tv Bloomberg Markets Asia Bloomberg November 29, 2017 10:00pm-11:00pm EST
factions with chinese president xi jinping. admits that, there is so much to discuss. they came out with a rate decision. we want to talk about the data coming through. bitcoin is also very much in the mix, bitcoin. a lot of people have been asking how do you -- without getting exposure to the cryptocurrency? stocks if you did not already has a look at overstock.com. listed in the united states. as you can see, the stock prices moved up substantially along with the price of bitcoin which is your second panel. along with it, the higher the the stock and bitcoin. we also have short interest also moving up as well. this is one of the ways you can short bitcoin in case you did not know just yet. the other thing i want to point
out, be ok very much in the mix. they are done with one. have a look at this other chart. the question now is when do they follow up with the first rate hike in six or seven years? when you look at the spread between the three year and seven day, you still look at real rates which is the bottom one, still negative. you would assume that this one corrects both for the middle. which essentially means either they hike once more which is or inflationthinks picks up which of the be ok says they will. at these, it does seem they are not done hiking rates. the question is when and whether or not the bond markets will listen. while we are talking about this, one is extending its losses as the governor continues to speak. sophie has been tracking the moves. a lot to be thrown today. >> dodging quite a bit. they have been able to resilient
in the face of north korea. we have seen the korean won stick below that 1100 level for some time. as the governor spoke, we saw that slump in the korean won deepened. you can see that happening over the course of the morning on g #btv 403 three. the be ok governors saying the central bank is sticking with its inflation forecast made back in october. we have seen a lot of job hunting from the south korean government today. adding to those are mark saying prolonged one strength may hurt some export sectors. he did say that one strength of negative impact on exports has decreased. overall, dovish tilt. or commentary from the governor that is rate -- weighing on the korean won. david: usually when you get a move like that come it used to be much more better. which a thinkg you touched on, there was some concern over samsung. sophie: morgan stanley downgrading. david: right.
everything still down today. there was a note from him from the be ok governor, saying the semiconductor side is not over. sophie: he does see the up cycle continuing for now. when you take a look at what is going on the -- on inditex spake is not space, that providing optimism. losing over 2%, dragging on the original benchmark. take a look at tech heavyweights, the like of samsung, tencent, at&t, and tokyo, they are losing ground, dragging on the original benchmark. tencent, that has lost 6% from a record high it hit on november 21. although it is in line for a 16% gain in november. you see tencent pulling along with aac technology which is falling over 4%. shares in hong kong's, trimming their monthly gains. to point out insurers are sliding, aii gains. david: have to talk about
currencies. talked about the won. sterling is very much in the mix. sophie: we have the pound gaining a half percent. this progressd by being seen around brexit talks. also want to highlight the aussie dollar, rising after the strong pmi data that came on the back of improving investment for australia. the kiwi dollar, that is on the back foot after business confidence fell to a 2009 low. i want to quickly point out what is happening with the yuan. we are -- we have the onshore rate come a strengthening on that pmi number out of china. soid: sophia, thank you much. let's get you an update on your first word news with ross and we are starting with north korea. >> thanks, david for president will bew sanctions imposed on north korea. those words coming after he spoke with chinese president g
jinping. trump did not specify whether the measures would come from washington or beijing. russia and china corporate dialogue, but the u.s. ambassador told the security council the world must do more. chineset trump called president xi this morning. and told him we have come to the point that china must cut off the oil from north korea. that would be a pivotal step in the world's effort to stop this international pariah. recent past, the overall situation on the peninsula was stable. which provided a window of opportunity with diplomatic efforts. regrettably, this window failed to lead to the resumption of dialogue and negotiations. >> on capitol hill, senate republicans may add provisions to their version of a tax bill that could trigger up to 300 $60 billion in automatic tax increases.
