tv Bloomberg Markets Asia Bloomberg March 21, 2017 9:00pm-10:01pm EDT
♪ it is 9:00 a.m. in hong kong, midday in sydney, 9:00 p.m. in new york. rishaad: i am rishaad salamat coming to you from bloomberg's asian headquarters in hong kong. this is "bloomberg markets: asia." ♪ haidi: asia-pacific markets following wall street down, concern that trumps pro-growth policies won't pass. rishaad: ¥9 trillion in market value is gone. that yen on its longest
winning streak in two months, not seen since the end of november. rishaad: billions into the system after smaller banks missed debt payments. indeed, we are looking at that story, are we not? injecting hundreds of billions of yuan after smaller lenders failed to make debt payments. injections following these missed interbank payments. looking at that. at cheung kong, and tencent at the bottom of the hour. haidi: that's right. see hows wanting to that advertising revenue has ramped up. watching the pboc in market operations after stress when it
comes to these rural lenders. we are watching the yen, because we are at these levels we have not seen since november when it comes to the yen. analysts saying if we break below, that decline could be rapid from here. we are 30 minutes away from the , singapore, taiwan, malaysia joining the fray. sophie, how is it playing out when it comes to japanese equities. sophie: taking the cue from wall street despite the jump in exports for february, so a risk off tone in asia, the yen seating gains, stocks down 1.6% in tokyo. a thirde declining for day, down 1.2%. malaysia snapping four days of gains, and stocks in taiwan lower by 1%, snapping a four
rise. gold holding steady, and oil on the retreat. we are just above that $48 a barrel mark. i want to look at when the big movers in taiwan. taiwan semiconductor has passed inte a intel,, ay -- beneficiary from some of the change in strategy. #6996 here on the chart. looking at the futures board for chinese and hong kong shares. we do have numbers for the
developers,ese soa china resources, expected to show slower growth. we will get the results from tencent, cheung kong properties, and ck hutchison. rishaad: thank you for that. back to sydney, paul allen on standby with first word news. paul: rish, u.s. supreme court nominee neil gorsuch says he would not hesitate to rule against donald trump if the law required it. he said the constitution has many protections for religious minorities. he told his senate confirmation hearing that he has made no promises about how he would rule on any issue. >> no one in the process from the time i was contacted with an expression of interest to the
time i was nominated, no one in that process, mr. chairman, asked me for any commitments come any kind of promises about how i would rule in any kind of case. paul: britain has joined the united states in banning large electronic devices in the cabin from select cities. tablets, laptops, and dvd players must now travel in baggage after reports that terrorists are planning a new, innovative attack. the ban is limited to five nations. canada is also reviewing a band. saudi aramco looking to raise $2 billion in its debut bond sale. it is the first up in a plan to tap the markets for $10 billion. sources say the islamic bonds could be sold as early as the second quarter. saudi aramco is expected to launch an ipo next year, which could be the biggest share sale
and history. more asian cities have made the list of most expensive with tokyo shooting up seven places to number four bank bolstered by a resurgent yen. singapore and hong kong retained the top two spots, seoul was six. cities slipped due to a weakening yuan and depreciation. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. i'm paul allen. pboc said to have injected hundreds of billions of yuan after some smaller lenders failed to make debt payments in the interbank market. tom mackenzie is looking at all this. what do we know here? tom: we are talking about missed interbank payments on monday, including some small commercial
rural banks, the pboc throwing a lifeline on tuesday by injecting these funds. #6985, the context is the rising rates, at least in the money markets. we have this year today chart. august is when the pboc started edging these rates, the seven-day repo rates, slightly higher, and we have seen that continue. we are at the highest level since april 2015. in the first few weeks of march we had 60 consecutive days where the pboc was draining funds from the money markets. this analysts say is a warning shot across the bows of them banks to move away from excess borrowing. we saw but it did to the bond markets, the biggest rout in six years, now the banks are facing the pressure here in china. haidi: what are you hearing about effectiveness? how effective is this likely to
be in cutting leverage? spoke to a chief toolsist who said these the pboc are applying are sophisticated, targeted, but we don't know how effective they are. what they are doing is showing the fragility of the financial system, the tug-of-war between the central bank and the lenders. we spoke to another analyst who said they don't expect these seven-day repo rates to come down anytime soon. 3.09%, a longntly way off the 12.45% we got in 2013. that is when regulators say they were trying to shake out some deficiencies in the banking sector, so we expect this pressure to continue on lenders in china could one senior fund manager domestically-based said expect more liquidity shocks in the months ahead. all right.
