tv Bloomberg Markets Asia Bloomberg June 18, 2017 9:00pm-12:01am EDT
last week. selloffs outweigh bids by 600 to one haidi:. toshiba said to be near a winner. incj are ahead in the field. rishaad: hong kong want to ensure it does not miss out on the next big thing. a reading on house prices in china. we are seeing pier 1 city house prices just inexorably rise. we have had this absolute run-up of late. expecteing how -- you bad loans at the same time. nonperforming loans. quite the reverse since march orer december of -- march december of 2015. people are not getting themselves into huge amount of debt. we have those numbers coming out in about half an hour.
haidi: always interesting to look at that breakdown between the big cities and the second, third, or even fourth tiered cities. this is a recovery we have been seeing it we are watching policymakers potential reaction. it is a big week for china. we are expecting msci, their decision on whether chinese equities will be added to their global indices. if they do, it will be four-time finally lucky. huge implications when it comes to inflows into china. 30 minutes away from the open in china and hong kong. singapore, hong kong, malaysia markets coming online. sophie, u.s. markets essentially unchanged. politics at the forefront with brexit. misadventures in d.c. asian markets pretty buoyant at the start of trading week. sophie: we have political wrangling in d.c. over the weekend. monday, we have asian stocks pushing higher and getting closer to that 2015 high with japanese shares leading the
advance. the nikkei 225 up .7%. a weaker yen and this morning's trade data led be providing some support for shares in tokyo. we have because the up .5%. take a look at shares -- we have the kospi up .5%. take a look at shares. financials offsetting the drop in retailers like woolworths, getting dragged down following the news of amazon's megadeal to buy whole foods. elsewhere, take a look at what is going on with currencies. we have regional currencies on the up here with the ringgit and korean won leading gains and the kiwi up .2%. the best g10 performer this morning while the yen is looking like thworst so far tda. the kiwi is nearing a form of high agnst the greenback on the back of rising consumer
confidence in new zealand. support is coming through from buying of the kiwi against the aussie according to traders. we are seeing the euro give up its earlier gain share, although it is set to test its recent range as leveraged funds turn long on the currency. the pound is looking weaker as formal brexit talks are set to kick off this monday. the outcome of the negotiations are not clear just yet. credit agricole says the best hedge against the potential hard brexit may be going long euro against the pound. has initiated a long position. brexit could turn ugly. the pound has been trading in a euro,range against the the tightest range since 2014. that could break out at sterling volatility could rise given these brexit talks. euro pound down 8763.
rishaad: just getting this breaking news out of britain with the metropolitan police in london saying there are casualties from this van collision in london. officers on the scene. emergency services. beinger of casualties worked on at the scene. one person has been arrested. they are calling it a major incident. really talking about -- early monday morning in the capital. this of course coming after that car that ran into pedestrians on the bridge. tee wee ago, the me three weeks ago, a van running into pedestrians. what is going on with the first word news. details? >> the yen weekend after softer e afterd softer than expected trade numbers in japan. estimates of a 16% gain. imports grew more than expected,
up 17.8%. that left a trade deficit of ¥203 billion. that is the equivalent of $1.8 billion. economists had expected a surplus of 390 million. india's finance minister says the government will roll out the goods and services tax at midnight as planned. a gst council made up of state and federal finance ministers had relaxed filing procedures for the first two months. the gst is the biggest tax overhaul in india since 1940 seven, following a decade-long effort to simplify the countries tax regulations. the finance ministers of china and south korea have held their first direct talks in almost one year. they met at the aiib summit. they agreed to cooperate more closely. for, buts what we hope given that there are still some
delicate diplomatic issues it too early for us to hope the barriers will all be away.ight given my meeting with the minister and economic data led channels the two have, we hope that nontariff barriers and the restriction on the package tours will be eased as early as possible. >> 3 days after thbrexit referendum, formal negotiations are about to start. brexit secretary david davis and european commission chief helotiator mike michaud bee banier -- on u.k. wants parallel talks the splits and trade links, but the e.u. insist that is not possible. global news, 24 hours a day, 000ered by more than 27 0
this is bloomberg. rishaad: the hong kong exchange have plans to attract more big startups over the next two years after it missed out on that massive one. we are talking about the $25 billion ipo, considering dual listings and allowing companies to list before they made a profit. what can you tell us about this exactly?and where can does it all come from? >> it is a big loss for them because of the restrictions around the dual shareholding structure. they have proposed scratching that will a couple of years ago, but they want to create a third one that would allow that as well. the ceo has said hong kong missed out on $50 billion worth .f new listings because of this in thecided to list
mainland. this is a way to attract them. rishaad: they already have one exchange meant to be sort of doing this. tell me, what are analysts saying about this move? >> people i spoke to are so far generally welcoming this move. the companies listing are going to be focusing on new economy companies, health care, technology. these are industries that will be the future driver of growth. skeptics say it is a question lister these will want to if they can get listed on nasdaq in the u.s., they might prefer it. it takes a bit of time. haidi: what are some of the making?oposals hkex is guest: they are proposing to tighten the rule around existing boards, with we have seen a lot small-caplatility in
stocks that are unexplained. some of the proposals include increasing the market cap requirement and the cash flow requirement and also controlling shareholders, restricting them not to allow them to sell below their stake within two years of listing. they are proposing a whole list of making it stricter. haidi: clearly, it was painful when they missed out on alibaba. as everyone knows, it was the crown jewel. if they managed to snag that listing. kana: right. rishaad: absolutely. that is one of the many i guess which will be on the wish list. still ahead, singapore enjoying a record property rally. is it built to last? plus, a case of the right place, and the right time, when
rishaad: you are back with bloomberg markets. i am rishaad salamat in hong kong. haidi: i am haidi lun in sydney. a quick check of the latest business flash headlines. and australian insurer considering putting more money into corporate bonds and infrastructure in a bid to find refuge from low yields. they now see opportunities in such securities outside of australia. head of investment says sembcorp sinco isng for -- looking for high-qualityr debt. rishaad: we are told it expects some staff cuts and changing --e
it went public in 1992. haidi: hong kong's defective central bank says it has served the city well for 30 years and it should stay. says the city is a small and open economy and keeping a stable exchange rate is important. hong kong linked its currency to the u.s. dollar in 1983 when negotiations between beijing and london ver hong kong's return caused ae rules capital exodus. rishaad: we are talking msci. why? it is wednesday. it will decide whether to list stocks in its global benchmark. the offshore market may be the world's second business, but there is no guarantee it will make the cut on his fourth attempt. allianzchan is a cio at global investors. won'they, what they --
they? raymond: that is the million-dollar question. i think this time around, it should have a higher chance them a last two years because there is some progress which has been made. there is also one to go. when i want to point out is although we all believe long-term that this had to be fairly positive for the markets, but the shorter term, whether it gets in or not, i am not sure. when you look at the index, it has not moved much. when you look at the underlying , they have done very well, partly because the local'' expectation that this stuff does well. if the decision is yes, there ticking inme up some of those stocks. rishaad: in previous attempts,
we have seen that happen. people have been very sanguine going into this and fairly nonplussed. very careful, it would seem, anyway. raymond: if you look at some of the underlying stocks, they have moved quite a bit. the msci decision will -- rishaad: have they come to a halfway? let somef these a-shares in and exclude others on certain criteria? raymond: this is the key. if you really look at the decision, in terms of the impact, the near-term impact, it will be very small. for example, we borrow less than 2% of the msci china index for the emerging market index, it may be around 50 business points. it will take a long time to realize the impact. haidi: i want to throw up a chart on my bloomberg, if you can take a look at it. 74, if you are playing
along at home. it is falling below the average. it suggests that perhaps we see a bit of a loss in momentum when it comes to trading. ,he last time this happened this gold circle, we saw the downside for the shanghai comp. the problem is, should we be looking at tentacles when it comes to asia -- should we be when weat technicals are looking at asia? is that something the msci will still be concerned about? raymond: i think you are right, actually. it is very much a retail driven market. technicals may not be that helpful. if you look at the fundamental part of the story, the corporate in the china a market have
proved they deliver better earnings, they deliver better cash flows, and we have seen some of this. the, which should be beneficial to the cash flows. we argue this is better. if you look at the valuations of the shanghai market, because of years ago, theo valuations now look a lot more attractive than before. that is what i would say. haidi: what about some of the fund flow issues? repatriation, the use of being able to repatriate funds is one of the reasons they are not good enough to be included the third time around. do you think they will make progress on that? raymond: they have to make more progress on that, no doubt about it. the fund flow is very important. people put money in, they need to get the money out. i expect there will be progress to be made there. we do need to wait and see what will happen. haidi: what about the downsize
risk -- the other downside risks? this is a key political year. stability is the thing regulators want to maintain. you have this deleveraging drive which has already called a bit of a taper tantrum across the bond market, the equity markets, and this crackdown on insurers as well. these were some headlines when it comes to big players like anbang. do you expect more volatility not looking at the downside risks potential he playing out this year? raymond: you are right. yields arethe bond going up. the shot rates are going up your the economy, after a good start in the first quarter, in the second half, we expect to see slowdown in the economy, although it will not be a major so in terms of the, you know, positive factors, we have probably seen most of it in the first quarter, in the first half. moving forward, we need to be more mindful. despite that, the market is not
expensive. we can make good gains if we take the right names. rishaad: absolutely. pretty good earnings momentum. these are good foundations for a buying opportunity. why is it such a screaming -- raymond: if you look around the world, we are in a position to take risks on the risk assets. we still believe globally that there are companies that continue to produce better earnings and all that. with me in the global markets, what we are seeing his asia, europe, and we think the u.s. is a bit expensive. we are not sure the trump effect on the markets. dateu look at your to performance, it is no surprise that this year, we are starting to see asian markets should outperform. this trend will continue. rishaad: i am looking at hang seng. cheap for a
reason?that is always the question. is, if youe key believe the fundamentals, the earnings, if you believe the earnings growth is coming back -- rishaad: you are saying it would be selected. raymond: certainly. stock picking is very important. what is your favorite -- rishaad: what is your favorite at the moment? raymond: let me share with you this. so far this year, if i look at the market's performance, the market haseen better. i would not be surprised to see the southeast asian markets take the turn going to the second half based on number one, the asian -- southeast asian market is behind. number two, if you look at the u.s. interest-rate, you saw the fed increasing the interest rate. if you look at the market, i am
rishaad: updating that developing story out of london, where a van has collided with a number of pedestrians. these are live images coming out of north london. on the seven sisters road, police declaring this a major incident. it has just gone to: 24 in the morning in the -- 2:24 in the british capital. this is an area which is close mosque.ark and the park
this incident is said to have occurred right next to that as well. these live images coming through on this developing story, where this man has collided with -- van has collided with pedestrians. police declaring this a major incident, just to reiterate. we will leave those images and keep you up to date. counting down to the start of the trading day in hong kong and china as well, looking at the premarket auction period, the 5.4% --ng session up up by .4%. now, let us have a look at what has been happening. while property itself may be incredibly popular and sent prices soaring, we have not quite the same kind of lift up when it comes to property stocks. bear that in mind.
