tv Bloomberg Markets Asia Bloomberg March 13, 2017 9:00pm-10:01pm EDT
♪ it's 9 p.m. in new york, may day in sydney. i'm haidi lun. rishaad: i'm rishaad salamat coming to you from agent headquarters in hong kong. this is "bloomberg markets: asia." ♪ haidi: rishaad: brian witt a big hurdle as parliament gives a thele -- approval to start process. scotland wants another independence note. australia ready to bring down housing prices.
a $15 billion bet on driverless cars, playing catch-up in haymarket seen as the next big thing. and ameeting of minds. washington saying it is in talks with beijing about a presidential powwow next month. got data coming out of china and about one hour, looking at retail sales as well. increased,s have looking at industrial production about 6.2% retail sales, 10.4% on year. one of the main stays of the chinese economy. we should be getting data about uan inn. in around -- yo about 10 minutes during the open, 29 minutes away in shanghai.
singapore started second day of trading. the prospects for janet yellen and company are playing out. with investors anticipating what janet yellen has to say, perhaps the china data to drop later today may give us some indication of how this may play out the rest of the day. for now, we are seeing korean shares leading gains in asia. we have the taiwan and malaysia coming online slightly stronger here. japanese stocks are on the decline. taking a look at the currency space, we do have the japanese yen, a little changed ahead of the fed meeting. the south korean won slighting against the dollar. prices, weok at oil do have new york crude holding losses below $49 a barrel.
this is the for u.s. government aid a is forecast to show u.s. supplies rising for a 10th week. looking ahead to april, the dia reckons that u.s. shares output would reach highs we saw last march. higher u.s. output is the main threat to opec steel. has been putting more risk to act as opec is cutting supply. you can see on the wet line that the accounts of drilling rigs was at the highest of september 2015. this confluence investment market chief market strategist it proves anything north of that will lead to expanding ri u.s.nts and higher expansion.
haidi: i will take it from here. let's get you up to date with first alert news with paul allen. reporter: thank you. the reserve bank of australia says regulators are prepared to do more to slow house prices. assistant governor michelle balint says there could be further restrictions, as initial affects our trip -- fading overtime. home prices in eastern cities have been skyrocketing, prices in sydney surged by the fastest pace in 14 years. >> there's also thinking to be done about how monetary policy consideration should factor into stability issues, and the real mack brown -- macro financial interests should play in a low interest environment. reporter: discussions underway for a possible meeting between president trump and his chinese counterpart . the white house says the matter will be on the agenda when rex tillerson traveled to china this
week. this comes amid rising tension in asia for the north korea's recent missile launches and beijing's anger of the u.s. missile defense system. the company owned by the family of president trump's son-in-law stands to make more than $400 million from chinese investment in his manhattan office building. with4 billion transaction provide the cushion or -- with funds. this has raised national security questions in the u.s. toshiba stocks funds -- plunged. toshiba has already delayed reporting was -- once. a write-down book of more than $6 billion of westinghouse. there may be a news conference situation.the
global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. britain is another step closer to quitting the european union. that is parliament gives the prime minister permission to launch the process. meanwhile, the united states is closer to the first rate hike of 2017 as policymakers prepare to meet. global policyr editor. theresa may, rebellion by her own party did not matter much. reporter: in the end, it does not seem to have mattered much at all. it may not be over yet, but yes. according to what the uk's supreme court decided, parliament has to give theresa may the go-ahead, but the house of lords came up with a couple of amendments to add to the draft bill, a very simple bill. -- in short commons
order the house of lords got on board and approved the clean bill theresa may wanted. the queen has to give royal assent. then theresa may has to invoke article 50 of the lisbon treaty. this has never been done. kind of making it up as they go. the word on the street is the last week of march is when this will be likely to happen.the times newspaper that members of theresa may's party are getting ready to introduce at least seven more builds on immigration. all caps of things last -- all kinds of things will have to be passed through theresa may to give the go-ahead. we will see how people deal with seven more bills. kathleen, frexit could mean the breakup of the u.k. reporter: it is certainly
intertwined. has already had a referendum on leaving the u.k.. this would be no small undertaking. but that did not pass. one thing that is different is that the u.k. leads the european union. one more reason for scotland to say that they want in. if they leave the united kingdom and become independent, they could apply the membership in the eu, and that is the impetus for them to move ahead. nicola sturgeon is the first minister of scotland, not exactly a prime minister because they are part of the united kingdom, nevertheless as the leading politician, she opened up this new brexit battlefront as she talked about moving ahead and talked about what theresa may has not done to get scott's on board. >> not only is there no u.k. wide agreement on the way ahead, but the u.k. government has not moved even an inch in pursuit of
compromise and agreement. our efforts at compromise have instead inmate -- been met with a brick wall of intransigence. reporter: interesting to see how this affects confidence in the market. i would like to take a look at the bloomberg chart. what it shows you is that hedge fund net short positions against the pound have actually been increasing. todaya may gets a victory when it comes to being able to move ahead on brexit, but the fact that the scottish parliament, the scottish minister, now saying they want , has gotad with brexit to be something else. they will continue to push the short positions. the white line goes down. the blue line is the british pound. up a little bit, but it is still under pressure. interesting to see if the latest
battle for theresa may has more pressure on the pound. haidi: elsewhere, it's almost a bit of a nonevent, but of course we are going into the two-day meeting. they look like happy campers ahead of the meeting. why? reporter: they seem to have done a good job of managing market .xpectations g i guess you could call it that communication. they have worked on it for a long time. what it occurred that had occurred is finally wall street aligned its view with what the fed has been saying. you're looking at the results of a bloomberg survey conducted march 7 and eighth. they see the hikes in march, june, and december. remember, the fed said in december they would go for three rate hikes. it has taken a while and now the lennon has occurred. we have another trait that can show you -- chart that can show you with a couple of nice lines.
