tv Bloomberg Markets Asia Bloomberg June 27, 2017 12:00am-1:01am EDT
president trump travel ban, saying travels must prove bona fide ties to the u.s. 8:00 is a clock a.m. -- a.m. in the emirates. shery: this is "bloomberg markets: middle east." day.e seeing a mixed some positive sentiment in japan because of the japanese yen. everything else is mixed. are pressing -- pushing toward the upper limits of the dollar-yen. several markets are reopening today, they have a good of catch-up. the philippines, i think it is leading gains right now. the other story, we are not getting -- except for markets in china. down one quarter of 1%. in the previous hour, they said when you look at the valuation, still quite cheap in the asian markets. iron ore top of the list.
up 3.4% following industrial profits in china continuing to rise. i think it was 6% year-to-year. shery: you mentioned some markets coming back from holidays, but in the middle east we are still closed because of the holiday marking the end of ramadan, with the exception of israel. still in themovers markets that are open. tencent, the biggest move on the regional benchmark. not very useful, but we heard they signed a cooperation pact with another company for cloud computing. they are doing pretty well with video advertising. they are beating the momentum from baidu services. also, bhp, keep an eye out. they are seeing the smoothing out of prices there.
also, they are planning to develop a new replacement mine that may cost $3 billion. da because it is one of the automakers that might not get the payments back from to ta and the recall of their products. francisco, that san philadelphia's poverty speaking. -- harper is speaking. david: you have the bank of canada in there. shery: it is a lot to keep track. first, let's check in with the first word headlines. >> the chinese khmer has warned the world economic forum that global growth is weak and
geopolitical risks are on the rise. ofoffered a robust defense globalization and a him a failed rebuttal of the narrative coming from washington. the offices china remains on track to meet its main economic goals for 2017 and will open up even more. >> geopolitical risks are on the rise. structural challenges abound. as long as we stand committed, we will be able to respond and prevail. >> early indicators from china suggest manufacturing a have peaked for the year, with signs factories are starting to flow. small and medium-size enterprises showed the lowest confidence in 16 months. conditions remain lackluster appeared standard charter says lending fell below 50 for the first time on record. beenl's president has
charged with corruption by the country's top prosecutor. he is been caught up in a massive investigation into business and government cap -- graft. he said on monday nothing could destroy his government. he took office in may last year after his predecessor was impeached on similar charges. panel on senate foreign relations committee says that u.s. arms sales to saudi arabia, qatar and neighbors -- bob corker says that this will nudge to an ending of the standoff. alliance -- global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. david: thank you. the u.s. supreme court has handed president trump a partial victory in his controversial travel ban, allowing a limited
version to go into effect. we will be hearing detailed arguments come october. shery: on the bloomberg, you can see the map of countries affected by the ban. you can see six muslim majority nations. they will be affected, including iran, libya, somalia. iraq was originally on the list in january. they were removed after specific steps to sue the trump administration. we discussed all of this with jodi schneider, who joins us here in hong kong. very interesting that this is a partial reinstatement of the ban. tell us what that means. allowed toe will be come to the u.s. from the six countries, they need to find a bona fide reason. it has to be something like an
employment offer they have accepted, admission to a u.s. university, a family relationship. they are not allowed to have any of those things as a way to get to the u.s.. it will be tricky to sort out. and in less than 72 hours, it will take effect. homeland security said at least they had some this time to try and work it out, but legal scholars have said it would be very interesting to see how they apply this. david: this time around, they did not start at one hour ago and then make the announcement. has the main issue been solved, or will we be waiting for that? the supreme court clearly said, we are not done, we want to look at this. we know we need to roll on whether you are allowed to do this in the short run, so they did that, but they will decide the full ban in october. three justices said they would be willing at this point to
accept the full ban. but of course, there could be that the other justices do some serious thinking about this. this is not implying we will see it come october, but it is moving down that road. the trump administration is very happy. shery: thank you so much. we will continue this discussion on trumped travel ban. thank you so much for joining us. when we say partial reinstatement of this ban by the u.s. open court, does this make a big difference, or is it essentially what critics are called a muslim ban? atit is a muslim ban, but the same time, the supreme court is only partially left the ban.
a whole, it is a decision that will be made in october. in your view, how do you think it will be received? it is not a total ban, but the doors open. amin: not very well. countries, those they will lose some travel to the united states. i think a number of them will have to get in the next 72 hours before the ban goes to full effect. another of -- a number of other , where terrorist activities have not been -- activities have been originating, they have not been included. some of the united states is probably being very highest court very particular states that have been targeted.
