Skip to main content

tv   Bloomberg Markets Asia  Bloomberg  March 6, 2017 8:00pm-10:01pm EST

8:00 pm
>> it's 9:00 a.m. in hong kong, 8:00 monday evening in new york. i'm richard solano. >> and haidi lun in sydney. this is "bloomberg markets: asia." ♪ >> dealing with china's new on day three of the national people's congress. >> trump and the republicans lay out their new policies, a travel
8:01 pm
ban and a bill to replace obamacare. >> interest rate increase next --annd almost certainty almost a certainty. >> the big australian lenders back in the spotlight as lawmakers get tough on banking comebacks. breaking news has come out of manila. it is the consumer price index, inflation 3.3%. that is an annualized rate, economists expecting an increase of just slightly less. still giving a little bit of wiggle room for the central bank there in the philippines straight that's where we go at the moment. that's right for a potentially the fed does not have ahead of next week's meeting. market very richly pricing in, that the high could come at a margin. of a direction, a muted
8:02 pm
session in asia. tracking those losses we had in the u.s. action, we are 30 minutes away from that market open in china and hong kong in the meantime thomas r, thailand, malaysia 23. let's get the latest from sophie kamaruddin on the markets. are seeing caution prevailing today, korean stocks leading gainers in age despite geopolitical tremors. please see the cost piece remaining resilient -- we see the cost piece remaining resilient. although we are seeing a drag on .aining stocks reports china has suspended new approvals of games made by south korean companies, and shares in tokyo are fluctuating at the end as those little changed against the dollar. we have okuma climbing today, it was raised to a buy goldman. . the nikkei reports it is to triple its bendable street capacity. fujikura, falling 2.4%. it was cut to neutral at nomura. justve stocks in kl,
8:03 pm
slightly unchanged. the same goes for stocks in singapore. now we do have 70% of companies listed on the msci, as yet index having reported earnings. more comes through than mrs. led by materials and consumer stuff. health care, i.t. city says the more positive surprises, they happen because of low expectations and a low base. earlier we had the philippines cps coming through. type one not getting the reflation memo here. taiwan not getting the reflation memo here. .04% of a drop for february. it's higher about 2/10 of 1%. a quick word on the snc and on high. liberty times paper based in taipei saying the two companies
8:04 pm
are to jointly bid for toshiba's the bid to be submitted before march 29. where the taiwanese dollar has given, inflation data out this morning, we are seeing slightly stronger against the greenback here. it's been one of the best performers so far this year, but we have seen a recent correction coming through in the latest inflation makes that may perhaps bring us that retracement dish. >> thanks very much indeed. china's new finance minister, the spotlight. correspondence is here with a look at what we can expect. >> is going to be his first mpcs, so it will be interesting to hear what his modus operandi will be. beyond the tax reform, he will be interesting to hear how he plans to tackle fiscal reform. they are comfortable with where
8:05 pm
the economy is and they are cognizant of the risks underlying the economy in terms of what it and leverage. but we haven't seen any real firm snap to rein in india. they are still going to be adding an economy tied with germany. richard: there are shares here talking out that the -- taking out the mpc. >> press conference going life now great it will be interesting to see, -- live now. it will be interesting to see. richard: there's other stuff going on here as well. what else are we watching for? we know one potential point of tension, trade tensions with the u.s. and china. navarroing to see peter speaking last night. he didn't just lash out in china, he lashed out at other countries around the world as well. he spoke about how it's not necessarily u.s. tariffs, but how other countries have to
8:06 pm
bring down their tariffs. it will be interesting to hear about how they might deal with any threat from the u.s. we are already that symbolic $2 trillion mark. what are the implications of this decline -- that this decline we have seen continues? >> we are in a comfortable narrative. we have gone below that psychological level. we know the back story. beijing is spending its international reserves. i think more interesting will be where we are going forward in the research story. we may have a fed rate hike this month. if we happen, if we have hawkish language, we will have more rate fed at a faster rate than anticipated, suddenly we might see a bit of change in the narrative of the u.n., downward pressure there, and even more pressure in china to spend its reserve there. i don't think today's story will
8:07 pm
be different, but this is one to watch in the months going ahead. haidi: thank you. first word news now with rosalind chin. board member says the central bank will maintain a loose policy as it tries to reach its target of 2% inflation. the boj meets next week, shortly after the fed. any u.s. hike could put upward pressure on japanese inflation. the boj still has a way to go to reach its target. an explicit pledge to resist protectionism, according to a communique just seen by bloomberg. the change in line which compared to the wording after july's meeting, when ministers and central bankers vowed to resist all forms of protectionism. the which comes after president trump enter the white house saying he will prioritize u.s. interest.