some have wanted the provision in order to prevent those tax cuts to increase the deficit. it is due by one point $4 trillion over 10 years. that is before accounting for any economic growth it might produce. janetmes critics of yellen fence has been nominated by president trump to serve as a governor. marvin good friend is a professor and a former researcher at the richmond fed. he serves on a independent panel known as a shadow -- open market committee that aims to have monetary policy. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i'm rosalind chin. this is bloomberg. korea raisednk of its interest rate for the first time in six or seven years. the quarter-point hike was back up to 1.5%. analysts.recasted by
it is likely a turning point for a lot of central banks across the asia-pacific are we are joined with our correspondent. steve, as we have been talking about, this was well telegraphed what were the key takeaways from the press briefing that just finished? to parse are trying the words from governor lee and seeing any kind of guidance because they have done this tightening the first time since 2011. the quarter basis point. the majority baked into the expectations. the question is, what are in the cards for 2018? say ity two hikes, some could be a shorter tightening cycle than previous cycles, because there is a ceiling on the potential growth in the economy. benignon also pretty right now. it is inching up towards 2%, but still fairly benign. i am going to run through some of the headlines in the last couple of minutes from governor
lee to get a sense of where he is pointing the arrow of monetary policy. he is basically saying he expects inflationary pressures to rise as the economy recovers. he expects semiconductor up cycle to continue for now. have forecastot for future rate hikes. i believe you must have been asked directly about how many more hikes are in there. he said he does not have a forecast for that. however, he reiterated that the bank of korea will continue this policy. they want to make sure the economic recovery still has solid footing. just before the close of the briefing, he says policy direction, the policy direction accommodation. in little bit of guidance there. perhaps this will not be a lengthy accommodative stance from the bank of korea. david: a lot of it really comes
down to how quickly -- how long the cycling last. the bigger question is what does this mean for other agent central banks? does this pave the way for them to start going in the same direction? do you follow the fed? lee did say that was not the deciding factor for raising rates this morning. it did factor in to stay ahead of any future rate hikes coming from the fed. look at the major economies in asia. japan, they are negative rates. there is no hike in the horizon. china, they are using other tools. they have not touched their benchmark rate for a couple years now. india, perhaps third quarter of next year is the projected first possible rate hike for the benchmark repo rate. then you have to start looking at australia as well. the projective verse rate hike would not be until 2019. they keep on pushing that back. even though their rates are fairly low at 1.5%.
you have to start looking at the fastest growing economies in asia. take a look at the philippines. take a look at malaysia. philippines is heading towards its sixth consecutive year of more than 6% growth. malaysia, 6.2% growth. these are two central banks coming up with great decisions are the philippines on december 14. they are very well likely could investment, given boom that is happening in the philippines. the infrastructure spending from mr. dutere and the like. also malaysia, they are going to their policy meeting january 25. a number of people are starting to place bets that may be the first one in 2018 to raise rates. david: steve, great coverage. out of salt or coming up, we will continue to assess this rate decision coming out of that. we are joined by the senior economist from the
♪ let's give you a quick check of business flash headlines. alibaba, the big deal. bonds priced its jumbo sales, the biggest bond sale by any asian corporate. $7 billion. the company raising a billion dollars in the first bond sale in the -- in 2014, which is the largest dollar domination by any asian corporate outside japan. moved swiftly to fix the security fall in high
sierra, operating system leaving an update and changing its development practices. a glitch affect in desktops. a lot anyone to login without a password and put personal data potentially at risk. it is a fairly embarrassing failure for apple whose software is readily known to the less prone to hacking then windows. the london stock exchange ceo is stepping down amid a high profile act. he said he would be leaving next year, but resigned. was being pushed out against his will and demanded he stake here the board stood its ground and reportedly planned to relieve -- two shows something on him. in the meantime, let's get back to our top story. the bank of korea raising rates for the first time in six years to the next guest -- our next us, he hasining
worked in the bank of korea for 15 years. korea, taiwan, and hong kong. thank you for coming in. >> thank you. david: we all knew they were going to hike anyway. the question is, when do they follow up and if they do follow-up? i want to bring up one of your charts you sent us. g #btv 3994. this is the index. what am i looking at? basically -- we put one of the macro data that the bok is looking at and we also put our bias of the members. this is the -- it shows the rate hike. we were looking at this index going forward. our baseline for you is that tore is no hurry for the bok
hike interest rates going forward. this rate hike is pretty much lift off, and we believe the next rate hike will be next year. the korean won is quite strong now. is downside risk. number two, the housing market in korea, we believe there is some kind of correction given the korea government implemented a measure on mortgages. that will have some kind of negative impact on consumption and investment. david: before we move into the economy, do you see one more second half of net -- do you see one more in the second half of next year? >> yes. for now, we believe the rate of this hiking cycle will be 2%. we will get there in 2019. iss terminal rate obviously compared to the previous hiking cycle them is much lower than that. there is obviously some reasons.
