following the rise in the dow overnight. and ahead of this key meeting in beijing. up over one quarter of present. ofhangseng over one quarter 1%. we have some indicators showing performance might be at risk. taking a look elsewhere in the region, we have what's going on with japanese shares.
a stronger dollar yen helping lift stocks in tokyo. back to the point about the leadership gathering in beijing. it is expected to be a big political year, with that shaping markets in china. with the label of currency manipulator hanging over china, pimco depreciate 5% to 7% over the dollar. the central bank leader of taiwan says he does not affect it to reach taiwan. leading gains today at 30 spots. headed in the other direction, two-weekalling to a low, 1140. we have a lively day for the dollar yuan. one of the most vulnerable currencies given this risk policy trade from trump. take a look at the yen, trading
at a two-week high. the dollar-yen has perhaps stalled once it hits when 15 on corporate loans in tokyo. -- it hits 115 with corporate lows in tokyo. in malaysia, the central bank out later this afternoon 3:00 p.m. local time. bloomberg economists are forecasting a hold. we had consumer prices rise the fastest in january in malaysia over one year. the central bank of southeast asia facing those price pressures, putting them on watch after years of policy easing. host: thanks for that. we have some live pictures to show you. this is the taiwanese central bank governors speaking now. he is talking about currency. there has been speculation that taiwan will come under pressure
potentially being labeled as a currency manipulator under the trump administration. taiwanernor saying that is not expect to be labeled a currency manipulator by the u.s. a report released parliament yesterday saying that taiwan does not deliberately weaken its currency, which is incredibly trade dependent externally, much like south korea and china, saying that it doesn't we can its currency to give it economy economy an- give its unfair advantage. the central bank of taiwan speaking that it does not expect to be named a currency manipulator by the u.s. will we will event -- leave that there. more from that conference as it becomes available. bloomberg subscribers can continue watching at live go. we have diary entries from today and other events you may have
missed earlier if you want to catch up. is at live , not just the fed making headlines. we are on central bank watch across southeast asia. higher inflation has put them on watch to respond to higher prices. david is looking at this for us. inflation is already -- is already's a core component of that. david: especially considering asia, not just southeast malaysia, is prone to these sudden spikes in inflation. these are developing markets. just because there is no core inflation doesn't mean it does not feel more expensive. if you have a terminal, look at that. the latest inflation report for
january. what is close to double the pace that we saw in december. it blew past virtually every single estimate. the headlines were driven by oil and other commodity prices, not so much a structural shift to the right of the demand curve. again, back to your point earlier that a lot of these central banks in southeast asia are on inflation watch. it is not so much that we are seeing runaway inflation. of course not. we are bracing for higher inflation down the. it is much more of the conversation now. you look at these minutes and speeches from these governors across southeast asia. there is a lot more mention of the word inflation compared to as recent as two months ago. into how does this work today's decision we are expecting?
just a few things. it is headline inflation, not core inflation. a a lot of economists have pointed out the inflation is on the headline number. as far as the decision later on in malaysia, have a look at that. 16 out of the 17 economies we surveyed basically saying, they will sit still at 3%. if you are curious who that loan analyst is, that someone from ing. that said, you have to consider that in malaysia's case, it doesn't mean that they won't cut. a flood of these economies, when youespecially, consider the prospect of outflows, it takes that tool to stimulate the economy further because you might widen that
exit door, especially how the fed is looking. 3% is what we expect on hold. if you look regionally, it doesn't look so bad when you look at core inflation. david: no, not at all. under control. look at this chart behind me. indonesia is in yellow advised. thailand, singapore, and malaysia rounding things up. a lots of these measures are under control. the risk comes into force. -- comes into complacency. this was pointed out by ing. if oil filters into core inflation, you have to play innovative catch-up. -- play a bit of catch-up. it is good we are talking about this at the moment.
that said, no immediate action it is inflation we are watching over the next couple months. host: let's get to your first word news. >> first to the u.s., and send board member says a rate hike is likely to be appropriate soon. she is the latest senior bank official to raise the right on borrowing costs early this month. the latest economic report shows modest to moderate growth in the economy. sees furtherk tightening in the market, but no inflation. general motors and nissan beat u.s. sale estimates, surging pick up an suv sales tempered worry of inventory. nissan reported a 3.7% increase. this may ease concerns that automator they have to reduce supply.
carl icahn is selling the former taj mahal trump casino to those led by hard rock international. it was acquired through a bankruptcy court restructuring in 2015. it shuttered the property last october after failing to reach an agreement with striking workers over pay and benefits. donald trump is no longer associated with policy. mr. trump's new travel order is set to drop iraq from the barred travel countries. it will still bar those from libya, sudan, syria, and iran from seven months. syrian refugees may be accepted from six months. mr. trump will delay the order until at least friday. the british government has suffered its first parliamentary defeat on the brexit law, with the house of lords rejecting a plea to leave the bill intact.
protecting the right of eu nationals tuesday. wantsa may once -- may speedy approval by her own deadline of march 1. global news powered by 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪ host: when it comes to gauging the health of china's economy, official government data comes with a delay. and questions about accuracy. prices arency market giving a more early an independent look at everything from manufacturing to real estate sales to food prices. let's get more with a chief asia economist for bloomberg intelligence. tom, we have long questioned the veracity of official chinese data. is it all coming together as a broad trend?