professor, if you take a look at the decision very closely from the u.s. supreme court. three conservative justices have said they would have reinstated the entire ban. we have two more justices, roberts and kennedy, saying some sort of compromise. does this mean a full ban is just a matter of time? how should these countries prepare in advance of that happening? that is highly possible, but at the same time i think those justices that have not really supported a full ban, they will have to do a lot of thinking and think about the interest of the united states, the region and across the world. this also affects refugees for the next three months. the united states is going to ,ome up with a refugee policy
that remains to be seen. david: stay with us, we will continue the conversation in a theminutes and focus on forecast, given we are four weeks into the diplomatic crisis in qatar. the fed is waiting in vain on inflation. janet yellen prepares to speak in london. shery: we are always talking about the fed. we are back at the world economic forum and we hear from a science company. this is bloomberg. ♪
by saudi arabia and its allies. we are hearing also the republican chairman of the u.s. senate foreign relations committee has said he will block u.s. arms sales to saudi arabia and qatar and neighbors in the gulf. let's talk about the growing theation of qatar with professor still with us. thank you for sticking around. this issue of the u.s. arms sales to the gulf, and the u.s. republican chairman of the foreign relations committee saying that will not happen until tensions ease and the reason. can you gauge what the u.s. stance is? it has been so polarizing from every single section of the administration. messages fromthe washington have been very contradictory. president trump has sided with saudi arabia, yet the secretary
of state has been trying to urge the two sides to negotiate and come up with a solution for the crisis as soon as possible. now we have the chairman of the congressional foreign relations committee as saying they are going to have on all of these countries. thee, itcommittee as appears administration, not only that but the congress, that they are not speaking with one voice. that is causing a lot of confusion around the world. david: ultimately, what way do you think the u.s. will side? there is a massive military presence of americans in qatar. i think the united states will do everything possible to see a resolution of the crisis as quickly as possible. united states, as you pointed out, has a good relationship
with saudi arabia and a number of its allies. at the same time, it has its largest military base in qatar in the middle east. the united states is not really interested in qatar being pushed further toward, for example, turkey and the islamic republic. professor, one do you think of the 13 demands made by the gulf nations? how reasonable are they? are notthink they terribly reasonable. they want to shut down one of the only independent tv outlets and downgrade the relationship with iran and cut off ties with the muslim brotherhood, particularly hamas in gaza.
they have been receiving humanitarian assistance to feed people in qatar. i think that would be one of the biggest tragedies, if the aide was to stop from qatar. they also demanded that turkey remove its base from qatar. i think it is an infringement on the sovereignty of qatar, and i think they are unreasonable and illegal. realisticterms of scenarios, should we start entertaining the possibility that qatar will eventually leave the gcc? if i am not mistaken, the gcc doha. is in amin: if qatar is not able to
meet the demands, obviously the crisis will continue, and there is the option open to expel them. that would be a dismemberment of the council, which originally came into existence to bring security to the region. insecurity and instability in the region. shery: in some ways, this was led by the new crown prince. wars also fighting a proxy in yemen. does he have an exit strategy for these conflicts? amin: one point is clear, he singled out iran as his main enemy. he has been relying on that to justify a number of foreign-policy actions, including the war in human. -- in yemen.
it has not been going very well, and it has proved to be very costly. at the same time, obviously, the new crown prince is very much interested in changing the face of saudi arabia, particularly economically and socially. so it is sort of a double-edged thing. we will have to wait and see what will be the outcome of the to theon of salman position of crown prince. the expediency council voted 34-31 in favor of him. that also means a position within the royal family itself. shery: diplomats are calling him mr. everything because his hands are in everything and saudi arabia right now. thank you so much for joining us this morning. david: coming up, as we mentioned, vitamin d.
