tv Bloomberg Daybreak Asia Bloomberg August 12, 2018 7:00pm-9:00pm EDT
yvonne: we are live on the asian headquarters. welcome to "daybreak: asia." defending turkey. accusing the u.s. of waging war on the economy and undermining the lira. the worstcy suffering since 2001. ramy: from bloomberg's global headquarters, it is just past 7:00 p.m.. not begain says it will used in the worsening trade war. kevlar continues to make headlines. paid by into the go private plan, but there is also a lawsuit.
good morning to you. looking, depending on where you are in china, russia or turkey, it is a maelstrom of tariffs and sanctions. the currency and bonds comes safe haven buying heading into developed markets. a lot of people are trying to make heads or tails of what is happening. right now we are getting those about trade swaps and the limits for the turkish lira. u.s. marketat the closed before we get into currency reaction. they were down across the board.
currency is really what is the roller coaster. right now, 1191. in 13 months, but the fear of contagion was hitting the euro. 113 there. the turkish lira is what we are all watching. their --strengthening 6.3% strengthening. also with new restrictions on russian businesses, the ruble is also weakening. the weakest in two years. yvonne: it does not see much there is a quick fix. contagion is the buzzword these days. a look at how we are set up across the board when it
comes to equities. starting things down one third of 1% in wellington. features pointing negative when you take a look at the nikkei. down half of 1%. we have seen the brunt of this selloff and the volatility picking up. in theseeing this dollar-yen. , opening up on that level. the offshore renminbi is quite interesting. some good news. delivering higher against the dollar with the offshore renminbi. actually, that seems to be hitting a bottom. we were getting close to eight two weeks ago to see a little
more stabilization. take a look at the bond markets. withw that on treasuries the exception of italy on friday. we were down about five basis points on friday. saudi arabia fund is in talks investment innt tesla as part of elon musk's plan to go private. told it is now exploring how it can be involved in the privatization deal. talks began before the controversial go private tweet. mightation over who finance it. elon musk under pressure to explain his tweet. we are told they are not
interested. intend to revisit the issue. president trump has again taken to twitter to criticize a company he once held as a true american icon, harley davidson owners. most companies coming in our direction, including harley competitors. a really bad move. bloomberg has been told they are trying to make china holds purchases for the coming winter to avoid potential tariffs. chinese president xi jinping might be willing to suffer some pain. the third-largest buyer. standing forjapan
reelection as leader of the democratic party. -- about three quarters of lawmakers would back him for a third term. they and whatnge he sees as a longshot bid. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ramy: let's head to our top story, which is turkey. limiting transactions with the country. president lashed out at the u.s. over the weekend, threatening to find new alliances and new markets. what else did we hear? the president spoke three
times today. he wrote an op-ed in the new york times over the weekend and continues to talk and talk. every time he talks, it unsettled the market more -- he hasrategists ruled out an agreement. he really does not know how markets work and what we are seeing now is coming home to roost, the very centralized government that he has put in place. kind of sidelining the country asked. and that this is the outcome of that. we have seen a spike in emerging andets, currency volatility the slide in the lira. nobody knows when the end will,
or what the endgame really is. how much concern is there about market contagion at the moment #there is a big difference between what the market is saying and what is coming out of the trump administration. >> the markets speak for themselves. trumphington, president really is comfortable with chaos. you see that on a number of occasions. it does not seem like he would be concerned about this. an interesting story on bloomberg over the weekend about -- seeing it as possibly an outpost of america .irst policy at some point, with
so much volatility and emerging markets and other markets, the u.s. is involved in some the disputes. it could be a negative thing for the u.s. markets. i think that would get the attention of the administration. the thing that trump does not want is to have stock market as we come closer to the midterm elections go lower. we are comfortable for now, but that might only go so far. yvonne: thank you. let's take a look at the ripple effect across emerging markets right now. thank you so much for talking to us. at the time of this financial crisis that we are seeing at the moment, what do you think the president can do at the moment to get turkey out of this crisis?
what is he willing to do? the first question is easy to answer. the willingness comes a little later on what he should do. liraelloff in the turkish and everything turkey is merely due to two factors. one is concern about the administration and all the stability ramifications that come with that. inflation.ckle inflation running almost twice as much. that kind of onshore policy, things that are more pertaining to turkey could help. he could take a step back and bureaucrats and administrators to carry out the
policy. on the international front, what markets are also selling off, fears of sanctions tightening and turning inwards. these are the things that we could do. yvonne: in terms of the spillover effects -- hold on. let me bring up a chart. the volatility that we have seen in emerging markets has risen compared to the developed nations that have stayed relatively subdued. we have known for a while about turkey's problems. how do you think this would be? is the selloff about turkey or more about strength of the dollar? that is a good question. we could probably handle this in a modular fashion.
big holdersen the that have been under a lot of duress. , so the bigey markets are wobbling. it did not help that argentina and so on -- but these do not help. the stress is quite different. we are seeing the effect of turkey. rising inflation were policy is not catching up. it explains some of the nonrelated currency. that is interesting to watch. notreal contagion has been
distinguishing. that is something we hope to avoid. ramy: where do you see emerging-market currencies here? we have this terminal chart. stalled over the past month or so. do you think we will see a rebound? >> we will see a little bit of a rebound, but we are very clear that it is not due to a sudden outburst of euphoria. it would be a tempering of the dollar. -- as we getat into 2019 and market offices on winding hikes, that is a new bottle for 2019. we could see a little bit of relief.
as a weapon. our china correspondent tom mackenzie is watching this in beijing. is this a change in guidance from the abuse -- the pboc? tom: ittom: -- tom: it underscores what we have been talking about. one line was saying the monetary policy should ensure that there is a balance between tightening and easing. said, they stressed he irrigatione massive the way they described it. challenge,cing this ensuring that those get cap under check.
