Skip to main content

tv   Bloomberg Markets Asia  Bloomberg  March 2, 2017 8:00pm-10:01pm EST

8:00 pm
>> its 9:00 a.m. in hong kong, midday in sydney, 8 p.m. in new york. i'm haidi lun, this is bloomberg markets asia. haidi: great expectations, the fed is running out of reasons to delay as more officials talk about imminent hikes. china's political elite gathered to map out their targets for the year. we are live from beijing. and attorney general jeff sessions denies lying about
8:01 pm
russia. president trump says he retains his total confidence. we are about 30 minutes away from the open in china and hong kong. day tracking these losses that we had on wall street. they are just kind of checking themselves at this point. a run up a little bit too quickly. in hong kong. once going on? >> we do have stock investors after thursday's gains. and acrosss in japan the board here. down over 1%. sincefter rising the most november. minors, the biggest drag. and base metals also slipping today.
8:02 pm
checking in on korea, the cost be down about .8%. stocks are falling after china reportedly ordered agencies to stop selling packages to south korea. month andraded last would benefit from the growth in chinese travelers. now in the red falling over 10%. it was up over 12%. keep in mind that shipping will start services this month. , i want to on taiwan highlight tech stocks. the economic daily reporting that it has received a boost in assembly orders to 10%. it saw a sales jump 33% on the back of rising orders. putting together iphones in india. capacity there.
8:03 pm
that data dump that we got this morning, seeing inflation rise after a year in negative territory. fast retailing, climbing on the back of better sales. and we do have the likes of the metals player up almost 2%. , picking up a little bit of strength. but it is still set for a weekly decline, the biggest this year. ahead of janet yellen's speech this friday. and we're expecting word from fisher. yeah, definitely ready --
8:04 pm
waiting for the big guns on friday. j powell has joined the chorus signaling a u.s. rate hike is coming soon. next of course, it will be yellen managing expectations when they speak. from singapore. i suppose it depends on whether you think this is a clever orchestration by janet yellen. but given that we have jobs , is there ang out chance that we might see her keep a bit of flexibility when she speaks. . imagine it gets pretty messy the guidance that has been given by some of the colleagues, she is meant to be in charge of communication and she's meant to be giving accord needed message. guidance,gave a clear it will be very strange if
8:05 pm
yellen does change that town and give us a slightly more dovish message. we will see what she actually delivers today. she needs to be consistent to avoid chaos. where does the dollar story go from here? you see the biggest moves of the aussies against the u.s. and also the yen. you would imagine that trade, you look at the dollar-yen where it comes over from back on the table. the think definitely, dollar at the moment is quiet after a larger move from yesterday. it will be hard to come in and sell the dollar this morning because there is very little risk reward. thenically, it looks like dollar can climb higher. who knows if yellen will deliver today?
8:06 pm
the dollar could fall and it looks like there's more room on the upside. >> we have been looking at this scenario. very low volatility and very high risk. it is focusing on one thing at a time. altogetherg it cohesively, where do we go from here? will it be greater volatility as markets kind of come down from this euphoria that we've had over the past few months? >> i think this is kind one of those big issues where we are getting towards a binary moment. a lot of people argue, is it up on this fed hike? on the guidance of the next week or two? or is it months away? volatility very low for an extended time. financial painful market corrections. they have try to sustain for a long time.
8:07 pm
unlikely to be the trigger this time. unless yellen provides that confusion today. extraordinary to see that reversal coming through tomorrow. thank you, coming to us from singapore. not run down and just one click, there's commentary analysis. exactly what to expect for your investments at any given time. let's get you caught up with first word news with pollen sydney. paul: nintendo shares higher on the day as the next generation gaming console goes on sale in tokyo. $300 and isells for touted as combining home and mobile usability. it's nintendo's biggest bet in
8:08 pm
decision to make games for smartphones and follows the flop of the latest console, the wii u. reviews had been mixed and shares had fallen 30% when it was announced in october. shares surged, closing 44% higher. 200 million shares each. $17 each. that valuation makes it twice as expensive as facebook and four times more costly than twitter. three analyst reports published so far, to our cell and one are hold. sell, one aris hold . t-rex the start you are seeing is really one of two things. how the company has executed over the last few years. and there haven't been a lot of tech ipos.
8:09 pm
to invest in companies like snap. >> they are at their worst in decades. until pyongyang abandons weapons. the north carried out a missile leaving china increasingly unhappy with its ally. strongly opposing souls plan to deploy an american missile defense system. global news 24 hours a day powered by 2600 journalists in more than 120 countries. i'm paul allen. this is bloomberg. china's political elite reveal economic targets at the national people's congress getting underway in beijing. tom mackenzie is watching this for us. tom, this comes at a pretty crucial juncture. what is expected to be at the top of the agenda?
8:10 pm
tom: absolutely right. some of the key economic matrix that you pointed to, in 2016, it was 6.5% and they announced it would be about 6.5% for 2017. it would give policymakers a bit of flexibility. the other thing is the deficit target. this is 3% last year. about 3.5st they wait to give themselves a bit more fiscal space. and there's the crucial question of leverage. and implementation. the five-year plan that was ruled out -- rolled out last year was put on the back is a try to shore up growth. there, aing director senior partner at boston consulting group. the c implementation of the five-year plan.
8:11 pm
be only onel keyword. implementation. agenda already for a while. the challenges about how to make things happen. and major items are going to be financial reform, how to upgrade to the industries. the environmental and employment challenges. tax reform to free up more consumption power for the population. --tom:we are also we are also looking for clarity and listening out for if they will try to step back. this is a crucial sector for the chinese economy. haidi: i know you've spent a few days this week on the factory floors. and the events and goings-on in -- do you expect trump to
8:12 pm
feature these discussions at the highest level in beijing as well? >> trump is expected to feature in those discussions. he's expected to be peppered by questions on trump. like so many of us, they are looking for clarity. in templeton says is a key relationship challenge for chinese policymakers. we are expected to see, military spending may pick up again this year. a geopolitical hotspot at this point. and the role that business leaders play when it comes to this political gathering every year.