buckle up. tom mackenzie force there in beijing. still ahead, li keqiang china, and the chinese premier li keqiang makes his first trip to australia since taking office. what will be on top of the agenda? we will look at that later on in the show. rishaad: plus, iron ore prices exceeded expectations. we will discuss that and more, next. ♪
avoid a bankruptcy that would disrupt the supply of parts. shares are down 50% in tokyo this year, currently down 9% come off session lows. toshiba offering stock and real estate as collateral as it seeks financial support. failing to pay back its debt appear low. it helps to ensure banks continue to provide financing, but it is the lenders rather than investors who will get their money back first. the retreat asn production problems that two of the world's largest mines appeared to be easing. operations for freeport macklemore resumed after a month. ehp hp billiton has begun talks to into the pay strike at its operation inchile. chile.
rishaad: right, let's have a look at iron ore prices, down 4%, slackening demand. let's welcome the irc chairman jay hambro. the last time you were saying $60 was the floor. , so it isding $90 now good all around. is it sustainable? >> i believe the floor i talked about than was correct. fact that wet the would continue to see volatility , and that has also been correct. do i think this prices sustainable? the reality is we will see this volatility between $70 and hopefully $100, but i see that as the future for the next few months. rishaad: right, it is also find demand. where are we with that? our flagship operation is
doing really well. this morning, we announced 75% capacity. tonsgives us 2.2 million to 2.4 million tons a year. the bridge being built between china and russia is coming in. when prices are going so good, people want to get back in. are you expecting that to happen, particularly when it comes to local miners in china to get back in? >> it is one of the reasons i talked about volatility. you will see people talking about the possibility of bringing back production. we are actively considering now bringing it back online, but it is not something that can be brought back instantly. these are operations you have to consider. you gear up your mining operation, logistics, then it
comes on stream come at so i don't think we'll see a supply fix in the immediate future. overallow much of this commodities boom we have seen has been driven by a hope and a wish that the u.s. would deliver on these reflationary infrastructure-driven policies? how much is that being priced in at the moment, and what is the downside of the potential disappointment? >> when you look at some commodity markets, particularly precious metals, you see volatility based on trading. as you talked about, hopes and wishes. and bulkiron or commodities as a whole are based on the fundamentals of supplying and demand. -- supply and demand, so you don't see any pickup in demand led by hope. companies based on making orders of are in or based on that pipeline of demand. you bought recent the
rio tinto's last operation in the u.k. essentially up in scotland. tell us about that. >> that is not within irc. it is within the alliance. it is an exciting transaction. it makes us the only producer of primary aluminum in the u.k. and makes us the first largest private land owner in the u.k.. a fundamental position both in energy generation and and aluminum production. it is an exciting operation. we are taking what is a producer slab, where this lab was going to the continent in europe, then coming back to the u.k. in the form of parts. we are now in scotland, so within the limits, we are a key
tier one supplier for most of the auto manufacturers in the u.k., so we will bolt on production of aluminum to that market. what most people don't realize when they look at the u.k. industry at the moment is that car production in the u.k. has never been as high as it is today. rishaad: all of it is foreign owned, so isn't this a gamble given what is happening with brexit? the think you have seen auto manufactures in the u.k. commit to the u.k. recently. toyota makesan, long-term commitments. rover,da, jaguar land and if they are producing 2.5 million cars a year, we would be able to produce 2 million wheels a year, so that is about a quarter of the market for aluminum wheels.