number one, the potential growth in south korea is going down because of the age -- age population. number two, we also think about the housing market. number three, information outlook. we believe the impression will gradually go up. it is not likely to be higher than 2% for the bok target. overall, we believe the 2% rate is in line with where the economy is on a potential level, and the impression will stabilize. david: we will get an update on inflation on gdp tomorrow. on that, real rates are negative at the moment. is that a problem? everywhere,rate is most of the country. south korea versus its trading partners. speaking, korea is not the only country to have a negative real interest rate.
there is a reason why they have a negative interest rate. because even though it is ok and south korea, the domestic demand and bond market is not that strong enough to support high inflation. david: we got a line from the press conference from governor lee. he talked about the strength of the currency. it has not really hurt exports that much. why do you think that is? that is the first question. have exports gone up the value chain, that it doesn't matter that much. et seq. -- the second point, at what level does it start to hurt? >> basically, the korean won is one of the currencies and asia, but as i said, not only south korea but the other a bit -- the other asian currencies appreciate against the u.s. dollar. the production facilities, they have a factory in the u.s. -- everywhere. exactly.
the strong asian currencies, especially in south korea has a better global macro. governorhy the bok said the negative impact is smaller now compared to the previous. depends. if the korean won -- it is quite strong. david: you are saying it is basically a dollar weakness story? >> exactly. tomorrow, 3.6 percent is the final expected gdp for south korea. does the economy continue to perform? is this the best we see? somewhere around 3% next year. -- the export this year is quite strong. next year, there should be some basic facts from the strong exports especially in the tech sector. again, south korea.
housing,easures on south korea is a first country in asia to hike interest rates, that will have negative impacts on construction housing, and also consumption. that is why we believe in terms of the course of momentum, we do not expect any stronger, but we do not expect any kind of slump. toid: the other thing i want ask you said to cover hong kong, at about this time we get these money market greats coming. recently what we have seen, we are coming off a little bit. rate topping 1% for the first time since 2008. is the tightness of liquidity becoming a problem to hong kong? u.s. --ong kong is the the hong kong local interest rate will eventually catch up. thisanking system, and at
moment the hong kong economy is quite positive on our hong kong gdp. and also the capital market as well. we believe it will catch up with the latter. it will be a gradual and it will take time. david: ok. nondisruptive. we get details out later on this afternoon. they give for coming on the show. on thek you for coming show. coming up, australia announces its wide raising increase. the potential impact on the lenders. also the economy as a whole. stay with us. this is bloomberg. ♪
commission to rebuild the public trust. and the political uncertainty they say is depressing the sector. that theclear speculation and the uncertainty in the politics around this toue require the government inquirytrol of the issue, have a properly constitution inquiry which is of commission, and get this matter addressed. toid: let's get a cross sydney where powell allen is standing by for us. paul, we know the prime minister have long been strongly opposed to this. obviously something has changed. what was it? the political climate has changed, david. it has always been fickle here in australia. it has gotten even more so recently. the government losing its majority over the whole citizenship saga. we now have a situation where it is threatening to cross the floor and a vote with the opposition in favor of holding
this royal commission of inquiry. he has done everything he could to hold this off. he even canceled this week's sitting of the house of representatives. it is clear he camp at this off any longer. it was getting to the point where the government risked losing a vote on parliament which would have raised much more serious questions about confidence in those entire and -- in the entire administration. the only good thing that can be said is the banks have had a fig leaf of decency and calling for this inquiry saying it is hurting confidence, including an offshore markets, just -- dismissing trust, but make no mistake, the government does not want to do this. the treasure -- the treasury saying the nature of the political event saying this is a necessary but regrettable action. david: i have to ask, looking at market reactions, we are not liking this one. what are the risks for lenders given this development?