8:13 pm
>> some of the biggest companies here, the big tech firms. a lot of these companies put forward proposals for lawmakers to look at. anything that would ruffle the feathers of chinese come in list -- communist leaders. haidi: in beijing ahead of the national people's congress, looking out for that gdp number being set as well. next, we will speak to the ceo of malaysia airlines about the airline's turnaround plan. when are higher oil prices could stall these developments. up next, a guest joins us to talk about investment strategy
8:14 pm
as fed officials get increasingly hawkish. this is bloomberg. ♪
8:15 pm
8:16 pm
haidi: a look at the business headlines. it to sheet -- toshiba has opened bids to its memory chip business and will take proposals through march 29. selling the entire unit could net billions and profit. toshiva has hired ubs explore the potential sale or ipo of its majority stake in swiss bank energy management company landis and gear. landis+gyr. offpart of a deal to spin the fast-growing division and create a strong rival to alibaba. the cell -- sale is set to be completed by the end of the year.
8:17 pm
the new york session, that is their biggest jump since november. a report from japan say foxconn may sell a small stake in sharp. it could clear the way for sharp to return to the first section of the tokyo stock exchange. includes 60% of the company and must be available for public trading and under exchange rules. they want to return to the first section by this year. guest thinks political risks are mispriced when it comes to equities. we are joined now in hong kong. great to see you. you know, we've been talking a lot and learning a lot. is that about to change? >> sorry, i didn't catch that. [laughter] haidi: andrew, hopefully you can
8:18 pm
hear me now. i wanted to talk about the situation, we have been complaining about this. surprisingly high risk. is that situation about to change. >> i think it will not change dramatically. there will still be a time for adjustment. it may come to a breaking point whereby the dynamic should shift. for thenged a lot world. a lot of things changed. in practicality, we don't know what that means for markets. 2017 will be the year when brexit is either induced or not. what the actual policies are going to be. in that last speech, we don't have a great deal of
8:19 pm
clarity. one indicator we can look at. particularly mispriced in the region. >> we got no specifics out of that address to congress but the markets have swiftly turned their attention back to the fed which goes in line with this idea to focus on one thing at any given time. i found it very fascinating. yellen has orchestrated this chorus of the fed building up market expectations. there is the effort that members forced their hand. do you think she will come out and reiterate a point being made ? a fair point. i don't think it matters. you would hope to think it was
8:20 pm
orchestrated. but if it wasn't, they kind of forced her hand. janet yellen will not want to take expectations from the minutes that took me to walk here. she will not want to take that back down to zero. for that reason, it would be grossly surprising now if she were to change that expectation that started to build this week. to 100 expectations go percent, there is no guarantee that will happen. i would be extremely surprised now. haidi: i want to take a look at this chart in the bloomberg, #5660. the china index as you can see is really on the way out.
8:21 pm
the shanghai composite has been trading essentially sideways. how do you feel about chinese equities given that it is so heavily retail dominated? >> that is absolutely true. and there is conclusion for shares in china. it is something people are not really talking about. we are talking about a 5% inclusion factor at the end of the day. billion, around the $5 in terms of money flowing in. , it would be much bigger think, in terms of flows for china. things happening at a similar
8:22 pm
time. it can really get international investors very excited about the region. is really quite symbolic. it forces the hand of every west coast passive tracking fund that has never had to touch chinese equities before. it should be somewhat of a mental sentiment shift if that were to happen. chart itot the same has helped global equities and it is a much cleaner correlation. >> the stabilization is what we're looking at when it comes to china. up, our exclusive interview on the challenges in china and plans for asia. this is bloomberg. ♪
8:23 pm
8:24 pm
8:25 pm
haidi: stepping up hiring a nation last year and growing personal wealth. overall, asia is a good place to operate. >> based on the strong asset base, a large revenue pool. we have been physically using that profit to make investments and after the investment, it started to pay off this year. >> why is that? >> we're running the old model kind of a ripoff. we did not have any future.
8:26 pm
>> i think there are two main areas. the north asia triangle, i would call it. with china and hong kong. china and taiwan. .ifficult to do business less wealth creation. and we have singapore. as you know, the big holy grail is to try to understand and eventually to deploy successful onshore strategy. partnerships and alliances until ith time that we find that
8:27 pm
will be more broadly in the. -- accepted. president trump says he is total confidence in attorney general jeff sessions. this is bloomberg. ♪
8:28 pm
8:29 pm
haidi: in china and in hong kong, we are counting down the opening. in shanghai and hong kong joining the frail little bit lower. we do get that we can over from u.s. markets. stocks falling from a record high. the worst a that we've had since january. forre all looking ahead comments coming from janet yellen. of coming outus of fed speakers over the last few days.
8:30 pm
markets pricing over the 90% probability. on china in beijing. the national people's congress getting underway. perhaps the, capacity. >> we do have in pc as you mentioned opening on sunday but today, we have the cpp, cc kicking off its 11 day gather he. that is the government's top advisory. property among the biggest is that the u.s. rate hike possibility on the sectors.
8:31 pm
new orders did rise compared to january. at 945. down about half a percent following for a second day. a stick a look at what's going on. we had the peavy oc fixing slightly weaker, the six spot. ahead of that gathering. we have seen the yuan following. it. is closing it is closing in. the see that emerging market currency. it is trading at the narrow , it could send ripples
8:32 pm
perhaps through the yuan's newfound comments. with the currency and financial market are giving the worries. expectations. limit the probably appreciation to contain the risk of u.s. protectionist measures. paul allen in sydney. paul: japan's inflation rose in january for the first time in 14 months. offering some hope the price gains may begin inching towards the boj's 2% target. however, household spending fell 1.2% from a year earlier, three times the forecast drop.
8:33 pm
higher inflation is at the heart of japan's economic revival and hopes of a turnaround and on higher oil prices in a weaker yen. caterpillar shares slumped the most and eight months as tax and finance officials searched offices. the government has not given details. revealed inerpillar a filing last year that it had been subpoenaed by district court eking financial information. new ceo jimme as applebee tries to provide the companies hit for a long slump -- the prolonged slump and commodities. france's far right has lost the european parliament immunity. abouting an investigation tweets about murders by the so-called islamic state. she leads the polls ahead of the first round, but she is seen losing the runoff. she worries -- the worries are that critics say it would be the end of the eu.