the beginning of this year, we have seen massive gains nonetheless for the likes of evergrande, soon after -- sunak, and country garden. evergrande, up 200% in that timeframe. haidi: yeah. this is one stock we are watching that became apparent to us friday when it fell 88%. we are talking about some of these smaller companies listing in hong kong. it is a bit of a murky mess. take a look at this stock. ofs is a provider funeral services. was suspended from trading. we had extraordinary trading of volumes as well. the average. shares.rman sold decline ine biggest
just on 9:39 and down to the start of the trading day right here in hong kong and in greater china generally speaking. we already had trade numbers out of japan. we're looking at brexit negotiations between the european union and britain. we've also got politics in the u.s. dominating headlines and congressional wrangling in d.c. providing this colorful backdrop. global equities last week finished lower. when it comes to markets, people looking at china a shares and possible inclusion in msci index. wti crude still below $45.
i'm rishaad salamat from bloomberg's asia headquarters. haidi: i'm haidi lun in sydney. we are still wondering whether the efforts that opec have made can actually rebalance the global glut. we will be getting inventory numbers stateside. that has been the major contributing factor. we are also awaiting some inflation numbers out of key asian economies, malaysia for emple. more central-bank activity after last week. the central bank of the philippines as well. we are awaiting may china property numbers. we expecting further signs of weakness. preliminary numbers, sales, transactions, suggest further weakness. we've had a number of local authorities put through these calling crubs, restrictions when it comes to mortgages for second
and third subsequent homes. we will be watching for whether this is going to show this extended calling. it is a balancing act when it comes to what authorities are trying to do. they don't want a state slowdown when there's so much financial risk and importance. we're going to get the latest. i believe the numbers are out. let's get over to tom mackenzie. tom: we've got the individual breakdown for the three top-tier cities, beijing, shanghai, and shenzhen. let me start with beijing. this is going to the month on month. prices unchanged in beijing. shanghai also unchanged month on month. shanghai year on year, those prices gained 12.6% for the month of may. that is year on year. shenzhen, those prices look like they fell -- shenzhen prices
fell 0.6% month on month. they assessed 70 cities and prices rose in 56 cities month on month out of the 70 surveyed. that compares to a number of 58 in april, 62 in march, 56in february, 45 in january. the number for may is 56 cities across 70 that are monitored where you have seen price rises. that would seem to the roughly in line with where policymakers would like this to be. they've been putting these curbs in place, tightening the screws, whether it is down payments or sources of funding for developers, putting price caps in place in some cities as well. they want to cool the price rises in the top tier cities. has appeared to have fed through to these prices. the real estate sector crucially
important for the chinese economy. feeding into the health of the chinese consumer as well. that is why we pay so much attention to these numbers and we talked to chinois earlier. he said that he expects possibly some of these curbs to be edged back. he doesn't see that they are the major sources of growth for the economy. want to meet their gdp targets, he thinks they need to ease back on these curbs. rishaad: absolutely. that was going to be my next question. you've really mentioned that perhaps, and i'm trying to dig down to what you said, it seems to be working. tom: yes. i think the focus -- we haven't heard anything as to whether they are going to withdraw these curbs.
in fact we've seen a tightening in recent months. saying that because it is such an important part of the economy, they may have to step back on some of these, but they are getting this balance right apparently. what they are able to do is pull back on some inventory in the third tier cities. inventories in april were down about 6%. that has also been a focus of policymakers, trying to shift some of the spending to the third and fourth tier cities. that has started to have some impact as well. in terms of what the pboc is doing, they've been leaning on banks to make sure they have extra scrutiny of mortgage lending. they want to make sure the mortgages are going out for the right reasons. we've also seen mortgage rates ticking up as well. that may have played into this number, 56 out of 70 cities where we see price rises, versus 58 in april. rishaad: thank you so much.
tom mackenzie there. just getting to this open in hong kong and china as well. property prices, property stocks at the moment, sophie. >> we're seeing some flic fluctuations in the open in shanghai following the report on the home price data. we did see the shanghai, turn positive. finally lower just ever so slightly. materials are dragging the most in shanghai. that includes construction material makers. we do have shares in hong kong up about 0.6% along with a-shares up about 0.4%. whenve carmakers on the up it comes to stocks in hong kong. checking more closely on what is moving the dial, on the hang seng, we have consumer staples and i.t. leading the gains. i want to focus on thanks as
well, financials up about 0.6%. chang sayingorman hong kong lenders are better prepared than in 1997 to whether asrash in property prices the bad debt ratio has come down. there's little one can say about when a potential crisis may occur. hong kong property prices have risen about 40% in the first order alone. in hong kong, we have the hong kong exchange popping about 18 points following news that it may look to open a second exchange. take a look at some movers in hong kong here. just pulling up the board here for our viewers, this following its share buyback. the cell phone maker says it stands by its report saying muddy waters' latest allegations hold no new arguments. hong kong is poised to see an ipo that could raise more than -- leaders have given the green
light for the connector unit of taiwan's foxconn group. foxconn's shares are climbing to a record in taipei. it is the best-performing stock in asia so far. numeral real estate is the worst performer in asia so far. losing over 12% today. over in sydney, we're seeing retailers slump following amazon's mega deal to buy full foods. -- whole foods. haidi: adding to a pretty bearish view on the retail sector. let's get you caught up with the first word news. paul is here with the headlines in sydney. paul: london police say they are dealing with a major incident with several casualties. witnesses say a white van drove into pedestrians outside finsbury park mosque. these are live pictures you are seeing here. not known what caused the
collision but police say one man has been arrested. president trump's lawyer contradicted his boss in the investigation over alleged russian meddling. the president tweeted that he is under investigation for obstruction of justice and it is a witchhunt. the attorney told nbc the president is not and has not been under investigation. he also said he had no notification from special counsel robert mueller. russia says it is still unclear if the leader of the so-called islamic state militant group was killed in syria last month. al-baghdadi is thought to have been among a group of fighters on may 28.ar raqqa al-baghdadi is rarely seen an israeli appeared since 2014 when he announced islamic state's intention to form a caliphate across the middle east. president macron is heading for a big win in the parliamentary election but not a thumping
majority that had been predicted. rche is heading for about 350 seats in the 577-seat national assembly. the fourth election sunday in two months has turned off the voters. turnout was the lowest ever for a french election and 10 points below the previous record. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. haidi: thanks for that. finance ministers from south korea and china met for the first time in almost a year at the annual aaib conference. bloomberg caught up with korea's kim who said that soul in beijing agreed to work more closely with each other. >> aiib is held for the first
time out of china and of course the location was not specifically chosen in consideration of korea-china relations, but i do believe it can be a good sign for improvement in the relations. i had a meeting with the chinese finance minister and the meeting lasted much longer than planned. of course there are still some delicate issues between the two countries. i'm sure we will be able to boost economic cooperation between the countries going forward. >> are tensions easing enough for china to let the measures against korean companies and lift the current ban on package tours? that's what we hope for, but given there are still some delicate diplomatic issues, it might be too early for us to hope that all the nonferrous barriers would be eased -- non-tariff barriers would be
used right away. based on my meeting with the finance minister, we do hope iff barriers and the restrictions would be eased as early as possible. that chinaconcerned is considering renegotiating the agreement between korea and the u.s.? there has been no official request from the u.s. government yet and i understand the nafta negotiations are currently underway. korea is a strong advocate of free trade and we are concerned any type of protectionism. there have been evidence that there are mutual benefits the countries have enjoyed. the benefits have been reciprocal so far. >> can the gdp estimate be raised from the current 2.6%?