paul: the risk is what else is hiding in the closet? is there something ugly and of the rug? so far we have had a series of scandals among the banking sector, including rate rigging, breaching of the money laundering, anti-terrorism, failure to pay insurance claims. the banks have been subject to a number of hearings. oral commission is much broader and has the power for subpoena anyone -- has the power to subpoena anyone. there is something hiding that we do not know about yet. this is why you have seen bankshares falling today. as far as the market is concerned, tier one capital ratio of the big four banks still very strong. moody says while there is potential for embarrassment, investors will see strength from the sector. david: let's keep our fingers crossed and follow this story closely. thank you for the update. we are also coming out of the real been over in tokyo come a
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we are down about 2% on that index. we could be falling a bit. at the moment, were 50 day moving average, five points away so far. we will look at that shape of red. >> tech stocks are having a bad uge,after an industry ga lodging its worst performance in the overnight session. look at the tokyo session -- tech stocks are set for the worst week since april. these mirror the pattern that we saw for the s&p 500 index. sunrise stocks and sony are
tracking lower. you can see that in the terminal. losses, this bout of there was a red flag raised when it come -- came to recruiting the hr firm. the stock was slightly overheated. earnings have been strong. we have an attractive short once inc. stocks climb farther -- bank stocks climb farther. fall, seeing a tencent trimming the advance from november. and we have laggards down over 4%. david: let's get an update of the first word news. tweetingent trump we anti-muslim video -- re-tweeting anti-muslim video. sparkedident's tweets
criticism from prime minister theresa may. jeremy corbyn said was a threat to society. the president responded by saying the u.k. should focus on domestic terror. theresa may is denying u.k. has reached a deal with the brexit divorce. may said negotiations are continuing. she said there would be no hard borders with ireland and the republic after brexit would be respected. the bali airport has reopened after being closed for three days due to a super volcano. indonesia says the danger isn't over. anyone steer up -- still near
the volcano should seek safety. today show host matt lauer has for fired after 20 years inappropriate behavior by nbc. guthrie on error said -- supposedly an employee had made a complaint, from within nbc. a day,news, 24 hours powered by more than 2700 journalists and analysts in more than 20 countries. this is bloomberg. david: will products cushion the effect of this pollution cleanup? stock dropped from the previous month, down to 51.4. drop,e expecting a slight
but we got to the opposite number on the way. what was behind that? note, we know the backdrop of the narrative is the deleveraging campaign. they are doing so in a way that isn't really hurting growth. when you look at the subcomponents, there was kind of a rapid growth from here. time, we have a very nice glide path right now. >> it seems as if that is winning out. aboutwe have been talking was the deleveraging -- what we have been talking about was the domestic deleveraging. this will continue throughout the year.
the degree of draft will be determined to two growth -- of drag will be detrimental to growth. we are expecting a continued push to drive down leverage. obviously, this one is not a problem yet. t. this doesn't have services. -- touch services. >> we are not seeing much of a hit right now. if you look at neighboring data from south korea, this looks healthy. the leading indicator for the china exports go to. -- go too. -- thereno prediction is a prediction that global trade will outstrip global gdp this year and next year.