8:34 pm
>> if le pen wins, it is game over for europe. it is possible for europe to have a leader of one of the most important companies of the european union, somebody against the european union. >> france's conservative presidential candidate is losing the backing of his own party as police reportedly raided his home in paris. or than 60 republican party officials say they will no longer support him during an investigation into the misuse of public funds. he's accused of paying his wife and children for fictitious jobs. that and called the allegations political assassination. powered by 2600 journalists and allison 100 20 countries, i'm paul allen. this is bloomberg. haidi: attorney general jeff sessions has are moved himself from investigations into alleged russian interference in u.s. politics. he has denied lying under oh the
8:35 pm
about meeting moscow's ambassador last year. claims this is a total witchhunt. more with the latest. this russian mini crisis is getting quite serious. >> it feels like deja vu all over again. the department of justice not once but twice during the u.s. campaign. mr. sessions was one of the earliest supporters of mr. trump and mr. trump says he still has confidence in him. thursday, he was acting in his own capacity as a senator. >> i have never had a meeting
8:36 pm
with russian operatives or russian intermediaries about the trump campaign. i was part of a continuing exchange of information. >> he says he will follow the advice of his ethics counsel. that is why he is recusing himself from these probes in regards to russia for the white house. , two other trump campaign officials have also been mentioned in terms of meeting with the russian ambassador. parts.f moving >> we have heard from the president. did. finally
8:37 pm
he was quiet for quite a few hours. but in the past 45 minutes, he came out with a few statements and was saying that this is a total witchhunt on the part of the democrats. he has total confidence saying that sessions as an honest man and he did not say anything wrong. he also said that sessions could have ceded his response a little more accurately. this follows his earlier support before the press conference. he was on a new naval ship being commissioned and reporters grilled him about his support. >> should sessions recuse trump: i don'tr. think so. >> did you know during the campaign? when were you aware he spoke to the russian ambassador? >> i wasn't aware at all. he probably did.
8:38 pm
>> mr. trump saying he does not think mr. sessions should recuse himself regarding russian meddling. but of course, mr. sessions now has. in terms of him stepping down, calls from the democrat side are starting to come through. nancy pelosi has come out on twitter saying that mr. sessions sorry attempt to explain away his perjury is inadequate and he must resign immediately. and former president bill clinton was impeached from office on something even less. attempt to grow him on all sides. haidi: that recusal not satisfying a lot of people. york, andurged in new overall downmarket. this was the biggest thursday game for major u.s. ipo since 2012 except for twitter. we asked if they expect more
8:39 pm
tech firms. -- more tech firms to list. >> we had zero in the first quarter of 2016. this is our 13th and this year in the first quarter. and we have a whole bunch more coming in march and april. it is not the big tech names, which is the premise of your question. i know firsthand those big tech names are watching very closely at what happens today and a counter plans apple ipo's forward or pull them backward. comfort that this was very smooth. >> do you feel 2017 would be the year of more weather and whether or not it would? >> things can change. in august 24 of 2015, a very volatile day. i am just saying again, the number of ipos we have planning,
8:40 pm
the particular date, it is very high. >> to ensure that you have prospects. >> it is hugely important. >> it is a very hot sector. it is from the lows. we would not be getting those as they are coming back. us fill outhelping the ipo calendar. conversely, who knows? maybe some of those names. that diversity is very important to us. >> we are at heady highs. is that cause for caution or optimism? kind of three things that matter. the absolute level of asset prices. volatility. and the lower the better.
8:41 pm
we are at all-time lows. and interest rates. it doesn't matter if interest rates are high or low. trifectaens to be the in terms of ipo environment. , itnyone of those falters doesn't mean the ipo or challenger goes away, just not all three factors are hitting. >> a perfect storm? >> i'm just going with trifecta. things are going well. that was caroline hyde speaking to the new york stock exchange president tom farley. coming up, malaysia airlines and 2016 ahead of budget. let be able to return to profit this year? we're asking the ceo. this is bloomberg. ♪
8:42 pm
8:43 pm
8:44 pm
haidi: malaysia airlines ended 2016 ahead of budget. initially projected bookings for the last quarter thanks to focus on premium business travelers. the question is, is 2017 the year that it returns to profit? from singapore with an exclusive interview, malaysia airlines ceo. great to have you. it seemed like things are going quite well in terms of the turnaround. in, if youerested get to profitability sooner than expected, how soon after that? >> good morning. great to be on bloomberg. the air ended better -- the year ended better than i expected. expecting to make a loss of the current year.
8:45 pm
in the last quarter of last year , it's a bit ahead. we should be back to consistent profitability in 2018. the current plan is to revisit malaysia in around march of 2019. we have a bit of runway left to get to that. we are certainly on track to do it and running a little bit ahead. could the spanner in the works be rising oil prices? a lot of carriers around the it's a constant level when it comes to crude. do you plan to have hedges in place? >> we're hedged about 65%. a bit north of 60. gettingect we will see
8:46 pm
closer towards 70. i have factor that into our budgets. that is the prudent way to approach it. we are aggressively hedging ahead. we are a prudent approach to it. just going to take a very cautious approach to it. the travel of business, fuel goes up and down. it is a cyclical thing. it is one of the many challenges you have. is theger issue for us weakening against the american dollar. we saw significant change. expect it was stay at a constant level at the moment and we would see some improvement over the next six or nine months that help the profitability situation. what is your pain
8:47 pm
threshold? >> if it goes north of 80 and you have to start looking at changing and pricing in structure. the price of fuel goes up a little bit and it can probably pass my competitors more than it will me. it may help us and a roundabout way. part of life, nothing we can do about it. things are out of our control. identified 400 million ingots worth of cost savings. on track to get those cost savings. it will counteract the change in the valuation against the dollar and leave us in an equalized position. >> malaysia airlines has been adding flight to service china.