it is a balance that is tricky but they are reaching high quality growth. , they will the yuan not step in a must there are massive fluctuations. yvonne: if the focus is supporting growth, how does this affect the credit environment? data out aboute new loans. that was interesting. it was up about $91 billion year on year. particularly out of this what was of interest to the infrastructure sector. it came in at 25 billion. that was a noticeable pickup.
industrial production and resale is expected to pick up. it will give an indication of how much emphasis they are putting on the growth environment. still with us out of singapore. a lot of data to look ahead to. when it comes to the policies coming out from china, do you think this is a net positive or a negative for the growth outlook? i think it is going to be a positive, but we bear in mind they are buffeting. no one is really going to be impressed with the overall growth numbers. it will be that
above expectation. it will be interesting to see how they rebalance. infrastructure as well. yvonne: tom mentioned that the july data could potentially hold up quite well in the face of increasing risk. are we in for some downward surprises? >> i think they capture some of the concerns. things that -- they do not pick up the new industries as well. they do not pick up things like
.&d activity that is probably where you see some of this coming through. two reasons why the data could look stronger. coming a little slower. now it could be people frontloading ahead of the tariffs kicking on -- kicking in. consensus,ng at the the estimate for retail and industrial production is set to rise. what might we be able to imply if the numbers actually come in -- as expected? losing credit conditions in
china, so this should allow some pickup in retail coming through at him point that will be closely balance. you would see naturally, the investment numbers would come much slower. whatever weill get have seen from the earlier half of the year. industrial production will pick up. the real dilemma would be as we get towards winter. china with some of the winter shutdown for some of the industries. whether they can offset that remains the question to be answered. harshould depend on how some of the tariffs impact. ramy: the yuan has been falling for nine weeks in a row. goldman sachs is saying that it might be the end of the period.
what you think about that? >> i think we are on board with that. we released a report in late june saying the renminbi is not a weapon of war for them. certainly, we think that china is going to step up if they can. below three. that explains many things, why did not step in preemptively and aggressively because they do not want to squander. for put in the measures budgeting forward. -- we think that this should subside. broad-based very dollar strength coming through. we will defer back. we think it should stabilize.
you think it will go above seven? >> no. we think it will stop level 47, along with the policy. they do not want another harsh selloff. ramy: do not forget our interactive tv function. you can catch up on past interviews and live into any of the functions that we talk about. the counterpart of the conversation by sending us instant messages during our shows. check it out at tv . this is bloomberg. ♪
kong director lee. a cash bids was announced in june. it requires approval from australian regulators who in 2016 rejected the infrastructure bid. ramy: general electric working with anchors on the possible sale of its power conversion business. it is part of the plan to restructure by slimming down. about $1.5tch billion, well above the $1.2 billion they paid for it. the sale process could begin as early as next month. yvonne: oracle has been named in a lawsuit accused of lying to shareholders. oracle engaged in collusion and -- coercion and threats. students lost money when stocks plunged in march after a disappointing report. ramy: we will ask why the
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7:30.: good morning, dealing with the aftermath of the weekend. here we are. 7:30 in new york. markets closed down .7%. worst fall in&p's a month because of geopolitical tensions floating around. i am ramy inocencio in new york. yvonne: i am yvonne man. you are watching daybreak asia. let's get to first word news. ros: president erdogan has defended the turkish economy, accusing the united states and others of waging war on his
country. he said there is no sign of a downturn in trade or tourism but no inherent economic reasons for collapse. the lira had its worst weeks in 2001 talking about government policies and the widening spat with washington. >> you are going to sacrifice your relationship with 80 million people for a pastor with ties to terrorism, but we will do at the law dictates. you cannot make turkey bow down by ordering us around. iran said it will stand with its neighbor. the foreign minister ruled out talks with american officials at the un's general assembly next month. washington's ambassador to london is calling on the u.k. to support president trump's revised sanctions on iran rather than stand with the european union. a chinese company will
take a stake in their gas drew.ts after total with -- withdrew. spent $46 million on the project by may when it that had to withdraw and could not stand the waivers of u.s. sanctions. nasa has launched a spacecraft that aims to fly closer to the sun than any mission in history. the solar probe lifted off from cape canaveral on top of the delta heavy rocket. it will touch the edge of the corona. it will reach solar orbit in november and make 24 close approaches to the sun over the next seven years. and to paraphrase at movieline, critics will need a bigger boat. the film about a 20 meter shark took the top spot. raked in $44 million in the u.s. and canada, beating
mission impossible, slender man and black clansmen. critics are split 50-50 on the meg. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. chin.osalind this is bloomberg. yvonne: more on what we should be watching as trading gets underway. our global markets editor joining us so far. what do we do now, or what we know when it comes to the situation in turkey and potential spillover effects in asian markets? do you think it is more knock on effects or a sideshow? with i think the set up first arrived, it was basically we had another pronounced slide in the lira. that kind of filter through to the strength in the japanese yen and the euro, extending losses from friday. that was on the back of the
weekend, comments from president erdogan that he would not start to do things investors are looking for but to stabilize the situation. that has changed with the move by the banking regulator to impose limitations on transactions in the lira and former and -- foreign currency. from what we have seen as a result is a pairing of risk off attitude that we saw earlier in the morning. the lira has pared some of the moves against the dollar. the yen has eased back. the euro declines have paired. atspeaks to this as being the moment a relatively contained situation to turkish and em assets. that is where the bulk of the deterioration in sentiment is. the question is whether this move from the banking authority in turkey is the first of a series of steps investors are looking for to get to grips with
