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tv   Bloomberg Markets Asia  Bloomberg  November 12, 2017 8:00pm-11:00pm EST

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♪ stocks onsia pacific the slide. the aussie dollar falling amid political upheaval in camera. president trump talks tough on trade and enters the last leg of and offered to mediate in the south china sea. i am rishaad salamat in hong kong. haidi: i am haidi lun in sydney. alibaba's annual shopping bonanza generates record sales with buyers from more than 200 countries. this is "bloomberg markets: asia." ♪
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rishaad: asia stocks under pressure, but global equities are at record highs. let's bring up chart 5892. ly is all amid this extreme low volatility. it is the world's best regional rally in turquoise. the 60 day volatility in the white line has dropped 5.9% to the lowest since 1988. in line with u.s. and europe, and the vix markets hitting new lows. the calm, but no storm, at least
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for the time being. pause.may be a muted at lofty highs when it comes to emerging markets in asia, japan in particular. i don't think you can blame investors for taking a breather. let's get it over to sophie with 30 market reaction. sophie: we have corporate earnings perhaps giving impetus to profit taking for japanese investors given those highs. leadingei 225 benchmarks in asia lower here it asian stocks falling for a second session. i want to highlight the currencies space. the korean won leading losses as importers why dollars.
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b.n.p. paribas says it is better late than never to buy the currency as cyclical momentum and tighter policy could see the won boosted next year. poundy is in play for the and the aussie dollar. this is 7137. the aussie dollar approaching in october low. thefinding support despite upbeat assessment of the economic outlook. a rate hike will come from a good economy, not a shock. some movers potentially this morning. apple suppliers, plenty of catalysts for those stocks. it is reported that apple may cut iphone component prices by 10% to 15% because of slow demand. could boostrders hon hai's net income.
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unit has signed an agreement for a $10 billion wistron.t in singaporek at ocbc in , and pleading the purchase of nab's private wealth business. rishaad: thank you very much indeed for that. happening out what is with first word news. >> thanks. good morning. has approved an investment led by softbank worth $1 billion, followed by a tender $9 billion ino shares from existing investors, including governance changes, and benchmark pausing its lawsuit. benchmark will drop the complaint when the investment and government reforms kick in.
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the imf has welcomed china's decision to relax restrictions on foreign ownership, saying it is a positive development that shows increasing confidence in the financial system. christine lagarde says china is taking action to wind back leverage. she says that shows a newfound confidence. isthe fact and that it considering to remove at least partially those barriers, to move above the threshold of 50%, then to gradually eliminate those thresholds, that is an indication of openness and also that her strength and confidence in their own system. >> south korea says global pressure on the north seems to be having an effect with no missile launches or provocative behavior for almost two months. there were fears that kim jong-un would test a weapon during president trump's trip to asia.
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>> we need to be absolutely confident of our deterrent posture, the combined deterrent posture with u.s. forces, but south korea's own deterrent capabilities. constantlye need to upgrade and update our military capabilities, and we have a very important agreement with the united states that south korea will continue to develop and acquire state of the art military assets. >> global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ramy inocencio iramy inocencio am. haidi: thank you for that. president trump his on the last leg of his trip to asia and offering to help resolve maritime disputes in the south
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china sea. the president is in the philippines for meetings on asean security. to thegetting closer opening ceremony of the leaders as they arrive, but ahead of this, president trump thinks he could play peacemaker on this issue. >> that's right. therrow they will convene code joining summit where they will delve into the geopolitical issues, including tensions in the south china sea, critical sea lanes, oil reserves, of course fisheries. there have been disputes between philippines and china, vietnam and china, and others. korea, which donald trump has said is their top priority, so those will be discussed at the east asia summit tomorrow. the leaders are arriving now one by one outside the cultural
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center of the philippines. the new prime minister of new zealand was the first one to arrive. we just had aung san suu kyi of myanmar the most recent one. donald trump will be arriving shortly here as they kick off the 31st asean summit in manila. you are right about the south china sea. last night, the president of the islippines mentioned that it better left untouched right now even though donald trump had offered to play a mediating role mediator among the claimants in the region. the risk conflict is too great and better to leave it untouched right now, but it will be discussed at great length for sure.
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rishaad: how far is trade on the trade here, multilateral come is that completely out the window? the multilateral trade issues are on the front burner as it , trying to revive the tpp without the united states as donald trump goes about a bilateral approach. the 11 existing members have secured a framework agreement to keep pushing it forward. there are lots of negotiations, lots of haggling. the vietnamese representative left at one point in frustration. the canadians delayed the signing of that framework agreement. so there have been some sticking points. some of the participants are saying we can push the framework
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ford, but it will take months, if not years, to get this going. and india arena pushing its own version of a free trade pact for the asia-pacific region that includes india. more about lowering tariffs but a lot of sticking points on lowering tariffs as well, where as tpp has more comprehensive elements, including protection of labor laws, intellectual property, as well as the environment, sticking points for emerging economies to cope with. still ahead, one of wall street's leading lights joins the show, j.p. morgan's global chairman for technology, media, and telecom. she talks exclusively with bloomberg in about half an hour. as china opens its
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financial sector to unprecedented levels of foreign involvement, we ask whether a flurry of deals would be on the way. this is bloomberg. ♪
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♪ rishaad: this is "bloomberg markets: asia." equities on the way down as the session gets underway. the recent drop in volatility subsiding for now. risk of auest sees a move up over the next year. he is in singapore. thank you for joining us. it started off with a chart that showed a global equities near record highs and volatility of record lows. how long does that situation go on, and what could be the catalyst for a correction perhaps, a move in one way up or down?
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not had much of a correction for some time, so now would be a good time to see where support lies for the market. equity markets have a habit of making new highs. we are in a sustained bull market phase that we think will continue for some time, but unusual in the sense that volatility has been low, but then again there are good technical reasons for that to continue to be the case. again, we are at new highs in a number of markets, and that does not mean we can't make higher highs. tell me something, when you look at the various asset classes and asked income and sovereign fixed income in particular and equities, which side is telling the real story? that what both
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sides are saying in a sense is not necessarily incompatible. i think if we look at positioning in fixed income markets, investors tend to be short at the moment and negative for the prospect of rising interest rates, but if you look at the long end of the treasury that seems to be indicating the rise in interest rates that is likely is pretty much reflected in the long end of the curve already, so from an equity perspective that is encouraging because it means low rates against a relatively low inflation background, so that combined with still plentiful liquidity is good for markets. rishaad: one looks at the yield fore in the u.s. insight into the economy.
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when we see the flattening of the yield, that normally means we will have a rough time of it, but qe and all that, has it gone out the window? thatthink you could say the yield curve is not necessarily giving us a her 50 accurate signal the way in might have done in the past, but i think in a way if you look at is forecast in terms of the five-year forward inflation rates, it is sub 3% and real long-term interest rates are likely to remain low come so the yield curve is not fully inverted, and that might be a concern. it is somewhat upward sloping. short-term interest rates have then adjusting to catch up with where long-term interest rates got to the early part of this year. heard over the past
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hour or so, the philly fed president talking about expectations for tightening and what this balance sheet unwind looks like, still ensuing in that december hike, and saying the unwind will be boring and done on autopilot. andou think policymakers the markets are miss pricing how messy it could be given that we have never been here before? , certainly we have never been here before, but so far, generally speaking, market participants have been concerned about the central bank handling of balance sheet unwinding. wrong,y that has been because of their fundamental factors have been more important drivers, so sure, there may be an accident with central banks or taperingoo much to aggressively, but at the they are looks as if
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airing on the side of doing it in a slow and boring fashion, which actually is reasonably constructive from markets, so the fears will remain because it is a major concern, however, it may well be that the whole process takes place to gradually and that ultimately that becomes the issue, but i don't think that is something that need concern us unduly over the next 12 months or so. haidi: philip, i want to throw newsquick chart and this that china will be opening up its financial or two majority-owned stakes by foreign investors and foreign banks. , howave seen the impact restricted that market is, total dropping to a record low last year. do you expect this will make a difference? if you want to be cynical you
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could say this is an awfully convenient time in the credit cycle to be inviting in outside capital. it,es, i think clearly that so it is a sign of confidence on the part of china in the strength of its financial institutions, to be willing to do this. i don't think it has anything to do with trump whatsoever. clearly there is an objective to improve the sophistication of banking and financial markets in china, and that essentially is what this potentially will achieve, and the timescale is quite rapid by chinese standards , so this is all part of an overall initiative to improve the effectiveness of chinese financial markets, which again his fairly fundamental to the continuing development of china come so bringing in international competition i think is good.