8:48 pm
how is demand going given that it is the one marker that i would imagine is still pretty sensitive from a consumer point of view as for what happened in 2014. china is thess to strongest region, currently. the flights that are there, i need more by the aircraft to carry large numbers of people. and there's a massive market for tourism in china. i think is the greatest global megatrend i've seen in all my time in tourism. 12% would have it in 10 years. 150 million people. in malaysiaple speak chinese. there's chinese food on every street corner. have a good opportunity, and we
8:49 pm
see no problem with our brand or reputation among chinese nationals. haidi: you're saying demand a strong enough that you look to add more wide bodies by the first quarter of next year, i believe? can you tell us how many purchases echo are you looking at least in? i believe that is a consideration as well. >> we're talking to boeing about the 787 and talking to airbus about the eight 313 deal. prices are not to where i would like them to be at the moment, but they are coming right now. they would do quite a beautiful job on them. and there are bargains to be had there. some of the carriers are startling -- starting to struggle right now. but wesee the benefit
8:50 pm
haven't got the price we want yet. some of these things are playing and our hands and there should be some great opportunities for us to have aircraft in 2018. dealing with the number of bookings we are turning away right now. i do want to ask you about the holding. airlines ceo in singapore for us. we will continue that conversation. this is bloomberg. ♪
8:51 pm
8:52 pm
with malaysiaack airlines ceo peter bellew who is in singapore. thank you for sticking around. let's talk about yield. it has been such a troubling factor in this business. you guys have called it irrational competition.
8:53 pm
do you expect things to pick up? what would be the catalyst for improvement for you? peter: i think on our side, we are seeing at the moment, a great advance in the business class bookings. right now, today, for the next six months looking forward into july, we have double the number of business class bookings made already compared to this time last year. and in an overall basis, 15% more bookings in the mix. it really helps us on our yield looking forward. we're focusing very hard at giving really good customer service. we don't bundle fares like everybody else in the world. customers like that. there are five or six different charges. it's holding up quite well. but against our record low factors, it is higher than singapore. we are very happy with that kind
8:54 pm
of numbers on the passengers traveling. peter, where you're planning to buy your new eight 350? the first one is getting delivered to you guys in december. where you planning to send them off to? it is likely at the star, they will operate to tokyo. we have incredibly strong business and both of those markets. start operating on the london route around september of 2080. the 6a3 80's. it is specialized in global images to saudi arabia. markets are growing rapidly at the moment. 0.beautiful aircraft at a35 the other operators at the moment are very complementary. and the, conservation,
8:55 pm
level of comfort and reliability. we're really looking forward to it. it gives us a shot in the arm. in all the marketplace that we need. the moving at the moment, we refit it with full life size beds. and we interjected into airline travel. i think it's got a bit of a utilitarian -- i look forward to the romance. you thought you were in a james bond movie 30 or 40 years ago. we want to give that atmosphere back into the customer experience. feel theo make people feeling of getting into the aircraft. and we want them on one of our wonderful planes. that, bringing romance and glamour back into air travel. what would be decidedly unglamorous is geopolitical headwinds.
8:56 pm
the trump administration we are talking about. also headwind coming out of europe. exit, political uncertainty coming from european elections. you see it is a downside risk to your business? >> we minimize our exposure to europe right now. we have recovered dramatically. the market share is 35%. and now over 60%. because we have done quite well against an sterling, it has been a benefit to our business. i'm not too worried from our point of view, the focus of being a premium five-star airline. 21 countries, 54 destinations. there is so much opportunity and business for us. in japan, korea. they have dramatically recovered.
8:57 pm
peter, great chat. always good to see you from malaysia airlines coming to us from singapore up next. we will be previewing the national people's congress in beijing. this is bloomberg. ♪
8:58 pm
8:59 pm
♪ almost 1:00 p.m. in sydney, 10:00 a.m. in hong kong, 9:00 p.m. in new york. this is "bloomberg markets: asia" i am haidi lun. ♪ haidi: the fed is running out of reasons to delay a rate rise as officials like an imminent hike. abenomics at the crossroads, inflation higher in japan, but spending continues to fall. china's political elite gather to plan targets for next year. we are live in beijing.
9:00 pm
well, we are ending the week on a muted note when it comes to asian markets, tracking losses in the u.s. earlier on, some jitters ahead of speeches from stanley fischer and janet yellen of the fed. to add to this course of the increasingly hawkish remarks from fomc officials? 90 percentcing in a chance of a rate hike. imaginegets derailed, i quite a bit of chaos on trading floors. trading in indonesia underway, but a lackluster picture. sophie: investors taking a breather, waiting to see if the chorus and force around that hawkish fed speak. she is the lead singer. in the region, japanese shares extending a drop .1%, but near 14 month highs thursday.