if the economy continues as it is today, and if the supplementary budget we have submitted is fully implemented, there is a possibility the gdp estimates could be higher than we expect. given that there are also uncertainties such as the u.s. rate hike and international economic and financial situations, we still need to be careful about revising the gdp estimates. rishaad: our exclusive interview with the finance minister. coming up, more reaction to those china property figures. are government measures finally cooling the market? this is bloomberg. ♪
sydney. the latest headlines at this hour, airbus is tweaking the design of its biggest plane in hopes of reviving sales. it says it will raise fuel efficiency by about 4%. airbus says the changes, plus a revised layout, mean overall cost per seat should fall by 13%. a lack of demand for the a380 has seen production fall to about one per month. rishaad: boeing is said to the closing on $5 billion worth of orders for the longest version of its 737 max. we're told it is in talks with india for about 20 of these planes, while indonesia is looking at 20 two as many as 50. the deals could be announced at the air show. boeing is likely to release more plans then. haidi: nearing a deal for the eno widebody --
neo wide-body plane. the carrier once other details and says there's no chance and order will be placed in paris this week. malaysia airlines responds to a booking slump that followed disasters in 2014. rishaad: china's home prices rising in fewer cities last month in the wake of cooling measures imposed by local authorities. let's get to denis ma, head of research at jl l. tell us, what did you make of these numbers? denis: i think that is more or less what we expected. the market had been cooling down over the last couple months. volumes are down, so not surprising to say that prices are soft. rishaad: does that mean the policy is working now? denis: i would definite say
so. china is always a game of pulling levers. we have to see. right now it does appear that the volumes are down and pricing has stabilized. rishaad: we have this split, if you will, normally tier one, tier two cities versus tier three and tier four cities. let's have a look at this chart here, 170, this is telling us that you would rather be buying property there if you saw these new home prices in beijing absolutely skyrocket in september. ever since then, they've been falling back. tangshan -- does that actually reflect what is going on on the ground? denis: definitely. for the early part, tier one and tier two cities reacted a little bit more strongly. then we saw a little spillover
effect into the tier three and tier four cities. i think over time, the tier one and tier two cities are going to be more -- rishaad: what is driving people to property still? are people fearing to trend? there seems to be oversupply in some parts and shortage in others. denis: there's still a lot of and up demand in the market. some of the individual projects we've seen in shanghai, the sales have been quite strong. haidi: what else would you be looking at in terms of the opportunities that still exist in such a multi-speed market when we talk about china? denis: again, like i said earlier, right now what you are probably saying to yourself, you got your tier one and tier two cities slowing down, and there's a spillover. if you look at it over the longer term, it should be the tier one and tier two markets. haidi: i want to get your views
when it comes to this extraordinary property market in hong kong. do you think the risks are just building for the inevitable downturn or is it because of the constraints on supply, on land, just going to keep rising? denis: here in hong kong, there is no bones about it. prices are very elevated and the market could be vulnerable to any kind of external shocks. the way we see it, there's still a lot of pent-up demand in the market and most of the buyers are still users. hong kong has never been a market that has corrected simply because interest rates are rising. it is normally due to an economic event. haidi: do you expect policy measures to help out some of these homebuyers or would the bemebuyers -- would- homebuyers in hong kong? denis: while the policy measures
are targeting investors and speculators. they have left the market. all you have left are your first time homebuyers. looking forward, one thing we need to keep an eye on is the policy risk. we are pretty confident the market is going to continue to go up this year and we expect about 15%. haidi: it is quite extraordinary. past the previous peak in 1997. alwaysa lot of people like to make a reference to 1997 when they say the market is about to topple over. there's a lot of difference between now and 1997. interest rates are substantially lower. if you look at transaction volumes, nothing like we saw in 1997. we don't have the speculators in the market. rishaad: i didn't ask you before, do you look at singapore as well? denis: not in greatail.
rishaad: i won't ask you, then. what do you see down the line for property prices? people expecting we will see some substantial walls. -- falls. denis: i think you're going to see volumes continue to tail off and prices will probably soften a little bit. they've been holding up a little bit but we will probably see them come back a little bit. for hong kong, we remain confident the market is going to continue to rise. the banks haven't passed off any of those rate hikes yet. rishaad: how are you seeing foreign buying at the moment, as in people in hong kong and china as well, looking to places in europe to buy property? denis: that is still very strong. there's a lot of uncertainty around the cake but we are seeing strong buyers in hong kong looking to invest overseas. that demonstrates the pent-up demand. rishaad: top destination for
>> rishaad: this is bloomberg markets. i'm rishaad salamat in hong kong. haidi: i'm haidi lun in sydney. the rally may be built to last. since the government eased housing curbs, shares have surged and strategists believe this is going to continue. let's get over to our singapore equities reporter. join us. in fact you have joined us. talk us through what is behind this rally we are seeing. >> the singapore stocks have
actually rallied since the beginning of the expectation that the government might ease some of the property curves. when they did it in march, after three years of decline, some of restrictions were altered a little bit and buyer sentiment came back immediately. marchansaction volume in came to a nearly four-year high and since then, developers who have started buying land for new projects are seeming to benefit from this uptick in property sentiment. haidi: bolivia, give us some context, some perspective here. this rally we've seen in property stocks, how does it compare to the broader market? >> out of property stocks, five out of the 10 best performing stocks in the singapore index this year, so it is one of the main reasons, one of the main drivers of the rally.
the market in general has improved on earnings revisions and a better economic outlook with better gdp numbers, export numbers, so property is one of the main drivers along with banks which have risen on the reflation trade. while the overall market has 13%, itsbout 12% to best performance in five years, strategists are saying the valuations are looking high historically and compared to its peers. 5%could only see maybe 3% to upside from here, whereas property stocks could go further. rishaad: very quickly, which are the most popular stocks? >> among the property developers, city developmentis one of the more popular stocks, compared capital land, which is the largest listed property developer. it has risen 28%. this is because city developments is very
rishaad: almost 10:00 a.m. in hong kong. i'm rishaad salamat. haidi: and i am haidi lun in sydney. this is "bloomberg markets: asia ." rishaad: we are on the up for asian-pacific stocks at the start of the week. the uptrend sends the msci index towards its april 2015 high. haidi: a weaker yen is supporting japanese equities.
sterling is falling ahead of the commencement of the brexit talks. rishaad: and remaining on traded and suspended. bids by some 600 to one. haidi: and china's property curbs seem to be working was more. insisting thee bubble will burst. rish, you know, if you live in china, you are talking about the property market or policy images to talk about the letter. want to bring up this chart, 637 on your bloomberg, air pollution. you can see this purple band here, and the red band here, that is where the air quality in beijing gets into hazardous territory. 2015 toa period from 2017. it is not when we saw the worst
pollution in the capital. this will be a key focus for the communist party congress in beijing. the party chief is a former beijing mayor. he is expected to address this issue of pollution and paint his vision of how to reduce future ofin the beijing. those issues are inextricably tied. rishaad: and serendipitously enough, we have got the capital mayor delivering a work report. he is setting a target of reducing this particulate matter, which is what the pollution gauge looks at. they want to reduce it by 30% over the next five years, looking to focus on their role as a political capital. beijing will pursue economic
integration with tengion as well. strict political integration is what they are calling for. let's get the first word headlines. reporter: first, the developing story out of the u.k., where police are dealing with a major incident with several casualties in north london. these live pictures now. witnesses say a white van drove into a group of pedestrians early monday morning. this is an area where the number of cafes and a busy underground bus stations are centered. many just finished worshiping at the mosque after breaking the ramadan fast. police say one man has been arrested. a large cordon is now a place around the area. president macron is heading for a big win in the parliamentary election, but not the majority that had been forecast.