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bringing in foreign capital and expertise is good in the services sector, and i think again, this will improve capital productivity in china. locall also help the markets to function much more efficiently in time. represent atoes the end of the day baby steps, incremental opening up of the chinese economy. perhaps we will see something on capital controls. i don't know what your time frame would be, but a flexible and fully convertible yuan. longthink that will take a time, but we are moving in that direction. it is clear that we are in the business of a multi-polar world unfolding. will see further announcements about the pricing of oil in renminbi in the future , and i think that there is a
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determination to become less to attendant on the dollar as a currency of settlement. begun, i process has think it will continue to move ahead, but as we have seen in the past, it will happen at a pace that the powers that be in china are comfortable with them and so they will a sickly set the pace and agenda, but there is clearly a shift in policy, a greater openness to seeing trade and renminbi developing as a reserve currency, which is hugely significant to global financial markets. rishaad: great talking to you. have a good week. this is what we have coming up, alibaba's single day breaking records again, but what next? analysis is on the way. this is bloomberg. ♪
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♪ annual: alibaba's singles' day went global. billion with$25.3 buyers from 220 five countries and regions. let's have a look at all this. , whaterg intelligence stands out for you in all this? , the theme for alibaba is what they call new retail, a term they have coined. onlines integrating the and off-line shopping experience for the user. previously they had another theme, last year was globalization. this year is new retail. what it means for allie poppa is expanding the -- alibaba is
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expanding the addressable market, moving on from china, and new retail addressing the market that is off-line. it is all about expanding their addressable market. rishaad: that that was the strategy of closing this structural gap, but what do investors think when they see this increase in sales? >> the number itself looks like a huge number, a 39% increase from last year when sales grew 32%. investors should approach this number with caution because it is ready the number for one single day. number hisnk that representative for the entire quarter. how to note, that is not
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alibaba makes money. alibaba makes money from advertising. thati'm saying is investors should not just look at that 39% and think the fourth quarter or december quarter revenues will grow 39%. rishaad: gross margins is what you are talking about. singles' day is a lot of money for alibaba, but is it just for advertising? it has developed globally. we should give credit where it is due. alibaba has captured the mind share of consumers. it is a showcase of the technology, the infrastructure, how they can stress test of their system and handle a huge number of parcels. it may not be that great on the financial front, but it is a
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good effort on their part. joining thank you for us. on the way, shares in the gaming zr startingker ra trading in hong kong. details are coming up. ♪
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♪ 9:29 as we can shoot down to the start of the session. we are looking at a negative start, negative markets down .2%. raising $529 million. its issuance was priced at the top end of the range. that is what we have at the moment. premarket, waiting for that gong to be sounded. haidi: absolutely at the ready.
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a false start there, but this comes on the back of that ipo with blockbuster demand for the tencent spin off. razer jumping 32% on its trading $530 million, counting down now to the ringing of the gong. there you have it. this is on the back of a wave of technology listings in hong kong the exchange transition away from traditional bread and butter listing of banks and brokerages that have dominated fundraising in this part of the world. we are seeing tech-related firms ,ike razer as you see there just seeing the ring of the gong, raising 530 million dollars after pricing near the top of the market range, a tencent spin off also seeing enormous demand from retail and
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institutional investors. you are seeing that pomp and ceremony take place, starting off the week with that ipo. this is a company that sells forng mice, equipment "hard-core gamers." i am not one of those. let's get over to sophie taking a look at hank on, shanghai -- hank on -- hong kong and shanghai markets. sophie: i am an observer, so a lot of games in my life. taking a look at equity markets, chinese large caps higher for a third session. the hang seng swinging at the open, now gaining ground. i.t., energy, financial stocks leading gains. taking a closer look at shanghai, the benchmark pricing for a sixth straight day, consumers stocks on the up after that blowout alibaba singles'
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25 billion dollars in sales. hasn't peak global says the chinesence is that online retailers have room to grow and they could hit $1 trillion this year. checking in on movers in hong jumping 11%y garden on news it will be included on the hang seng, but cathay pacific is sliding on their pending removal and changes effective december 4. cathay pacific has fallen for an eighth session, the worst for the stock since 2015. cathay pacific is the biggest laggard on the hang seng, down over 2.2% this morning. up, suspending trading in hong kong, but the stock was cut to neutral on weaker sales growth and slower store expansion. those exclusions and removals
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driving markets so far today in hong kong. rishaad: thank you. let's get to first word news with ramy inocencio. >> president trump has offered to settle territorial disputes in the south china sea. the president is now in the philippines for a series of meetings on regional security. a key topic will be the flashpoint point of shipping lanes that contain oil and gas reserves. trump says he is a very good mediator and a very good arbitrator. the japanese prime minister held talks with the taiwanese lawmaker despite being warned by china not to do so. he spent about half an hour with the head of the people first party in vietnam, and the meeting threatens to strain relations. australia's central bank says
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improved expectations for demand are trifling a pickup in non-mining investment. the rba deputy governor says non-mining business investment has been solid hand in real terms -- and in real terms, 17% higher 10 years ago. the philadelphia fed president is the latest policymaker to all but confirm a rate hike before the end of this year. speaking in tokyo, he said a move is lightly penciled in and inflation is expected to assert itself. sizeso said the eventual of the fed balance sheet has yet to be determined and the unwinding will be boring and run on autopilot. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thank you so much for that.
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an update on razer, the newest addition to the hong kong stock exchange, manufacturer of equipment and accessories for hard-core gamers, extending that gain to almost 42% in its hong kong trading debut. ,e spoke to the ceo earlier on saying hong kong was the perfect place to access capital. it appears he is right with that ipo being priced towards the top end of the range and we are looking potentially at access to the shenzhen stock connect as well for that stock. ands stay with china christine lagarde has praise china's plan to ease foreign ownership limits when it comes to financial companies, describing the move as a positive element. tom mackenzie joins us now for more. this type of reform is something the imf has been pushing for. behind the scenes and in
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public trying to push china on these financial sector reforms, so not a surprise that christine lagarde welcomes this but it was interesting to hear her say that what we are looking at is a trend to greater openness from china policy makers when it comes to the market reforms. take a listen. >> the fact that it is considering to remove at least partially those barriers and to move above the threshold of 50%, and then to gradually eliminate those thresholds, that is an indication of openness and also that a and confidence in their own system. welcomingmf chief these moves to reduce the cap or on foreigncap ownership of chinese banks
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currently at 25%. they will be removed after three years completely, and for the first three years, for an investment banks can increase ownership to have a majority hold on some operations. we are still waiting for the timeframe to be laid out by policy and more details. christine lagarde saying as well that she continue to hear positive sounds from chinese policy makers it came to tackling the debt picture. this move to lower the barriers in the financial sector seemed like some as a way to tackle that debt because it is a way to get foreign institutions involved and their greater focus on risk management and better corporate governance can inject some competition. welcomed as ween have been hearing from j.p. morgan, morgan stanley, and ubs as well. bloomberg intelligence says it is a case now of waiting for the
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details. rishaad: right, let's discuss that with theo head of china bank ratings at fitch. grace, were you surprised by this? >> not really given that china in publicdvocating statements that they are committed to financial sector reform. iting wise, i think coincided with the u.s. president's visit. that is probably something that was planned on by china's side, but it is not likely to be a game changer in china's banking foreigne given that banks combined on the account for less than 2% of the sector currently. rishaad: we don't know when it the legislation has been trapped it come up but there is a timetable for when it will be introduced, and it is remarkably quick.
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is it hasty? >> it is probably something they had planned for years. the fact that previously one of the major restrictions on foreign bank expansion apart from ownership restrictions is the fact that china used to have a deposit ratio that was an effective way to constrain foreign banks and organic growth domestically. now that the ratio requirement has been removed, theoretically speaking there are already barriers to grow organically in china if they wish to do so. the fact that the system is not growing as quickly as before, margins have contracted. we are seeing deterioration in asset quality, so opening the sector now fully is not attractily going to
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significantly more foreign interest in china. what we have seen in the past couple of years is foreign banks exiting from their chinese banks. haidi: that is my question. you look at these banks that are looking by some indicators fairly distressed when you look at talents sheets, questions over risk management. who would want to buy a chinese lender at this point in the game? mind that even with the restriction and ownership stake, for foreign banks to buy a sizable stake in any chinese banks in dollar terms will be a significant thestment, so by that foreign banks that would be interested in making that kind of sizable investment would already be quite limited. certainly there will be some foreign banks that are keen to explore opportunities in china, but we suspect that this will be limited to a few. you are being a party
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pooper surely. you look at the banking sector, profits up, rising rates environment come a great opportunity isn't it to get involved with banks posting strong profits and trading at a discount to most european and u.s. rivals? >> we have written various research this year highlighting the systematic risks and vulnerabilities that is much second-tierrated in banks. some of the regulatory anditment to tackle shadow off balance activities is putting pressure on banks to put these assets back on their balance sheet, and with that migration process, it will weigh on bank capital, so certainly there is a need for these second-tier banks to be opening up their capital base and
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inviting more foreign investors thatlp partly recapitalize migration process they are expensive right now. , butad: they are cheap they must be achieved for a reason ultimately? >> the fact that there is still a lot of activity residing off talents sheets -- rishaad: precisely, do people trust the balance sheets? they can be hidden away in all sorts of things by off-balance-sheet accounting. our estimate is that there is roughly a third of credit that currently resides outside the banks formal balance sheets. when we look at reported us quality or capitalization matrix and we also consider the other part of that picture, and that the reported numbers don't necessarily give you the whole picture.