the indications for china at the moment are more positive than negative. david: it does have a tendency to spread the love. give me something we should be watching. enda: there is no shortage of risks. campaign toental tackle environmental degradation -- we are seeing some volatility in the corporate bond gilt markets, going -- yield markets, going higher. that will impact margins and profits. there is a wider narrative that china wants to reign in all of this standing credit. manage to avoid a this would all of eventually start to have ended seen effect on activity and
a more subdued china into next year. david: enda, thank you. taking us through the latest gauge. we have pricing coming up as well. have a look at president trump in what's happening in washington. the president says major sanctions will be imposed on north korea in response to that latest missile test. whether thepecify sanctions would come from washington or beijing after talking with president xi. u.n. ambassador told the security council the world must be on guard. >> president trump told theident xi we have come to point that china must cut off oil from north korea. a pivotal step in the world's effort to stop this international crisis. >> the overall situation on the
peninsula was stable, which provided a window of opportunity for the diplomatic efforts. there was a failure to lead to a resuming of dialogue. david: let's bring in our reporter. we were talking about donald trump's comments about, "we will take care of it." this was it. the u.s.as it, demanding that china stopped oil imports in north korea. it is unclear how they plan to do that. this is up to china. china has not shown willingness to do that in the past. its largestis trading partner, and has not wanted to do anything that
destabilizes they are economy. -- their economy. china's negotiating posture has the u.s. and japan should stop their military exercises and to call for talks. indicatione is no there needs to be a next her push for china -- that china would make an extra push. >> it is unclear they would make any changes to their policy. the u.s. has a lot of options in terms of dealing with north korea. every time there is a provocation from the north, one of them is to say, we need to do more in terms of sanctions. david: we just have to keep an eye on things. i want to ask you about tax reform. it was a busy week. we were speaking on friday and monday. today, giveay and
us a sense of what has been accomplished. they got the senate finance committee to approve the bill to pass it to members of the senate floor. they have begun debate in the senate. in the next day or so, it is going to be critical. there will be a lot of amendments voted on, the vote-a-rama, like a party on the senate floor. david: [laughter] >> they need to shore up those votes. they will probably get no democratic votes and can only afford to lose to republican votes -- two republican votes. senator ron johnson of wisconsin doesn't like the way businesses are treated in the tax reform think they aret
treated as well as corporations. others are concerned about the amount -- the amount of money that would add $14 trillion over 10 years. but it did pass a big hurdle. david: thank you. coming up, we will talk about the uncertainties with opec. extending the kurds, that is the keep -- curbs, the key question. this is bloomberg. ♪
>> that would be for nine months, not six months. agreek the majority will that it be in conformity with that. >> and look at the overall $2.50 beingice, associated with opec. this move we have seen is being driven by the underlying demand. david: those were some of the comments on the upcoming opec meeting taking place. together with our senior oil and gas analyst. let's touch on the optics. help us draw the line between where you would consider what will be a very bearish deal. three months? what would it be?