9:01 pm
japaneser we got the inflation, core cpi better than expected up .1%, the first rise in a year. something for the boj to when it meets. in shanghai, stock swinging, but continuing to decline after the latest read on china's services sector are. the caixin survey say providers saw slower growth in february, slipping away from the 17 month high in december. something to consider up to the strong pmi report on wednesday. hong kong falling .8%, h-shares sliding, the only stock in the green up over .9%. property stocks weighing, the potential fed rate hike. leading tothe kospi
9:02 pm
drop, 1.25% down. reports that travel agencies stop selling packages for tourists into south korea. unless look at australia, asx 200 slipping after rising to the highest since november on thursday. minors are the biggest drag on the asx 200, gold players falling. bullion prices are wavering ahead of fed speak. ,ron ore falling as well weighing on minors such as bhp, rio tinto, and fortescue metals. 114.21, now trading at weakening from the high we saw earlier today. that. thanks a lot for
9:03 pm
let's get first word news with paul allen in sydney. paul: attorney general jeff sessions is stepping down from any inquiry into russian influence in u.s. politics after the justice department said he met moscow's ambassador twice before the election. during his confirmation hearings, sessions denied under oath that he had any contact with russians. democrats are calling for him to resign, but president trump says he has total confidence in his attorney general. >> i never had meetings with russian operatives or russian intermediaries about the trump campaign, and the idea that i was part of an "continuing exchange of information during the campaign between trump surrogates and intermediaries for the russian government" is totally false. shares and snapchat's parents surged on debut, closing 44% higher. snap sold $200 million -- 200
9:04 pm
million shares of $17 each. ohree analyst reports, tw sell, one called. france's conservative presidential candidate is losing the backing of his own party as police reportedly raided his home in paris. more than 60 republican party officials say they will no longer support him during the investigation into the misuse of public funds. is accused of paying his wife and children for fictitious jobs. he calls them political assassination. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. i am paul allen. haidi: thanks for that. inflation data
9:05 pm
from japan may offer governor kuroda hope towards that 2% target. the inflation climbed for first time since december 2015, increasing 0.1%. brett miller joins us now from tokyo. managedsed to expectations when it comes to price pressures in japan, but was this a good number? >> it is. it might not look like a big number, but for japan, it is a good number after a year of declines. the turnaround is to be noted. we did have the numbers a long way in the red in the middle of last year, so improvement is something to celebrate for japan, small as it is. we do have economists talking about inflation reaching 1% this would be something to truly celebrate for the bank of japan. it is a long way short of the 2% inflation target, but we do see
9:06 pm
the weaker yen and oil starting to help drive prices in the right direction in japan. haidi: amongst the other numbers, the job market, are we going to see wage rises? we will see wage rises in some areas. when it comes to hourly pay, we should see that increase. there is a lot of demographic pressure in japan that should work am a in contract part-time work. we will see hourly wages creep up because there is a love of squeeze and the labor market. that 1.43 ratio of job applicants to jobs available, that is tied back is into the 1990's, but in other areas with the spring wage talks come up we want see as much action when it comes to full-time employees. theywe see there is that
9:07 pm
are trading security for wage gains, so there will be areas of increase, and other is where we may not see so much action. haidi: the real disappointment and this morning's data was that household spending number, wasn't it? yeah, that's right. to the extent we get inflation in japan, that will have an impact on household spending. arenese households sensitive to price rises, so while we have the boj pushing to get prices higher, anytime we see an increase, households tighten their belts come as of that is a dilemma for the boj and one that will not change too soon. brett miller there for us on that data dump out of japan today, a mixed picture, but some price pressure is better than none when it comes to that economy there. as momentum builds towards a rate hike, we look at what to expect from janet yellen's much-anticipated speech in chicago. shes a question of what
9:08 pm
behind in orchestrating this course of increasingly hawkish comments coming through a variety of fomc officials? or was her hand force? jobs numbers to come from the u.s. before that fomc meeting, so does she want flexibility of ahead of that march rate hike decision? saturdayatch it live morning, 2:00 a.m. hong kong time, 5:00 a.m. in sydney, 1:00 p.m. friday in new york is when janet yellen will be speaking, delivering her economic outlook speech. hour,g ahead this singapore has a key advantage in investment could we ask one analyst how long these low prices can persist. next, expect the expected as china's political elite heather in beijing. we ask what is on the agenda and will there be any surprises? ♪
9:09 pm
this is bloomberg. ♪
9:10 pm
9:11 pm
thei: a quick check of business flash headlines. the nikkei news says toshiba has opened bidding for its memory chip business and will take proposals through march 29. selling the entire unit could net more than $8.7 billion in profit. to explore hired ubs the potential sale or ipo of its in its energy company. jd has agreed to sell its finance arm, but will retain a share of future profits. it is part of a $2 billion deal to create a strong rival to nt financial. shares rising 6% in new york, the biggest gain since november.
9:12 pm
reports from japan say foxconn may sell a stake in sharp. one person could be offered to clear the way for sharp to return to the tokyo stock exchange. they control 56 percent of the company, at the 35% must be available for public trading. sharp was to return to the first section of the tokyo exchange this year. china's political if he will reveal their economic targets on sunday at the national people's congress. for us,enzie is on this and what is on the agenda? you know about this one. the key question for many will be what policy makers say about tackling the growing pile. we know that china's debt to gdp is around 270%. we know bank assets are around 312% to gdp.
9:13 pm
we have heard them talk the talk on this. will they say anything that suggest they are prepared to walk the walk as the economy stabilizes? to that end, we look at the gdp target, 6.5% to 7% last year. will set it atey miss giving them space to that number. we will be watching for that. the deficit target, 3% last year , will they increase it to add some fiscal wiggle room as the pboc takes baby steps towards tightening? the money supply number was around 13%, now some suggestions 11% or 12%. we are listening for signals or details on financial regulation on the property sector. will they increase curbs on the real estate market here? chockablockis a
9:14 pm
domestic agenda, but other going to talk about trump? trump will feature whether they like it or not. the foreign minister will be holding a press conference, likely to be quizzed on trump and the sounds we have heard from washington. they, the chinese leaders, like all of us, are waiting for more clarity on trump's stance towards china. we do know the tensions eased somewhat when president xi jinping have that call with president trump. a key emerging market investor says this is a key challenge for chinese policymakers. there likely to hear on military spending budget, north korea, and from private is this is as well. we have been speaking to the ceo of by do. they are likely to put four a proposal on artificial intelligence. governmenthe central
9:15 pm
and local governments to incorporate ai into development plans and believe it can be used to ease traffic congestion and china's major cities, so private companies and state owned enterprises, as well at this party congress gets underway in beijing. haidi: that is crucial, isn't it? you spoke about robin lee. they do play a role in shaping policy, these business leaders, this weekend. tom: they do. the billionaires will be there, tencent, xiaomi as well, and they put ford this policy proposal that the legislature will digest and look at, and occasionally act on. it will likely feed into the out by the set commonest party leadership, but it is a way for china's private companies to make some kind of impact on policymaking going forward, and of course the big state owned enterprises as well
9:16 pm