the crisis or whether this is a small move, and then we go back to the rhetoric heard a lot -- the president has been putting out. that is the critical juncture we are at. we are not setting up too bad in asian trading at the moment area the losses are limited to the lira and emerging markets. ramy: big questions for turkey but maybe not asia. adam haigh, thank you. the u.s. dollar rally in -- that is the view of the biggest public hedge fund, and that is in contrast to other big hitters like morgan stanley and wells fargo. we have the story. why does man group expect the dollar appreciation? reporter: man group believes there is further strengthening for the dollar mainly because of the effect of the trade war. tariffs, itimposes
says there will be a spillover effect on other countries including from the european union. it believes if the euro, which makes two thirds of the dollar index, declines, that will further support the u.s. dollar. .an group is not alone if you pull up a chart from the library, what it shows is other speculators such as hedge funds are actually betting on, on a further rally in the u.s. dollar. what it shows is while the bound has been relatively in the last month, speculators have the most that bullish position since february 2017. yvonne: man group's views, some of the biggest financial firms,
they are calling it a peek. why are their views so different? reporter: morgan stanley and wells fargo and j.p. morgan, they really believe that this rally is pretty much exhausted. a lot of the good news that has supported a rally of more than 6% since mid-april like high treasury yields, higher interest ,ates, economic growth stimulated from the u.s., that is priced into this rally. we will have to see what happens. in the short-term, speculators seem to have gotten it right given the rally in the dollar on friday, following what was seen in turkey. yvonne: thank you. our cross asset editor joining us from sydney. coming up the latest in taking
this is daybreak asia. i'm yvonne man in hong kong. ramy: i am ramy inocencio. let's turn to the opening bell, and tesla likely to dominate the headlines. a sovereign wealth fund and saudi arabia could become a major investor in elon musk's plan to take the carmaker right of it. tesla is facing two investor lawsuits. bloomberg's su keenan is here. su: a lot of pressure to push the stock either way. let's talk about the possible ending. we have learned from people close to the matter saudi arabia sovereign wealth and, also known as the public investment fund,
has built up a stake of 5%, under $200 billion in tesla. the way tesla has traded has a lot to do with the questions about where their private funding might be coming from. couldarabia's involvement possibly be the answer to taking the electric our maker private, as elon musk has tweeted out he intends to do. people close to the matter say discussions are at a high level, but no commitments are set. we are told according to people who have asked not to be named that this investment is a strategic way for the biggest crude producer to hedge against oil. we are told the discussions began before the controversial august 7 tweet that we find out is the subject of these lawsuits. we found last week that tesla has spoken to softbank a year ago.
we now have confirmation from people close to the matter that those talks faded because of issues of control and because there was concern about competition for tesla's electric car, the fact they had not reached the mass production talked about, and softbank has already put money into gm future cars. all of that again raising the question of who will be funding possible buyouts to take this company private as elon musk has said. yvonne: certainly they need deep pockets. let's bring it back to the august 7 tweets, which triggered two lawsuits. tesla and elon musk are being sued by investors who allege this announcement was designed to ambush short-sellers. are the claims justified? su: there have been no comments
from tesla. the billionaire cofounder and ceo of tesla as well as the company itself, charged with manipulative the stock. if you look at the way the stock traded, there was a significant bump up after this week, and it is the focus of the lawsuit. let's look. 53was august 7, and it was a character tweet that basically said that elon musk was considering taking the company private, and the keyword in the tweet was funding had been secured. we had wording on that, it would be great -- there you go. funding secured. according to charges in the class action suit, the facts that funding was secured was mentioned as part of the announcement is viewed as material and viewed as bumping up the stock. it jumped as much as 11%. back,ately after, it fell
and speculation grew heading into the weekend where the funding is coming from. a group lookeded into a number of public announcements from tesla, sparked by the august 7 tweet. there is a concern by the sbc we are told whether these announcements were to give up news or for some other purpose. heavilygoing to weigh on the stock. the issue of whether funding was secured and when, likely to be key in any lawsuit going forward. ramy: so much up and down with tesla as we have seen in the share price. thank you. let's get more on this. joining me is car lab founder and president eric noble. there is a lot of hope if you are a tesla shareholder, but if you are a short seller, there is a lot of headache. let's start with saudi arabia's
possible role with the pif. what do you think? eric: sovereign wealth is not new. we can go back to malaysian sovereign funds for many years being the majority shareholders in a privately held -- sports carmaker out of england. we have had sovereign funds in support of ownership of aston martin and mclaren cars. and then on the privately held carmakers side, a competitor to u.s., karma in the wholly-owned, privately by a chinese entity. this sort of ownership of specialty carmakers is not unusual. what is unusual is the size, the size of investment needed, the losses. this is not just some sports
carmaker out of england, not to denigrate those other brands, but tesla has been a darling of wall street. the number of public shares outstanding and the value make this an altogether different animal. ramy: one of the latest lines, masayoshi son saying they are not interested. after talks faltered the last time around, it is not a surprise. it is not. the trouble is not that they are sinking outside investment. it is at this point a lot of the funds would have to cover negative cash flow. that will make this particularly difficult. maybe tesla waited too long to affect this. a year ago in hindsight would have been much better timing for this. the cash burn if you will, not just the model three production which we hear a lot about, but support flagging other models
will figure into this. the question investors have to ask is, are these funds going to go towards future capital to build future wealth, or are invested funds going to go towards cash burned which was extremely high in the last quarter's? most recent announcement, cash manywas lower, although people on the automotive side, it was manipulated by tesla post payment towards suppliers that made numbers look better. no matter how you cut it, they have a cash out that is very heavy. what would this investment be funding? is that forward planned and for research and development, to crush this try along for another year? yvonne: either way, if it does happen, doesn't ease -- does it