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rishaad: thank you very much indeed. looking at the opening up of the banking industry and the prospect of it at least in the near future in china. their week out. , live from j.p. morgan's global technology media and telecoms conference talking tax reform and impacts on technology companies and their money. this is bloomberg. ♪
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♪ rishaad: this is "bloomberg markets: asia." i am rishaad salamat in hong kong. sydney. am haidi lun in j.p. morgan is holding its global technology, media, and telecoms conference. there with one of the most influential women on wall street. >> what a year at has been for tech.
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we have seen the likes of deals like microsoft buying linkedin, whole foods and amazon pairing up. how does this set the scene for 2018? warner, theime merger has become busy over the weekend. jpmorgan has been an advisor to that. of's ask the global chairman investment banking for j.p. morgan what is at stake now that this deal seems to be almost in jeopardy at the 11th hour. we are hearing president chiming in saying the doj is likely to block this deal, maybe litigation. optionse thrown some out there, like selling turner, which owns cnn. was this a surprise to you? regulatory approvals are always lengthy. they are never certain. a year or so ago, comcast and time warner cable, that got
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turned down by the regulators, so nothing is certain and nobody goes into these deals guaranteed of any particular outcome. i would be surprised if this one did not ultimately close, but we will have to wait and see what happens next. >> is at&t prepared to go to court on this, or is there a middle ground in terms of what the doj is asking for in terms of the vestment of assets? >> there are all sorts of ways i thinks resolved, but at&t has made it clear they intend on working through this and closing this deal. strategically important to them, so it is hard to imagine we don't get to the finish line. inwhy do you think this came at the 11th hour. we all thought this deal was done a couple of weeks ago. now we are hearing the doj and president trump chiming in on this. does this set the stage to 2018,
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media companies, t-mobile and sprint as well? not good when we have regulatory uncertainty. most of us were expecting this would get approval ultimately, has gone sideways to some extent. that will be concerning for everybody in the industry contemplating other deals, the wireless sector or any other communications and media combinations. i think all of this is a little unsettling for everyone, but i would expect at&t will get this deal closed. he will be obviously a longer journey on the regulatory side than they expected. >> there are talks of disney buying fox. it has raised questions on the scale of media has these conglomerates begin to grow. do you see more potential disruption in the space given
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facebook, netflix, amazon changing consumer behavior when it comes to digital content? >> we are seeing a response in terms of potential consolidation everybody not facebook, microsoft, apple, amazon, because that is the competition. companieslot of media when they and look at the competition provided by the amazons of the world probably have no choice but to consider consolidation trades to make themselves more relevant. it is just an increasingly competitive business, and netflix and others just seem to go from strength >> to strength. >>what about an apple-netflix tie up -- >> what about an apple-netflix tie up? sure apple has looked at everything and they could by any one of these companies.
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they certainly have the financial resources to do that, but am not sure they want to plant the flag with one particular player. i think they like to play all options and have all partnerships open and available to them, so i don't see that happening yet. at some point in the future if any tech company tries to do a deal like that, we may see everyone else responding, but right now they are watching what is going on in traditional media with a great deal of interest. >> we will continue our conversation and talk more about tax reform and how that will 2018t the scene of m&a for come also this tech ipo frenzy in hong kong as well. plenty more to come. stay with us. this is bloomberg. ♪
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haidi: all right, we are taking a look ahead to the next hour of the program. we are looking at a light start when it comes to asian markets. a lot on the agenda this week. japanese gdp, can that they sustained that momentum? pbi beating expectations today, but analysts saying this is as good as it gets in relation to that japanese gdp. course, domestic activity indicators, retail sales, industrial production, and fixed asset investments and loans data coming through as well. let's get a check of the business flash headlines. nexon surging to a high, buying
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a california based studio which makes story-focus games for smart phones. the acquisition is the largest in five years and intended to feel the expansion outside of asia. south korean media reports say the government's plan to sell delayedstake may be because of the resignation over a scandal involving the illicit hiring of children of government officials. a 7% stake will be sold next year. morgan, the global tech, media, and telecoms conference. conversation.ng a i want to talk more about china.
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with these tech frenzies and ipo, a lot of the m&a activity has been fueled by these tech giants like alibaba and tencent. do you see the trend continuing? >> i do. i think there is a lot of m&a likely to happen next year, certainly in the u.s. with tax reform coming. also think companies in china are looking to make acquisitions as well. they have great currencies, great financial resources. regulatory issues can get in the way of some of that and we are seeing some in certainty. in the u.s., it is hard to predict as well. , and islittle bit hard not a lot of clarity has out these -- as to how these regulatory agencies are in evaluating deals, creating hasn't and see, but once that --
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settlesy, but once that down, we will see cross-border activity pickup. to early to say it is a coming-of-age when it comes to chinese tech? >> i think that paradigm shift was a long time ago. i think the world is picking up on that and getting talked about more than it had been before. i arrived in hong kong over the weekend to singles' day on saturday, a phenomenal success of that event for alley, is mind-boggling -- alibaba is mind-boggling. >> tax reform, what does that mean for m&a valuations for 2018? a good thinguld be because it is hard for boards to push the button on the deal when they are not sure on taxes, so clarity is the more important thing, then we will see m&a activity pickup. >> thank you.
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their conference in asia, now back to you. haidi: thank you for that. stay with us. this is bloomberg. ♪
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♪ rishaad: a mixed start to the anding week, hong kong shanghai rising, but negative in tokyo. razer soaring on its debut in the past half-hour. i am rishaad salamat in hong kong. haidi: i am haidi lun in sydney. coming up, trump tough on trade. he is offering to mediate in the south china sea. this is "bloomberg markets: asia." ♪
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haidi: plenty of geopolitics and traded today. big bang the this news from chinese regulators, saying they plan to open up the financial system when it comes to banks and insurers and brokerages to foreign stake holdings. this is chart 6825, nothing spectacular, but does tell the story. we had the foreign share of total bank assets drop to a record low last year. it is a difficult operating environment when you are a foreign player, so the question is does it draw in global banks to take majority stakes. saying spoke with fitch, there are few global banks sitting on the cash required to , and questioned me why would they want to this stage in the credit cycle has loan growth is coming down?
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still some dubiousness when it comes to asset quality. is there going to be interest? rishaad: that is just it. time will judge that. returnevels, dividends, on equity pretty good for chinese banks come up there is a there is a lots of off-balance-sheet money as well out there. that has spooked some investors. let's find out what is going on market wise with sophie. still: some investors spooked after that risk off sentiment on friday. asian stocks sliding for a second day. more mixed with chinese stocks leading gains along with hong kong. consumer discretionary shares leading the rise thank to that singles' day smash. japan is leading laggards, the nikkei 225 falling for a fourth straight session.
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we do have the pound losing other, and we have some attentional catalysts for sterling this week. inflation data and doe speeches. i want to highlight some moves in the chinese on space, 10 year yields rising to a 2014 high. ipo fever back with the bank in hong kong. over 40% earlier on its first trading day after raising $500 million in its ipo. the mood looking good in hong kong. looks like this. analysts are rushing to boost price targets after earnings. they are looking more favorable when it comes to the segment. aia group surging to a record high. cathay pacific leading laggards
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as it is to be removed from the hang seng index. country garden is soaring. earlier jumping over 11%. a last look at bitcoin, , testing the fall nerves of investors after the cancellation of a tech upgrade, falling 29% after hitting a record high. that is the third notable retreat for bitcoin so far this year. rishaad: it is incredible that run-up. we are checking on some first word news headlines. has a big investment led by softbank worth $1 billion, followed by a tender offer to buy $9 billion in shares. the deal includes governance
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changes and would see benchmark stopping its lawsuit against travis kalanick. the imf has welcomed china's decision to relax decisions -- restrictions on ownership, saying it is a development that shows increasing confidence. speaking to bloomberg, christine lagarde said china is listening to warnings about excessive debt and taking action. she says that shows a newfound confidence. >> the fact that it is considering to remove at least partially those barriers and to move above the threshold of 50%, then gradually to eliminate those thresholds, that is an indication of two things, openness and also better strengthen confidence in their on system. south korea says global pressure on the north seems to
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be having an effect with no provocative behavior for almost two months. fears that kim jong-un would test missiles during president trump's trip to asia so far unfounded. >> we need to be absolutely confident of our deterrent posture, the combined deterrent posture with u.s. forces, but south korea's own deterrent , webilities, and to do so need to causing upgrade and update our military capabilities , and we have a very important agreement with the united states that south korea will continue to develop and acquire state-of-the-art military assets. rishaad: global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: president trump is on the
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last leg of his asia trip, offering to help resolve maritime disputes in the south china sea. the president is in the philippines for a series of meetings on regional security. thehen engle joins us from net love. what is the latest going on over there? arrivedhe leaders have at the cultural center here in manila. they are here to attend a cultural show. in the opening hours, last night and this morning, palm and ceremony to summitf of the asean here and the conferences that will take place over the next couple of days. donald trump among the 20 or so heads of state here in manila, listening to rodrigo duterte well come them. he mentioned on terrorism and
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regional security, key issues for southeast asian nations at asean. he touched on migrant workers and the issues of trafficking. not a lot of headlines from this speech, that we will be getting more comments from dmitry medvedev and donald trump later today. trade will likely be top of the agenda as they try to revive tpp as well as china's and india's rival, rcep. also of course one of the things quite often subject for discussion is the south china sea and the various territorial claims. donald trump is offering to get in there and mediate. , he said he is a dealer. he is good. he could be a good arbitrator in the dispute.