350 seats out of the 577 feet national assembly. out is the lowest ever for a french election and 10 points below the previous record. the australian economy is perfectly capable of fast growth, if parliament can overcome political gridlock. he says lawmakers must focus on reforms that can make a real difference to living standards. if not, he thinks australia will fall behind. element hasn't connected a significant economic reform since 2000, with the goods and services tax. rex tillerson has canceled a monday trip to mexico to try to resolve the qatar crisis. the state department says he has had more than one dozen phone conversation with regional leaders and wants confirmation the u.s. is attempting to mediate. washington is in a delicate situation with saudi arabia, its biggest gulf ally and qatar.
global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i'm paul allen. this is bloomberg. rishaad: getting straight to the trading day, where we are up. >> at the tones -- up beat tones are coming through in asian markets. we have tech players leading the advance come up .9%. henang sangeng in hong kong. starting off the drop we saw in the u.s. counterparts, which fell in the movie with the amazon deal. now, that theme continues when it comes to supermarket players here in asia, the likes of west farmers falling in sydney, the one blemish for the regional
benchmark, as you can see from the mx ap index. these shares are joining the regional advance. we do have chinese stocks building on this morning's gains with financials and industrial, adding the most to the shanghai composite. a softer yen is helping to support shares in tokyo with tech makers leading the advance for a second day of gains. elsewhere, we do have the hong kong dollar rising slightly here. this as the chief says there is no need to change the city's 34 year peg to the dollar. we do have the ringgit and yuan leading gains. that is up 0.5% here. the pound, that is the worst so far. take a look at sterling is down .1% against the dollar. this, as record talks are going
to kickoff -- this as brexit talks will kickoff on monday. we had the likes of credit agricole saying the best hedge against a potential hard brexit could be going long enuro againt the pound. that pair has been trading in a tight range since 2015. haidi: thank you for that. let's get back to our top stories. house prices in china are rising. this suggests the government's curbs are taking the heat out of what was once an overheated market. tom mackenzie has been tossing the numbers for us. what are you reading into all of this? tom: it is the second straight month where we have seen these prices increase in fewer cities. 56 at of the 70 monitored for the month of may, that compares 258 in april. april.ares in they were nine cities where the
prices fell. let me switch to the top-tier cities, the hottest markets in china. beijing, they some month on month, those prices unchanged. existing homes though, they ,eclined to the lowest level 0.9 percent. this is the biggest decline since february of 2015 in the capital. jen jen saw prices falling to the sharpest level in three months. shanghai prices month on month for the number of -- prices for new homes, i should say, were unchanged in shanghai. shanghai some protests over some of these curbs earlier this month. these curbs rolled out and are continuing to take a toll on these prices and it seems like they are propping up the prices across the board in china. you've got the first and second tier cities that are starting to ease off. in third tier cities the focus
has been appalling down those inventor is. we heard from the likes of we that in the second half, will continue to see this house was grow to moderation in china. clearly, a key sector for the economy, driving all sorts of different elements here. that's why it is so much in focus. this would seem to be in line with where policymakers want things to be going and easing the top-tier cities, or demand in third tier cities. rishaad: what about those curbs you alluded to? what is likely to be done with them? tom: as yet, no word on whether or not they will be pulled back. , in 12 interesting months or so, these curbs might start to be reduced. take a listen. >> i really do not see any short-term growth an engine,
apart from the housing market. if the commoner is going back to the route of studying, trying to achieve that market, i think it o surprisingnot to that another 12 months on the road we have nowhere else to turn, but to lift those policies that were put in about six months ago. ning essentially saying he does not see any of the drivers to meet that gdp target, that everything else is slowing. by targets were about 6.5% the end of 2017, but after that, he suggests ebd will have to step back on some of these curbs because the real estate market is such a driver to this economy. in terms of the pboc, we know they have been pushing banks here to monitor mortgage lending. we know mortgage rates have been picking up, above 4% now. that might have disincentivize some of the buyers in the
chinese market. inventor is have been ticking down. in april, they were down about 16%. that is something policymakers have been looking to see. it is clearly a balancing and, as we always say, for policymakers. what it comes to real estate, they want to take steam out of the top-tier cities, but it is such an important component for the rest of the city they don't want to come off sharply. it seems to be relatively balanced at the moment. rishaad: thank you for that, tom. looking into what we have got coming up. where now for the federal reserve after last week's hike. haidi: but next, bracing for brexit. what the state of the negotiations are as they finally begin in brussels. ♪ rishaad: this is "bloomberg
kong. haidi: i'm haidi lun in sydney. tony fernandes says his unit will concentrate on asia from now on, seeking flights eight to nine hours. on twitter, you said airasia x will not be dragged into a price war for flights with london. he says in the fourth quarter of this year, it will be the company's best ever. rishaad: southeast asia's biggest online luxury retailer is planning to raise as much as $150 million working with credit suisse and goldman sachs to engage with investors, wanting to boost the marketplace to expand in japan, china, and south korea. at $8 millionlued in 2015. australia's biggest insurer is considering putting more money into corporate bonds.
they have predicted more but nowe notes, sees opportunities outside of australia. the head of investments says some corp. is looking for investments in utilities. rishaad: it is almost a year after the brexit referendum. the first formal talks are finally about to start in the two sides will meet with brussels. let's discuss all of this with of state street global markets. i think it is a realization that the talks have to start somewhere. it is quite clear from a european perspective, that the election changed the dynamics from the u.k. perspective. from the u.k. said, i think there is this realize asian that there are some initial factors
that need to be drawn out first before we go even further into the. detail of the negotiations. in this is a starting point. -- and this is a starting point. rishaad: yes, from all guns blamezing. it seems that has crumbled. >> yes, because of the election results. in despite of what theresa may would say, she wanted a stronger mandate, such that she could effectively go back to her preferred negotiation stance. remember, she was a pro-remain supporter ahead of the brexit vote. she was looking to get leverage out of parliament, so she could get her leverage regarding the brexit talks. that has now been lost, given the fact she will be dependent again on those extreme right wingers in the conservative party. she has lost a lot of her stance.ion
rishaad: absolutely. with this inconsistency and a lack stance. of clarity as to where she is driving to, i guess tehe big outlier is sterling. >> it is. there are a couple things going on. the first, you have the brexit negotiations. the whole brexit story has weighed on sterling. that has been tempered by the bank of england, as to how they were looking at monetary policy going forward. it is still an environment where you would be very skeptical of sterling going forward. to begin with, there is a level of uncertainty on the politics. though the bank of england was more hawkish last week, they will probably hide behind brexit uncertainties as a means to nothing in the midterm. if you are an international investor and looking at the u.k., you want to sit on your hands and see how this plays out, and that will be negative
for sterling going forward. heidi: you mentioned t election. is there a sense that some of these members of the monetary policy committee are sending a bit too hawkish, given the uncertainty in the downside we are looking at for the economy? >> well, they have got the challenge of focusing on the bank of england's mandate, which is inflation. the one thing we can tell with a degree of certainty is the weakness of sterling is now feeding into high inflation pressure. so, it is a difficult balance for the bank of england to try and offset the uncertainty with the very clear shift higher in terms of a u.k. inflation. i guess from this point forward what we are really looking at is the trajectory of sterling. if sterling stabilizes, it puts less inflation pressure into
pipeline, in which they can back off from the hawkish stance. if you see further downside pressure on sterling, that puts the monetary policy committee between a rock and hard place on policy. i think they will hedge their bets and argue the uncertainty is too great to move on policy for now. but it creates more uncertainty again, if you are a foreign investor looking at the u.k. as a destination for your capital. haidi: if you talk about a hard brexit or a softer brexit, as these negotiations go on, it is hard to build any sort of positive upside risk case for favoring u.k. assets, isn't it? >> well, you hope that negotiations proceed well. hope there, you might begin and take from the european side as well. if we step back three to six months, and look back to how the european union was, at least attempting the first negotiation stance. they wanted to ensure no other country would go down this route, in terms of exiting from
the european union. they were playing hardball. as the negotiations proceed, it could be the case the european union needs to find some sort of middle ground with the u.k. this. negative not get o on how this plays out. ultimately, it is a negotiation. both sides might come out of this with something they actually want and of course, let's not forget as well that would it comes to the u.k., when it comes to sterling, when it comes to you pay interest rates, we are still in an environment where the u.k. interest rates could rise before the other leading central banks globally. there is still that do hold onto, in terms of relative interest rate differentials. i would agree though, it is difficult to make a positive case with the u.k. at this particular point. haidi: i suppose you know, to put things into perspective, even that immediate reaction after the pretty calamitous for theresaults may, is all sterling not shrug it off, but those losses were pretty contained. yeah, only because
realistically, there was a potential, if not coalition path, but parliamentary path that would support the conservatives going forward with the d.u.p. from northern ireland. back to the uncertainty in terms of the u.k., one thing we need to be aware of is there is no formal agreement between the conservatives and the d.u.p. this agreement in parliament could actually fall down at any moment. it is a very unstable agreement. and that being the case, we cannot rule up the possibility we could get another election out of the u.k. we cannot rule out the possibility that to reset' thera may tenure's might be quite short. sterling acids generally right now are one of the reasons why you really do look at the u.k. with a high degree of uncertainty right now. economy,bably an currency, and market that investors will shy away from.