ease cash concerns to help tesla grow when it is more nimble? eric: it would. course,o difficult of and i am not a psychologist, so i won't try to analyze the behavior at the top of tesla as an organization, but what we know is at the current rate, this is not a sustainable operation. the trouble is if we go back historically, it is not historically sustainable either. this is a company that has never been profitable. the cars that itself are not profitable either. there has been discussion in the last several months of renting up -- ramping up model three production. but losses occur on ever units sold, ramping up production will not solve this. the thing to remember is there is a different market for ev's than five years ago. all the majors, mercedes-benz,
audi, bmw, porsche, general all of these, many luxuries, will come to the inket with competent ev's the next months, and all of them have gasoline powered vehicle sales that are profitable to subsidize what will be inevitable losses on ev's. let's summarize that and the other carmakers are running and can afford to take losses. tesla cannot continue to. yvonne: i am still curious, why make an announcement like this where the board seems to have okayed it? do you think elon musk wanted to see how investors would react, or is it away to one off the short-sellers? eric: he has been very concerned about short-sellers, and his percentage held by them of course, but one thing musk is
good at is staying ahead of things. this was a good way to test the appetite. the company is very attractive. it has become the most successful new luxury car brand in decades. its global stature is fairly high, so there is brand there. there is a lot of equity. luxury markets love the product, the buyers love the product. sort of dangling this out to the market and seeing if there is investment interest from sovereign funds in a lot of ways looks smart, particularly when you have increasing pressure from wall street for some sort of returns or stanch the cap flow burn. ramy: but now he is facing lawsuits from that tweet. factual or not factual? is it being probed? [laughter] eric: probably the best way to
characterize mr. musk is on racing terms, we call it the ragged edge. his actions really have supported tesla's share price for years. that can be a double-edged toward but for investors, any equity they have in tesla, not based on the company's financial performance. i have talked to major investors who have said it is not an investment in tesla but an elon musk investment. he drives the share price by staying in the news. we saw this last week. he made that announcement and drove share price. why was it? hard to read. ramy: we have a story about tesla killers, jaguar, porsche -- is the appeal losing its luster for tesla? eric: i think the brand is
appealing. the problem is technological. tesla doesn't have any technology that is dispensable. that doesn't mean it is not enough of a good car. ev's are very mature, worked out and any automaker that goes to a material one supplier community can get the same controllers and promoters and deliver in the same package. the same problem for tesla is tesla has to make money doing that. ,o other carmaker selling ev's they have got to sell to make regulatory demands. they will subsidize ev's. tesla has to compete against all of the world's automakers, subsidizing where they will take losses to capture market share. that is an onslaught, and it is imminent. the $420eal quickly, price tag he has thrown out, is that a lowball amount, does it
justify where they will be? eric: i will avoid any for 20 jokes, but -- 420 jokes it, but it is overvalued. i think by a factor of 10 relative to how they perform as an actual automaker. tesla isen debate if automotive or technology. as long as musk can continue to keep people thinking it is a tech stock, those numbers are possible. the business numbers don't sustain it, in the end it is a car business. we bend metal, weld it together, put tires on and send it to dealers or that is a massive investment and a low rate of return. musk is in the car business, welcome to the car business, for hundred $20 a share will not be supportable. if you can get sovereign funds to buy out investors, i think
they could happily feel they will whistle past the graveyard, and their investment was justified. people that invested early were reported. -- were rewarded. it was not sustainable. ramy: a fair point. thank you very much for your analysis very let's do a look at the stoxx trending on the bloomberg universe. on the web, for a lucky few, how the there is plunge is giving luxury shoppers in turkey for a huge discount. agent:r white house complicity with the trump administration. on tictoc, why they say taking a plane is easier than stealing a car. we will read stories trending on the terminal. this is bloomberg. ♪ mberg. ♪
yvonne: we are counting down to the market open in japan, south korea and australia. the big focus is going to be on turkey once again going into the full-blown crisis. we will look at potential fallout. seems like for now asia, the meltdown, relatively contained. we heard from regulators they will be stepping in and imposing [indiscernible] we saw the lira pare back losses. we are set up for a choppy session. s&p futures, the nikkei down. s&p futures also on the low. the fx has taken the brunt of this. see more pain to come or some relief when it comes to p.m.. we have -- to em. we have a reporter to join us on that. also talking about last week. what was achieved with [indiscernible]
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>> it is 8:00 a.m. in hong kong. asia." to "daybreak asia and pacific markets brace for decline with big growing concern about turkey. erdogan says the u.s. is waging war and undermining the lira. the currency has suffered its worst week since 2001. >> from bloomberg's global headquarters, it is just past 8:00 a.m. on sunday. in a bid to avoid potential trade tariffs. tesla continues to make headlines.
saudi arabia may buy into the go private plan. softbank is not interested. yvonne: we have to talk about turkey. we have singapore's gdp numbers. the final data number we govern second-quarter. worse than expected. 0.6% quarter on quarter growth. the 1% priorff print we did see year on year figures also missing the mark. 3.9% growth for the second quarter. economists were expecting 4.1%. we talked about the headwinds reliant citye state like singapore. certainly they are facing
domestic as well as external threats. ramy: interestingly, looking ahead to the total growth forecast for gdp for 2018, they did maintain that 2.5% to 3% rate. checking quickly with singapore dollars, not seeing too much of a reaction. we are trading at 1.37 and change. we will call that flat. let's get the first word news now. erdogan has defended the turkish economy accusing the united states and others of waging war. there is no inherent economic reason for the collapse of the lira. the currency is recovering after its worst week since 2001 on concerns about government policies and the widening gap with washington. saudi arabia's sovereign wealth fund is said to be in talks about a significant investment in tesla.