playing their role in this meeting that takes place on sunday and goes on for about 10 days to two weeks. haidi: what i love is the costumes and the garb you see of the weekend as well. stay with us. we will be bringing into this conversation, the cohead of chinaeconomic and economic research unit at ubs from our hong kong studio. great to have you. this last year, the premier saying the supply-side reforms, cutting capacity, it is like taking a knife to your own flesh. in the time that has passed, we have not seen appetite for that, paper cuts if anything come a so do you expect more moves when it comes to reforms? event thatring the one of the key areas the
9:17 pm
government will focus is supply-side reform. a would consider it has had some success last year when they close down excess capacities and restrained production in the steel and coal sector, so we would expect further targets for the sectors and expanding to other sectors. i also mention that getting rid of some become please would be a key focus as well, so that is something to watch out for in the npc. , quite simply, do you think it is time for the leadership to drop this growth target? it just is an artificial number. distorts the economic priorities are policymakers. isn't it time for them to drop it completely? think the chinese growth target is also considered a signal, and it's something to
9:18 pm
basically anchor expectations for both policymakers as well as local government and local business, so i would think it is hard to drop the target, that i would agree they should lower the target. given that this is a leadership transition year at all levels of government, they will probably still announce a target of around 6.5%, but going forward, especially as the external environment becomes more complicated with perhaps trade protectionism against a china coming next year, i think there is a greater chance for the government to actually lower the target even further and deemphasized this next year. and what do you think the pboc's role will be? to continue to set up operations in the open market? you think they may resort to a benchmark rise this year? that that isu said
9:19 pm
unlikely? most important thing we will watch out for, what the central bank may do, as kindentioned earlier, what of monetary aggregate targets they will set. is is still 12% to 13% question market is hard to see the pboc tighten monetary policy, but if they can set the target lower, then that gives the pboc more room to tighten, and in open .arkets they have tightened they have let the rates go up, but to some extent, that is also a result of higher rates overseas and tighter regulations. as you know, the pboc has floated some proposals of tightening the asset management business and shadow banking regulations. we willthat is an area have to see, but there is a conflict between tighter
9:20 pm
regulations and tightening of shadow banking, but at the same time, the growth target and the need to support credit, to have credit supporting growth. haidi: we heard from the new chairman yesterday. containment to be of the systemic risks. it is a bit late, isn't it? they are the ones saying that you have some banks in china that have more off-balance assets than on sheet. how do you contain that? >> those banks tend to be small banks that have an aggressive and expanding their shadow loans and off allen street items. ,he banking system as a whole on balance sheet items are more important, although the risk has risen because of the rapid expansion of shadow credit. thannk it is better later never. it is still a good time dan raine in the risks.
9:21 pm
rein in the to risks. it seems the senior leadership more emphasisng on this issue since mid to late last year, so we are seeing more regulations coming through, and we expect more strict implementation of these measures in the coming year. all right, certainly watching out to see if there is the appetite for these difficult reforms at this weekend's npc. thank you so much for that. there is one new feature we would like to bring to your attention. it is our interactive tv function. onfind it at tv the bloomberg. also see previous interviews you may have missed. five into any securities or bloomberg functions we talk about and become part of the conversation as well by sending us instant messages during our shows. this is a function available to
9:22 pm
bloomberg subscribers only. do check it out, tv . coming up, the u.s. attorney general removes himself him investigations of russian interference and the 2016 elections, but he insists he did nothing wrong. this is bloomberg. ♪
9:23 pm
9:24 pm
general jeffey sessions has removed himself from investigations into alleged russian interference during the u.s. election, but denied lying moscow'sabout meeting ambassador last year. president trump has called sessions and honest man and says the whole thing as a witch hunt. let's bring in ramy inocencio. first, michael flynn getting fired essentially over similar allegations, and this russian crisis is getting bigger and bigger by the minute. ramy: that's right. just in the past few weeks, michael flynn resigning as
9:25 pm
national security adviser, and now attorney general jeff eatsions in the hot s because of similar allegations. the justice department is confirming that mr. sessions met twice last year with the russian and basinger -- ambassador to when mr.it states, but sessions was going through senate confirmation under oath said "i did not have communications with the russians." at a press conference today, he said he was acting in the capacity of a senator. let's take a listen. >> i never had meetings with russian operatives or russian intermediaries about the trump campaign, and the idea that i "continuingan exchange of information during the campaign between trump surrogates and intermediaries for the russian government" is totally false. mr. sessions as you can
9:26 pm
see there is maintaining his innocence and says he will follow his ethics advisers and recuse himself from any probes with regards to alleged russian meddling and u.s. politics, but that twoy reporting trump officials spoke with the russian ambassador as well, so a lot of moving parts here. hasrussian ambassador responded saying it is a total witchhunt on behalf of the democrats and said mr. sessions good have stated his response more accurately. he also said mr. sessions was an honest man and did not say anything wrong here. democrats are calling for jeff sessions to step down. tocy pelosi said his attempt explain is totally inadequate and that he must resign immediately. and a sincere on
9:27 pm
that developing story for us. coming up, snapchat's parent and joys one of the best debuts for a major listing in years. to one of snaps first original outside investor. this is bloomberg. ♪
9:28 pm
9:29 pm
10: 29 in hong kong, 1:29 in sydney. i am paul allen with first word headlines. nintendo shares higher as the next generation gaming console goes on sale in tokyo. the switch combines home and mobile usability. this is nintendo's biggest bet in years after its decision to make games for smartphones and follows the flop of its reviews console. the reviews are mixed and show fallen since it was announced. marine le pen has lost european in anment and unity
9:30 pm
investigation into tweets about murders by so-called islamic state. she leads the polls ahead of the first round of the presidential election, although as seen as learning -- losing the runoff. minister saidme it would be the end of the eu if she was elected. it is gamen wins, over for europe. it is impossible for europe to have a leader of one of the most important countries of the european union, somebody who is against the european union. >> sweden is to bring back .onstruction -- conscription about 13,000 young people born in 1999 will be called up from july 1, with 4000 facing compulsory military service in 2018. the news comes as president trump insists america's allies should contribute more to the nato defense bill. sweden is also debating joining the alliance. global news 24 hours a day powered by more than 2600
9:31 pm
journalists and analysts in more than 120 countries. this is bloomberg. i am paul allen. this is bloomberg markets: asia. i'm haidi lun and sydney. let's get the latest on the markets. we are looking at a down day when it comes to asia. to be fair, it has been a turbulent week for equities, bond investors, currency investors, with all this fed speak building up to speech or of from paes chair fisher and janet yellen on friday. will they continue this rhetoric 90%ding up to and over expectation they will move to hike rates this month? let's get a look at the asian action. given all that we have seen, we do have the dollar weakening after a strong start this friday, the dollar-yen upward momentum stalling. succumbingcurrencies
9:32 pm
to broad dollar strength, the yen most vulnerable, the singaporean dollar, and the kiwi. golduries on declines, headed for the biggest weekly drop this year. lining up withis increasing odds for fed tightening, and with that tropical gold prices, gold miners are leading to drag in sydney. the asx 200 falling after a high on thursday. is set to cut over 100 jobs, shares falling for a sixth day. in tokyo, that drop easing somewhat, but the nikkei 225 lower after three days of gains, the pipe -- despite core cpi gaining. checking in on jgb's, yields ticking up.