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whether china would welcome donald trump, who has 10 a big critic of china's moves in the south china sea and the reclamation products, whether they would welcome him as an arbitrator is yet to be seen. one thing we heard from the vietnamese side -- we did not hear from them. they declined to comment when asked about donald trump's offer to be mediator, but the philippines foreign secretary had this to say about donald trump as a possible arbitrator. >> your last question about president trump's offer to forate come we thank him it. it is a kind, generous offer, because he is a good mediator. he is the master of the art of the deal. so far not a lot of meat on the bones at the beginning of the asean summit, a lot of
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singing and dancing, and yesterday president rodrigo duterte at the request of donald j. trump saying his favorite song about a woman's love for a man, so there you have it. haidi: very romantic. trade also at the top of their busy agenda. is a self-styled dealmaker, but i'm wondering how he fares and this multilateral framework. he wants bilateral agreements that favor the united states. korea and in south japan, he wants bilateral agreements that favor the united states. he keeps saying it is going to be a america first, and he is telling that to his trade partners here in asia. whether they are listening and want to alter the framework of their trade agreements has yet
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to be seen or whether he will get progress on reducing the trade deficits that the u.s. has with all five trading partners. he has pulled the united states out of the tpp. the 11 other members are going ahead without the united states. they have secured a framework agreement. as i mentioned, the regional comprehensive economic partnership, rcep, being pushed forward by china and india has new urgency because of the 11 members of tpp getting on board and pushing that ford. the chinesething would like to see southeast asian nations contribute to. haidi: competing trade deals without the u.s. a chinese 30 billion startup made list soon. we will ask where and when, next. rishaad: overweight in india government bonds, but other
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global funds cut holdings, we find out why later on in the show. ♪
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♪ backad: we are giving you to the j.p. morgan tm conference in hong kong. aey can be described as yelp and food panda, valued at $30 billion and yet almost unknown. take it away. >> that's right. , baidu, the acronym bat alibaba, tencent. the last one is meituan-dianping , the fourth most viable start up in the world of $30 billion.
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billiont secured a 4 round of funding. i'm pleased to be joining by the senior vice president of meituan-dianping. thank you for joining us. put us on the map when it comes to where meituan-dianping's right now and china. you have extended well beyond core business, but china is still dominated by alibaba and tencent. how do second two players like meituan-dianping fit in? >> it is still early, so the service industry we are is still in early stages. there seeing a trend in industry we are operating in. we have over 290 million annual active consumers that connect to over 4 million active merchants. this phenomenon numbers provides
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a strong foundation for a platform like us to continue to provide service for the younger generation. it is still so early that we are excited about this opportunity. >> you are also looking at ridesharing, gearing to compete with didi. how big of a businesses that for you? projects, 10-15 pilot so we think it is important for a company like us as a disruptor still sensitive to the growing trends of the market and able to make innovations on our platforms. invest in certain categories, but from a consumer increase thecan we
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stickiness of the consumers and merchants. what about when it comes to travel? you spent hundreds of millions of dollars to become the leading travel site out there. what can you do to beat out the monopolies? >> we are different and strategy here. we cover about five times bigger areumer base, most of whom leisure travelers compared to business travelers. more offerings for gose travelers, so when they out to find entertainment come they can enjoy movie tickets, restaurants, and the travel business we can offer. is one of your backers could what opportunities
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to collaborate -- your backers. what opportunities are there to collaborate? >> priceline brings a valuable incremental consumer base to the china business, so it is natural for both parties. >> the competition for food delivery is fears. .lobally -- fierce globally it has not been profitable. is it time to bury the hatchet and merge with alibaba? marketlready have 60% share today and are growing market share month by month. will stick ton we our platform strategy is forumers come can come movie tickets or local services, and when they cross purchase in other categories, they become stickier on our platform compared to vertical players, so that is the power of the platform we are building. aidoow did you beat out b
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given they have the strength when it comes to ai. generationg and new understands the new business model and invest more heavily onlinee focused into the platform model. that is different from. online. we have the people across the whole country that serve their merchants and consumers. dayave over 2 million each to help deliver those orders. >> payments was my next question. they all have good payments networks. are you in the market to buy? >> we are not in the payments market. >> you have a fast rope of customer data. >> we work with all the other payment solutions because
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consumers come to us for transactions and payments is just the last step. we have our own payment solutions and a still have an open strategy with other players. then january, we heard from government. there seems to be scrutiny and cracking down on internet platforms with fake reviews, artificial sales. is meituan dianping concerned about this now? >> we make sure that quality and the content is at the level we are emphasizing, so we have invested heavily in the off-line side to optimize content. plans, question, ipo should we expect an ipo soon? this is more a natural result of business growth, so we don't have a timetable.
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we are managing it more like a public company because we have a large portion of public shareholders who come to us for long-term. >> early 2018 some are saying? >> no timetable for now, but we will continue to work hard to achieve it. >> thank you. the senior vice president of meituan dianping. haidi: not giving anything away when it comes to that ipo timetable. we will continue to watch and see. uber approves softbank's offer to buy a multibillion dollar for oneetting the stage of the largest private start of deals ever. details are next. this is bloomberg. ♪
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♪ we are back. approves softbank's multibillion-dollar investment, setting the stage for one the biggest private start of deals
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ever. , give us an idea of the key terms of this investment. >> sure. only a week, it was ago that softbank was reporting wasings and masayoshi son asked about this deal. he said we are working towards a final agreement, but maybe we instead, butn lyft today we are getting news that uber and softbank have reached preliminary terms for this investment. in $1 billionput in fresh capital and fine $9 billion in stock from existing investors to take a substantial stake in the company. this will come along with governance reforms to decrease the influence of travis kalanick. he will give existing investors more influence in that respect. what does it give
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investors in terms of improving the competitiveness of uber. what does that mean about having softbank on board? >> the company is working its way out of the scandals it has had over the past year. it gets freshank, capital and a company backing the biggest ride hailing companies around the world. china, ola, and grab. so there is the opportunity to possiblerom growth and collaboration. this investment does include $9 billion in shares bought from existing investors, what price are we seeing softbank pay?
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>> that has not been determined yet. that is why it is only a preliminary deal. the $1 billion goes in as fresh capital, and the next $9 billion purchased from shareholders will come the price will be set by an auction. shareholders will decide whether they like the price they are being offered. there is a chance they might not reach final terms. softbank once a substantial stake in the company, so they want to get that substantial stake at a reasonable price from their standpoint, and the existing shareholders need to decide whether they are willing to sell at these prices. we will have a look at the business flash headlines. alibaba singles' day at the global, and it went generating record sales on and off-line. billion in$25.3
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sales, pulling in buyers from 225 countries and regions. the government seems to be most interested in the media companies, and of course we are not a media company. we are a massive feet congress, payments coming cloud computing company. the hong kong dealmaker holdings is ditching its name, planning on calling itself see wt international. the company says the new name will better reflect its strategy cwt financial and logistics arms have now become core businesses. jp morgan saying china is poised for a surge in m&a activity. deal making said to pick up,
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particularly with aviation. that is according to the companies apec vice chairman. ♪ retail.
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under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.