you are seeing now the yellow line is what we saw up until recently. just two hikes in 2017. the turquoise line adds one more step. now you see one step, there's the second,, the june hike at the end of the far right, that's the december hike. there has been quite a change. one more thing about the federal reserve. the atlanta fed finally chose their replacement. they have the honor of choosing the first african-american said bank president in the 100 for your history. 104 year history. haidi: thank you. yet another delay from toshiba as that company struggles with nuclear arms h-shares taking in the -- tanking in the tokyo session. rishaad: we will be hearing from ups was management with -- wealth management. ♪
haidi: this is "bloomberg markets: asia," i'm haidi lun in sydney. rishaad: i am rishaad salamat in hong kong. intel betting more than $15 billion in driverless cars.plans to take over the israeli partner . rival isl's biggest qualcomm. 29% in theing almost new york session, while he had intel on the way down by more than 2%. >> the market had already priced in a good premium. if you take a look compared to the price, it is about a 35% premium compared to the current market value. but you have to take a look at is it is growing at a significant rate, and we think it will be a billion-dollar plus
business. calls for new talks on tuesday to bid to end of month-long strike on escondido copper mine in philly -- chile. face-to-face negotiations are the only way to resolve the issue. union leaders are reviewing the invitation, which includes improved pay and conditions offer. bhp says it has no plans to extend the miners working days. rishaad: saudi arabia considering a study group for the sale of the aramco shares. they were among 43% shall joint projects announced by the countries. other projects include initiatives to ease bilateral business, and dedicated industrial zones in saudi arabia for japanese companies. step closer tor be triggered later this month, after the u.k. parliament gave the british prime minister
permission to launch the process of brexit. we learn more about the implications for investors. is this potentially the start of a return to volatility in the market, given we had the very higher risk scenario that has been plaguing a lot of market participants? thinkually, i don't volatility -- i don't see many reasons for it to spike up a lot. the fed hike, everybody expects it. so do we. the fed policy still remains very conducive to growth and accommodative. not much of a change in terms of voluntarily d -- volatility. what we've been watching is not so much the fed. too many people look at the fed.
we are actually starting to prepare our investors for the second half, especially september, with the european central bank and where they have a big press meeting where they the tv or to announce think about tapering for 2018. that is likely a bigger mover on the currency and probably a bit more against what markets think than the fed meeting itself. haidi: perhaps not looking at the fed at the moment, but we have to look at the pboc. eairly substantial move for th yuan. of fedes a faster rate tightening mean for the pboc, and what sort of a monetary stopped easy china taking this year -- stock do you see china taking this year? >> they are shifting to a fairly
neutral share -- stance, not necessarily tightening. they manage that i capital outflow restrictions, but we iso think the big numbers not necessarily indicative of a new trend. we do think the outflows are likely to also continue or resume, so therefore we do believe that if you look at this , we expectcurrency over 12 months a bit more pressure. we had over 720 forecast. rishaad: why do you believe that? the reserve has stopped, but temporarily in your view, right? >> most likely. especially if on the u.s. dollar side, things become more attractive, and the pboc doesn't
match that in terms of monetary policy, that's not even china suggests the attractiveness of the u.s. dollar relative to the yuan. e more?ldn't there b really from an interest rate differential point of view alone, that speaks in favor of yuan.nk versus the rishaad: let's move to europe, and the whole idea of brexit seems a lot relayed this morning invasion -- a lot more real this morning. sterling? it stood up pretty well, but we have been reporting how the short position taken by hedge funds on the currency has been increasing. would you be a net seller right now of the pound? on the contrary.