9:33 pm
the latest update from the boj, it reduced the purchasing of for maturities below 25 years. strategists say this shows the boj commitment to keeping 10 year yields around zero and steepen the yield curve, so the 10 year rate at .08%. thank you for that. snapchat's parent enjoyed a dream debut in you or commit shareown market, around $25 to close ahead of its $17 listing price. joins us now from tokyo. does this say more about snapped the company or appetite when it comes to tech ipos? was closely watched because of snap in the snap business, but more broadly
9:34 pm
coming you have these private technology companies that are worth tens of billions of dollars, and this was a test case for how these companies will fare when they go public, , airbnb, a bunch of companies that everybody knows will go public at some point, but they wanted a test case for how investors would react to these types of businesses as sharesied to sell to the public. there was a big pop in the valuation. haidi: how does that valuation look after that opening they pop? as you said a very big pop, shares rose more than 40%, and the violation went up to $28 billion. when you look at that, that is 25 times their projected revenue for this year, which is twice twitter, forming times so it is a very high-value
9:35 pm
asian. some have expressed concern that it is getting ahead of itself. there is optimism around this business, but this is a quite high valuation. haidi: the founders have done pretty well out of this? >> they have done very well. the two founders, including evan spiegel, they have stakes worth about $4 billion, so they have a strong debut. now they need to prove the company can live up to this play wishon as they go forward. haidi: absolutely. for us there and tokyo. lightspeed venture partners was one of the early investors and snap. we spoke about the relationship founders, the board, and the future of the company. >> when you become part of popular culture and see that user base aging up, so it started off with mostly young women when we invested, mostly teenage women, teenage girls at
9:36 pm
first, but today you see that has been spreading to people in their 20's and 30's and beyond, and as you see that broadening, you gain a lot of confidence. geographically speaking? they say you need high-speed, powerful phones. where else but the united states? we are almost hitting saturation point in the u.s. >> if you think about the places with high-speed internet connections today, the u.s., north america, about 70 million of the daily active users. europe is also big. the rest of the world encompasses some of the spots in asia with more developed telecom, the middle east, and other areas. expand to gen x, millennial? , and you look at norway
9:37 pm
the fall of 2012, snapchat hit andapp store for norway that was the one place a got big faster than the u.s. there you see it used by people all across the spectrum, age, gender, and has become embedded youociety was so that gives confidence that it can become something broadly used by everybody. >> what about hardware? how much does that become an important factor? fine. spectacles are just i was wearing them this weekend. i was wearing them with my kids, moment,being in the without a phone between you and the expense you are have ring -- are having. >> there has been reporting about your relationship with
9:38 pm
evan spiegel and the business. relationship? there were some arduous owner's points of view. do you agree with that? >> there will be friction in any relationship. what is more important is whether you can work through it commony and find a solution that everyone feels good about, and we did that with snapchat, and while the ipo is not an end goal, it is an important milestone for the company and one worth celebrating. >> do think the restrictions you put in place where onerous, or what comes as part of being as an investor? >> when we first met the company, we were very interested in what they were doing and would love to continue to invest in the company in the future. that is what we have been able to do. that was lightspeed
9:39 pm
venture partners they're speaking to caroline hyde. coming up, real estate wars, hong kong versus singapore, and our next guest says one is a clear winner. we will find out why. this is bloomberg. ♪
9:40 pm
9:41 pm
check of thek latest business flash headlines. india's richest man is planning a revamp of his holding. owners would transfer shares held in 15 entities to hate companies. the transaction will big sim from india's takeover code, and buys one not have to make an open offer to minority shareholders. group saysulting international banks have paid $321 billion in fines since the financial crisis. the charges range from money
9:42 pm
marketing to manipulation and terrorist financing. the report says banks shelled out 42 billion dollars in 2016 alone, up 8% on the previous year. fines are only expected to rise as asian and european regulators get more aggressive. looking to raise billions of dollars to buy more time to build a profitable business. sources say investors are divided over new capital bracing for the ride hailing service that conquered uber in china. to invest want didi in autonomous driving technology. skeptics say more equity will only dilute existing shares. property markets into bank of asia's largest commercial centers have diverged sharply in recent years. andrding to cushman wakefield come hong kong office rents are three times more expensive than singapore.