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>> 10:29 in beijing. i am tom mackenzie with first word headlines. president trump has offered to resolve territorial disputes in the south china sea. the president is now in the philippines for a series of asean meetings on regional security. shipping point on lanes that contain oil and gas reserves. trump says he is a very good mediator and a very good arbitrator. bank sayss central improved expectations for demand are driving a pickup in nonmining investment, helping to support the economy. upward trajectory over the past
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couple of years has been solid. in real terms, such investment is 30% higher than 10 years ago compared with 3% in japan. the philadelphia fed president is the latest policymaker to all but confirm a rate hike before the end of the year. he said the move is "likely penciled in" and that he would be comfortable with three hikes in 2018. he also said the eventual size of the fed balance sheet has yet to be determined and the unwinding will be boring and run on autopilot. joking new delhi is so bad that united airlines has suspended flights. minister has described conditions as a gas cheaper. levels reaching 676 on sunday afternoon, about 14 times the accepted danger level.
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other airlines are still flying to and from delhi and it is not clear if they will follow united and hope flights. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. -- halt flights. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. i am tom mackenzie. ♪ haidi: thank you for that. a weak start to the asian trading week. some weakness from wall street, that lackluster session with the s&p falling in the friday session, but i look to geopolitics and trade on the agenda as trump wraps up his asia trip. he is in manila with asean leaders, malcolm turnbull of australia. in his meeting with rodrigo duterte, it is bound to be interesting. rishaad: it is. there are reports that they even had a report before they met. this is after that huge dustup that rodrigo duterte had with barack obama, a little over a
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year ago now. how things change has philippines-u.s. relations with good signs they are warming up. tokyo about two go off on its lunch rate. it looks as if we have a recovery there, but ultimately a lot of jitters. sophie: a lot of jitters. we do have profit taking a catalyst here for what we are seeing for japanese stocks. leading laggards in the region, but overall a mixed start for equities. chinese equities are a bright spot, large caps gaining ground as consumer discretionary and financial shares lead gains in shanghai. picked up ontting prospects of greater investment into the chinese financial industry. take a look at the offshore yuan gaining ground, while 10 year yields are picking up this morning. when it comes to the japanese
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session, even with the weaker yen, stocks not catching a bid. check this out. this is 7142, investors looking afterw regions to buy driving the nikkei 225 and topix to three decade highs. several strategist reckon this is a short-term correction given the rapid run-up. mitsubishi ufj said the market will probably take several months to work through a correction and that the nikkei 225 will probably trade around 23,000 points and the next three months. when it comes to the session today, we do have earnings a driver from some -- for some stocks. and smelting gaining 14%, trading at a decade high after its results. credit suisse says it does anticipate a grim situation for
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the company. futures pointing to continued losses for the nikkei on course for a fourth day of losses. isook now at the pound, this 1146, taking a hit in the asian trading session on reports theresa may faces party troubles , that some 40 party members have signed on to challenge her leadership. the pound has fallen by the most and hask on speculation lost ground against the g10 peers. it is still difficult to short sterling, and this week we have a slew of potential catalysts for cable. you have inflation data, retail sales numbers as well, and we have a series of boe speeches on the radar. that could affect what is going on with the pound. thank you so much for
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that. a lot to watch out for. agenda this week, we are watching president trump in the philippines, the final leg of this 11-day trip of asia. we are looking ahead to the data coming out around the region, japanese gdp this week will give us an indication of whether this momentous trajectory will be sustained for japanese growth as well as china numbers, retail sales, industrial production, fixed asset investment, and credit data will paint a better picture of how we will finish out the year for that economy. let's head over to korea, the new south korean foreign minister says the fact the north has not launched a missile into months is an encouraging sign. that it showsberg international pressure is working, but also warned about being too optimistic. >> we should not read too much into this, but one way of reading it is the message of the
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international community, the global condemnation and absolute unacceptability of their nuclear program is finally getting through. the sanctions are working. that may be causing them to recalculate. it could also mean that they are fine tuning some technical aspects of what further provocations they might have up their sleeve. it is good that we have this od of no provocations. north korea needs to stop its provocations, and we hope this continues. will never enter into any kind of serious discussion about de-nuclear station, and our goal through these sanctions and pressure is to draw them out, to force the
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point on them that they need to change course. >> do you think the u.s. and china are taking the right approach? or is there a need to bring russia into it? all important parts. china, russia, and the u.s. are all members of the security council permanent members. in the sanctions, and they have a primary responsibility to not only implement the sanctions, but to ensure these challenges to global peace and security are dealt with, so on that fundamental level we expect china and russia to play that very important role. also, iuclear issue think china is implementing faithfully the sanctions. it says so and we see the actions on the ground.
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russia says it is faithfully implementing the sanctions. >> can north and south korea ever unite? >> well, there is always the future, and i think after peacefully living together, there will come a time that as of people on both sides feel it is time, but what we need in the first instance is a permanent peace on the peninsula. at know that we are frozen the armistice agreement at the end of the war, and that has not been replaced by a peace agreement. but for us to work towards a permanent lasting peace we need to come to terms with the nuclear issue. >> some analysts say north korea is aimed at achieving unification on its own terms. what you make of that? >> it is rather unrealistic.
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south korea is 40 times richer. so much more prosperous and dynamic and have support from the international community. we are a unique success story from the global scheme of things. this being unified on north korea's terms. i think they may be betting on their nuclear capabilities, but i think it is completely misguided. does south korea need nuclear submarines? would that help deal with north korea better? >> because of north korea's , andar and missile threat growing threat, we are very sure we need to have a robust military preparedness to what
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have her contingency might arise. we need to be absolutely confident of our defense to turn's posture, the combined deterrence posture with u.s. forces, but south korea's own deterrent capabilities, and to do so we need to constantly upgrade and update our military capabilities, and we have a very important agreement with the united states that yes, south korea will continue to develop and acquire state of the art military assets, military assets can mean many things. i think the discussion about the nuclear submarines comes as part of that discussion. korea's newth foreign minister there talking to our chief international correspondent for southeast asia. well, president trump is in the philippines on the final leg of his trip to asia. let's look at his agenda with our next guest which runs the
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marketines largest conglomerate. thank you for joining us. give us an idea of how you feel about this move in essence. this summit is like a brotherhood and sisterhood of nations. this has fostered friendship and cooperation among the asean nations, and also east asia and other major trade partners. i think that has put a lot of in theon to the region philippines, and i think we are all having fun here. at least we are engaging with each other. tell me something, what is the mood like there currently?
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do expect anything substantial to emerge? it will be more the attention to the asean and philippines. in terms of trade, maybe in terms of what the bigger countries can do for the asean, especially the philippines. in the philippines, we will p.m. put to showcase that we are part of the asean that is important to the world. haidi: let's talk about the economic side. i'm wondering what kind of opportunities do you see for businesses on both sides as a result of a closer relationship. with the friendship, then
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comes the commerce. i think there are a lot of opportunities here and it is a matter of showing them the opportunities come up because many of them do not know much about the philippines or some of the asean nations. i think we are a country with 100 million population and there are many other countries that will be interested. we are a young nation. i think we are more flexible. you doing to are tap the regional markets and what benefits does it help to accrue from that engagement for your core business and beyond? beyond to the philippines, we
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have investment in china. we are looking at southeast asia -- i should say the asean. we have been invited by some to go to their country, so i guess we are looking to property development. in terms of the philippines, i think there are, we can always look for people who may like to do business in the philippines and who may lack also to joint venture with us. -- like to joint venture with us. haidi: let's talk about china. you have significant holdings in terms of property and retail layer. are you concerned about whether areill see a slowdown, or you still optimistic about this emerging middle-class story that has driven growth? we are very
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optimistic here. we have not really gone into the digital environment. it is coming, but the digital , it also needs brick-and-mortar to grow further, so the channels that would be good for us in terms of properties. we are social beings, so we have to be together, and we provide the social interactions for friends and families. tell us about the other side you are trying to get to within the world of retail. platforms areas and are plan to expand? space and omni channels, the department store or stores that can become
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showcases and warehouse is for digital companies. there are many things we can do, and with the population of 100 million and with a growing there is as, i think lot of consumption that will be done in the next few years. rishaad: thank you so much for joining us. sm investments pfister person. -- vice chairperson. ♪ rishaad: our next to guess says tensions in the middle east remain dangerous, including a risk for bond markets. let's go to singapore and join our real yield guest. thank you for joining us. theses an idea of concerns and how they are affecting your search for yield,
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and indeed returns. >> on think clearly at this time, especially home these geopolitical concerns, some of them start off like focal brushfires and can develop into something very big, so we are vigilant on this. also talkedtime, we about the massive amount of liquidity that central banks have pumped into the market, $12 trillion, of which the u.s. is trying to do a normalization process, but in europe and in japan, liquidity continues to be pumped into the system unabated, so you have a situation whereby what we coin has the uncertainty is high, but the volatility in the financial market is low
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because of the liquidity being pumped and by central banks. so we are vigilant, but the reach for yield, you look at aging populations in the beenoped world, what has generated in the eurozone, the forngs looking home, the search for yield continues even though you have all these uncertainties as usual in the background. rishaad: against a backdrop of monetary normalization in the u.s. possibly in the medium-term , that has affected the yield curve and flattened it ironically in the u.s. in a funny sort of way, but that also plays out in this part of the world. how are you seeing that? >> if you look at the yield curve in the u.s., take for
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tens, wehe five and have flattened from 55 basis points at the beginning of the year two 34 basis points. 30's, coming from 70 basis points to currently 47 basis points. i'd look at the situation right now of what we call the flattening of the yield curve to be similar to the episode in the u.s. fedreby under chairman greenspan raised , and yetrates 16 times if you look at the behavior of the long end of the curve and what happened to the 30 year bonds, they remained flat as a pancake. the 30 year bonds did not move. terme time, they coin the
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the conundrum of savings, savings from emerging markets, particularly chinese official reserves. even though chinese reserves have come down to $3 trillion, the amount of private chinese money overseas and offshore continues to be large. issome indications, there $700 billion of fx deposits in china onshore and more than $500 billion offshore in dollars. i think the real number is larger than that. we have more private savings, and i mentioned the eurozone today had a 7% current accounts deficit, aging population, continuing to anchor the long end of the curve. the fed is not really normalizing. haidi: let me jump in and clarify. in don't think the flatness
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the curve portends anything in terms of doom and gloom? it is a demand-side phenomenon on the long end? >> yes, very much so. there is a lot of demand for long-term assets, a lot of demand for fixed income, given the aging population. it is not a recession or indicator as far as i am concerned. , and the grand scheme of things then what does really at the moment, perhaps not now, but in six months time, represent value and return? guess it is no mistry that everything is richly valued. everything is finally valued, whether stock pes. the bonds in my universe, things
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are very rich. at i think when you look at strategy in terms of the fixed income market, i described earlier that the demand for fixed income remains strong and unabated. the government bond yields, which if you look at it as a vision diagram, at the center treasuries, fed funds, and has sovereign bond yields are very low, we have to move up the risk spectrum come of the yield spectrum for buying corporate bonds, emerging markets, then it will continue to expand out. this strategy is still good for the next year, the market continues to run and increase the yield of the portfolio. we just have to move in terms of the credit and risk spectrum.