i suspect i know the answer to this, but one of the last two bidders for the assets, what are you are allowed to say about that and how that is going at this stage? i cany limited as to what say because we are in a competitive process. what i can say it is an exciting process. we are very excited by the barium assets. we are looking at them in line with the model that the alliance has with liberty to have a mine, integration, still production, and still processing and recycling. fits the industrial strategic model very well, so that is why we are in the picture. from our perspective, we have made a lot of act recessions
recently in the industrial space and are conscious that thenesses that are in process is damaging for the business and the community in which the business operates, so from our perspective, we are trying to move forward with this direction transaction in as much of a next but i did manner as possible. wrapped up've just the parliamentary meetings in beijing, and as you talk about reform, cutting capacity in industry, how hopeful are you we might get an upside price -- surprise with iron or if china comes through more than expected. good news forbe us. we are the closest supplier into china. question marknge i don't think i'm bold enough to forecast what is going on within beijing i'm afraid.
suggest that me to anyone who forecasts on that basis gets caught out, but i think it would be an exciting move for irc if a positive momentum happened in the iron ore and steel space. bringd: what does arium to you? , we have met with and have a supportive relationship. they have a strong tie with the unions and the u.k. and i would like to think that we would get from the reference unions and the u.k. because we have done a good job working in bringing an investment strategy to the u.k. that works, both for the shareholders and for the unions in a positive way. mishaad: but what does ariu
bring to you? >> we have presented a strategy called our green steel strategy, which was focused on the u.k. the u.k. is one of the largest exporters of scrap, so one of the lowest recyclers of scrap metal. that gives us to go into that market and move it much tour to to where -- much more the u.s. is at the moment. in the u.k., it is a very small amount of recycled steel. we have acquired furnaces from tata which would give us the ability -- rishaad: that's the one you did not get. businessthin the arium there are two alternatives on the west coast. rishaad: and that's which are interested in? >> and the mining operation.
haidi: this is "bloomberg markets: asia." i am haidi lun in sydney. rishaad: i am rishaad salamat right here in hong kong. looking forward to the open of markets. taking a look at what we can expect. it is a down arrow story. it is not bucking the trend in the asia-pacific. 's are looking for li ka-shing
group of companies out with earnings. that promise of dividends and reorganizing his companies is coming to a test today, ck hutchison holdings and cheung kong properties coming out with their first earnings since the overall was completed. anticipation for big payout as ck hutchison is expected to raise the dividend excluding interim payments. that is a couple of stocks we are looking out for here as well. haidi: that is always a big earnings presentation around this time. we are also looking ahead to tencent fourth-quarter earnings due today. we've been talking about this emerging markets rally taking a breather today, but the biggest beneficiary has been tencent, now the 11th largest company globally.