>> anything below six would be bearish. the market is looking for a nine-month extension. opec is trying to take inventories back down to their five-year averages. whether it is a six-month extension or a nine-month extension, we will have to see. extension really will get us there. if we go for three months or six months, the worry is that is too short. vid: let's say they do extend it for nine months. do we get a rebalancing? neil: the market has already rebalanced physically. markets are physically undersupplied. we still have 160 million barrels, the five-year average. cuts areachieving the
extended for 9-12 months, we will see the industry back to its five-year average by the year-end. the 28th -- 2018 inventory gets us there. david: i want to bring this on bloomberg. assuming they do extend it to nine months, we were just talking about an extension, not deeper cuts. what are we looking at? million? neil: that is where opec are at the moment. holds the line, production exports stay at a certain level. russia,he risk -- nigeria in the mix? what are the things to watch? neil: russia has been one of the wildcards coming into this
meeting. there has been a lot of talk about whether or not russia would support the extension to nine months. they will support the cuts. high, it oil prices provides a green light for the shale drillers. we start to see opec losing market share. i don't think that will happen and russia will stay in alignment with saudi arabia. in terms of libya and nigeria, those are the two countries not in the opec agreement. production has been increased by almost 800,000 barrels a day as we have seen geopolitical tensions ease in those countries. what would be -- what would be interesting is if they came back into the fold in the opec agreement. the optics would look better for
those two countries if they came back in. david: how much does politics play in the steel? -- in this deal? i look at the current state of politics and how everyone doesn't compare -- doesn't agree with each other, currently. does this affect the potential deal he might get? -- we might get? war, ahere is a proxy lot of tension at the moment, in libya, saudi arabia, syria. -- if you oil prices look at almost all opec countries, they are still running fairly significant budget deficits. comeneed oil prices to back to $60, $70 a barrel to break even. saudi arabia has a big ipo
coming in. david: a put, isn't it? the saudi oil minister will be trying to align opec members to ensure these cuts continue, ensure there is a proper pricing environment as we come to the 2018 ipo. avid: talk to us about the demand curve. are we under -- underestimating this picks up? if you look at china and europe, things are looking good. neil: a surprise this year. we are seeing a global synchronized economic recovery. that growth, coupled with oil prices we are seeing, is incredibly stimulative. at 1.7 million barrels in demand growth.
tighter created a much market as we come into the second half of 2017, which a lot of people expected. demand is helping the rebound and of supporting oil prices as we go into the next year. we see these inventories normalize more quickly than people expect. ending?s there an we are still a good for months away from it taking place. neil: one of the big questions is what happens when these cuts expire. a netheroking at million barrels of oil coming onto the market, and we are starting to see the shell response,- shale putting 2 million barrels a day onto the market. what is the impact on oil prices? opec needs to address the exit strategy.
in some ways it is very similar to the complexity the fed is dealing with with raising interest rates. 2019, how canwards we not disrupt the oil market? david: i want to bring up a chart. as short-term as you can get. 3122. highest levels going back to may, which says people are building insurance in case there is disappointment. what is your gut feeling in case we get a nine-month extension? what happens to these oil prices? neil a slight increase:, not to month -- too much. the consensus is a nine-month extension. delivers, oil prices will take up a little. the downside is a much higher if
we don't see a nine-month higher if wea lot don't see a nine-month extension. david: let's hope we get it. thank you so much. if you are a bloomberg subscriber, you can catch all of the interviews on the interactive tv function, tv . you can send us instant messages, ask guests a question during a live show. check this one out. this is bloomberg. ♪
bloomberg intelligence from india. the economy there has been shrinking -- slowing down over the last five quarters. in the third quarter, it finally snaps back. >> yes. we are at some recovery in the gdp. 5.7% gdp growth in the september quarter --6.4%. how we rebound in gdp is likely to be anticipated. the bank looks at value-added growth. we were expecting a 4% growth. in contrast, i am looking at basis points lower than the rbi had anticipated. --id: into submission
implications for the rbi? the growth looks better. the government is doing its part to support find -- simplify taxes. there should be more recovery in the quarters ahead. rbi reduces the cost of capital i taking more rate cuts. -- by taking more rate cuts. expect this at the december meeting. gdphe absence of rate cuts, numbers are likely to be downgraded. david: how relevant is that? the cost of capital -- it is e nottant, but i imagin many people are in the banking
system in india. is that a key driver of growth, what the rbi does? >> there is a very strong case the rbi will start easing. one of the key reasons why the rbi had been holding back was monetaryent that the transmission in india is lower than anticipated, especially on the way down. -- all theent's plan reforms of the banking sector have now improved under it. changes, it is now imperative to cut rates and allow the economy to benefit from oversupply. david: we have to leave it there. thank you for coming area -- for
>> i am a alisa parenti washington. you are watching "bloomberg technology." the president spoke today in wisconsin in his second visit to the state to sell his tax plan. he said it will cost them a fortune. fortune, and rejected claims that the democrat will benefits the rich. this is the first congressional action on gun legislation since the mass shootings in las vegas and texas.