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rishaad: great talking to you. we have to take a break. a full market check, a mixed day for equities in this part of the world. this is bloomberg. ♪
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♪ nexon urging to an
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all-time high. $360ting profit up from million a year ago. pixelberyyying the studio. -- pixelberyy studio. a $14.8 billion bid for shares it does not own to take the company private. brookfield has offered $23 a share for the remains, half in cash, half in equity. brookfield submitted that did saturday. there is no karen t gigi p will accept. willarantee that ggp accept. saying: the korea times
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a delay has been forced by this months resignation of the chief executive for woori over a scandal involving the hiring of children of government officials. a trapped budget submitted says a 7% stake will be sold next year. investor of lyft says it is gaining ground on uber. uber sees one third of the as it benefits from the management missteps and turmoil that have distracted uber in recent months. plenty more to calm. -- two,. to come. this is bloomberg. ♪
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>> we are in the middle of the first trading day of the week. welcome to "bloomberg markets asia." ♪ david: hong kong and shanghai are positive, but it is a different story when you look at tokyo.
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>> you have some positive parts to the market right now. some are a bit lackluster when you look at the markets. i just want to look ahead this week. there's lots of bits and pieces of data out. arguably it is the inflation rate of the u.s. midweek we are really looking forward to seeing. if you look at how the bond markets are positioned into december, they are certainly scoped for disappointment. it potentially could be a game changer when you look at this chart and how far that spread is between where the u.s. has been and where the german bunds are. bundsrman -- are german too expensive or are the
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american bonds to cheap best ?onds -- bonds too cheap morgan stanley says if we do get a miss, perhaps the ability that the fed moves to as low as 50%. something to watch midweek. that is the story of that. look at the broader markets right now, sophie is here. sophie: we start with the dollar-yen. ahead of that inflation data we are seeing that pairing at the one for things -- at the 1/13 th spot.113 when you regular at the session, it is mostly a mixed view for asian equities. want to highlight the pound as well. it is dropping as theresa may
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faces a leadership challenge. it is leading decent losses against the dollar. the korean yuan is leading far lower against the asian greenback today. the chinese 10 year yield is now trading at 2014. chinese stocks are leading regional gains. when you take a look at the breakdown in shanghai, it is financials leading the charge, helping the benchmark climb for a sixth straight day. this is china trying to ease some of its foreign investment limits in its financial sector. some see it as a symbolic move. we do have some beneficiaries digitally on this oldman -- this goldman. they see profitability increasing in the sector. consumer shares are also gaining
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ground in shanghai following that smashing singles' day we saw saturday. this performance puts chinese online retailers on course for a growth margin.% lensve gains on 3-d prospects. i am going to show you country garden, that earlier jumped as much as 11% on its upcoming inclusion. david: thank you for an update there. let's head back to manila right now, were president trump is on the last leg of his asian tour. with some ofo help
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these territorial disputes -- he is offering to help with some of these territorial disputes in the south china sea. we are joined by stephen engle's there -- by stephen engle there on the ground. there? happening reporter: no singing. they are down to business. they have moved venues out of the cultural center of the philippines to the convention center, where some bilateral meetings are happening. we were told donald trump is going to have a bilateral with malcolm turnbull. now that, according to the white house, has turned into a three-way pull aside with shinzo abe and malcolm turnbull with donald trump, a little bit of a photo op. now donald trump has changed dinner plans. he will have dinner with malcolm turnbull of australia. the news flow has slowed considerably given there was a lot of pomp and ceremony to kick off the association with southeast asian nations summit.
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the real issues they are getting down to is trade deals, less about north korea, a little more about south china sea disputes. trade is the real thing on the table right now. a couple of competing trade pacts being debated. of course, tbp come up -- tpp, the transpacific partnership, which the u.s. got out of in favor of more bilateral agreements that trump favors, then there is the regional copperheads of partnership -- comprehensive partnership spearheaded by china and india. there are still a lot of hurdles to overcome on both of those. the 11 members remaining on tpp has signed a framework agreement to push that forward without the united states. rcep is getting more added urgency giving the coalition of tpp coming together. rcep has some challenges as well
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about reducing barriers to facilitate trade. however, india, for one, is great worried -- is quite worried that could exacerbate india's trade deficit with china. lots to still resolve. now that the singing is done, maybe they can get down to brass tacks and figure things out. david: when it comes to the south china sea, a lot of competing forces there, right? you look at the south china sea come a president trump obviously offered to mediate a lot of what is going on there. this comes on the back of president xi of china looking to increase his influence in the region. what exactly did president trump have to say is mark -- to say? reporter: he says he can mediate, be a moderator in their
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competing and overlapping claims to the south china sea, which of course led to some conflict between the philippines and china, between vietnam and china , and even donald trump has lashed out on the campaign trail in the early days of his presidency about the land grabs by the chinese and the reclamation projects in the south china sea and strategic waterways and fishery grounds and mineral reserves underneath the south china sea. there's definitely room for --iation, but donald trump but is donald trump going to be the best arbitrator? that is yet to be seen. mr. jeter k -- mr. duterte already said maybe we should shelve the talk of this right now because tensions are quite high about the south china sea, they don't want to lead to conflict. david: especially with everyone there on the table. steve, thank you. great reporting as usual.
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we will talk more about this visit by president trump to the philippines. bywill be joined exclusively blueberry resorts chairman and ceo enrique razon. that is coming up in about five minutes. stay tuned. before that, let's get you an update of your first word news with debra mao. host: uber has approved a big investment led by softbank was an initial $1 billion followed by a tender offer to buy up to another $9 billion in shares from other investors. firmsee venture capital benchmark causing its suit against travis kalanick.