you look at that correlation between the emerging-market rally and that stock, up 50% since may last year, up 30% since december, and investors take a look at the update from the transition to what it said is performance-based advertising. it relies heavily on we chat. and deutsche bank seeing that advertising space reaching $724 million in the fourth quarter. that increases due to smaller advertisers on that wechat platform. according to three analysts at bloomberg, we are expecting a revenue rise in on lifline advertising revenue of 44%. coming up next, we stick with china because china-australia ties are in focus. the chinese premier li keqiang heading south, arriving this
it is 9:29 a.m. in hong kong, cloudy, rainy day, counting to the start of the first trading day of the week. i am rishaad salamat coming to you from bloomberg's asia headquarters. haidi: i am haidi lun in sydney. we are seeing a negative session in asia, picking up that lead from wall street overnight. take a look at the yuan, china and focus, not least of which is the impact on the small rural lenders, banks who have failed to make that repayments, forcing the pboc two and jack hundreds of millions of yuan into the system. the money market rate climbing
the highest since april 2015 as the pboc tries to strike this delicate balancing act. right, also, of course, those losses we solve for u.s. is a theme there trump trade is over with and those progrowth policies will not get easy passage through --gress, and that oriole royal wall street. we are seeing that risk off sentiment transmit to asia. the question of whether or not we should be preparing for the trump correction. black rock saying the reflation trade is down, but not out. taking a look at stocks in hong kong, the hang seng falling 1.3%. h shares on the decline, down
1.6%. stocks in shanghai down .7%, snapping a two day advance. a closer look at one of the stocks today, the world's biggest aluminum maker trading suspended in hong kong, but how their $2018 bonds are faring, falling the most in 18 months, down by more than 2.4 basis points. the company says a made delay its 2016 results as its auditor has flag issues around its accounts. it was the subject of a critical short seller emerson analytics last month. .7%id see shares close up after news of a potential investment by civic asset manager cti. the slew of earnings
later this afternoon, let's look at the board to see some stocks in focus. we do have the likes of tencent and ck hutchison falling ahead of their updates. anta seeking to issue 175 million new shares to raise 3. 9 billion hong kong dollars. shares falling for a second day. and tencent extending tuesday's up 40% over the past 12 months. ck hutchison, when we do have the earnings from the likes of ck hutchison and cheung kong, that will be a test of li ka-shing's pledge to investors of the dividend pay off. chineseticking with the markets, the open, that benchmark seven-day money rate dropping to 2.45%.
we had benchmark money rates climbing to the highest since april 2015. they are put under the crush because smaller lenders could not make repayment, and the pboc made cash injections into the money markets yesterday, and this drop in the money rate it is a direct correlation to the dibiase injecting 40 million yuan through reverse repose, still tweaking that system to achieve that delicate balance there. let's get to first word news with paul allen here in sydney. we are told financial institutions will only be allowed to use aaa rated company securities as collateral for short-term loans. shanghai and shenzhen exchanges have tighten controls for
exchange traded bonds. demand from china helped to drive japan's february exports to a two-year high. should and's jumped 11.3% from the year earlier in a while , leavingncreased 1.2% a trade surplus of $7.3 billion. ,xports to china jumped 28% shipments to the u.s. crude less than 1.5%. the trump administration places a lot of emphasis on trade deficit from the perspective of washington. a bit japan, it is challenging because that trade deficit with united states continues to be large and problematic, and so the japanese have to decide do they want to push on tpp. if they do, what that continue to antagonize washington? it is impossible for them to flip a $60 billion deficit overnight, so for me, the best outcome i think is to continue
to lead on tpp. the european union is to make britain wait for brexit talks while scheduling a summit of remaining bloc members four weeks after the process starts. president donald tusk a says the party is to protect citizens, companies, and states from negative effects. theresa may says she will launch the two-year brexit process on march 29 and a month will have elapsed before the eu meets. taiwan to build its own submarine fleet with the president one thing the first vessel and service within 10 years. she has promoted the plans after talks to buy u.s. boats proved fruitless. tensions between beijing and taipei have worsened since the pro democratic party came to power last year. 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.
thanks. 'sinese premier li keqiang first visit to australia sends a positive message to the world when it comes to free trade. we will get a preview with nick coyle in beijing ahead of premier li arriving this evening. i want to play you this piece we heard from the trade minister when we spoke to him earlier. pretty optimistic saying the relationship between the two countries is as positive as ever unsurprisingly to take a quick listen. >> australia relationship with china is very strong. in fact, if you want proof positive, there is an op ed whichtoday by premier li speaks in glowing terms about the china-australia relationship. we see strong growth in
investment, two-way trade, export primes are up significantly. he gave that response when i put it to him that this is the first head of government visit from china in over two years. it is the longest stretch in a decade. we have had these high profile blocking's when it comes to deals coming through from china to hong kong, as well as the detaining of the crown employees and china as well. i'm curious on the ground what you are hearing from the companies you deal with. what are the concerns about this potential he drifting of this relationship between these two trading partners? i'm not sure the relationship is drifting to think the trade minister is corrected there. from time to time, there will be issues between australia and china where we will not agree, but i think the trade minister is right.