and there is evidence of that in more broader capital flows that we are seeing into and out of the u.k. haidi: dwyfor evans, stay with us. we will talk more about the political environment in europe, france, and the ecb, is that the next shoe to adopt this hawkish tone? ♪ haidi: let's go back to our
conversation with dwyfor evans, the head of asian-pacific macro statu strategy at state street global markets. i guess, does attention really now focus -- does the focus now shifts to italy? are you concerned about how much traction the five-star movement has been getting there, and the possibility of getting
potentially an anti eu government in rome? >> that looks like a low probability now. it looks like we have swung from one end of the spectrum to the other in terms of political populism, effect words with what we saw in the u.k. for example, was a very high vote between the conservatives and the labour party in the u.k., i.e. back to the traditional parties. and the shift in france towards a new party and how the traditional parties were squeezed out. there seems to be a big shift from one end of the political spectrum to the next. italy is not really on people's radar. i think your money is more on people's -- i think germany is more on people's radar. the probability of a shopping outcome from both is quite low. that appeases those who are looking at the european politics as a major risk for 2017. realistically, i think that was couhed early on with the dutch
elections and the follow-up we saw with theu.s. elections, feeding into the european ection calendar, particularly with friends. my the the dutch nor french -- neither the dutch, nor the french election turned out to be a markets apprise. rishaad: it does come against the backdrop of an improving economy for the euro area. how much of that is playing into what the european central bank is seeing here? >> they are being reasonably dovish because there is very little inflation pressure. i think the way draghi is looking at markets within the eurozone is underlying inflation is very low. from are pressures northern europe, particularly the germans, to modify policy into normalized policy. draghi is clearly in no rush to do that. from a market's perspective, it remains one of
the larger liquidity providers globally. he could take a very gradual approach in terms of policy adjustment, which is what the fed did in the u.s. thether words, not to shock market, but to withdraw accommodation very gradually. there could be a change of language in the second half of the year, but we are not there yet. rishaad: does political risk also play a role? >> it does to the extent that the ecb did not want to do anything at the beginning of the year. firstly because the numbers are not strong enough, and secondly because there is a little bit of political risk. it is a secondary factor and when we can probably ignore with a fair degree of probability. but then they go back to their core, and that is to look at their mandate and the underlying strength of the eurozone economy. it is much stronger than it was. it up is coming off a low base. the fact you are not seeing any
rishaad: 10:29 in hong kong. i'm paul allen with the first word headlines. a developing story out of the u.k., where they are dealing with a major incident with several casualties in north london. witnesses say a white van drove into a group of pedestrians near a mosque early monday morning. it's very busy underground in bus station. study of the victims are thought to have just finished worshiping after breaking the ramadan fast. it is not know what caused the incident, but one man has been arrested. a large cordon is in place around the area. 361 days after the brexit
referendum, formal negotiations are about to start. brexit secretary david davis and european commission chief negotiator nicole bernier will meet in brussels later today, 82 days after theresa may notified the eu that britain intended to leave. the u.k. wants talks on the split and trade length, but the eu insists that is not possible. divers have found the bodies of several sailors aboard the stricken destroyer that collided with the japanese container ship. searchers have reached spaces that were damaged in the collision. the fitzgerald is at the home of the seventh fleet while the philippine flag container ship is at a tokyo wharf. google is stepping up the fight against terror laden propaganda in response to lawmakers who say they are a breeding ground for radicalism.
are visiting that one. also don't forget that lots of politics provides mood music for wall street, particularly in washington, d.c. are we going to have an up arrow week? have we started? we had japan come out with surprise trade numbers, stronger imports in the best export growth in more than two years. our managing editor in tokyo is brian fowler. what should we take from these numbers? they don't ring true. brian: it's kind of a mixed bag of data. as he said, rish, it was the fastest clip since 2014, powered by shipments of everything from auto to steal to semiconductors. however those numbers were exaggerated, the increase is
exaggerated, by comparisons to last year when we had the earthquake, which temporarily stalled some production lines and weighed on exports. as for the deficit, a lot of that is from energy, particularly the cost of imported thermal coal, quite a bit higher this year. i guess the big question is if we will see that rising inflation, imported inflation, filter into the regular economy. does this really have any implications for the boj, given that we aren't really looking at what this unwinding from extraordinary policy looks like? is it steady as she go? most seem to suggest they just need to keep doing it. brian: i think the bottom line is, of course we know that using cycle is over, so the question
is when does the tapering begin, and when does the exit strategy layout? these numbers are in line with what we have seen recently. export growth has been powering the economy for quite some time. just lasthat the boj week said they upgraded their assessment of private spending. so that's a very good thing. one thing we will want to see is this robust performance by exports feeding into higher production, higher capacity utilization rates at factories, which leads to even more hiring, more tightness in the labor market, which could in turn lead to more upward pressure on wages, which would be a big part of that virtuous cycle that mr. kuroda has been talking about for some time. haidi: we are still waiting. brian, thank you so much. let's get e latest on the market as we get the trading week started. lot to wat o for in terms of downside risks.
for now we are seeing a pretty good start to the trading week. >> looks like investors are able to look through the potential downside risk. plenty of green across the screen. in tokyo we have japanese shares closing out the morning session and adding to friday's gains as well. it is helping to lift other benchmarks across the region. the hang seng is that for the biggest since may 9, rebounding from its worst week in three months. we also have shares adding 1.2%, able to maintain the days momentum. we had costs up .4%. we heard they would become bullish on china's stock market, given the potential inflows to emerging markets. this week will be big for chinese investors, given the
potential inclusion of onshore chinese stocks to the msci global indices. take a look at what's moving in the region, coming off what's going on in hong kong. we have developers on the hang 6%g in the gainers, up over after this morning's latest data from the mainland. sales will likely lose more steam in the second half of the year and officials need to take on property markets. elsewhere in the region, we have nomura leading, down over 13%. the most since 2011, this after japan said it is no longer pursuing an acquisition of nomura's real estate unit. i want to highlight woolworths, slumping the most in three
months. it is sending jitters across the supermarket industry in new york, europe, and now in asia. rishaad: thank you. over theconcluded its weekend pledging to do more. let's get info from our correspondent who was at that meeting. what was the key takeaway? >> you know what, rish, the message from aiib was clear -- it is committed to infrastructure. unlike other multi-development banks, which are seeking to look at poverty, we heard the president say that the bank will boost more projects as the sole lender, even as it works with others on large-scale infrastructure deals. be as a 7 billion
-- wants to boost its own credibility and be seen as a real alternative to the likes of the abb and the world bank. , it is 80 strong -- hong kong argentina, madagascar, tonga. membership is rising to 85 by year end. he also says he will keep the door open for the u.s. and japan, the only two members who have not signed up, and are unlikely to do so. you spoke exclusively with the korean finance minister, who seemed to suggest that these tensions between china and south korea are starting to ease, because we saw that outpouring of quite a bit of fury after the deployment. what did he have to say when it comes to reach rise? >> whe thnew finance
minister says he is hopeful of better relations with china after deploying that defense system operated by the u.s. the sensitiveedge issues remaining in that stands in the way of normal relations full the it will take time. here's what he had to say. >> [speaking korean] buthat is what we hope for, given that there are still delicate diplomatic issues it might be too early for us to say all the nontariff barriers will be used right away. but based on my meeting with the finance minister in the economic dialogue channels we do hope that nontariff barriers and the restrictions will be eased as early as possible. haidi, the backlash has been wide-ranging. rivals dropped 40% in march,
increase the cost of korean products. carmakers in particular were badly hit. but of late, the pace of retaliation or somewhat subsided. that pretty much has to do with the election, indicating that the president will suspend the program. you also spoke with the egyptian finance minister. what you have to say about his economy which has, after a lot of turmoil, shown signs of improvement? >> well, it's true. it is recovering, and according to the egyptian finance minister, confidence in the economy is returning. if you take a look at the demand for government bond issuance and demand for equities, investors support billions of dollars, but the biggest concern for the egyptian economy is the persistent inflation, which is expected as 23% in the coming fiscal year. that is a huge concern for the
rishaad: we are back. a little bit of business flash headlines, with amazon saying they will keep whole foods reputation while cutting prices. we are told it is expecting to cut some staff in change some products, and that would be to help whole foods compete with walmart and other big-box retailers. they are cutting prices in the face of its worst sales slump since it in public in 1992. haidi: hong kong's central bank says the dollar has been sitting
well for more than 30 years, and it should stay. the monetary officer says it's a small it open economy and the exchange rate is important. it linked its currency to the u.s. dollar in 1983, when negotiations between beijing and capitalpurred a x exit. rishaad: -- in a deal worth more than $3 billion. is sub-saharan africa's largest carrier and wants new plans to expand its reach across the continent. 777 looking at the boeing . haidi: let's get straight to the weekly real yield segment. the bond market continuing to defy wall street consensus after