8:08 pm
forces in the usa progressive groups have been targeted by russian hackers attempting to extort thousands of dollars. investigations were launched by the fbi after at least a dozen groups received -- accompanied by sensitive data in the hacker's position. demands range from $30,000 to $150,000 payable in untraceable bitcoin. north korea says american military drills with the south are driving the divided peninsula and its neighbors towards, quote, nuclear disaster. accusedg's ambassador the u.s. of using stealth fighters in exercise that could lead to outright war. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm rosalind chin. this is bloomberg. thanks for that. two major developers out of
8:09 pm
washing today. filing aadministration new travel ban against several muslim majority countries. republicans in congress have finally unveiled the details of a replacement for obamacare. ramy inocencio will take us through the details. take two of that controversial traveled and. the second travel ban. critics are saying this is a travel ban 2.0, or muslim ban 2 on twitter. basically we are looking at the idea that this might actually have some standing and it might not go away like the first one. lawyers have risen up this, the state department has also vetted the wording in this new proposal here. let me walk you through the details. a u.s. document, for example a visa, green card, or who is a dual citizen, and will not be denied u.s. entry. supplies to 6 -- this applies to
8:10 pm
6 muslim majority countries. has been dropped. the u.s. refugee program has been frozen for the next six months, or will be frozen for the next 6 months, starting march 16. looking ahead at what is happening here, jeff sessions, rex tillerson have come out saying this is not about religious discrimination. they are saying it's more about national security. take a listen. >> today more than 300 people, according to the fbi, who came here as refugees, are under an fbi investigation today for potential terrorism related activities. >> to our allies and partners around the world, please understand, this order is part of our ongoing efforts to eliminate on her abilities that terrorists cant and will exploit for destructive ends. the white house saying it
8:11 pm
is a matter of national security. critics also saying it is a matter of religious discrimination, and you can bet the legal challenges are going to be coming. already the state's attorney general of washington state in massachusetts states have come out saying just as much, they are looking at options and nestle go steps. bob ferguson was one of the attorneys general who led the successful attempts to push back against the first travel ban in late january. also the aclu, american civil liberties union, says president trump can expect continued disapproval from both the courts people.as the earlier on bloomberg markets, alan kershaw which, also said they are looking ahead, although challenges may arise, he does expect that this travel ban 2.0, as some people are staying, will stand -- saying, will stand. richard: republicans in congress have unveiled legislation to repeal and replace the affordable care act, or
8:12 pm
obamacare. it seems a bit knee-jerk, doesn't it? what are the details? ramy: this has been a long time coming, a longtime promised. as for the details, that is the aca under obamacare. this is called the american health care act, or potentially ahca. this would unwind over the next three years pretty much all of the affordable care act. be thegest things would repealing of the rule for everyone in the u.s. to have insurance. it also proposes a tax credit based on age, versus on income. the older you get, the more tax credits you can get. sticking that is a point is that no estimates have come out for the cost or the coverage that will be supplied to americans who to apply for ahca, if it indeed does come to pass. but interestingly, looking at the political side of things, four gop senators, four gop
8:13 pm
senators have already come out against this, notably rob portman of ohio and lisa murkowski on the right, senator of alaska. the reason for this is because the new affordable care act -- the new care act winds down the expansion of medicaid, and they are against that. in a letter to senate majority leader mitch mcconnell, they basically said as much. they said, we will must support a plan that does not include stability for medicaid expansion populations or flexibility for state street reforms should not come at the cost of disruption and access to health care. breaking down the politics of that, if those four do leave support, 52 republicans are in the senate, minus those 4 is 48. the american health care act does not come to pass. rich? richard: still ahead, the markets priced in trump's pro-business policies. bought about implementation?
8:14 pm
-- but what about implementation? we will talk about the downside risks. we are joined by a veteran sx expert. that is next. this is bloomberg. ♪
8:15 pm
8:16 pm
richard: you are back with "bloomberg markets asia." haidi: i'm haidi lun in sydney. investors will be watching for any comments on surging half prices. atenior vice president compass global markets is here. the aussie pretty range bound over the last few sessions. do you feel with the commodities store, a lot of people are saying particularly when it as well ason ore, this rhetoric as of this is as good as it gets, and therefore the aussie dollar.
8:17 pm
>> the aussie dollar is being quite resilient. there's a number of reasons why it is resilient. we have seen the terms of trade improve by almost 60% year on year. there's also been a lot of sydney halferms of prices in particular. you mentioned the property 18 percent year over year. the rbi is keeping a careful eye on it. the governor recently mentioned, he said people using the interest rate cycle is at the end of its journey, and that means the market is now looking at the next perhaps being a lifting interest rates. possibly mixed. there is a chance that rates may go up in australia next year. is australian dollar hovering between 73 and 7810 level, we believe that range bound situation will continue as the u.s. dollar is more strength, the share with further
8:18 pm
rate hikes expected in the u.s., should see the australian dollar fine and little bit of support because of those terms of trade. haidi: i'm jumping around a bit to go from the aussie dollar to the um. one of the interesting things to come out of the mpc document over the weekend, the change in wording from stability to further liberalization. some market participants are saying investors say this creates a tolerance for downside when it comes to the u.n. quite a significant move as prices go, 8957. where do you see the chinese currency going from here, particularly with the sensitivity of these currency wars potentially being labeled currency manipulation by the trump administration? >> it remain sensitive to the fiscal stimulus and the situation in the u.s. as well. it's interesting imagined the chinese premier's comments over the weekend.