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the reserve bank of australia says improved expectations for demand are driving a pickup in non-mining investments, helping to buoy the economy. in real terms, such investment is about 70% higher than 10 years ago -- 17% higher than 10 years ago. the imf has welcomed china's decision to relax restrictions on foreign ownership that shows increasing confidence in the financial system. they say china is listening to warning about excessive debt and taking action to wind leverage, which shows a newfound confidence. is consideringit to remove at least partially those barriers and to move above the threshold of 50% and
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gradually a limited those thresholds. that is an indication of openness and also strength and confidence in their own system. host: in philadelphia, fed president patrick harker is the latest policymaker to all but confirm a rate hike for the end of the year. speaking in tokyo, he said a move is "likely penciled in," and that he would be covered will with three hikes in 2018. he also says the eventual size of the fed balance sheet is yet to be determined, and that the unwinding will be run on autopilot. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm debra mao. this is bloomberg. david: let's hope it is boring and uneventful. thank you for the update. looking ahead, we will be joined by the chairman of the company
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that runs solar resorts, which raised in record profits this razon.nrique and we will assess this promise from the chinese to open banks and other institutions to foreign money. we will put it all together a bit later on in the show. stay with us. this is bloomberg. ♪
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david: you're watching "bloomberg markets asia." lets the you caught up with your latest business flash headlines. bitcoin with a big move this morning. there ago. week.n versus last it fell as low as $5,600 from a
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high of $7,882. aboutis some concern undermining the original currency. h and a holdings plans to call itself cwt international. the company says the new name will better reflect its strategy as a commodity marketing in holdingsrvice for business. salesa generated record on and off-line. saturday the right of $25 billion -- they racked up $25
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billion. the government seems to be most interested in the media companies, and of course we are not a media company. we are a massive e-commerce company. david: one feature would like to bring your attention to is our interactive tv function at tv . watch us live, watch previous interviews you may have missed, any of the charts and functions we talk about -- i brought the two-year spread for the treasury -- have a look at that chart, and become part of the conversation. said your questions and and we will ask the guests time permitting. check it out. tv . this is bloomberg. ♪
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david: this is "bloomberg markets asia." have a look at markets right now. one of the standouts so far and , these are theng downsides when it comes to the .si 300 arguably -- and this is fairly hard to know -- might be a little more sustainable this time around, 4127 on this index. we could get the next catalyst here. the big news from friday, china opening up its financial sector. talk more on the story, i am joined by the author of "china's banking transformation, the untold story." is also the best she is also the
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independent director at a number of chinese banks -- he is also the independent director at a number of chinese banks. catch many by surprise. do you think this was coming anyway? guest: yes i do. i think when you go back and look at the reforms passed in 2013, resolution 12 and 24, you see they are very general guidelines laid out on how they will open up the financial sector and other sectors to greater international involvement and begin to align rules on the capital market between the domestic and foreign players. that was the general direction. now we see the first specific things coming out, that is typical of china. andnnounces direction gradually step-by-step gets around to implementation. i don't see a big bang.
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china doesn't do big bangs. david: know they don't -- no they don't. a lot of it is carefully planned. a lot of it is hidden beneath the headlines. assuming there is a bank out there with a balance sheet that could afford to buy, does it mean china would then allow one of its large banks to be bought up or be controlled by foreign money back up -- money? guest: that is a huge assumption. i think that is clearly what china does not have in mind. it is a real stretch. because it isngs in its own interests. what they are effectively doing upthis is not only opening what other countries are
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demanding, but in a sense outsourcing some of the work. in the banking sector, where i think they have some needs, in the periphery of the sector, some of the city banks, credit trusts, shadow banking, things of this sort, those are of a size where a large western bank could conceive of coming in and playing a constructive role. the key thing is, does it align with china's overall financial strategy? we know china wants to keep control of the big banks as a strategic sector under the control. they have opened up in the past to 25% opening. they have all kinds of ways of ensuring that a foreign player would not get 51% share of something like icbc or bank of china. these are the ground rules of the system.
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i would argue that foreign banks would not have at this point in time much to contribute to improving the efficiency of those institutions compared with 12 or 13 years ago when foreign banks did come in and invest. but in the smaller banks they play a very constructive role. if you look at the equity sector, the securities firms, asset management, insurance, there are enormous needs. these are various where the transformation of the system has not yet begun. tremendous amount of work to be done. it is less strategic sensitivity then the banks. i can see, first of all, it is more in china's interest to bring foreign players in in a significant way, and second of all, i think there will be much more appetite on the part of foreign players of getting into something like the securities industry. not justt would be --
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for icbc, but even one of the joint stock banks. reporter: tom here in beijing. what would your advice the two a foreign bank or insurance firm looking to get in to these markets? iest: on the banking side think there's some very interesting possibilities in the city banks. some of the city banks are extremely well-run, such as bank of beijing. they don't need further foreign assistance. you have other city banks in the rust belt of the northeast, in some of the more inland provinces which are under local government control, so those would be interesting target. some of those provinces have 40 to 60 million people in them, and those banks have good franchises in those provinces.
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the key issue for considering investing in them would be establishing the rules of the game not only with the central banks, people's bank of china and cbrc, but also with leading local shareholders in a province . your partners are going to be local governments. give got to make sure there is a clear understanding on each person's role -- you've got to make sure there is a clear understanding on each person's role. reporter: i know you have mentioned in your notes that the insurance sector could benefit. how exactly could the insurance players take the opportunity? think the future of probably in china is a -- version.
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to getreign player was into insurance in china, it will have to figure out a way through -- if a foreign player was to get into insurance in china, it will have to figure out a way to means, andgh digital is somewhere that has a real need for improvements and even the. then i think the authorities -- and even see -- and efficiency. but i am a banking expert, not an insurance expert, so i don't want to say more than that. david: let's bring it back to banks. help clarify something for us. what happens to the foreign banks currently present in the market to a limited degree? how does this change the game for them? guest: i don't think it changes the game very much for them. there in mind these banks --
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bear in mind these banks have dozens operating either out of single branches or offices. egypt of these banks has each ofhed a niche -- these banks has established a niche. have niches. they really can't be thinking in terms of becoming a mass consumer bank. even the city banks and hong kong banks are doing kind of upper-level private banking, consumer banking. they are not doing mass consumer banking because they can't compete with the locals on that. that you have a variety of other banks which have a niche in particular corporate sectors. the big foreign banks also play a role in supporting soa he's -- an -- supporting soe's.
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david: thank you for fleshing out this opening up of the chinese banking sector. tokyo reopening in a few minutes. we will get you those numbers in a few moments. this is bloomberg. ♪
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♪ >> you are watching bloomberg markets: asia. markets not very exciting. a seventh straight weekly gain. the gains over the past few weeks came down to earnings impressing the markets and another leg higher. as we enter the latter part of this earnings season, about 15% more of the blue chips set to report, there is not a lot to take us higher. let's flesh out the story and the japan reopened. not very good. sophie: glaring red for the
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nikkei 225, a fourth day of losses. some catalysts when it comes to the dollar-yen move. japanese third-quarter gdp do this week. investors need some new reasons buy this could. be a correction in the near term. korean stocks losing ground. cosmetic companies and duty-free operators like hotel s hilla are climbing. the hang seng is trading at a decade high. in china, consumer shares leading gains for shanghai, the large-cap index up .4 percent on this singles' day smash. this could further reinforce
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optimism around china's new growth stocks. check out 7189. goldman sachs created a china oriented version of the nifty 50, made up of large-caps towards consumer and tech-led growth. 80%, thehas gained line in white. gains of 11% for the shanghai benchmark. david: thank you so much for the up date. let's get you caught up on first word news. south korea says global pressure on the north seems to be having an effect with a note missile launches or provocative behavior for almost two months. fears kim jong-un would test a weapon during president trump's visit to asia turned out to be unfounded. south korea's foreign minister
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in her first international media interviews and sanctions are working. absoluted to be confident in our deterrent posture, the combined deterrent posture with u.s. forces, but south korea's own deterrent so, weities, and to do need to constantly upgrade and update our military capabilities , and we have a very important agreement with the united states that yes, south korea will continue to develop and acquire state-of-the-art military assets. has offered trump to help resolve territorial disputes in the south china sea. the president is now in the philippines for a series of asean meetings on regional security. a key topic will be the flashpoint of shipping lanes that contain oil and gas reserves. trump says he is a very good mediator and a very good
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arbitrator. small-choking in new delhi is so bad that united has suspended flights. levels have reached 676 sunday afternoon, about 14 times the accepted danger level. other airlines are still flying. united said it did send a plane to the city on sunday. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. david: that is filthy. i can almost taste it. anyway, i am off-topic. approved this multibillion-dollar investment offer from softbank in one of the biggest private start up
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deals ever. peter elstrom joining us live from tokyo. what are the key terms of this investment? >> this is a parliamentary agreement where softbank and investors are planning to put in $1 billion in fresh capital and spend $9 billion in additional money to buy shares from existing shareholders. they do need to set the price for the purchase from the existing shareholders. they will go through the process over the next week, so it is not a done deal. this deal comes with some governance reforms so ex-ceo travis kalanick will give up some control over the board and allow a majority to decide what happens with the board going forward. the engine market is putting on hold at least for now his lawsuit against travis kalanick. how does having softbank
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as an investor help uber strategically? >> it is not clear how that will work out. softbank has been aggressive in investing in ride hailing companies around the world. they are a backer of didi in grab in india and southeast asia. it believes in this business. has been an early and big backer. with uber, it is not clear whether these right hailing companies will collaborate. they could in theory use each other's apps. has historically been working with those three companies, so we will see whether that alliance breaks up if softbank completes this deal with uber. david: talk to us about price.