tom: the moment we have a pretty clear matchup between the private data and what the big data series are showing. that is a pickup in growth. so far in 2017, we've got business surveys, pmi surveys and others. we have big data indexes. we have price gauges of -- the trend is pretty clear. we are seeing a pick up in manufacturing, a cups in exports -- a pickup in export orders. a concern for the month and is signs of a continued slowdown in property and auto sales. in, is the stabilization story enough to give policymakers -- we know they are heading to the npc invasion -- npc in beijing.
does this give them space to put the more painful reforms they have been talking about? tom: safety say that the chinese economy remains in a squeeze bunt. spot. -- in a sweet growth remains on pace. the hollows -- raising interest rates higher is necessary to the agenda, necessary to lean against yuan weakness and capital outflows. we think they have space to continue with that agenda in the months ahead. we think that is the tone they will be hitting it the national people's congress ahead on sunday. tom, you have pushed the view to not overset the fear
factor when it comes to these risk stories in china. it seems to be workable sometimes. what are you concerned about systemically? tom: capital outflows. houses were getting their $50,000 quoted recent. -- quoted reset. there was a concern we would see a flood of capital outflows in january and that would put pressure on pboc's sustained rate. we saw sustained outflows, but not a february surge. we are waiting for the data next week with some eagerness. it seems that the worst on capital outflows did not materialize. host: we will leave it there. we take a eying asia, look at why our next guest says chinese investors will turn from
host: china has been trying to curb capital outflows, making it difficult for chinese home investors to invest overseas. our next guest says yuan pressure and political negotiations will shift towards asian markets next year. joining this is executive of asian research at -- international. you are joining us from hong kong. the proportion made up of chinese investors in the asian market has been fairly small. do you expect -- you expect that to change this year. >> yes. if you look at property capital outflows for the last three to
four years, there has been a strong increase in asia to global flows, which last year reached just under $60 billion based on real capital analytics data. the driving force behind that asia-to-global money has been the chinese. we calculate the chinese to asia-to-or 43% of that global real estate investment. the chinese activity has been strongly focused on the united states. however, what perhaps is more interesting and significant is capitalraregional asian state flows are higher, hundred $70 billion last year based on rca data supplemented by our own
calculations. and the chinese as the proportion of the number are only about 17%. chinese interest has been strongly focused on north america, the u.s. in particular. we think looking forward the focus of chinese interest will shift increasingly to other asian markets. host: yields on average this year are expected to stay flat across the region. i think that is a fair assessment. you have very strong capital flows. there is lots of demand for real estate assets within asian, and of course strong demand should mean that prices go up and yields come down. the other hand, interest rates
have stopped falling in many markets. there are some markets, hong kong in particular, where interest rates vary likely to rise over the next couple years. there are other markets in the asian pacific, australia and india, where interest rates have at least stopped falling. if interest rates are going to try and upwards -- trend upwards, the cost for investors will trend up. that exerts a pressure in the opposite direction. that exerts downward pressure on pricing. ou overallr view in asia this year is that property yields will stay more or less flat across the region. some markets for a little further. more or less flat on average. host: me ask you about specific
markets. we have seen chinese interest in hong kong, sydney, australia, melbourne. do you see a rise in these do you see domestic curbs coming into effect? andrew: i think any reduced rate is for -- at a reduced rate as far as hong kong is concerned. the chinese to some extent see hong kong as a proxy for the u.s. the hong kong dollar is pegged to the u.s. dollar. there has been considerable interest in office property by chinese investors in hong kong. considerable investment in residential property. our thesis moving forward is
that the bulk of depreciation against the u.s. dollar has already happened. if that is the case, there is less incentive for chinese investors to move money abroad, to into u.s. dollar or hong kong dollar denominated assets. ofre may also be some degree political pressure, which might encourage chinese groups to invest close to home. as far as australia is concerned, it is in with the asia-pacific region, it is close to home -- i think interest should continue. on the topic of china, property rises are starting to come down. that might get reallocation. great to have you. parentup, is snapchat's
has: snapchat's parent confirmed prices above market range, $17, giving snap a market value of at least $20 billion. snap is the first technology company to go public within the u.s. this year, the biggest offering since twitter. it was listed thursday on the new york stock exchange under the ticker snap. investors will have to come to terms with snap's unique shareholder structure. it limits the influence over the company's direction and could raise questions when it comes to what stockholders could expect
in the long run. >> snap has most of the ingredients for a successful ipo. app, salesmedia growth, but a blockbuster ipo does not guarantee a public stock. there has been risk between the short-term excitement and long-term for snap. it is still losing money, and user growth has slowed. there are signs if it is not going to be the next big thing -- stocks could be in for a bumpy ride -- we have seen stock scope sour for twitter. revenue stalled with profit nowhere in sight. groupon, consumers soured quickly. zynga failed to come up with
hits and lagged behind. could fallnap farther than its peers. why? investors have no voting powers and no say on executive pay. if they are unhappy, the only recourse is selling. if snap can rev up user growth and inched towards profitability, their shoulders can - their shareholders can enjoy the likes of facebook and apple. host: there is one feature bloomberg would like to bring to your attention, our interactive tv function. there you can not only watch us live, but see previews, do a deep dive into any security functions that we talk about, and be part of the conversation as well. send us instant messages during the show. this is for bloomberg