the hike to rate. joining us to take a look at what's going on is the executive vice president and head of portfolio management for emerging equities. great to have you. that sayst all, dsn't it? the bonmarket continues to defy wall street consensus and seems to have serious doubts about what it is going to do. >> very through. -- true. the key thing to point out is that inflation expectations have come down a lot, and at the same time the fed is still on course to hike rates and taper. there seems to be a dislocation between these things. do?i: what does the market they can sort of control the front end of the curve, but they seem to have a lot of difficulty moving the other end. is there a sense that, even as
you do get potentially a more hawkish trajectory from the fed, that the market is going to continue? the end of the day, is it still a liquidity story? these moves are really so incremental when it comes to central-bank tightening and normalization. >> there are three things to focus on. the first thing is that there is a direction for interest rate policy. the second thing to focus on is the issue of tapering. the third thing is the fact that -- in februaryk or march of next year, they may have different people running the show. let's take on those three things. first, on the interest rates, there is a sense that there are three more hikes to go between now and the end of 2018. that is pretty much what the market expects, unless they get derailed. the second thing, on tapering, they have signaled quite clearly that they want to start this process later on this year. a greatiously has been
beneficial factor for asset market, and if that starts to fade, the demand curve slips. but in terms of what the fed will look like, that is what the markets are grappling with, and no one really knows. haidi: you mentioned this idea that the fed will look different come next year. stanley fischer unlikely to be reappointed, janet yellen is a real question mark. there are many members that have a seat up r grabs.. does that make this fixation over the dot plot irrelevant? >> not irrelevant. there will be some continuity with the people there. but most importantly there's a framework, and they have a mandate. what people have to focus on is the fact that the u.s. economy has healed. they are miles away from the problems they had five years ago. the unemployment rate is pretty low, inflation is lower than most people anticipated, and there is room to expand. chad to the complexity, you have
this new administration that wants to ease fiscal policy cut taxes,, do more on the investing side. all of these things should be growth enhancing, which means the fed is more than likely to keep going with rate hikes. that's not really going to change. of question is who does it and how quickly. but they are moving away from a common policy, and they want to start changing the framework. those things -- i think asset markets have a glorious time of it over the last five or 10 years. rish in hong kong. what does this mean for yield? does this mean this bond rally we have been seeing spotters, and we finally see a bull run lasting decades, you could argue, coming to an end? low was a lot
sooner than now. we have seen very low yields in rates,. and in global and it is difficult to dispute the idea that with growth where going with global growth up to multiyear highs, you wouldn't expect to see rates going up everywhere. the markets have got the dollar wng -- i would have thought the dollar would be going up. i would have thought that u.s. rates that were up would have been heading towards the 2.75% or 3% range. if you reset expectations from here, unless you see a major deflation, the u.s. rate should be heading towards anything too low but it depends on where expectations go from here. terms, on balance we expect the rates to rise going forward without too much of a
concern, and that will impact how other central banks will do it. you can't just sit there is the fed is hiking. rishaad: that's what i'm trying to head to. now, 2.1% foren bund,0 year, the german that spread is going to widen it will get even wider when it comes to yen denominated debt stock what stresses and strains will that bring in? >> the key factor when you are looking at rates is about growth and expectation of what policymakers will do. what the u.s. is doing is building themselves up a cushion -- if they face some kind of downturn, they can cut rates. the europeans are in a tougher bind because given where they are right now if they start to sense a downturn they don't have
much firepower to do anything. it all goes back to can we cheapen the currency? same thing with the japanese. but when i look at the rest of the world, average growth rate is 4.5% to 5% across asia with a lot of room to cut rates and to let the currencies weaken. i think the asian economies probably has more flexibility. rishaad: thank you so much. coming up, making magic and shanghai. how the disney adventure could be getting a sequel. this is bloomberg. ♪
haidi: disney's $5 billion backed on china seems to be paying off. bob iger says the anghai theme park is close to breaking even after just one year of operation. he says that is some thing none of his other resorts have managed to achieve over the past 30 years. >> earlier this week, we hit 11 million. just before our first anniversary, that's quite an achievement. we are extremely confident this will continue to grow for a few reasons. people are obviously enjoying the product, word-of-mouth is very strong.
we know for the people who visit that they love it because they are spending more time here, and they are telling their friends about it. we also know that awareness of this park is tremendous. we expect that the majority of people who come from the shanghai region in the first year of operation, before the rest of the country found out about it -- it's about 50-50, 50% from this region, 50% from the rest of china. that's an extraordinary achievement. it means that not only are people arware, but they know it's worth visiting. we have a large piece of land, we have developed about half of it. we have already begun expansion, and next year we will open toy story land. it's a better opportunity to build this out. after a year i am pleased to say that it is really strong for continued success, continued growth, continuing to provide the people of china with a unique and authentically disney
destination. >> i know you were hoping to break even this year. can you give us a sense of how it's breaking down between ticket sales, merchandise, and what impact that may have on tweaks to the business plan? >> we did say we hope to break even, i can confirm that we will. we are close enough -- today is the end of the first full year of business. that's also an extraordinary achievement. i'm not sure we have ever ne that. we haven't in the last 30 years. that is quite exaordinary. we don't breakdown from the revenue perspective what we get from tickets versus beverage, merchandise, hotels. obviously itu that is higher than we expected it would be. we also have had extremely high occupancy for our hotels, higher than we expected. on the food and beverage and
merchandise side, we have had some challenges, but it's mostly learning with the people of china want when they visit a disney theme park. we are working through some of that, the small challenges, ones that we are taking had on. it's not a big issue. merchandise, you don't really know beforehand what people will want to buy when they come in. certain things are more popular than we expected, other things less so. but in general, this is a healthy business no matter how you look at it. that's great after only a year of operation. rishaad: disney ceo bob iger speaking to tom mackenzie. up text, energy and david with the top stories. this is bloomberg.
angie: it's almost 11:00 in hong kong, crime angie lau. david: i'm david ingles. we are in the middle of this asian trading session. welcome to "bloomberg markets: middle east." ♪ hong kong leaves the asia-pacific higher, the hang seng rebounding from its worst week since march. meanwhile, the weaker yen is supporting equities. elsewhere, the euro has given up early gains. sterling fell ahead of brexit talks.
japan posted a surprise trade deficit last month, stronger than expected imports overpowering the best export growth in two years. and china's property curve seems to be working as prices cool once more, but some still fear the bubble will burst. not bursting yet. the market is looking up, an up start to the week. david: very much so. volumes are flat, but the rest of the story is very positive across the asia-pacific. we have a few weeks spots here and there, but generally speaking it is rising overall. we are pushing toward the highs we were last at in april of 2015. just to give you a snapshot of what we are seeing, that is what we are seeing all the way down. story,soft u.s. dollar
now pushing a bubble back below 1130. down, seeing aay little bit of positivity. the city just cut their forecast 13%, and across the sovereign bonds stake it is very much positive as well. short, there is some re-risking of portfolios as we get started this week. angie: that's a good term. hereas been a lot of talk that the stock rally has fueled stocks to new highs. the talk washink surrounding the msci the high we stop hit back in april of 2015, a lot of that has to do with the rallies we's all in hong kong. where are we now as far as valuations? target, 157 back in
april of 2015 -- let me just see if i can get it up here for you guys. index, the real question is where we are as far as valuations. generally speaking, it is still cheap right now. ,e are treating over 15 times closer to 14 times. the corporate earnings revision story still very much tilted toward the positive side. 155 looks cheap if you believe that side of the story. here is your first word news with paul allen. paul: thanks. police say there have been several casualties in north london after a van drove into a group of people near a mosque early monday morning. it is a diverse area with a busy underground and bus station.
many of the victims were thought to have just finished were sipping after breaking their ramadan fast. it's not know what happened the police say one man was arrested. president emmanuel macron is heading for a big win in the parliamentary election, but not the thundering majority that was were cast. they are heading for about 350 577 available. sunday's election was the fourth in two months and has turned off voters. turnout was the lowest ever for a french elections. the north korean president is set to meet some of the country's most itant corpate figures as part of the government's plan to clean up business. the fair trade commissions are being invited for talks under the revelation that egg business paid millions of dollars for government favors.
the de facto head of samsung remains in detention, accused of corruption. the rba governor says the australian economy is perfectly capable of faster growth if they can overcome political gridlock. he says automakers must focus on reforms that can make a real difference for living standards or australia will fall behind. parliament hasn't enacted a significant economic reform since it was introduced in 2000. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. rose outoperty prices adjusting for these cooling measures that continue to be taken out of the market. angie: our china correspondent tom mackenzie is monitoring the situation. what can we read into this? >> i think it is fair to say it
is probably aligned with what policymakers want. they have had best tailored approach to property prices, trying to pull down the prices in some cities and a trying to reduce the inventory in others. while we see in the cities that are monitored one fun months, prices rose and 56 out of 70 cities, marginally down from the 50 cities in april. if we break it down we can see existing home sales fell for the first time is about february of 2015. in some citi we are seeing the hottest property prices with the biggest decline month on month for the last three months. overall, of the 70 looked at, five cities are unchanged.