♪ david: welcome back. we just heard from the chinese premier. he spoke in davos. shery: he said he would continue to deepen reform and the opening of china. those remarks made at the world economic forum. let's take a look at this chart on the bloomberg. david: one of the things he pointed out was when you look at the economy and china, it has evolved. if you want to break it up, the chinese economy is in the basics reviewed the primary industry, that is sort of raw materials,
you have the secondary market of manufacturing and you have the distribution sector growing. the fastest-growing part of the economy is the tertiary. that is away from the low, cheap old-school manufacturing. shery: let's talk about the chinese economy and what is happening. stephen engle joins us from the gathering. we just heard from the premier about opening china. what were the key takeaways? what he said was that 2017, they are on target to hit their growth target about across the board. the second quarter was a slight pickup from the first quarter. the annualke to
meeting of new champions. if you make money in china, you can take your profits out despite capital controls, but if you invest in china, you can make even more, which is what he said. rebuke of thef a policies coming from the united states by pushing a globalization agenda and a little bit of a dancing china will uphold its commitment to the paris climate change agreement. abouttalk a little bit the opportunities for foreign companies. the ceo of royal dsm from the netherlands. thank you for talking to us. what stood out to you as a foreign business person who also does business here, i think about 13% of your revenue or thereabouts comes from china, right? what stood out for you? >> the premier is stressing very much the inclusive growth in the west. china has benefited quite a bit
from the globalization, the west also, international trade. but in the west, in the united states, and in european countries, the feeling is that the gross globalization has not been beneficial for all parts of the population. there is roughly 30% in all countries that feel left behind. those people vote in a particular way, as we have seen in the u.s.. also in france. it is a kind of detection is him. china is not want the west to be protectionist, it wants free trade. that is what they are instigating. >> i will play the devil's advocate. donald trump says they have not been playing by the fair trade rules, if you will, living up to obligations of the wto. there have been criticism
. no one likes to criticize china, but what is a fair assessment? always thes not been advocate for free trade. no import barriers and wto. let's look at how china developed over the last two decades and did its own thing in order to develop itself. we are it is in the interest of china, but maybe an interest for the entire world to have more free trade. if we are all withdrawing on our own islands and we protect a borders, nobody will benefit. especially china, therefore the premier and earlier this year, the president, advocating for free trade, even though some people feel left behind. closing the borders is not the answer. having more inclusive growth in
western countries is the answer. that is what the premier was saying today. it is more a message to us in the west to make our growth more inclusive. spend much time on climate change. to think china is seizing the opportunity to take the global lead in climate change? >> i don't know if they will take the global lead, that i am sure they will take a lead. at the end of 4017, china will put a price on carbon for thousands of countries -- copies in china. many western countries are still deciding if they should put a price on common omissions, and china is going to do that. they will do it. >> can we continue the conversation after the break? we have not even scratched the surface yet. i would like to talk with you about world dsm. i will send it back to you, we will come back to royal dsm.
♪ welcome back to our coverage -- stephen: welcome back to our coverage. we are at the world economic forum. let's get back to our conversation with the ceo of royal dsm. thank you for sticking around. let's talk about china opportunities for your company. i believe in february, you talked about high single-digit growth for 2017 for global revenue. what are you -- how are you
looking at china? i look to the breakdown, about 13% is china. 23% is asia. how do you see that growing? >> growing more than double digit. more than 10% growth in the first quarter. most likely at this moment, above 10%. china is offering great opportunity for our company to grow. sustainable materials, healthy food ingredients, addressing climate change, bringing new innovations, there is so much desire in china. we can bring those things to the market and grow. urbanization is helping us. more urbanization, more people will eat healthy, go to the we can bring thosestore, buy thr ingredients, buy a car with our materials, by electronics with our materials. it has a great opportunity. stephen: where would you like to see improvement? >> think we need to realize that although we are benefiting from domestic gross consumption,
still a lot of the growth in this country is coming from investments. at the end of the day, the country needs to not only grow from investments and exports, domestic gross. we benefit from that. the premier talked about that. cocktailit is a hard to put down, investment led growth. they have let on that. -- led with that. domestic consumption needs to grow. the chinese people like to save money. they are concerned about pension costs, health care costs and education costs. they are a little bit restrictive in their spending, the opposite of the average american. we would love to see spending more in china, that there is enormous urbanization in china
that gives a drive for spending. stephen: how have you been impacted by the capital controls the institute at the beginning of the year? -- instituted at the beginning of the year? >> we've been growing so fast in china that it did not matter at all. the money we made in china needed to be reinvested in china. now there is more liberalization products out of china. quick, unitedy states and trump rejectionism? -- protectionism? >> we are still growing fast in the united states, as well. it is so great market. the fact that the united states independent -- energy , it should not be
attractive at all, but the spending is there. inhope that the u.s. will the end remain committed to address climate change. stephen: thank you. we will see you next year at the annual meeting of the new champions in china. back to you. shery: thank you so much. get the headlines. >> president trump says the supreme court's partial revival is a clearel ban victory for national security. justices unanimously said lower courts have gone too far by blocking the 90 day ban. people from six mainly muslim countries will now be part and must the can show a genuine relationship with a person or entity in the u.s..