the 12 month forecast actually implies a bit of a rebound for the pound. reasoning you could argue is that the purchasing power parity is stronger. the logic of why we are seeing the pound recover just as much as we think the euro will do is the following. in the second half, the ecb starts to talk about tapering in 2018. we know from the last five to six years that when big move happen on the currencies, they don't usually have been 50 or 75 basis points. they happen on putting on a tv, or taking off the tv.that is when you see are takingon the qe off the qe. if the euro as we believe strengthens, there could also be a catalyst for the pound.
notwithstanding the noise about brexit, to move more in the direction of the fundamental value. you say that selloff in u.s. government bonds is largely done, but the 10 year is holding --over to .6%, which is bear which far both a market for the bonds. do you see that happening? >> interestingly, it may be the end of the massive bull run we had over many years. months trade six that might be potentially interesting. yearsld go longer than 10 and finance it out of cash when interest is minimal. maybe it was six, possibly 12 months earning. incifically what we observe history is that the 10 year
prices peaks earlier. this also gives you an improved return overcast, but it could also be very interesting. turmoil,is a bit of this should be a position as well. of payingique way right now. haidi: thank you for those insights. rishaad: just getting this breaking news out of toshiba. the troubled consumer electronics maker has a nuclear division that has been causing it all kinds of problems. this is the third quarter financial statement. this is amid uncertainties over
gained. 9%.as been up around some of theactually stocks that are unlocked at the moment, some of the ones with the least analyst expectations. far. got 10% up so it's not no buy-in recommendations. 15 sell recommendations. a thorough click there at the moment. cells.15 quite a lot of interest. we can see what has been happening. one of the world's biggest pork producers, on the way, just around 4.6%.the majority of them are buy recommendations.
rishaad: 9:29 a.m. in the brand on theng as we start you hong kong trading day. i'm rishaad salamat coming from bloomberg asia headquarters in hong kong. haidi: i'm haidi lun here in sydneyhaidi:. watching the yuan is interesting. a little weaker today, but the broad trend has been a story of stabilization thanks to a number of controls and trying to fight in the market at. we are seeing chinese companies now taking out more for an -- foreign company loans. sinceear was the most
june 2015. essentially analysts are saying the growth in currency loans showing chinese corporations are seeing -- feeling better about the trajectory of the yuan. we are seeing the trends continue. it could be the fed. looking to the fed, looking to data out of china retail sales as well and, asset investment. all ahead of the bank of japan, the bank of england, and the election taking place in the netherlands. reporter: markets opening somewhat weaker, after 8% on monday. we do have consumer stocks also
in the red. we are waiting for the main activity indicators to give us a sense whether or not we are seeing momentum continue for the chinese economy. we have the effects of the lunar new year holiday, and we will see what it means for china at the bottom of the hour. in hong kong, financial stocks up about a third of a percent. stocks in hong kong rising for a third day. we will be diving into the dichotomy of hong kong equities later in the show. shares are shunned by analysts, outperforming the index. in sydney we had energy and materials stocks. the plans to tackle the energy tesla will be among the companies vying for a mega battery project for the
state. can fix theat he energy wells in just 100 days. checking in on the australian, we had a falling quite sharply. for business index confidence drop in february from the highest level in more than three years. is decline in the index taking the heat out of the aussie dollar with a large rise on january, considered a break from the record. --ore i go, a critical look quick look at what's happening with toshiba. we did have an update regarding the earnings report seeking delays until april 11. we are anticipating a press conference by the president at 4 p.m. today local time. we are seeing toshiba shares falling here today, down about 6%. rishaad: thank you, sophie.
let's get you to the first word news headlines with paul allen. reporter: the u.k. is ever closer to triggering brexit, with prime minister theresa may winning parliament improve the two invoke -- approval two invoke the lisbon treaty. the house of commons first rejected the brexit bill. it needs while approval to become law. theresa may will launch the process of leaving the european union. president trump sent ripples through wall street backing moves to separate investment banking from consumer lending. the idea would be for companies to partition investment banking into separate holding companies. the president says to raise the issue on the campaign trail and still supports it. reports from seoul say the government has tentatively agreed the election of a new
president will take place on may 9. the president was ousted friday after her impeachment was ruled illegal by the constitutional court. the potential date must be discussed with the national election commission and also reported to the cabinet. japan is expected to approve a special law soon to allow the emperor to step down. made a tvr, akihito address saying he was tired and worried he would not carry out his duty much longer. prior laws prevented him from abdicating, but a special bill will be introduced in april after opposition lawmakers compromise. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. thank you. returning to the problems at toshiba, where losses are in the billions because of its
embattled u.s. nuclear unit. the company is considering selling westinghouse and there could be some keen buyers. let's get some more. what the latest we have? there's a lot of moving parts regarding toshiba. is essentially buyers for the nuclear division. that is the core of the problems in the u.s. westinghouse unit, triggering a series of events facing a 6e toshiba -- six plus billion dollar write-down, then has to fill the whole by a best-selling assets. causing disclosures are toshiba to face lifting because it's trying to get its earnings results together to report them.