8:19 pm
he said he wants to stick to a market orientated exchange rate regime, and he mentioned the word stability. that to me means we will see more market-based approach, when it comes to the yuan. our baseline case hasn't changed. we think the u.s. dollar will rally by another 5% or 6%. we could see dollar-yuan back up to 7.4. as long as the chinese government is happy to keep the marketplace approach intact, then we should be the yuan we can as the u.s. dollar strengthens. meanrd: what does it all also, with the fed. the fed is a done deal, it looks like, next week. it looks like maybe three this year. how does that play out when it comes to the u.n.? >> absolutely. it looks like it is fully priced into the market. the situation there is u.s. economic data continues to improve. even the fed chair janet
8:20 pm
yellen over the weekend talked about march being appropriate for a rate hike. my concern is we might only see 2 rate hikes this year instead of markets expected 3. u.s. treasury secretary mnuchin came out recently and said he aims to pass legislation through congress based on u.s. tax reform bill, perhaps by around about august this year when the congressional recess takes place. i guess we've got to wait 5 to 6 months before we get a feel for what is happening with tax changes in the u.s. the market may look at -- certainly margins fully priced in, september on the radar. we might have to wait until 2018 before we get a feel on the impact on the u.s. economy from their. u.s. dollaree the contain itself. you can put a lid on the u.s. dollar, which would then see other dollar bloc currencies perhaps benefit from that move. richard: you said 5% increase in
8:21 pm
the dollar. who is going to take the brunt of that? it looks like we are getting some of that event risk in the future, political risk such as the duck -- dutch election a german election already priced in, and the euro firming up. perhaps investors looking eased over those concerns. certainly brexit is also out there. >> indeed. we have seen the sterling pound fall to two-month lows. and in europe as well, when we look at what's happening there, the uncertainty regarding inctions in the netherlands, france, in germany in september and possibly even italy, who knows? that sort of uncertainty is seeing a lot of european funds go elsewhere traded as benefiting the dollar bloc currencies like the u.s. and aussie dollar. we could see the euro find itself back testing that support level of 103, in coming weeks, in line with our baseline forecast the euro is heading
8:22 pm
towards parity this year. richard: good call. well, it's a call and we will make you stand by it. this is bloomberg. we will look ahead to the open at the bottom of the hour for hong kong and shanghai. ♪
8:23 pm
8:24 pm
haidi: this is "bloomberg markets asia." i'm haidi lun. mr. xiao talking about the chinese ability to control their overall debt. interesting line, doesn't exactly give you much confidence here. one of the things he's been saying, this is the minister of finance that china's
8:25 pm
generally controllable. that's what he's been saying here. that's what we've got at the moment, so far at least, heidi. haidi: that's right. because of course debt has been the key concern as far as these systemic issues go, a lot of investors and economists saying, this quite a danger to 41% of government debt. what is concerning is what is not being reported and that number. also saying the finance ministers setting a time when it comes to personal income tax reform. was at the head of the tax administration, so that is something he would know quite a bit about. he is saying china is considering tax breaks to encourage domestic spending changingchina, mulling threshold to waive the income tax. hearing from the finance minister, who took on the role last year. is itd: also suggesting,
8:26 pm
more room also to raise that. let's head to the bloomberg business flash. a shot at turning around north america's division. shareholders should vote on whether to accept harrison's request of $32 million a year. million did cover lost income from his previous job at canadian pacific. stock is up more than 38% since he was suggested as chief executive. richard: deutsche bank fell more than 3.5% in new york after concerning the change in strategy and plans for a $.5 billion in use stocks. that oneold bloomberg key stakeholder has signaled they will take part in the share fourthhe bank costs capital infusion since 2010. richard: exxon mobil planning to spend $20 billion in the united states through to the end of 2022. it's designed to expand domestic production.
8:27 pm
od said the shale boom is encouraging exxon to bring spending back to america. 45,000 jobs in texas and louisiana. that is a we have at the moment. there's more when we return. -- what we have at the moment. there's more when we return. ♪
8:28 pm
8:29 pm
richard: it's 9:29 a.m. for those window cleaners are the industrials finance center in hong kong. seconds to got 50 before the start of the session right here in hong kong. i'm richard salama coming to you from the bloomberg asia headquarters. i'm sure there is a markup analogy we can job there with those last shots we are seeing. i'm haidi lun in sydney. we are looking at a mixed session when it comes to asia. likelihood of the fed moving next week being priced in.
8:30 pm
we're looking for other drivers straight looking at shanghai and hong kong marks its open, we have these other comments coming through from the finance speaking for the first time at the national congress, saying government debt is generally men eligible -- manageable. taking a look at how the markets are reacting at that open. sophie? >> we are seeing marginal moves over in shanghai. falling for a third day. we have the deputy governor saying that china should prevent as well ascurities the property markets, and the real economy should be given a boost to hong kong, extending monday's gains here. i want to point out one stock in focus. we had china hung chow fall nearly 5% this morning. trading suspended on monday after sending as much as 9.2%, and with a target of a report by
8:31 pm
emerson analytics that spurred that selloff. emerson's allegations have since been rejected. it is the world's biggest aluminum producer. elsewhere, beating gainers up leading gainers-- of about 2% there. rate, seeing the offshore just about a six-spot. this after pboc to the daily rate at the weakest level since january 17. the level was stronger than what was forecast by the bank. china's pledge to further liberalize the yuan. it has to be right at the tolerance for further depreciation. yuane seeing the offshore raise its premium against the onshore rate, trading near a 2-month low. richard: thank you very much. from so we be get to rosalind
8:32 pm
chin, who is taking a look at the resumption of that ban on people coming from certain countries around the world in the u.s. margaret: president trump side in order restricting people from 6 muslim majority countries entering the u.s. it revives the policy overturned last month in the courts. the directive takes effect on march 16 and removes iraq from an initial list of citizens is countries cannot enter the u.s. -- countries from them citizens cannot enter the country. presidential candidate has won the support of his conservative republican party despite assertions he used public money to pay his family for fake jobs. the party was left with little choice after his replacement refused to step in. an independent and far right asder marine le pen are seen favorites for next month's election. the u.k. prime minister theresa may being urged to take the
8:33 pm
country back into a european trade body. was one of the founders of the european free trade association, but quit in order to join the body the became the european union. the group is made up of norway, switzerland, iceland, and liechtenstein, and brexit supporters in parliament say the suggestion came from -- itself. the ambassador to malaysia has flown to china after being expelled over the murder of kim jong-un's half brother. he was ordered to leave when he criticized investigation into the killing and accused alledge of can firing with north korea's enemies -- conspiring with north korea's enemies. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm rosalind chin. this is bloomberg. government debt is quote, generally under control and the level won't change much
8:34 pm
this year. he has been speaking at the national people's conference in beijing. our reporter is there. is generally under control, is that generally reassuring here? i guess that depends to you talk to. yesterday we spoke to the chief economist of the itc, an investment bank here. she said these concerns about china's debt problem are being overplayed. but then you hear from moody's, and they say reforms are not enacted. the heavy lifting isn't done this year, it will be credit negative for china. but we are hearing from the finance minister giving more details as we speak. he did say that local governments and regional government that is a concern. he did say that he wanted to draw back the veil on any hidden risks, and he was upping pressure on local government officials to monitor those. they want to enforce stricter caps on government borrowing. there are measures in place,
8:35 pm
this is clearly something they are aware of great the details a rather thin on the ground -- of. the details a rather thin on the ground. other information we got from other points, tax reform. this is something he knows a lot about. towants to cut corporate tax small businesses in china by about 50% and wants to reform personal income tax. other measures to recalibrate the tax system here, we also heard about infrastructure spending, they have sent out about 17 billion u.s. dollars this year. the all supply side performance we heard about, challenges is pointing to about putting back to work late off employees in steel, iron, and coal. we are getting more details as we speak from the finance minister and we will be bringing those to you as we get them. haidi: we are expecting to see another reduction when it comes to the foreign reserves later this tuesday. if the government running out of options when it comes to supporting the yuan?