that there seeing is prices are coming off in second-tier cities but there's now greater demand and third tier cities and that is something that may be reversed in the longer term. take a listen to what joseph foul had to say. >> right now what you are seeing is that the markets are slowing down and there is a spillover. if you look at it over the longer term, we should be in the q2 market. it is worth noting that our own analyst continue to think there will be a slow down in house price growth. we have also heard in the last saying thatfrom snp the real estate sector in china may enter into a cyclical downturn in the second-half as well. story,is chart tells the
one seeing the only that uptick, and we are also seeing from r.b.i. colleagues that there are three inventories that are actually falling quickest, the lowest since february 2011, 9.4 months in april. the question is, will they catch up? any clues that property curves are being closer to d listed? >> th's e key question. i think that charlie pointed to is interesting because it shows that divergence. but as you point to the drawing down of inventories, that has been a crucial part of the strategy, or tailored approach. in terms of the curves being put in place, there hasn't been any
mention and doesn't seem to be any consensus that they are going to be pulled down, reduced, at least in the next 12 months. some of these are very stringent depending on which city you are in, somewhere in the region of 50% if it is your second home and developers are seeing sources of hunting restricted in there havese were been price caps put in place and it distorts the market. you are getting more of a read of policy rather than the actual trends within the market because you have some cities were the properties are sold at one price and then getting converted and decorated. that is one way developers have been getting under the price cap. we had one guest who said after 12 months you may start to see the curves round out because it is such a central driver.
he doesn't see many other strong drivers for the economy if the government wants to meet its target. and that is putting a bit more to make on home buyers sure it is in line with regulation. david: absolutely, where most of the wealth is stored. tom mackenzie live out of beijing. one thing we would like to show you is the interactive tv function. you will not only be able to watch us live, but see previous interviews, drive into any of the functions we talk about. if you have any questions for our next guest, go ahead and bang it out. angie: absolutely.
it is for bloomberg subscribers only, be part of the conversation. looking ahead, the clock is ticking on bad debt in india. the r.b.i. intends to wield stronger firepower. we will be live in mumbai. david: and japan springs a surprise trade deficit from a. we will be looking at the key factors. this is bloomberg. ♪
there is a tweak in the design of the latest playing in the hope of reviving sales. it says it will raise fuel efficiency by 4% and the changes will allow more passengers more costs per seat. the plan also gets more crowded. fallhave seen production about one per month. bolinger said to be closing in on $5 billion worth of orders for the longest version of the 737. they are in talks with spice jet for about 28 claims while another is looking as many as 50. the deals may be announced this week at the paris air show. exports out of japan
jumped almost 15% from a year back but for the strongest growth in a year-and-a-half they almost doubled. joining us inside, the global strategist and executive director of lgb capital. nice to see you. we can look into these numbers up and down but the long story short is that the economy does well. >> whether it is nominal or real, that's pretty clear now. theirve a beautiful chart showing the 40 year surplus. you can basically see that if you average the last five years it is basically zero. it was negative in the beginning when prices were collapsing and to a slighturned
surplus. but the big picture is that was nowhere near the surpluses japan used to have and that is normal. postindustrial but it is more and more domestic demand oriented and there aren't a lot of exports. i would expect it to be eight at sign if they import more things which is in line with the success. that: this the support medium groth we were hoping to see for inflation in japan? >> i don't think so. it's a monetary phenomenon -- angie: not necessarily demand? butell, demand helps, demand in japan will not ever be that strong. society.ounger
there is some wage pressure in certain segments and the working population is also shrinking, but overall it's not going to get it to 2%. david: we had a few guests last weekend, they said we need five more years of intensive tightening in the labor market, everything that the boj says before we get to a meaningful 2%. >> at the current pace five years is probably fair. it will certainly not meet their remember theynd have that overshooting incentive within a two-year timeframe, which is normal for central banks. i think they are right but i hope they will ease again because they certainly need to. angie: let's take a look at what easing means.
we are already seeing -- this white line here, it is close to the highest amongst all of them when it comes to bloated balance sheets. there is pressure on haruhiko kuroda to communicate when they will start tightening. that you shaky shouldn't be talking about that at all? --he didn't make very clear i would be more radical if it was up to me but i'm not a political peonnvolved in central banking in japan. angie:it is supposedo be a political. >> institutional. and it is a political thing because it has to be approved by parliament. but he should say we will talk about balance sheet normalization, they are so far away from the target and if they
talk about balance sheet , it's just a , strict,n to the old disciplinarian bank of japan regime and that doesn't help at all. -- it's a goodar step in the right direction but my preference would be not to talk about it at all which would constitute a form of easing because it makes clear that we are not going boldly on this. david: do you expect him to stay for another term, and what could that easing, in? >> i am reasonably confident from what i hear from people in japan and who are more knowledgeable, that the decision has been taken by the prime minister and that mr. corona is willing to accept it so i am
confident it would happen. angie: i want to ask you about using. it's not necessarily what we are seeing when it comes to super long bond purchases. i want to go again to the bloomberg -- this is the chart we have been showing the past week ahead of the boj decision and we wanted to figure out what exactly this means -- is tapering already underway? are referring to the amount of bond purchases and i wouldn't see the amount of purchases as a gauge of easing or tightening. tightening the happening because interest rates are falling. people say that when interest easing,e low, policy is
but when you have low interest rates it means policy has into tight. that's why you have low interest rates. if you had easing monetary policy your interest rates would be rising because people would be losing faith in the value of your currency and they wouldn't be looking for other stock and government bonds. that is why policy is too tight. buy, -- they david: i wanted to ask you about this in a said context. he will stay with us. or to discuss. ♪
hopefully they will restructure the economy and i can see that the eu is also pushing free trade with asia, the future of the eu as an entity and united body is not just stronger than 12 months ago and we shouldn't underestimate this dynamic economy at the moment. we have seen this global economy. >> you can't get to negative on how this plays out. ultimately both sides may come out with something they want. and let's not forget that when it comes to the u.k., when it comes to sterling, to u.k. interest rates, wee n an environment where u.k. interest rates might rie before many other leading central banks globally. there is still that to hold onto in terms of relative differential. oure: multiple views of
guests this morning on those upcoming brexit negotiations in brussels. let's continue that conversation with a global strategist at executive director at lg capital partners. you don't think brexit is a good idea that after that surprise -- i say loss -- may does not expect to have a home parliament. is it at least faring better? if we want to get the positives out of the way, any form of political increase in rationality instability is good for the u.k. and good for the pound and the negotiation process. that in the longer term the u.k. is perfectly fine in the longer term of coping with even a bad brexit situation. -- ise original question it better than a harder brexit
-- i think soft brexit doesn't make a lot of sense -- david: we interchange these terms, but is there a lot of difference? >> how it looks from the outside, it looks like it is more of a british slightly delusional playing on details because what soft brexit is essentially is keeping the status quo, accessed the market with a lot of the obligation but without any rights. it's actually not a good options so in that sense -- we decided this so we should leave, but that is even more nonsensical for a major trading nation and the european power like the u.k. angie: does it matter to europe? >> i n't think it matters that much. france, withhad in somebody who decided to go out
with a positive message, you can be cynical about it but at the end of the day someone who comes out with a positive and optimistic message is working and the results have shown that the europeans are willing to move forward and for that they don't necessarily need britain. britain was always rather skeptical about everything. david: and the latest from the boe -- looks like we might see a high great. given everything that's happening, that everyone could stay put -- englandnk the bank of is one of the central banks that should be talking about balance sheet verbalization and they are the only one out there which is actually delivering on target and overshot it. a very credible bank, great
paul: i'm paul allen with the first word news. u.k. prime minister theresa may has described an apparent attack on worshipers near a london mosque as a terrible incident. police say a van struck a crowd of near the mosque causing a number of casualties. they haven't given further details. one man was arrested at the scene in many of the victims were thought to have finished prayers after breaking the ramadan fast. 361 days after the brexit referendum, formal negotiations are about to start.
the brexit secretary and european commission chief negotiator will meet in brussels on monday 82 days afr theresa y notifiedhe eu britain intended to leave. the u.k. wants parallel talks on the split but the eu insists that is not possible. navy divers have found the bodies of several sailors aboard stricken uss fitzgerald that collided with the japanese container ship. searchers reached space is damaged in the collision. the fitzgerald is at the home of the seventh fleet while the container ship is at a tokyo wharf. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. stocks are on a firm footing this monday, encouraging regional data to support the up the mood in japan.
there was an uptick in new zealand which is helping to spread the pop in the kiwi dollar. markets will find out if the msci will include onshore and shares rose almost 1% ahead of the date. hikes, the at these biggest gains since april 25. it is being led higher by pharma stocks, the highest level in 16 years on an optimistic earnings outlook and chipmakers are on a tear this monday as japanese stocks are set for a second day of the. at 111, the worst performer while the kiwi is the best. cable is looking weaker ahead of the brexit talks and the euro has reversed the earlier morning as there have been turns
as the commone currency as tracked by the blue line on the chart right here. did: thank you. the hong kong stock exchange plans to attract more big startups over the night dear after it missed out on the $25 billion ipo in 2014. we are looking at you will listings before they make any money at all. angie: talk about missing out. take a look at this chart. alibaba is listed in new york, but take a look at tencent, which is listed here in hong kong -- that really underpins the incredible ride we have seen
. can you imagine if alibaba was heart of that story? -- equities reporter is here what else can you tell us about this new exchange? mentioned, there was the dual shareholding issue and they proposed to scrap that role but now they are proposing a whole new way to remove the and the ceo said hong kong has missed out on $60 billion from the mainland soause of the constraints it's a way for them to try. it is similar to what we see in china. whether analysts say? of whetheruestion
these technology companies would want to come here, if they can get listed or not. even if you look at the market today, hang seng is up, strategists are saying people are taking this positively and new economying gains to health care and technologies as the focus. potentially opening up for new investment rules thates and new could make a more reliable market. angie: is it opening up to new opportunities, or is it relaxing some of the rules that were in place designed to protect investors? >> the dual shareholding issues are becoming more and more but as long as investors are more careful in their investment -- david: what other things are
they proposing? >> they are also proposing to tighten existing -- we saw a lot of volatility in small-cap. they are proposing things like larger market cap, increasing the cash flow requirements. david: make it tighter but easier for small companies that usually don't have any profits either way. but you have got to show that you can turn a profit before you ask people for money. angie: thanks. is pledging to do more as regional influence expands. david: let's get more insights from haslinda amin, who was in the meeting -- talk to us.