it isws out today is that seeking another delay, raising also the risk. back to the nuclear business, there are some potential buyers in asia. one is china. they are interesting -- aroundted in deploying the globe, and interested in the supply chain for toshiba's machine. they are a potential buyer. south korea, that's another possibility. they deployed this advanced third-generation nuclear reactor that toshiba is building. there's a good fit. the least likely fit is mitsubishi heavy and other companies in japan. because of technical incompatibilities in any case, any buyer is not going to want liabilities associated with nuclear business so toshiba will
have to figure out a way to restructure debt is off of the southss and observe it in -- itself. rishaad: this is an industry backed by spiraling losses, credit downgrades, and growing debt. the difference between the companies that survive and the ones that are flailing is a level of state support. what is the government in tokyo doing for this? is there any word from them? reporter: i think at this point given the accounting scandal we saw with toshiba in 2015, and now this involving the nuclear business, the government is prepared to life its hand of -- wash its hands of toshiba. you might have seen in japan a couple decades ago swooping in to save failing businesses.
i think toshiba will be on its own. the finance minister last week already indicated they will probably face delisting because of the earnings delay. we will have to wait and see whether toshiba comes out of this in some way shape or form we can recognize. many call this an existentialist threat to the venerable company. reed stevenson in tokyo. let's get more on the potential meeting between president trump and xi jinping. rosalind is standing by. rosalind: first, the u.s. and china say work is underway to get the presidents together. president xi jinping and donald trump have a meeting, which could happen as soon as april. guess what is going to get them together? kim jong-un, be
concerns of the north korean dictator. the presidential meeting is probably one of the things that will come up when rex tillerson week. china does coming it's part of his trip to asia where he will visit south korea and japan as well, all nations with concerns about north korea's nuclear ambitions. kim jong-un has major the nuclear issue is at the forefront for ballistic missiles last week. it was a missile testing february, and numerous tests last year. needed, but atis this point we don't know if that is. donald trump during his campaign said he would be happy to sit down and negotiate over a hamburger. china is pushing for talks at this point. it doesn't look like that is where the u.s. wants to go at this stage. haidi: how are things looking in south korea?there's been quite a bit of a people.
we do know we are expecting a shakeup at the top in south korea. will that change things? to have giveneems stocks a little boost in the last few days. upholdstitutional court to oust the president. some stocks in china, after being shaken by china moving in retaliation to losses -- a group . the chinese are against the deployment of the missile defense shield in south korea, and have not kept those feelings hidden. inthink some recovery shopping stocks. regarding a possible new
president at the top in south korea, that could be resting with perception that any , looking likedent they might have a bit of a softer touch with north korea and more engaging with north korea, and rethinking options. haidi: thank you. we will be watching that story very keenly. coming up next, hong kong stocks flying high in heavy weather. my troubled companies are enjoying the risk. this is bloomberg. -- why troubled companies are enjoying the risk. this is bloomberg. ♪
site weibo. more than 1/5 of the shares were sold. that is up from six percent in early november. the market values doubling, making close to the u.s. rival twitter. haidi: hong kong securities regulator is said to be investigating the number two are -- underwriter. documents relating to the work on the proposed 2014 listing of a chinese seafood supplier which has been scrapped has been requested. the regulator wants to know whether due diligence was done. citrix is said to be working with goldman sachs. that is according to people familiar with all this.
the value is that more than $13 billion, putting off many potential buyers. some of hong kong's most beleaguered companies have been enjoying a rally, while analysts thet see shares downhill, rating see stocks in the opposite direction. let's explain why. this is a really interesting story. why are the low rated stocks outperforming? reporter: you would think the opposite would happen. onespeaking to strategists, of the reasons could be that one economies slow, companies with a lot of by ratings tend to outperform because these are companies that kind to deliver earnings growth despite the economic headwinds. when things start to turn around , use theooking better
low rated companies suddenly looking like they can deliver growth. suddenly the company's people were not interested in look cheap. haidi: right, so what analysts and investors weighing about the in phenomenon? >> looking at some of the companies that gained despite having sell ratings, despite -- , itexample cathay pacific is up more than 10% this year, outperforming the hang seng index despite having sell ratings. falselly is based on optimism from investors, and us soon as they see the reality of the earnings, it will be stripped out. , where analysts have reiterated their position. rishaad: the question will be what are people saying about the trend? does this go on?