the relationship has never been stronger. the implementation has gone well so far, so are not seeing immediate concerns on the ground. some of those isolated issues really should be viewed and that way, and isolation. haidi: what went some of the companies you deal with though want to be on the agenda for premier li's trip this time? >> there is a lot we can do in nontariff barriers. that start significantly with a long, but we are still way from having an ideal situation when it comes to nontariff terriers. we are hoping this visit will see some traction there, in the chapter agreement, there was an intergovernmental panel to assess those non-tariff barriers. there is certainly some positive
news coming out around beef, which has been highlighted in the meeting this morning in australia, and we've seen more progress on that front. on the trade front, that is positive. on the investment front, i think there is still a little bit of concern in china that the desire for australia to receive chinese investment, chinese capital, so i think we can push a more positive measure there on the australian end, and i know the government is trying hard to push that message through, so really on the trade side the focus would be the nontariff terriers, and on the investment side driving that message home that australia is open for business. to bring up this graph which shows how big trade flows from australia are. the thing about this is, does this underline that australia needs china vastly more than
china needs australia? look, that is a fair point, rish. look, the relationship is one that is very mature now. we have been doing business with each other for a long time. the australian business community is well established here in china, and vice a versa. we have seen strong outbound investment from china into australia, so there is a strong desire from chinese business to look at australia as an , chinang market, and yes has become a more important trading partner for australia. whilst that is true, it is still one of mutual opportunity. well, tell me something here, you mentioned earlier this unsure feeling in beijing about what they need to do with chinese investment into australia. australia once chinese investment, but on the other hand there is confusion.
what is going on with that and how do you get rid of the, well, i suppose the gray areas? >> look, it's difficult. we have our process through the foreign investment review board. oz group decision created concerns and china, the time taken on the process around the decision that was the problem, so there is an element of uncertainty around how that operates from the chinese perspective. we do understand the austrian government rightly push the point that overwhelmingly applications are approved, but there is still a process you have got to go through where it is not 100% defined as to what ick ands you need to t what the outcome will be. ,ny business once certainty whilst a robust and good process from the chinese perspective
does not give that as much certainty as they would like. now how you fix that problem is a difficult one. i think it's just going to be a matter of time. the austrian government has a firm view that favors the way it wants to move going forward, so put throughs get and are successful, we will see that dissipate over time. >haidi: i'm curious about what you mean by saying a strike cannot expect special treatment, rather that china is not a new frontier. what you mean by that? >> well, sometimes there is a perception and australia that whilst we have good brand equity over here, there is a perception that if you like we have a permanently advantageous deal in the china market, and whilst that might be true at the moment, -- we have a really good trade agreement, china is not resting there here at it is
pursuing i lateral and multilateral agreements with a range of other countries. we have seen, for example, if you look at the beef industry, beef exports to china declined 2015, andmpared to one of the reasons why was because of increased competition from brazil. goodt it does give us a comparative advantage now, we are going to see more competition coming in from other countries, so the absolute imperative, and this is one of the points we push firmly in our submission to the department of foreign affairs white paper, australia must maintain its global competitiveness. in fact, it has to increase its global competitiveness. it is now the most competitive marketplace in the world and australia has to realize that, understand that, and focus on its long-term competitiveness. haidi: certainly being such an externally vulnerable economy in
fonterra will pay an interim dividend of 20 cents per share and april. haidi: ck hutchison and cheung kong properties report earnings, the first set of results since li ka-shing completed consolidation of his empire. both companies are expected to raise dividends. reportingencent later, and investors hoping for updates to its transition to performance-based advertising. you me something, would mean by performance related advertising here? is when people click through on the advertising. performance-based advertising and branded advertising, and there is a shift to performance-based ads because people want a sense of