the court will consider in october whether the executive order is constitutional. president trump has warned the indian prime minister that his country must do more to defeat obstacles to u.s. exports, even after he thanked him for u.s. -- for purchases of u.s. equipment. after a meeting, trump said the two countries must have a fair and reciprocal trading relationship. gave.k. prime minister details on the rights of eu citizens in the ua -- u.k. post-brexit, saying they will enjoy the same entitlement as british people, but that failed to convince brussels. michelle barney a says more ambition, clarity is needed. however, treason may insists her offer is fair and serious. mongolia's presidential election will go to a runoff for the first time in the country's history. a populist tycoon is representing the democratic party and one the most votes but fell short of an outright majority. he will face the parliamentary who ultimately came in
second. the runoff is july 9. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. david: thank you. those charts behind denver, you can see what things are looking like. philippines,at the it is all about winning. we are-- juliette: seeing the philippines leading the gains in the region. some of these markets of come back online, including singapore at 4/10 of 1%. see, slightly higher. this csi 300 has been on a strong run. a good rate on consumer confidence in korea, lifting it
up by a quarter of 1%. gold is in focus. you are seeing big gold producers under pressure today after the erroneous trading coming through the so-called good trade, it fell in the london session. we are seeing gold hold fairly steady at the moment. select the $45 handle. a lot of focus on the gold shares today. shery: thank you. the dollar, still down over 6% from the start of january. that is when the trump reflation trade was running full steam. what are the prospects for the currency in the coming weeks? joining us is the senior currency strategist at commonwealth bank of australia. it is good to see you. let's talk about the dollar first. i have some tracks on the bloomberg, number 449. can million -- the measure
of momentum is about zero. in march, april and may his soul that -- we saw no momentum. we are seeing increasing pressure on the dollar. your call on where it is headed. i think in the near term for this week and potentially the week after, the u.s. dollar could actually. there are two reasons. there are growing doubts that the latest health care reform that was introduced last week by the senate republican leader mitch mcconnell will have the necessary votes to pass congress. and less these doubts of eight, the u.s. dollar can can further thatse it raises the odds an aggressive tax reform package
will not be introduced later this year. that should continue to weaken the u.s. dollar. secondly, later this week on friday, we have the feds measure of inflation it comes out. deflationxpenditure -- deflator. it is likely that it will remain forecast.f1 sees -- that will push the u.s. dollar potentially lower. david: do you think they are still looking at inflation as i guess the number one catalyst for them to hike rates, or are they looking at something else like the amount of money out there or the fact that financial conditions continue to be easing? inas: certainly a pickup inflation in the u.s. would do a great deal in terms of raising
the fed normalization process, but judging from benign inflation pressures in the u.s., and despite that we have fairly encouraging wage growth, it will be very gradual. discountedlly another .5 basis point rate hike this year. i don't think this will significantly benefit the u.s. dollar, particularly considering other major banks are moving potentially toward less monetary aussie accommodation. at least there is a prospect of a happening. yen near ajapanese one month low against the u.s. dollar. you seeing the weakness in the yen will not be sustained? i think it will trade with financial risk sentiment. at this time, clinic equity markets are doing very well. the yen continues to underperform, not just against
the u.s. dollar but potentially against higher data currencies like the australian dollar and new zealand dollar in an environment where appetite for risk is plentiful. volatility in the currency market is significantly low. we are bound to see some risk aversion, potentially in august. we tend to have a significant increase in risk aversion. it is always good to have the japanese yen in the portfolio of currency because the japanese currency is the ultimate safety currency. david: i want to play game with you, because we have a big panel coming up tonight. there are some fairly distinguished names. i will read those out for our viewers. the bojney, mr. kuroda, governor. if you had to see them in order most hawkish to least hawkish, how would you order them? elias: i would put stephen
now,s on their right judging from his comments two weeks ago that -- he suggested more monetary policy accommodation for canada is probably behind us. i would put him number one eared -- one. carney i would probably put in the middle, at least equal with kuroda. bit are probably a reluctant to introduce more aggressive stimulus measures, but they are also quite cautious to limit a pick up where there is an upward revision to rate expectations by money markets. fully the euro-yen is creeping toward the top end of its recent trading range. is that something you are watching? elias: it is a good trade. both countries have a decent
current account surpluses. the political uncertainty in the eurozone has clearly diminished and their will be fairly good support for the euro. also, european activities doing fairly well, particularly relative to japan. we should see upward revision. higher eurosupport over the japanese currency. david: very quickly, your biggest currency trade. in the second half of this year, i still think the path of least resistance for the u.s. dollar is down. largely because another fed rate hike is priced in, but the prospect of more or less monetary puzzle -- monetary policy, there is a scope for that to be holler against -- to be higher against the u.s. dollar. the big risks in my view is some form of tax reform or aggressive
tax cuts are implemented by the u.s. before the end of the year. in my view, these risks have diminished. i see further u.s. dollar weakness until the end of the year. david: there you go, you heard it. thank you for joining us on the program. shery: coming up, now that takata has pulled the plug on its operations, who will pick up the tab for the world's biggest recall? ♪
clear and consistent that our plan is to take substantially all of the employees from takata. managementeir talents. we view them as having a strong and dedicated global workforce, all of which we value. very robustn listening sessions with the takata team as we work for our integration plan. i don't have specific details yet, but we plan to take substantially all of the workforce, including much of the leadership. made, the central issue here, who is going to pay for some of the liabilities, massive liabilities by takata? how confident are you that you are going to be shielded by any repercussions by the recall? >> good question.