reporter: if you take a look at the longer-term view taken a these are higho, rated companies that have performed. speaking to people, a lot of them don't think the current trend will continue for that long. it is a short-term market pattern. it could be that people who missed the opportunity to get into the rally are now looking into opportunities. rishaad: thank you. into the a transition china and hong kong markets. what do you think about these stories? the ones that are should be driving the hang seng. .t must be a bit of a headache >> we look at this very closely. we are having a bull market rally.
macro is improving, inflation is coming that. it makes actually a lot of sense. chart here asve a well. it all comes from behind, but does it also indicate the bullish spirit with the way china has been looked at? you have gone overweight, having you? >> yes. clarity is improving. high. is we just had the mpc. this is carrying the markets along with it. especially the unloved stocks no one is watching, they had not rallied as much, so people are seeing where the laggards are at. cls a a few months ago that came out with a report about ranking and the banking
industry in china, and the risks we are seeing. has that you change going into this year? how does that feature in how you feel about chinese assets? >> that view has not really changed. china has a problem with the banking system. what has surprised is the leadership putting a price on bad debt. quite responsive to broader concerns of bad debt in china. commodity prices everything, so that is where the bad debt is. npl ratios are trending downward. .hings are actually improving haidi: but right now you're seeing signs that commodity prices are starting to fall over a bit. has the window for them to be a will to deal with the issues, these are very entrenched
issues, is the window closing? >> i don't think so, because the economy is improving. also they saw supporting commodities, like coal has a price range. they would like to keep commodity prices at an elevated level harshly for markets and partially for capacity cut. rishaad: stick around, we have loads more to talk about. ♪
the big event this year is the election of the chief executive. what are the implications market speaking,trategically the ecb could inadvertently have an impact on housing market? >> both chief executive candidates have talked about this is a big topic in hong kong prices.gh both of them want to subsidize low end buyers into the housing market, giving them subsidies. given that the market is only so big, when you actually increase demand, there is less apply for everybody else. the problem is supply is tight. rishaad: they have to build. >> they do. they have a problem with supply. rishaad: what are the other implications as well when you look at all the? -- this? >> is a political angle. reforms, both of
them have had protests in the past. there is a budget surplus in hong kong. rishaad: you would think they would have the imagination to do something with the surplus and build social housing. >> i think they thought about that. the problem is they are having trouble getting supply on land. rishaad: there's tons of land. by developersre and they need new thinking on that front. haidi: you have seen mainland consumer driven stories improving. what you see an upgrade for the related stocks? >> i think this is one of the biggest stories we have been china this year. consumption trend is actually very good stabilizing force on the economy. there's a trend moving toward more consumption. haidi: what in particular? time,ve seen a horrible for example a hong kong jewelers.
>> actually we've been talking to them. their sequential improvement and businesses. macau is improving. hong kong tourism is improving. by and large we see the big trend that is actually very supportive of the economy. far have the changes been viewed as cyclical? you can argue it is a structural shift. there's also a structural shift in singapore. are the government and authorities there addressing this properly? >> the big transfer companies is domestic consumption. more, are buying at home there luxury prices making it cheaper back home, and the cuts are tougher. you can call this a cyclical change in behavior, but there is where them trend
older generation spends less and the younger generation spends more. could last longer than people think. insighto you have any into what progress is being made to get the msci approval? is this going to be the next catalyst for mainland stocks? >> i think this is inevitable. i think the next time around, the indication is unlikely to have been there are still too many companies being suspended, companies having trouble getting out of china, partly due to issues.controls and i don't think it would likely change this year. always a pleasure. coming up, we hear the latest indicators when it comes to
♪ announcer: from our studios in new york city, this is "charlie rose." john: good evening. i am john hockenberry filling in for charlie rose. we begin overseas with the seemingly shrinking caliphate known as isis. you probably know it as isis. iraqi forces have taken all but the western city of mosul. the last major isis stronghold in the country. u.s.door in hundreds of marines and their artillery are joining local forces in preparation for an assault on the isis capital. is it safe to hope this is the beginning of the end of isis? with me is michael weiss, a columnist for "the daily beast" and co-aut