the public investment fund has built up its stake about 5%. it is now exploring how it can get involved in privatization. before the go private tweet last tuesday. speculation over who may finance the -- withlivening elon musk under pressure. we are told softbank is not interested. they held talks last month -- last year about investment, but do not intend to revisit. haltpany in china may purchases to avoid potential tariffs. it would stop u.s. shipments. it's just chinese president xi jinping may be willing to -- to avoid backing down.
china is currently the third largest buyer of u.s. lng. donald cap has taken to twitter to criticize a company. harley davidson moves production abroad. companies are coming in our direction, including harley competitors. a really bad move. moved overseas to beat the presidents trade tariffs. dayal news 24 hours a powered by journalists and analysts in more than 120 countries. this is bloomberg. yvonne: what we have been seeing here of course is the fallout from turkey. the lira off record lows. certainly the sentiment is hard to turn around. ramy: we will get to turkey. it is about sentiment right now. quite a bad start to equity
markets following what was a risk off session on friday. have a look at the gap on the nikkei. similar losses we are seeing in australia. in south korea as well. s&p futures lower in the monday open. 22,000 on the nikkei. -- ifhould take is below i'm not mistaken, that should take us below are 100 day moving average. it is not that clear, but have a look. let me zoom in. there is your index. first time i believe in a couple weeks trading below that. follow that closely of course. have a look across the treasury marketeer. when you talk about yields abms, up until a couple weeks ago, it was higher yields for em.
negative four em as well now -- for em as well now. goldman sachs saying if you are worried about spillover from turkey, look at russia, other e.m.'s, not as much. , the biggestms drop in e.m. currency on friday since the brexit vote in 2016. watch this dynamic closely. have a look at currencies. at euro-yen and celery and as a factor of risk aversion. -- and dollar-yen as a factor of risk aversion. it is hard to imagine the scale of this graph. that is 550 all the way to seven. we actually broke seven early.
we are trading at 653. have a look at the spread right now. in a lot of ways it is not very liquid out there. quite a blow in spreads. one last thing before i go. is your function on the currency. at 12 month forwards. 834 on the lira's. if they don't really come out be in bigr, we could trouble. they need a massive rate hike is what a lot of people are saying. a lot of things to follow here. ramy: thank you very much. checking the markets before the asia-pacific open. meanwhile, the people's bank of china has said it will not use
the yen as a weapon in worsening trade relations. it also ruled out strong economic stimulus. our china correspondent is watching from beijing. is this a change in guidance? >> i think this is a central bank trying to clarify the communication around this marginal shift we have seen to a looser monetary policy. ruling out two things that would have concerned economists. the one --erating they are not going to weaponize the yuan. heard from ago we the top policymakers at the top of the government suggesting in articulating regulations around asset management, around corporate bonds, around increased stimulus and funding for the infrastructure sector, the such blank -- central-bank
saying this is not contribute to a massive stimulus. has this minefield of balancing the need to ensure there are no bad loans or reducing the number of bad loans, but also ensure the credit is going to corporate corporate's that need it. monetary policy should ensure you have a balance between tightening and easing. it is that line that suggests you are not going to get massive stimulus. they have policy tools at their disposal they can use, also saying they're going to increase the amount of activity and competition within the financial sector here and saying that long-term, achieving high-quality growth is going to be arduous given this environment. yvonne: we know with the pboc now with the shift toward growth, how is this affecting the credit environment? regulators are encouraging banks
to lend more. should we expect the stock of credit to accelerate? >> we are seeing that come through with some of the data even as banks here have told -- annag there is still has said banks are still uncertain about the policy environment and therefore not passing on as much liquidity and transform that into loans they could be. we have seen the new you and loans to get. they came in at 212 billion. that was an increase of 91 billion year on year. you also saw on the ground terms of yuan loans to the infrastructure sector, you're going to see stepped-up support. you saw those come in at 25 billion u.s. dollars. more dates tomorrow in terms of -- those are expected to look healthy. it is going to flesh out to the degree policymakers are moving toward progrowth stance.
we also going to get broader credit dan -- stance. it is clarity on this edging move from china's policy makers toward a more supportive environment. the banks want that clarity as to investors. maybe the data will give us more transparency. yvonne: how we are going to track the size of the stimulus, of course. thank you, tom mackenzie in beijing. turmoil in turkey sparks concerns of market contagions. a turbulent open for asian stocks. it has been pretty contained so far. on theater, more spillover effect from the lira's meltdown as erdogan insists he will not step down. ♪
talking about, the turkish lira's decline has sparked concerns not only among emerging markets, but also the spillover into european banks. let's get more on this from the head of asia research. good to speak to you again. let's get everyone up to date in terms of where we are. last week the lira size worst fall since 2001. 6.8.we are at folks are saying in terms of asia spillover effects, that could be muted. >> that's right. i think the direct transmission effect from turkey to -- from turkey to asia is limited. there is not a lot of direct trade or investment between asia and turkey. nonetheless, asian assets are not expected to be totally immune. we have seen weakening pressure
on asian currencies on friday. expect that to continue some watch -- somewhat today. a lot of the impact on asian currencies and asset prices is in direct. the european bank exposures to turkey -- we have seen the euro come down sharply. risen to allar has one-year high. dollar strength or euro weakness is the main transmission channel into asian currency. >> should investors be on the lookout in some short timeframe for opportunity here? >> given that asset prices have been beaten down quite sharply, ,ven before this latest episode we have had quite massive declines in asian currencies and equities over the past few months. valuations are starting to look attractive.