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we know the absolute amount, 9 billion from existing investors. what price are expecting softbank to pay? >> uber is the most highly valued start up in the world at $70 billion, so the first $1 billion will go in at that evaluation -- that valuation, and the price they buy from existing shareholders is yet to be determined. salt bank will -- softbank will start on the low side and decide if they get enough shareholders to sell as they move up. enoughbank can't get people to sell at a price it things is fair, it may yet walk away from this deal. it was only a week ago that masayoshi son was asked about this deal and he said we may invest in lyft after all. we will see. david: thank you. peter elstrom life out of tokyo. let's get back to manila, where
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summit is taking place, president trump being welcomed by rodrigo duterte. our next guest is the chairman ctsi, a listed company in manila. thank you so much for coming on the program. i understand you are a busy man this morning. , and i from your company see fairly busy behind you in your casino, you cleared nine point 6 billion pesos in revenue for the third quarter with the peak christmas season still ahead. we safely say you will clear 10 billion pesos this quarter? we had a fairly decent , some growth over last year, and the trend is the same
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in the fourth quarter. david: two what conditions would you attribute the business environment you are under and are you confident those conditions will continue to exist in 2018? inmarket growth and growth is mainland chinese market due to improved visitations and market growth. david: one thing that has changed between the two administrations has been the improve relations with china. can you talk to us about numbers? what is the tangible improvement you have seen from two years ago to where you are now? >> a very strong market from china and korea. china is probably 200% year on
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year. that is not just with us. it is all over. right, we have seen a recovery take place in macau, and how well you have done there, it makes it difficult case to say macau has taken from the philippines, but do you get a sense there is a preference manila,u over or can the two coexist? >> i think the market is large enough that we can coexist. the market has been growing even as macau was contracting, and now they're growing again. i'm not even sure if there is a co-relation between the two. you recently ventured outside the philippines and snapped up some gaming assets in south korea. is this something we can expect from your group, and aggressive diversifying away from your home market?
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depends on the regulatory environment and governments. slower to open up to gaming than other aspects of their economy. there is not really something that interesting out there. opens up, andan this is a theoretical questions, people talking about as the next gold mine in the gaming industry. would you be interested to look at japan? >> absolutely. as soon as they come out with implementing rules and regulations, we are very interested. david: apart from gaming, let's talk about your broader business here it is there anything apart from gaming we should -- gaming -- water business. is there anything apart from gaming we should expect your
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group to go into? >> -- david: the peso has been trading on the weaker side of 49-50 basically all this year. is in u.s.r debts dollars. are you expecting to see a drag, a noticeable drag, on your earnings because of the week currency? no, any drag on the earnings is not currency. it is just a part. if there is any drag, it is the ramping up of startups, but that will turn into a strong growth driver down the line. david: one of the other key themes we have been talking year since donald trump became president, he
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started to talk a little bit more protectionist when it comes to trade. i you worried that this protectionist tilt from president might affect your ports business? >> can you repeat that? >> i was saying that president tilted towards being protectionist when it comes to trade policies. are you concerned that might affect your port assets? >> concern on what? the currency? from president trump being more protectionist. oh, yes, yes, that is a concern, absolutely. david: how are you adjusting then? how are you positioning? >> it is very hard to figure
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that out. we will have to wait. and there have been reports you might be interested in infrastructure assets in the philippines apart from gaming and ports. is that something you're looking into, airport, infrastructure assets? >> yes, that's true. ,e will be interested in depending on which sector though. david: any specifics you want to share with us? any specific projects you are looking at? >> could be in the airport sector. that would be one. i think probably it would be a priority because of the tourism business that we are in. right, now, final question for you. in terms of your financial targets next year for the
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casinos and ports, talk to us about how much you see revenue grow by for next year? >> could you repeat that? david: your targets for revenue growth, sir come into next year, should we expect to double digit growth to continue in both ports and casinos into next year when we talk about topline? overall tradehow goes. in the gaming sector, we are not projecting that aggressively. we areport sector, projecting only single-digit growth. comingi appreciate you on the program. i know it is very hard to hear with everyone very busy behind you. right, let's tell you what is
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coming up on the program. the challenges facing japanese lenders working with an aging and shrinking population. we will be back in tokyo next. this is bloomberg. ♪
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♪ welcome back. some breaking news crossing the bloomberg terminal. here we go. buy indiaower to tower businesses for about $1.2 billion. that is what we know so far. we will bring you more details later on, but that headline says it all. american tower looking to close that transaction and buy india tower businesses for $1.2 billion. we are in during the last face of the earnings season in tokyo. take a look at my chart.
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this is a snapshot of the earnings the season. it has been very good. banks toiting for report, so a lot of that coming next few days. it will be a busy week for financials in japan, mizuho reports today, and the bleakest outlook of the big three lenders according to bloomberg intelligence. in our japan banking reporter life out of tokyo. ared of these numbers, what we looking at in terms of broader expectations for these results? speaking toeen analysts about what we can expect from the banks in terms of net income. mizuho reporting this afternoon. they are expected to have net income of ¥150 billion, 35% down compared to a year ago. there have been reports that
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it's closer to ¥180 billion. that would be 20% down. net interest income, the core business for the banks, still being squeezed by the negative interest rate policy. make hard for them to money from their court lending businesses. we believe they have had some better luck in the deal's overseas. sold somemight have of their cross shareholdings as part of japan's push to improve governance. with the nikkei hitting quarter century highs last week, maybe they're looking to trim some gains. david: when it comes to the core market ande have a notconomy that is
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translated to growth in the lending business. why not? ,> the customers are doing well making record profits and retaining those profits as cash. there is little demand from for banks lending. when they do lend, they do so at incredibly low interest rates that are not profitable. it is more than the whole economic environment. it is central-bank policy polling the yield curve down that it is hurting the core business. in japan is incredibly competitive as well. there are well over 100 banks in the country. att will be to consolidation some point, that is a topic of conversation. it is a tough environment for banks and does not look to get better in the near future. david: one topic we have to talk this, what is the extent
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time around for the major banks? monthseems in the last the sense of urgency in terms of the need to do something about cost cuts has come out. we have seen reports that they will look at cut staff, mitsubishi ufj looking to cut 10,000 positions, mitsui just said they are hoping to replace 1500 jobs with automation. in japan you can't just fire people. they do this as a process of attrition for the next 10 years and try to get rid of the office jobs where people are manually entering data and crunching numbers and try to shift them into more productive roles. thank you very much. markets in mumbai getting underway. we will flesh out that story
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next. this is bloomberg. ♪
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♪ david: this is "bloomberg markets: asia." bloomberg markets: middle east coming up at the top of the hour. yousef gamal el-din is standing by at the dubai air show. take it away. >> we had an interesting day at the dubai air show with a surprise upset. itsexpectation was him or would sign a deal with airbus. the head of commercial aviation from boeing announced a major deal for dreamliner's, 47 airliners, one of the biggest upsets in the dubai aviation show in recent history. we are looking ahead as to whether airbus can stage a comeback. they have done that in the past.
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we will be speaking to a lot of ceos throughout the day. david: looking forward to that. indiaion numbers out of due out. where are we headed question mark up or down? -- headed? up or down? likely to jump to 3.5 percent, a seven month high on the back of higher recovery in vegetable prices, which is seasonal, and higher rent allowances for government employees. havein mind this could been higher because of crude oil , but a cuting higher last month will get factored in. i on corewill keep an inflation, expected to be 4.5% to 4.6%, a little bit higher
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than the r.b.i. target of 4%. david: how does this change the math for the r.b.i.? >> that's right. if inflation trajectory is going higher, and the bar for cutting rates or monetary accommodation we'll get a little bit higher. you have to keep in mind that there is a calibrated global tightening by central banks, so you have higher crude oil prices and bond yields in india are climbing towards 7%, the highest since september 2016, so some investors are pricing in a small chance of a rate hike in coming months. david: we will see what happens there and the bonds selloff we are seeing. thank you for joining us.
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the cash markets are up and running in india. a quick check, not very interesting. and somet a fraction weakness in the currency. we are eight hours from the release of the inflation data. something is coming up lunchtime. traders infinally the lion city, 3000 brokers about to get a lunch break for the first time in more than six years. if i know my singapore correctly , that is the maxwell food center, the famous chicken and fries place. that matches hong kong's break. we are looking at about an hour inso to the lunch break malaysia and mainland china. singapore still has the longest
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all ages major exchanges, but now with a break in between. that is it. number markets middle east coming up next. ♪
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♪ yousef: populist presidents meet, donald trump and rodrigo duterte a get together. we are live in manila with the latest. hike, the philly fed president says a rate increase will take place before the end of this year. a boost for borrowing, snags a $15ne maker bior

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