8:36 pm
we know it broke through that $3 trillion mark in january. we expect further burning down of those fx reserves for february. at the start of this year we had about $50,000 quota that chinese citizens get, a conversion quota. that is likely to have measured and drawn down some of those fx reserves. the bigger issue, as we've all been talking about, are those fed rate hikes. if they take place, more pressure on the u.n., more pressure on capital outflows. that leaves the pboc with a number of options. when is to go for a one off the evaluation, unlikely at this stage. the other is a benchmark rate rise. that's a possibility. most economists don't foresee this happening yet in 2017. final option of bloomberg intelligence, most likely, continuing to muddle through with a combination of capital control burning through those fx reserves and raising
8:37 pm
rates in the open money markets, in the money markets. we are seeing things like the medium lending facility. that is what bloomberg expects. it is a difficult position for the pboc. clearly they have the world's largest fx reserve. we do expect further pressure on those, if those fed rate hikes to come to fruition. -- do come to fruition. haidi: i like that strategy, aggressive muddling through. we will get back to you in a bit, as we continue to hear from china's new finance minister in beijing. let's go back to australia. they could come out with a surprise. >> they might. but central banks tend not to do those things. just as the fed and u.s. has been talking up the expectation of a rate increase, in australia precisely the same has been done, saying does not going to be any change to the cash rates. we are on language watch for
8:38 pm
this one. but even the statement probably will not be wildly different, probably looking for commentary around the level of the aussie dollar. these have previously been identified as not wanting to inflame any further for the sake of more growth. we have all economists today saying no change in 2017. richard: the chief executive has been testifying to australian lawmakers. they have all been doing that, haven't they? what kinds of questions has he been taking? year forthe time of that, the second time all the bank chiefs appeared before this standing committee on economics. to take similar sorts of questions, mostly around accountability, what happy banks done -- have the banks done to address a lot of scandals.ism around
8:39 pm
a lot of questions around that sort of area. it is politically charged, being a committee made up of mp's. your position, labour party, really wanted a royal commission into the banks, these hearings are a trade-off from the government. he has just wrapped up his testimony and they will break for lunch. at a quarter past 1:00 local time, we will have a ceo at his turn to take 3 hours of questions from lawmakers, rich. richard: paul allen in sydney. i want to tell you about one feature on the bloomberg terminal. it is the interactive tv function. you can find it on tv go. you can watch live. and you canbout -- become part of the conversation as well. send us instant messages during our shows. check it out. tv go. haidi: up next, room for
8:40 pm
disappointment. find out why russell investments isn't too hopeful about the trump effects' longevity. this is bloomberg. ♪
8:41 pm
8:42 pm
richard: this is "bloomberg markets asia." i'm haidi lun in sydney. a quick check of the business flash headlines. a raise of $13.9 billion for its me that private -- major private equity fund. the maximumlected 12.5 billion dollars from investors, earning $1.4 billion from its own balance sheet and employees. kkr's north american team raised a $9 billion for its annual fund. bmw saying he sees
8:43 pm
the european car market slowing to single-digit gains this year after enjoying a double-digit rise last year. kisses harold kruger. he speaking at the geneva motor show, telling others that europe remains vitally important, and policy changes need to happen. >> the european market grew last year by a two digit number, which has been a fantastic achievement. we may be ca1 digit higher, one digit number this year. europe needs free trade as well. 44% of ourstill 43, sales worldwide it bmw. europe is still very important. euphoria to not last a snap on its third day of trading. she dashers falling below the advent. shares down 44% on the first day of trading last week. on friday the stock climbed 11%. by monday, five out ofshe dashee advent. the seven had a celebrating. two had it on hold. our next guest sees
8:44 pm
downside risks ahead. haveis after markets raised in close to perfect implementation of trump posco business policies pre-us is the chief market strategist. thank you for joining us. near-perfect implementation of donald trump's policies, many people in the markets are saying at the moment. the point is, implementation of what? we don't know. point.h adds to the we know the broad outline of what president trump has proposed. there's not a lot of details there. the legislative process will change that. right now we think what we've heard is going to be positive for markets, we think it will be positive for growth, positive for earnings, that we have a little bit more modest expectation of how positive it's going to be, and given how far u.s. equity markets have rallied and see election, we think
8:45 pm
there's a lot of optimism. perhaps too much optimism based upon that. these valuation levels, and it is largely a valuation argument, this only more room for downside surprise than upside surprise. absolutely. some would say that investors are pollyanna about this. on the other side of this, they might start thinking later down the line that protectionism is the biggest problem. they gives them another reason to sell, doesn't it? i think the valuation argument would make them more compelling, and the negatives from trade, the negatives from the fact that if the trump i thn argument would make them more compelling, administration is as successful as it hopes it is, that the federal reserve might be more comfortable raising rates. calln't have a recession in the u.s.. we don't have a hardly negative view on markets. we just ate at these valuation levels, a lot of perfection is priced in and this would be a very good opportunity to take profits in the u.s. it has been a great 8 years we
8:46 pm
are about to celebrate next week. take some profits and be more globally diversified. value -- more valuations are not necessarily as much of a headwind. volatility has been a real head scratcher given that so much risk is still on the table. it was interesting, a bit of a contrarian view that a lot of market participants would want to express, there are people that are may be looking forward a real head scratcher given that so much risk is still on the table. it wasto hoping for something st you can get volatility and opportunities to make money again in the markets. >> that's an interesting question. when we look at valuations, europe on a relative and absolute basis more attractive than the u.s. that would be our top destination for a u.s. dollar strategy.location also what we've seen in europe is the political headlines have provided downward opportunities to get in. when you look at the the european
8:47 pm
business cycle is early stage, the u.s. is late stage. their central bank will be easing quantitatively for some time. the fed will be discussing raising rates. when you start adding up the case, that says that europe has we think more tail winds, but also these political volatilities we will see, la will it be a frexit, nexit. the german elections are coming up right in europe and short time -- short term has provided interest opportunities we have not gotten in the u.s. if you're stable and have done your homework and are disciplined, looking at valuations, we think a european focus can provide these opportunities on a tactical basis. about whatcurious you like in a chapter you say japan is one of your picks. is that the classic short again, long japanese equities? it would be that classic play.