what people are clicking on. rishaad: this is a company which has been criticized as having too much reliance on wechat, its messaging system. the top rank app in china. rishaad: look at that. biggest emerging-market stock by value. this year, quite a lot, and that is outperforming alibaba and baidu. its dependence on wechat means it does need to be making money, so advertising is one of the areas they are looking at. wechatits dependence on being a bit of a revenue one trick pony there. is that one of the challenges company faces as it tries to grow? >> that's correct. they are looking at ways they can make more money from wechat,
developing apps within apps. the other area is expanding to payments and cloud. thank you for that. that is one of the most anticipated earnings releases in the session today, tencent. coming up, we will be live at art basel in hong kong. we will hear from the founder of our economics next. this is bloomberg. ♪
rishaad: this is "bloomberg markets: asia." i am rishaad salamat in hong kong. lun in sydney.i hong kong playing host to art basel with more than 200 ver 30ies from o countries taking part. it opens thursday, but rosalind chin has a preview. these are the numbers that have risen pretty much every year for art also hong kong, but some
people are having a look, and is that translating into sales? that's an excellent question. we have seen interest in art increase in hong kong and asia in general. ,'m joined by clare mcandrew the founder of art economics. this year she is producing a report published by art basel, and she joins us now. pretty much your reports have an taken as the definitive snapshot on the art market. 2015, we saw the art market contracting. what did you see last year and what were the factors in that? >> it has continued to be a challenging year in 2016 with a lot of uncertainty globally and geopolitically, a lot of things going on. it is a supply driven marketplace, and it is thinned or's holding back.
we saw that a specially at the top end of the market. did veryte sector well, but the auction sector declined. ,hese macro figures i produce they mask difference performance between regions and between different sectors, so it is a mixed bag of performance, but overall a challenging year. rosalind: what about your forecast for the coming year? the sales we have seen so far are early, but it does seem like the market may be getting on firmer footing. >> it is so based at the end of the year, the big sales at the end of the year. you can get off to a good start here at it is a predictable -- unpredictable marketplace. i think people are more certain that things are going on, politically and economically, people want to spend as well.
it is a supply driven marketplace, so if the auction houses and dealers can get the appropriate works for sale, there is always demand for them. rosalind: we are seeing issues with supply, increasing use of guarantees, a seller getting a cut of the buyers fee -- what are your thoughts on that? is it distorting the market and prices? oy thehelps to bu marketplace, but has not proved profitable for auction houses be we did see scaling back on guarantees last year. there is such competition for supply and vendors that it is a sellers market. they cannot stop these things altogether, but it cuts into profitability, and the bigger auction houses have seen that on are taking actions to rectify that. rosalind: we have seen a rise in marketcentage of the taken by private sales, dealers,
while auction house sales have been falling slightly. the report earlier this year said that come about what is your view? dealers are now 62% of global art sales? >> i think there are some measurement issues there, but increase, the dealers substantially, and this tends to happen when a market is declining. much is not as expected upside in the auction market. in a good market, sky is the limit, but in a certain market, -- uncertain market, you can get burned at auction. they do tend to veer and markets like that towards private sales. do see impact from china's capital controls on buying art? >> that could have some effect. chinese lyingobal
on a big scale probably have diversified wealth already, so that will not be an issue, but it could potentially boost sales within china if there are not that many options for newly wealthy chinese to spend money on and invest, so i could boost sales in china as well. certainly for the high spenders in the global market already, they have quite diversified portfolios. rosalind: thank you for your insight on the markets. we are seeing markets possibly on enough from her footing for this coming year, especially as geopolitical and economic issues wecome clear perhaps, helped, in the coming months of 2017. back to you rest. rishaad: coming up, the latest on the biggest share market slumps in the election with $80 billion wiped off the topix in tokyo. you're watching bloomberg.
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