what was the key take away from all that went on? they say they are committed to infrastructure, unlike other multilateral development banks which are seeking to fight poverty. will lose morek projects as a sole lender even as it works with others on largest deal infrastructure deals. currently they have a $7 billion pipeline and 16 projects already approved. seen it as a real alternative to the world bank. -- it iss interesting a strong right now, hong kong, argentina, madagascar are the latest and they say they are keeping the membership open for the likes of the u.s. and japan. he says he wants to keep the
doors open to the only members that have not signed up but it seems like they are unlikely to sign up. you had an exclusive interview with the korean finance minister who suggested that tensions are easing. >> south korea's new finance minister says he is hopeful of better relations with china after the missile defense system operated by the u.s. but he did acknowledge that sensitive issues remain and that stands in the way of normal relations. >> [speaking korean] aiib was held for the first time outside of china, and the location was not specifically chosen, but i do believe it can be a good sign or an improvement
in the relations. i had a meeting with the chinese finance minister and the meeting lasted much longer than we had planned. of course there are still some delicate issues between the two countries. i am sure we will be able to boost economic collaboration between the countries going forward. enoughpensions easing for china to lift the monetary measures against korean companies, and left the current ban? >> [speaking korean] that's what we hope for, but given that there are still some delicate diplomatic issues that might be too early for us to hold that all the nontariff barriers will be eastward away. but based on my meeting with the chinese finance minister in the economic dialogue channels we do and that nontariff barriers
restrictions would be used as early as possible. concerned that trump is considering renegotiating the trade agreement between korea and the u.s.? >> [speaking korean] >> there has been no official request coming from the u.s. government yet and i understand the nafta negotiations are currently underway. as you know, korea is a strong advocate of the trade and we are concerned about any type of protectionism. there had been evidence of mutual benefits that two countries has enjoyed, the benefits have been reciprocal so far. >> can it be raised from the current 2.6%? ? [speaking korean] if the economy continues as it is today and if we supplement -- if the supplementary budget
we have submitted is fully implemented, there's a possibility that it could be higher than currently expected. but given that there are also uncertainties like the u.s. rate hike and international economic and financial situations, we still need to be careful about revising the gps. >> the minister talked about the supplementary budget, expected to create more than 70,000 jobs. even though the korean economy is doing ll, the rception within the country is not strong. the perction is that the economy still needs a boost in debt and the reason why the supplementary budget is being imposed despite the momentum we see in the exports in gdp growth. david: good reporting from haslinda amin in singapore. angie: coming up, amazon has an appetite for whole foods, but
angie: this is "bloomberg markets: asia." david: let's get a check of your business flash headlines. midday, the chairman was taken into custody. the company says investors rated office is over the weekend before detaining the chairman. he is suspected of violating the securities and exchanges act and the financial holdings act. angie: southeast asia's biggest online luxury retailer is planning to raise as much as $150 million to engage investors. they want to boost their
marketplace business and expand in china, japan, and south korea. valued atof was several million dollars in late 2014, making it the most valuable in southeast asia. david: australia's biggest insurer is considering putting more money into corporate infrastructure. they previously bought corporate notes and subsequent is outside the country. saysead of investments some corp. is looking for high-quality debt for nonfinancial companies such as utilities. amazon says it will try to keep the whole foods reputation for premium quality while cutting prices. staff ins to cut change some products to help whole foods compete with walmart and other big-box retailers. the company already cut prices in the face of its worst sales
slump since going public. david: look with having across the market. some food retailers have been reacting to the takeover. have a look at this story in 3.5%., down it could perhaps change the whole landscape when it comes to groceries. is one of the greatest value investors of all time but his performance in the past few years has been nothing short of off, betting on stocks that have turned out to be duds. he says this shows retail continues to be brick and mortar stores. it says to me that there is a need for physical space in retail and there is a need to and iremendous locations
read the newest headlines thinking and it reinforces my thought that the physical world is not disappearing, that the digital space is not disappearing retail. malls are doing quite well although they are transforming village life where you can have a social community and get everything done in one place. you see the transformation and people don't understand that the real estate value, not so much in the building as the parking lot worth you have a building and has 8-12 acres of land it is part of the world where there is no empty land like that , it's tremendously valuable stop you have a basic level of
infrastructure, electrical grids, it is very valuable. there are thousands and thousas of acres which surround these anchor department .tores foodsamazon buying whole should help people revalue assets? >> there is tremendous value in the locations and in the cooperation. >> hang on, because that's a provocative point. should amazon by sears? >> that would be an intelligent move. it was an intelligent move to buy whole foods. it was intelligent to work with sears when you consider the infrastructure and systems and the other pieces that they have
added to the puzzle. it's a gateway for new designs and companies to come to the united states to show their stuff, it's a great way for the logistics systems that can be utilized. tough,tion is extremely people have to find ways to become more efficient and to do a better job and we will have to see -- you will have these mergers and amalgamations, it makes sense. >> do you have any reason to believe they will by sears? >> i have no reason to believe that. >> but you believe it makes sense. thatbelieve it makes sense various retailers and mall owners will have to get together -- the math makes perfect sense to me. >> don't miss our exclusive interview with berkowitz. inwill hear about him
angie: we want to bring you up-to-date o london. he's are live pictures from where it is and drove into a crowded pedestrian. has,,y has dawned, light and pulleys have cordoned off the area. several casualties have been reported although police have not said house areas the injuries are. 4:50 a.m. in london, live pictures. david: "the guardian" reporting counterterrorism police have joined officers at the scene. the incident happened around 20 minutes past midnight in london
after prayers. we heard from prime minister theresa may and over an hour -- over an hour ago. we are just moving into 5:00 a.m. live pictures from the scene from the london incident. back in asia, have a look at the early moves on the currency benchmarks. half of a percent looking generous. in india, the country is pushing to clean up the banking sector by cracking down on corporations which have become one of narendra modi's top priorities. angie: let's take a look at this chart.
you can see that nonperforming loans have really risen and in said to be is ordering lenders to go after these corporate default is by triggering bankruptcies, getting them to pay it all back. we have our asia finance reporter joining us in mumbai. what is this plan all about? >> the reserve bank of india has prepared a list of corporate default errors and handed it over to the bank, asking them to seek each of these. the idea is to resolve this talk and once weaccounts
have this accord, they will put in place the researching plan whereby they sell off the assets to recover the bad loans. david: i guess part of this is the government's effort -- in order for them to revise they have to get rid of this problem. how big is this in the banking system? the stress out here in india , the bad loans that comes through, they would be really low, accounting for almost -- top would be among the eight in the global economies. it is really choking the credit growth, which is th missing link. angie: quickly, which sectors are being targeted?
sayse royal bank of india most of the bad loans are coming from the steel industry, which is taking a hit after the cycle turn. it looks like they are under a lot of stress right now and the last would be the infrastructure sector, the road builders going through a lot of stress. david: thanks for that. everyone on the events overnight, one person h been confied killed after a van was driven into a crowd pedestrians near a mosque. angie: these are live pictures from according that has been put in place. u.k. officials are saying the counterterrorism command is investigating.
the incident happened around 12:20 a.m. london time as crowds of worshipers left a mosque after prayers. the u.k. prime minister has described it as "a terrible incident." david: we are getting more details as they are made public. top of the hour, we have "bloomberg markets: middle east." yousef is standing by in dubai. what do you have in store? yousef: we will be looking at the possible inclusion of saudi arabia and the emerging markets, that saudi arabia is one of those last, huge untapped frontiers for foreign investors. it has the largest market capitalization in this part of the world, and we are looking at which companies are likely to benefit, what waiting will they have that would include the kingdom? that's not the only thing we will focus on. we will talk about regional
investment strategy ideas. ahead of investment strategy at abu dhabi commercial banks will be joining us. but we have much more, including the crude oil discussion, which continues to see quite a bit of downside momentum off the back of the latest data from the baker hughes index, which indicates that brazilians in u.s. oil production raises the bar for opec. all that at the top of the hour. angie: thanks. we are going to be able to track this story a little bit more with the latest development, now hearing that one person has been confirmed killed after the van was driven into a crowded pedestrian near a mosque in north london. se are live pictes from the area, where police are standing by, cordoning off the area. counterterrorism command is also on location and is investigating. david: close to 5:00 a.m. in