8:48 pm
when one looks at growth in japan, that is yen-based. so, getting the currency right. also in japan, there is a lot of activity that wasn't here 10 years ago or longer. we have been here for 30 years with their office. we are not building this capacity, we think valuations look ok in japan. the economic cycle is improving. for people who get the security selection active part of it right, we think japan can provide some opportunities. outside of japan, the chinese economic cycle is stabilizing and improving, so that has chinese implications straight it also has broader emerging markets and commodity implications. interesting,ing and japan might be a lot more interesting than global investors or maybe usd investors might have been experiencing over the last generation. richard: coming something, steve. -- tell me something, steve.
8:49 pm
would you say abenomics is working? many people have written it off. >> we would not be writing it off just yet. abenomics is working. there is traction. the question is magnitude of expectation. for the more optimistic expectations, progress is slow. i think for more tempered expectations, we are beginning to see initial signs. we are beginning to see inflation crop rate. the economic cycle is beginning to cooperate. perhaps most affordably, this is a global monetary policy environment for the u.s. federal reserve began this coming out of the great recession. has beencentral bank very disciplined on their quantitative easing program. also, the bank of japan has a very disciplined commitment to quantitative easing. that ultimately will make a medium to longer term difference, short-term there is a currency effect as haidi mentioned earlier. longer-term, disciplined commitment to auditing of ease which the japanese have
8:50 pm
not done historically. there has been a stop-start history they've had. longer-term commitment to quantitative easing, monetary is the baseline. fiscal stimulus down the road is beginning to show signs, and getting the stock names right, getting the asset classes right in japan, which is what my colleagues do for russell globally, will be a great option to globally diversified strategy. richard: looking across the border, looking to china here as well. what are you looking at in that country? >> a lot of the work i do in my group, we look at china, first and foremost as its contribution to the global economic cycle. the official number is set to be 6.5 percent, which is a bit of a deceleration. also we think that's getting closer to a realistic assessment, what chinese economic rose is. the low sixes, perhaps a mixed
8:51 pm
6% gdp growth rate seems reasonable for china. and it seems reasonable to the and therging markets commodity cycle and mentioned earlier, we have begun to see stabilization in those areas. emerging markets, we would unpack that and deconstruct that and look at a name by name, country by country basis. the chinese growth is contributed to that stabilization of the em cycle. richard: steve, great talking to you. steve joining us from turkey. up next, be cautious on china. the new finance minister outlines his agenda. ♪
8:52 pm
8:53 pm
richard: the chairman of the royal bank of scotland saying he sees nothing on the horizon that ought to worry the markets. howard davies telling bloomberg
8:54 pm
the credit in china is something to be wary of. i think markets ought to look below this noise, because it is noise, until we have serious investigations, we have no idea what's going on. is that thecan see fed are going to tighten. the fed are reasonably confident that the economy is on an upward path. i don't think the worries out of china are that dad. we all expected chinese credit to slow a bit, but we heard from chen last week with confirmation of that. but i don't think it's disastrous. i don't think there's anything that should really alarm the markets at the moment. >> was the biggest risk to the world economy right now? -- what's the biggest risk to the world economy right now? he talked about the fact that we 2% growth. into
8:55 pm
what worries you the most? >> it's probably chinese credit, can the chinese manage that expansion downwards. he was trying to reassure us last week that they are aware of this issue, credit growth has an rapid, and the banks have grown very rapidly. just today the chinese banks, the chinese banking system is bigger than the european banking system, which is extraordinary, really. 2% growth. what worries you the most? >>can that be managed downwards are managed at least flat? that is the biggest problem. the disruption in the chinese financial system would be very worrying. haidi: how do they handle that? this is the trilemma we talked about in china. premier saying there is no financial crisis looming. are they concerned that they can keep a handle on it this year? in two yeras, it unravels and gets ugly? i think they can. ultimately the finances of the chinese state are very strong, barley is relatively low. or probably there are more bad debts in the banking system than
8:56 pm
we are currently seeing in their accounts. what they did the last time this happened was create an asset management companies, bad banks to take these debts of the bank's balance sheets. localf them are indebt to governments and state enterprises, where the banks have been leaned on to lend to them. the chinese government can deal without alarming people. there are tensions within the chinese administration as to how it should be dealt with. haidi: we will be live at the asia-pacific investors corporation in tokyo in the next hour of the show. we have our very own shery ahn there. what do you have lined up for us? shery: haidi, more than 100 chief investment officer's and directors here and tokyo, just talking but the japanese economy. remember, the pension funds struggling right now as japan's aging and shrieking population puts pressure on them. we see jumping of retirement payout.