on our measure, in some of the currencies, severely undervalued such as ringgit. i think we need to see at least some stabilization. thate investors feel comfort to get back into some of these. yvonne: what we have seen in asia fx overall for the last 10 weeks has been declines. even before the turkey story. it seems like we have seen quite a bit of weight on these asian currencies overall over trade concerns. the big question is whether this is just a turkey story, or is there more about strength of the dollar? >> i think we still have a backdrop where the fed's hiking interest rates in reducing their balance sheet. global environment of reduced liquidity, we can expect
pockets of stress to pop up here and there. on top of that, the trade war is not helping with depreciation in the yuan. the discomforting thing is we have not seen any concrete signs trade tensions are set to ease anytime soon. we still have a period where we can expect some volatility and turbulence ahead. once we can get some resolution or easing back of some of these tensions, we can expect to see value emerge for some of these currencies to rebound. after all, they reached levels where they are starting to become very effective from evaluation point of view. we are still some way off from a catalyst that will instill confidence in us for investors to come back into the market. slide.ontinue to see the it seemsk at euro,
like we have seen a bit of a correction now. should be expect stabilization at these levels? think they have done most of the depreciation we can expect to see. i look at the dollar, the key level that i think would be very difficult to break. ofen that there is a lot pricing to the yuan, we need further material escalation in trade tensions from here in order to see the yuan we can beyond that. i think the chinese authorities have made it quite clear with the reintroduction of the 20% requirement and also recent that they- commentary are getting uncomfortable about the extent of weakness in the one. we have probably seen, if you like, the worst of where we
expect the yuan to get. maybe some stabilization from here. suddenly we do not expect the yuan to get caught up in the troubles of turkey because it is a very different set of circumstances there. ramy: you are echoing what goldman sachs is saying about dollar yuan trade. jpmorgan is saying donald trump may sell dollars as a weapon in the u.s. trade war. while one has been rising against the other, has almost been the same percentages from your today. what do you think about this -- from year to date. what do you think about this? of call ina point terms of expecting the u.s. to intervene, something they have not done for a long time. you start to get massive overshooting the u.s. dollar, especially what happened in the
mid-1980's, maybe we could see some kind of cutback agreement where the g7 or g20 gets together and decides to engineer weakening in the u.s. dollar. i think we are a long way off from that. if you look at the dxy, has broken 96. it is well below the peak of over 100 just over a year, a year and a half ago. interveningthe u.s. to sell dollars, i think a long way off from that happening. yvonne: we have central-bank meetings this week. indonesia central-bank certainly in focus. we have seen these rate hikes since may not do a whole lot to reverse the decline in the rupiah. do you think central banks are right to extend their currencies? or more risk at the cost of growth? banking, they of have a mandate of rupiah stability.
they are willing to satisfy some near-term growth in order to maintain stability in the rupiah. rupiahr view, having a that is stable can do more to foster growth and inflation. in that regard we are expecting a hike of 25 basis points met when they meet this week. that is to ensure the rupiah can remain stable. thereport widening in account deficit in the second quarter. clearly the widening deficit, hiking interest rates and sentiment around emerging markets fuels -- feels somewhat fragile. it is important for the bank to maintain a very attractive real interest rate in order to attract foreign investors to keep the rupiah stable. yvonne: thank you. joining us from singapore this morning. who mayead, details on
ramy: welcome back, this is "daybreak asia." yvonne: let's return to the tesla privatization saga. on the one hand we have saudi arabia's sovereign wealth fund discussing a major investment. on the other hand we are hearing softbank is not interested. lots to chew on. our chief asia correspondent is looking into this. steve, we are talking about -- what more do we know on the softbank side? >> so much for a slow news cycle for summer. i go way to seattle, there is a hijacking of an aircraft, now the tesla saga.
you mentioned saudi arabia started talk about that. elon musk is trying to come up with tens of dollars for this go private plan he surprises late -- surprisingly tweeted. you look at the usual suspects. you look at the sovereign wealth fund of saudi arabia, which has accumulated upwards of a 5% stake. you have to look at softbank. they have always looked at these kinds of technology. they have invested in a number of different automobile companies and new technology. they had talks with elon musk in 2017. but we are hearing from people close to the situation saying no thank you. we are not necessarily interested in revitalizing peace talks. a number of reasons why. billione invested $2.5 in gm's, autonomous driving unit crews. strategic top of
investment they have done in the chinese ridesharing company. uber.ooper -- ramy: no surprise after talks failed last year. that still leaves the saudi's sovereign wealth fund in the picture. under 5%of their stake, your $2 billion, what are the details? >> this could potentially make sense, that they would like to , asto that nearly 5% stake well as a hedge against oil. that would be another way for the public investment fund after accumulating or building up this nearly 5% stake, now, again, the price tag is huge for elon musk. to have an investor -- like that is critical. number ofwants a different investors, not just one or two cornerstone investors. against theack backdrop of these lawsuits,
following this august 7 tweet. again, musk saying funding had been secured. that might have been premature. this is a saga is going to go on. ramy: thank you very much. you can get around about the stories you need in today's edition of daybreak. bloomberg's subscribers can go to the terminal. it is also available on mobile. you can customize the settings so you only get news on the industries and assets you care about. yvonne: coming up next, japan trade talks set to continue. we will discuss how they can find the middle ground. we saw those talks here, a lot of threats to the u.s. potentially on auto tariffs. it certainly is going to be hanging on shinzo abe's shoulders. can he give some concessions without losing political capital
yvonne: it is a: 30 in singapore. you still see a bit of sun. gdp growth missing the mark. half an hour away from the start of trading there. ramy: you are watching "daybreak asia." the first word news now. >> singapore's economy grew at a slower pace in the second quarter than projected as construction slumped. 0.6%xpanded at a rate of against a forecast of 1.4%. risks are now building as regional supply chains come under strain because of a u.s.-china trade war and a
stronger dollar. say shinzom japan abe intends to run for reelection. thenikkei news says decision was announced at a party meeting and lawmakers would back him for a third term. the former defense minister says it is a longshot bid. iran has condemned u.s. moves against turkey. the foreign minister ruled out talks with american officials at the you when general assembly next month. washington's ambassador is calling on the u.k. to support president trump's sanctions on iran rather than stand with the eu in backing the nuclear deal. china's cfpb will take aftere in a project renewed u.s. sanctions.