9:43 pm
our next guest says the spread has made singapore a much more attractive location for companies to house regional headquarters. let's bring in the asia is a at cushmanrch m.d. wakefield. we've have this bribery play out time and time again, but you say this is a clear win for singapore when it comes to pricing. >> yes. seeing a differential between these two markets, and it looks like this is not going to be changing anytime soon. just looking at singapore right rents are set to decelerate tissue. there will be some rental operating adjustments over the next several years. we expected to be modest. in 2020, we expect another way five supply coming in and singapore, so that is why rents
9:44 pm
will be relatively stable, perhaps increasing. in hong kong, rents have been going through the roof over the past few years. if you look at the situation inay come very low vacancy singapore, and a lot of the new supply will be coming online in kowloon. next five at the years, it looks like things will not be changing. there are some office sites that will be available for redevelopment, but it will be a slow process, so we are looking at another 5-6 years with rents going up and very low vacancies, so for any occupier today it might be difficult to look at their options in hong kong. those are for occupiers,
9:45 pm
but what about investors? how does it stack up when it comes to rental yields? >> singapore and hong kong are not a yield play. when investors look at this market, the returns are mostly on the capital appreciation. lastu look at the five-seven years, capital appreciation in singapore has been quite significant. some assets have traded double in terms of pricing over that time frame. prices have not really come down, so essentially when investors come into this market, they are banking on capital appreciation. , in terms of what you expect to see in the coming we have the outlook for increasing curves and hong kong, is that going to drive that premium appeal of singapore you think? of,ell, right now in terms
9:46 pm
in hong kong, you have -- .ingapore i was just looking at singapore. the fundamentals are quite steady and government is actually doing whatever it takes to make sure the economy switches to a service-based economy, so what you are seeing his that in terms of the jobs, that would be more service or into it, and the commercial sector would benefit from that. government is also doing what it takes in terms of restructuring the .conomy to grow and in terms of the yields, we don't see that being affected. haidi: right, what about the political environment? is that part of the appeal as well?
9:47 pm
concern about the encroaching influence of beijing when it comes to hong kong, some of the uncertainty there. it present a more clear-cut environment in that respect? >> singapore has always been a pro-business environment, and so in terms of the policies, the government is always making sure that it is easier for any multinational or occupier to be setting up operations there. so what it is doing is making look at the budget that was unveiled for the last week, and singapore is actually , souraging more of them there are incentives to be sure they will thrive in that environment. labor pool, of the
9:48 pm
it is also giving some that thes to make sure population in singapore is able to keep up with the demands of the business environment today. terms of the policies, singapore is very, very transparent in making sure that the government is able to support the growth of the business. right, great, we have to leave it there, but very interesting stuff, this rivalry between singapore and hong kong. apparently there is a winner if you are a business wanting to base yourself in one of these financial hubs. momentum seems to be building for a rate rise this month, and a hike would be a signal of strength. in an exclusive interview with bloomberg, he expects the fed to move this month or next. >> i think the markets are running a bit ahead of the rate
9:49 pm
hikes. we are seeing markets anticipate this already for quite a while, and any signal that it is closer will help markets get to the next level. i think it seems to be imminent. >> if you had to hazard a guess, win? >> between march and april. >> would a series of fed rate hikes be beneficial to wealth managers? >> i think it will help continue building confidence on the outlook, increasing rates is a think of strength, and i that is what we all need right now, especially wealthy clients. there is still a lot of cash sitting on the sidelines waiting to be deployed, and i think that could be one more stone in getting people back into action in the markets. you elaborate on that? what proportion of cash of a holding? clients we are seeing
9:50 pm
holding 20% to 25% in cash, which is a lot of cash, and as you know it is taxing to be holding cash, negative interest rates and inflation, so a doubled this advantage. >> do see that changing, that cash holding diminishing in the months to come? the firstseeing movement, but it is difficult to say whether that is a trend or not of people starting to go back and invest into some solid firms and good sectors, good industries. we see some cash starting to move into security. let's see if that trend continues. inthere seems to be optimism the u.s., its growth story, are your clients eager to invest in the u.s. also partly because of what trump has in mind in terms of spending? what private equity be attractive to them at this point? clients thating
9:51 pm
have returned to markets favor the u.s. market. already over the last few months we have seen valuations rising. athink there seems to be trend, and i think that should potentially continue in the months to come. an interviewas exclusively with haslinda amin. coming up, alibaba's jack ma has another rival on the horizon, and this time it involves it's his crown jewel finance business. this is bloomberg. ♪
9:52 pm
9:53 pm
haidi: this is "bloomberg markets: asia" i am haidi lun. jd.com has agreed to sell its finance arm for more than $2 billion but will retain a share of future profits. what is jd.com trying to a cop this move? >> i think two main things. it was essentially a lossmaking unit with a high risk profile. it makes the core e-commerce business more attractive. is creatinghink it a second unit and positioning it for future growth as a fireball online financial giant to take on jack ma and eventually.
9:54 pm
and ant finanacial eventually. haidi: how is jd.com planning to take on ant finanacial? asit has been valued as high $75 billion. i think they are hoping several things happen. it has this massive chinese consumption base from which to build the world's largest retail market. doing that it is hoping to attract domestic funding, which means if it is only chinese investors that you can go for regulatory the licenses, and you hope to turn jd finance into a supermarket for anything from car insurance, securities, to trading, and grow an empire and compete with ant finanacial.
9:55 pm
hast forget that jd.com reputation for being the scrappy underdog, and it has held up well against alibaba so far. haidi: when you're talking about a market that big and growing that fast, even just a part of it, you would be doing well. broadly speaking what does the deal me in for the overall jd empire? expressed his intentions to turn his empire into the world's biggest companies, not just tech them up at one of the biggest companies. it goes back to the fact that he is one of the major players in the world's largest online retail market and the world's largest market for financial services. base, hisn that ambition is to turn jd and jd finance into something bigger than what it is today, but even alibaba and ant finanacial
9:56 pm
aren't quite there yet, so we will have to see how he does. much forank you so that. we will be watching that deal as it grows. just ahead on bloomberg markets, some of the big stories of the day so far, and happy friday to you. ramy: happy friday down under. basically right now i am looking ahead to what is happening on the markets. right now, seeing them in the red off the worst day in the u.s. since january. we have j.p. morgan's chief market strategist for asia. he is bullish on risk assets. i will ask the best and where in asia. this is bloomberg. ♪
9:57 pm
9:58 pm
9:59 pm
10:00 pm
♪ announcer: from our studios in york city, this is "charlie rose." >> good evening, i'm alison stewart, filling in for charlie rose. we begin this evening with politics. president trump delivered an address to the joint session of congress last night. he defended his administration's first five weeks in office and vowed to reach across party lines to achieve legislative goals. including building the highways and roads. pres. trump: if we are guided to the well-being of american citizens, i believe republicans and democrats can work together to achieve an outcome that has

58 Views

info Stream Only

Uploaded by TV Archive on