8:57 pm
he will have the president and ceo. he will talk us through what he sees in the japanese market and why he is neutral on the market. we also have the ceo of sander levin investment, all coming up on "bloomberg markets: asia." ♪
8:58 pm
8:59 pm
>> it is 1:00. i am heidi bloom. >> i am rishaad. you are watching bloomberg market. >> the chinese finance minister says that things are generally under control for the a rate hike is seen as a certainty and
9:00 pm
policymakers are told to get on with it. republicans the move on with a travel ban and a plan to repeal obamacare. evidencel look at this as we go to tokyo. going from 202 asian to new york. >> that is right. marketst a look at the or us. >> it is a mixed take sure with the philippines here and it is coming in at around estimates and it is reaching more than was the a quarter of a
9:01 pm
percent and northeast asia is in of hered we have cost with the room porting of this beginning with the arrival of equipment in north korea. and we arewing this seeing stock are somewhat weaker. we are taking a look at what is going on with industrial leading the rise and we have read hence stock. we are seeing a rise in building with investment saying demand has risen and this has rebounded for
9:02 pm
recent levels. here withk at this how the currency has been playing out. these markets are seen consolidating and they see the range staying in this with stock buying providing samsung electronics is a clear head. disagrees with the findings on these ports and alledge that other executives hid bribery. optimistic outlook with fundamentals around stocks. >> think.
9:03 pm
eufinance to says that governments debt is under control and this level will not change much. this in november and tom mackenzie is all over this story. is it generally reassuring to say it is generally under will? >> in a word, no. there is reassurance that this is a shift with this priority and they are focused on the local and regional government debt with a finance minister saying he wants stricter caps in place to ensure the contingency plans at the local government level and he said that he wanted to pull back on some of the
9:04 pm
risky actions and he wanted to see the government bond issued. this year, the target has been set and it was 3%. the actual number came around 20%. he was asked if there was and he spelled out the fact that this was an in on the year on year around 30 billion u.s. dollars and he said that his money is not being spent on welfare, but sets. t gdp, around 40% debt to which is just the government number. is concerning
9:05 pm
investors and analysts. some exempt did household items. they said they would do the spike cutting corporate taxes and replacing them with value added taxes. he talked about jobs and employees who were laid off. a lot of this is on the agenda, but if this was a chief question. reserve is the foreign pile on tuesday. is the government running out of options? >> we should not lose sight of the fact that these reserves have broke through the march and it is expected to come down again for february with the
9:06 pm
pressure mounting and the conversion florida set. vantage of this and burned through this reserve. the figure pressure is putting this in a difficult spot that bloomberg intelligence points out. they say that there are three options. one of them is to raise the benchmark rates. continue to go through the current process and open the money market rates with capital controls and continuing to earn through those reserves. it is a chief challenge with policymakers and you can look at that rate hike.
9:07 pm
>> thank you for that. we're turning now to the first word news. >> the philadelphia fed president says they are running in of reasons on a rate hike. he spoke about central bank losing credibility, if they do not raise rates soon. fragility of independence ama concern to me and i worried about reforms the proposed undermining that and making the fed more political and not more than. i have can turn to that. exxon mobil will be allowed to expand production. will. 45,000 new jobs in texas and
9:08 pm
louisiana. a statement was released that called this a true american success story. the ipo of theow price. shills urged on the first day of trading last week. by monday, five of the seven tolysts were celebrating and them had it on hold. and korea says -- they are accused of using strategic bombers and self letters in exercise that could lead to outright war. news 24 hours a day. poweredmore the 2600 --
9:09 pm
by more than 2600 journalists. development of washington today with a new travel ban against six muslim countries. the detailsvealed for the replacement to obamacare. >> the travel ban. if you hold a u.s. document that has allowed you to get into the country, you are ok right now. citizen ona dual this list or other countries, there are six countries on this
9:10 pm
ban includedfirst iraq will stop also, there is going to be a 120 day halt on refugee admissions. the reason there is a focus on refugee admissions was because of -- >> today, more than 300 fbi, areand to the f e under investigation because of potential terrorism related a is to orders. >> please understand that this is part of ongoing efforts to eliminate possibilities that radicals will exploit. >> major cabinet officials talked about this and another
9:11 pm
talked to u.s. allies around the saying, please understand our position. there are going to be a bunch of legal challenges in washington state and massachusetts and they has said that they are looking at legal options. one of the people who let the charges and the push backs against this travel ban. the american civil liberties union says that people will decide and will say that trump is on the wrong side of this here. said,alan dershowitz regarding the travel bans and the court challenges, expect this to stand. republicans,
9:12 pm
unveiled their legislation to repeal and replace obamacare. >> yes. the name has been shared -- changed. administration, it is called the american health care act. the would unwind most of affordable care act and repeal most of the rules and regulations that require everyone to have insurance. suggest ano age-based tax credit. the older you get, the more tax credits you get. not say how does much it will cost and how much it will cover. theg sticking point is on
9:13 pm
political risk. gop senators have already come out against this potential plan, including rob portman and lisa murkowski. it would winds down the expansion of medicaid and they say that they want to have access to health care for all. politics coming into this. thank you for that. still to come, we will talk to the chief executive in japan. seesll talk about how he this playing out over the next year. , he is selling us the best investment opportunities. is bloomberg.