a news agency says it will become the lead partner in the project. it has spent millions of dollars on the project by men when it would have -- by may. probeas launched a space that aims to fly closer to the sun that any mission in history. the solar probe lifted off atop mission to touch the edge of the sun's corona. it will make 24 close approaches to the sun over the next seven years. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: thank you. more now on turkey and the worries there. deepening turmoil, the lira fell down. mliv strategist
mark cudmore joining us from singapore. we did see the regulators step up to try to impose these limits on swaps. to what extent does that relieved the pain for the lira? what is the best case scenario? mark: i do not think it will really relieved the lira pain for long. there is very little real trade going through. dollar turkey to trade at 724 earlier this morning. on bank platforms going to retail customers it did trade slightly higher. the real high on the charts has been a spike. there has been very little real trading. overall it is important to remember there is no natural level in the lira that shows value. the lira will not bottom out until concrete measures are taken. either extreme rate hikes, 10% plus, or capital controls. erdogan has made very clear he does not want to go down either
route which means overall lira weakness will continue this week. there is no natural stopping point. whether it is 10, whether it is 12, do not worry about the level. what could be really see ? there were sources saying even if we see some drastic measures from the central bank to hike rates, any kind of threat from the u.s. with sanctions could quickly offset that. in terms of policy levers, what is possible? to be reallykey threatened by sanctions to the u.s., they would have to be sanctioned on debt. that would be quite an extreme measure. the u.s. has not gone that far on russian debt just yet. that would be an extreme measure i cannot see happening anytime soon with certainty. it is important to note sanctions are very targeted and not that bad a problem for financial markets. it is the signal they are sending. the fact the u.s. is putting
sanctions on a nato ally. if there is a very large rate hike, 10% may not be enough. someone said they may not have -- they may have to do 15%, 20%. argentina did 40%. overall if they do hike rates by an extreme amount, or capital controls, that will work. it does not matter what happens with tensions with the u.s.. that is just hitting somewhere that is vulnerable already. ramy: in terms of the spillover affect, it seems that is contained for asia. for europe it might be a different story. mark: i think so. what was interesting about the evolution of thinking over the weekend, 24 traders over the weekend, there is very much this evolution that friday they were thinking this was very much an idiosyncratic turkey story. we knew this was coming.
therefore there would be little contagion. most traders were selling the broad risk aversion we saw friday. turkey would hike rates or capital controls the rest of the word -- world could go on to rally. there have been increasing fears at the fact that erdogan has been so stubborn. they are getting worried there will be broader contagion. just from the fact traders did try to fade friday shows people are now offside. markets are vulnerable in the short-term even if this gets finished overall this week. cudmore in singapore, the latest coming out of turkey as well as the lira. you can follow more on our markets live blog on the bloomberg at mliv . run down ofa market one click and there is commentary and analysis from bloomberg's expert editors so you can find out what is affecting your investments right
now. petrochina is said to be planning a temporary halt purchases of liquefied natural gas from the u.s. to avoid tariffs. unites tell bloomberg the will increase buying from other countries or swap u.s. cargoes. our energy reporter joins us from tokyo. how will halting these u.s. imports affect petrochina? >> that's exactly what everyone has been asking me. the big thing that is going to be happening is china's going to mitigated as much as possible. the person i have been talking to and different analysts have been saying it would not be hard for china, which imports 5% of their lng from the united states, to swap and minimize costs. their strategy might be to hold off any large impact on the company. >> expanding this to other chinese companies, do expect
them to follow suit? >> that it's exactly it as well. china has said they might start at 25% tax on imports of u.s. lng. if petrochina is worried about this, it could be every other chinese ire as well. we might see them follow suit. the trade war is only escalating. the chinese government is putting pressure on producers to make more gas at home. with the pressure to increase might bemport less lng from the top and we might see this spread to other companies as well. yvonne: you mentioned 5.7% of u.s. lng is important to china. if that is gone, where the companies or countries that could benefit? >> some of the folks i have been talking to say may be bigger capacity from countries like australia or qatar could go to china if they were to get rid of their u.s. supply. there is a bit of oversupply in
the market around the world. it would not be hard for china to get cargoes if they needed them. thank you, our energy reporter joining us from tokyo. more on the trade were between the u.s. and japan. agreeing to meet again next week to work toward a comprehensive deal. the two sides did not come to a agreement on how to pursue a deal, but the u.s. still searching for a bilateral agreement and japan pushing the u.s. to join the tpp. us, the japanese investor to the u.s.. he also served as japan's chief negotiator -- tell us what was achieved in this first round of talks cfo >> thank you for having me -- round of talks. >> thank you for having me.
you do not expect this will finish in a day or two. it is just the start. negotiators the have to sit. that did not bring out concrete results. i think it was anticipated. it was very good. does the u.s. hold the upper hand? they seem to be dangling this threat of auto tariffs. the prime minister actually avoids some type of concession that hurt him politically. beenthink the u.s. has thinking of the auto tariffs and the japanese would like to avoid it. that is the reason we have to be meeting. --hout that, japanese is not if they make any discussions with -- we have to avoid it.