this is been a very dynamic process. our intent in the deal has been to ensure that we architect and industry solution with the key goal that we protect supply of our very customer base. we have different customers between safety and takata. the deal structuring, which is been a very complex process, we haven't short that the transaction structure was offering protection for the new company. it is critical in the context of maintaining supply for our customers that we have a sound structure to protect the company going forward and we are very confident of that. it looks like carmakers could shoulder most of the costs for takata's potentially lethal and backs. there are about $5 billion of
exposure with little chance of compensation. david: we are joined by jim combs. are they strong of? -- strong enough? they are.nk this has been unwinding for eight years, this recall crisis since the initial problems were found. carmakers have been setting aside money to pay for this. , the scale certainly is massive, you look at a company like toyota, they have an estimated 16 billion dollars in profit coming this fiscal a big talk ofthem that but they have already written -- those costs are not coming in one year and they have written them off. in terms of their operational finances, it will not have a big impact. several european carmakers have also told us have already accounted for the expenses
related to the recalls. having said that, there are still recalls ahead. there are millions of cars out there that still have the airbags the need to be replaced. when you start looking at smaller carmakers, be it mitsubishi motors, suzuki, subaru. subaru told us they were still looking at possibly increasing their provisions set aside for this. it does have a big impact on carmakers, that it won't really affect the bigger ones they have -- at the bigger ones. they have already set aside the money. shery: takata has listed more than $10 billion in liability. what will happen to that? dave: a lot of the money is basically going to be -- it is going to be sucked up by the companies that are owed. he will have to write those off. in addition to the high abilities related to the recalls we discussed, you also have lawsuits under way. you have personal injury
lawsuits, class-action lawsuits related to personal injuries. there is a lot of money. entity,as a surviving will not have the money to pay those. it will be paying some sense -- cents on the dollar for those suits. thank you. coming up, hope for a quick end to brexit negotiations seem to be fading. details, next. this is bloomberg. ♪
the rights of some 3.2 million eu ex-pats living in britain fell short of brussels expectations. she announced that they will be treated as if they were british with access to state education, health care, the fifth and pensions. yet this failed to in class -- impress the blocks main negotiator, said the morning -- said that more negotiations are needed. for example, the proposal appears to dilute the current rights of eu nationals that want to -- in your nationals. really -- rejects the idea that the eu served as the will for its citizens residents seek permits needed if -- it also obtain
depends on securing equal rights citizens living elsewhere in the uap -- in the eu. shery: daybreak europe is next. , good morning. so much in europe going on. so many in portugal. what are you watching? manus: just to touch on carolines last report, what is the debate in europe? and the brexit debate at the in europe and- the brexit debate at the moment? on the european side, he said more ambition, clarity and guarantees are needed than in today's u.k. position.
that was mr. barney a on twitter. the goal is for the same level of protection as eu law. that comes down to the court of justice, or will it be some other bodies that will be created to look over the rights of european individuals and u.k.? we will catch up with a little bit of reaction from my part of the world, northern ireland. the leader will be joining the daybreak team on his opinions on in democratic unionist party the north of ireland. the say a pact with conservative party will be fraught with tension. focusarney is also in au'd is it time to take little bit of an elixir of life, away from the market? it has an impact.
a large gin and tonic away from you on a friday evening. david: if you don't take it friday evening, you might take it saturday morning. unemployment being said it is not? low enough -- not low enough? beautiful retreat, i've been there many times. it is a fading glory, i am talking about inflation. that is the challenge that draghi and mr. carney discuss today. we have a pact show. -- packed show. david: you can see that offense have peaked. shery: that is it for this edition of "bloomberg markets: middle east." david: a lot coming up in
>> i central bankers in the spotlight. we hear from draghi and carney today. a partial win and an uphill battle. the u.s. supreme court clears part of the travel ban, giving president trump partial vindication. meanwhile, the senate health bill faces opposition from enough gop members to block it. fema under fire. e president has been charged with corruption by the chief prosecutor.