9:14 pm
9:15 pm
9:16 pm
with bloomberg markets. now.t's go to japan are going to the asian investors summits today. what evidence are you seeing? focusedtors have been on the japanese market, especially after the trump election. hims go to my guest and ask what he thinks about the market. joining me now is the investment manager. thank you very much. stalk about the equity markets.
9:17 pm
that we arefact seeing the best profit margin in so.last decade or >> there is still a eight uncertainty. there is a noise in this market, this right the back that japanese companies are doing ok and the ernie expectation is getting higher this next physical year stop given the fact that we have uncertainty in the market, we have to be cautious about the equity markets. >> there is uncertainty about the japanese yen. broad gains, but the japanese yen has losses right now and what is your directional
9:18 pm
for and what does it mean the equity markets? be weaker right now. relativelythat it is sideways and we hope that it will get weaker. that correlation has always in high. >> you have those valuations on the stock market and we see a share buyback dividend with positive capital policies coming out of japan. something to look forward to? >> definitely. we talk about what for governance code and things being made clear from the outside active and are getting more
9:19 pm
clear about the entire mark and our witty market. i think we should look more positive about the japanese come in these and investors trying to make sure we are more parent. >> this means a shift towards valuation. >> i think it is going to the more valuation. >> having said that and with the uncertainties in this interview, is there a chance that we are rebounding with this around the world and europe? >> this is the thing we need to watch for and it is true that in japanould get shaky and outside of japan and that will play out. >> comes to this real economy
9:20 pm
here and we are seeing a nation starting to pick up. you say you don't see the meaningful wage increase and this is a huge problem for this economy. inflation last? >> it will take time. wage increases are happening in some sectors, but have not and white right yet. we have seen some companies increase what they are getting therom services and i think this is creeping up. >> what does it mean for the economy are smart >> it is generally good and we are not
9:21 pm
expecting rapid inflation. the boj will continue. the inflation is picking up. they are struggling with yield and trying to keep the 10 year yield anchored. tos it mean they will have go for the target? the situationt and thereout japan will be a bit more of a week and see mode and the bank of japan might not have to do anything. is an unprecedented third term. does it mean that there is more momentum for him to accomplish
9:22 pm
the reforms? true and his is health has been good. is really important and you cannot forget about the importance. changes and itny investors a lot of being uncertain about japan and the stock market. >> thank you for coming in and joining us here. of course, as he told me, he could serve a longer time and we could see more policy stability in japan, which would he a net
9:23 pm
positive for the country. >> thank you. we are counting down to the rate decision. are headed over to sydney. that is on the way.
9:24 pm
9:25 pm
>> welcome back. i am in hong kong. waitinge in sydney in for a week decision. they could still surprises. >> they could. rhetoric suggests no change to the cash rate and we watch here forge
9:26 pm
commentary around the dollar and cutsng prices here for the and more growth. front withp to the shane elliott and the commonwealth bank boss. what has been under discussion? goingiott is going to get and what was initially discussed was talk about scandals with the wealth management division and the investigations that took place afterwards with many asking why senior executive student gets set.
9:27 pm
dimension a political , you are right. >> thank you for that. north korean missile launch.
9:28 pm
9:29 pm
>> i am rosalyn shen with the first alert headlines. reefing officials. he says the debt ratio will not change much and they have uv is adding debt swelling and the equal point the january gdp. president trump has signed an order for paper will from muslim majority countries entering united states. this took effect on march 16 and he removed iraq from the list of
9:30 pm
dual citizens will not be a change in to stop strategy and an offer for new stocks falls ceos told bloomberg the fourth capital infusion since 2010. >> we have been shrinking in reconstructing over the past two years. we want to move back into a modest growth mode and we thought that it would be helpful to have cap at all. news powered in 120 countries will not this is a very. >> thank you for that will stop
9:31 pm
started off mixed and we have the nikkei in play and we have equities over there. >> we're seeing this across the region and going into the break down. the morninges into with and it is lower industrials on the index and we have infrastructure shares going tunnels,ll here with bridges, roads, and so on. of china increasing
9:32 pm
the reason jim that the resumption of training was started today after being suspended. biggest -- producer. the shares are recovering after falling. they became the target of emerson analytics. we are seeing properties rising this gives a nd around what china plans to do around economic growth will stop -- growth. >> there you have it. says that the united
9:33 pm
states has reaffirmed its commitment to the ally. isabel joins us. say is something that they when the drills take place and the action seems to be from the same flavor. and we haveay that seen a flurry of phone calls with trump and the prime minister talking, but could not agree that this represented a high level of threat. hisld trump reiterated assurance about the united states supporting japan and asking for believe in the united states support. from northn this
9:34 pm
korea and it warned of being on the brink of nuclear war. three of the missiles landed in the economic sound and i think there is plenty to be nervous about. longer are the implications? we will seehink japan, south korea, and the u.s. the this and you have missile defense system, which is something that china has been it is what the threat these three countries working and various other issues.
9:35 pm
they will have no choice but to work together. >> very unfortunate timing for china. great to have you here. pull the united states out of the trance of a partnership has left companies unsure how to proceed. work went into this over many years and i think countries have taken this to a higher level of openness and preparedness with regulatory standards. shame to see all of that loss. engagementeen the with the united states and it is possible that this could and not havingan
9:36 pm
it makes it worth less. >> anything is possible. wise? downsiden't see the and it is really a question of can beal will and this very attractive and encourage countries to take a step forward. >> you have china stepping in and defending free trade and liberal trade. it is fascinating. space for china to
9:37 pm
step up. do you think that china is ready? >> it is an ironic question. thesee that's reach and president was the champion of global liberalization and it all seems a little bit unbelievable. china has been able to beneficiary in global markets. the has brought china to international system and china has a lot to lose with a return to protectionism. they have started to show leadership in a number of places. active in negotiations and they realize that these times come and become more active, showing a degree of
9:38 pm
leadership, but it is a long way the government became for introverted. >> discussed the little earlier on. >> right. metformin bank of england and withjoined us journalists on thursday. we also know the global head of commodity research is going to .e in new york that is the bank of montréal plus longer siphon serving boss. that is just after midnight in hong kong. that is what we have through the day. next, economic
9:39 pm
expansion last year and how they are coping. this is bloomberg.