minister i think has to be very mindful about agriculture. this is a very important area for japan. line have to find a fine where it is a win-win. maybe we do not come to agreement before the september meeting. we have to show we're making progress. think the united states has -- has the midterm election in mind. we know what japan has to do is stay on the line.
i would characterize the strategy as correct, consistent, and cool. c's.hree that is my word, not the japanese government. ambassador, let's game this scenario out. if things take a worse turn for japan, what could possibly tokyo do? think -- i'm not in government anymore. has been government for 40 years. -- i have been in e-government for 41 years.
eight -- to talk about a doomsday scenario would bring about that prophecy. the u.s. saying we would take retaliatory action, i do not think we should be discussing that at this stage. ramy: one thing that is interesting -- is that you spoke about promoting bilateral trade. the whiteis a word house prefers. multilateral of course is japan. in this an implication of a baby step toward donald trump's position? >> that i do not know. i cannot say. i know bilateral has been used. but in what context i am not sure. we're discussing bilaterally. what is important is that in ss oh -- ffr, free,
fair, and reciprocity. if we change to focus on the , it will be different. we have to keep that element always in mind. the united states and japan. japanese and americans have always negotiated with each word, noh -- in my no take for granted. americans should not take us for granted. japanese should not take american generosity for granted. we have to find some way out of the situation. quickly, is the
goal still for japan to get the u.s. back into tpp? is an official position. not many people think that would happen quickly. we will continue to say that. if we make a bilateral agreement, that is the surest recipe to push americans away from dvd -- the tpp. we will continue to discuss. the aim is to bring back the united states to tpp. politicalat is the strategy as well. not too many people think that could happen within a few years or so. we will continue to pursue that. on top of that we will be discussing bilateral with the united states. yvonne: thank you.
yvonne: this is "daybreak asia." let's do a quick check of the latest business flash headlines. hasinese workspace provider raised $120 million in a funding round. the money will be used to fuel expansion. the startup wants to more than double its space and plans an ipo in three years. last year its new york-based rival secured a $1 billion investment from softbank. yvonne: oracle has been named in
a lawsuit. the case said oracle engaged in coercion and threats to sell its products creating an unsustainable model. the investor leading the suit got money after stocks plunged in mark -- march. ramy: officials have identified potential problems and local authorities have taken measures to maintain stability. regulators will help with mergers and asset sales and will crackdown on what should walk terms malicious exits. p2p lending platforms collapsed in july. yvonne: let's turn to the investment taking sector. is seeing women make their presence felt in a male-dominated sector. something unseen elsewhere in the world.
sophie kamaruddin is in kuala lumpur speaking to the women committed to the top -- who made it to the top. >> good morning. to get that insight, we sat down cimb, and tworom other executives. it was clear in our conversation that their intelligence, determination and wit is what helps all three women rise through the ranks. they also raised three kids each. the access to domestic health, government support for women to excel in the corporate world. they were honest about their struggle, dealing with splitting time between work and home, or
being -- beating their own glass ceiling. >> we're lucky to be in malaysia. we have support for family members as well. that helps you remain in the workforce. in european countries, home health is a lot more difficult to come by. >> malaysia is lucky in that we all have a lot of domestic help. we all have family networks who are always willing to help each other. that actually helps a lot in a woman's career path. in life -- >> they also spoke to the willingness of their bosses to have confidence in their abilities to take these leaps of faith to allow women to follow in the footsteps of the first
women i.b. ceo in malaysia. what they also made clear is that meritocracy is very much at work, which means the right candidate regardless of gender. one shared an anecdote on that front as well. describing what it means for a malaysian ceo to make it. she shared an anecdote from south korea where they were surprised she was the boss. let's bring that, up this graphic to visualize that. 257 global financial firms are tracked by industry research, in of female leaders -- malaysia, women hold 27% of the i.b. jobs. that is a zero in south korea and 3% in the united states. ramy: 27% for malaysia.
is a not being done to make sure more women aspire to senior leadership roles in investment banking as well as under in -- other industries? the top level, all three women agree government support has helped as well as internal pushes by corporate. they also a plot government's drive for corporate's to appoint more women. it cannot be a statistics game. listen to what they said. >> the government has played a good role on a crowd pushing for women. in pushing for women. complained about a specific statistical requirement , therefore making it look bad on women because it is just a question of, i need 30%, i don't care who it is. i think that is actually
degrading to a woman. think is key about this requirement is it sets the tone. it sets the message to the market that women are as capable openhey should therefore it all up. >> the government is trying. have put in these gender diversity programs. to a certain extent, it is pushing that. progress is being made in the investment banking world. when it comes to other industries, that may not be so much the case. labor participation rate in malaysia is relatively low compared to other countries in regions -- and regions. pulling up this graphic right here, today there are more women in higher education than men, making up 62% of public universities due to its even --ugh they make -- university students even though
bloomberg markets: asia, let's do a quick look at how markets are trading. nikkeithe board, the 200, the kospi down, a bit of a negative handover from the u.s. on friday when markets closed down the most in a month. yvonne: we are below we have seen in the session. it is early days. take a look at equity futures in malaysia, following the trend here. that miss ono get gdp. keep it here, markets coverage continues next.
rishaad: currencies at the for today. the lira and during its worst week since 2001 as erdogan accuses washington of attacking an old ally. the yuan making headlines. china saying it will not be used as a weapon in the trade war. sterling matching its longest streak of daily losses. adding to the strength of the dollar. >> also coming up, tesla continues to make news. saudi arabia made by into the go private plan. softbank says it is not interested. thiss