9:40 pm
9:41 pm
inthis is bloomberg markets asia. i am in hong kong and we are look in at the business last headlines with disappointments increasege talks and wage -- the base wage rising. inflation, boost to something they were desperate for. clashes, a showdown set
9:42 pm
for wednesday on who will get to run the company. powers bystripped of the chairman. it has been at least three takeover proposals in the past three months. >> saudi arabia may be overvaluing talks. value is at $1.5 trillion. valuation,s than the which is around 2 trillion. >> after looming in the early days, their assigned mounting that the real estate investment
9:43 pm
trusts market is starting to lose steam. i understand that you are with somebody who is not positive about the real estate. , bututiously optimistic the thing is that we are seeing low interest rate, which is positive. guess about what he thinks he will see. out.or taking time fall in the this the gains.spiked what is your stance on this market? run, woody's had a strong -- equities had a
9:44 pm
strong run, generally. we see a lot of cash coming into this isct markets and having a bit of an impact, with the reductions that you mentioned and that reduction in performance. >> does this concern you, the impact? >> in situations like this, we have had it for a long time with unusual policies and helpful implications for the mark its. risk that theoretical they can have on the marketplace , as with any monetary policy. time, there are other things, like the yield control curve and the fact that they have been willing to use
9:45 pm
that and have an clear about that. it will work both ways. >> do you see them having to raise the target? >> i think that there are significant moving aspects here stabilityve political and a reasonable economic growth with a lot of interest in japan. aspectsf that, you have to consider, like impact in volatility. all of this could and will impact monetary policy decisions imagined. >> will they raise the yields targets? is only one of a number of policies they are
9:46 pm
following and you can look at the conference and their only andsing on the policies looking at that third arrow. element ofstructural unemployment in japanese society and other areas that have a big impact on the economy. >> you talk about the geopolitical uncertainties. given the prime minister and the potential of becoming a longer siphon serving prime minister in mean lesss that volatility in this scene? clarityit provides is of 10 year in the political perspective and then you have what the fsa is doing and
9:47 pm
discussions with financial institutions here, providing a sense of stability here in japan. you are meeting people and listening to what others are talking about. there is a sense that things are moving. is thatd, the issue there are many factors that andd affect the yen investors, from the french elections to north korea. reliancehas been the on the weakening yen. gains withng broader and where is it heading? >> a good question and it is
9:48 pm
volatile. gains and action in the early part of the year. sentimente is dependent and will be on factors. >> you told me about what you heard on the ground and that is a reason why you are boosting your presence here. what are they interested in? the last five years is the asset allocation strategy. assetking for yield and allocation. there are many funds who
9:49 pm
and the in markets biggest challenge is the risk and the rate differential between the united states and japan, markets many investors focusmiliar with and they on how to diversify and create the right level of yield. area investors will focus on is passive or asset investing. we are seeing managers trying different ways to get the edge investmentw management has passive bonds doing well. >> yes. very competitive market, as you know.
9:50 pm
institutions are provide we are able to new strategies outside of the comfort zone, which could be unusual private market , in addition, there is more long-term partnerships where we provide additional services to institutional investors and we are more capable of listening to .he institutions and working market and we will work with that partnership and the japanese institutions on that approach.
9:51 pm
>> are you still boosting your estimates? >> we are. we have anreased and exciting future here. >> thank you for coming in and joining us from the summit here in tokyo. that was the ceo of standard life investment, who talked about investment opportunities here in the market. >> a great job. a lossmaking nightmare. we will get a report from paris.
9:52 pm
9:53 pm
>> this is bloomberg markets. >> a deal described as a win for all sides. the general motors come in he seeks to end the streak of losses. relationship year that is about to your revocable a change. they have lost nearly $20 billion. are they saying --
9:54 pm
owners of this brand are asked whyale and i now. >> perspective is that europe has to verged from the rest of and webal operations need more scale to make investments that are necessary to the success of. >> it has been 1999 since you turned a profit. >> we have done a tremendous job here over the last four and five years and we put the business on portfolioh with the improving the bottom line and we feel that we need to get more scale here and that is what this transaction is about.
9:55 pm
>> it is all about a buyback. >> we returned capital to shareholders and we announced buybacks on the last couple of year. down onkind of totals this. if you don't want one, you can always get a chevy and drive it to the levy. it is still available in europe. >> we got the reaction to this deal for the european assets. hadn the past, we competition and we have always respected them as competitors and we will respect new cop nation -- new competition.
9:56 pm
we are very confident. this is our interactive television function, which you can find. you can also catch up on previous interviews you may have missed and security functions we have talked about. send us messages. well, that is it. stop do stayhat with us to stop we will be back tomorrow.
9:57 pm
9:58 pm
9:59 pm
10:00 pm
00 him announcer: from our studios in new york city, this is "charlie rose." jeff: good evening. i am jeff glor filling in for charlie rose. we begin with politics. after delivering a well-received address to congress, president trump and his administration are mired in controversy again. after delivering a well-received on thursday, attorney general jeff sessions recused himself from any investigation into charges russia meddled in the 2016 presidential election. this followed new revelations sessions met with the russian ambassador to the u.s. in the lead up to the election. sessions addressed the situation at a news conference late yesterday afternoon. >> i have decided to recuse

20 Views

info Stream Only

Uploaded by TV Archive on