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tv   Bloomberg Markets Asia  Bloomberg  August 16, 2018 9:00pm-11:00pm EDT

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rishaad: asia pacific markets gently positive, trade tensions eased slightly. dollar holding declines, the yen flat, the lira paired three days of gains. washington warning more sanctions in the park line. investors optimistic about trade talks. china willrump says have to give up a lot more if a deal is to be done. i am rishaad salamat in hong kong. this is "bloomberg markets: asia." ♪ rishaad: getting through to the
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upside, taking a look at markets coming on stream, singapore, taipei, and kuala lumpur. there we go. i lift up their. up there. riseikkei trading at .5% thus far. we are under 30 minutes away from the start of the session. let's bring in sophie kamaruddin. what do we have? >> despite dark clouds gathering in hong kong, futures pointing higher for chinese stocks, tracking gains elsewhere in the region and the overnight jump for wall street. bearscatalysts, yuan getting squeezed, encouraging equity bulls. morgan stanley seeing more deterioration for asian emerging
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markets, cutting the target for the csi 300 i june 2019. june 2019. citing upside momentum and the dollar, copper declines, and global crises. as china and the u.s. prepare for trade talks at the end of the month in washington, d.c., that offering some news for cheer today. rishaad: sophie kamaruddin there. we will continue our chat about trade tensions and bring in jodie snyder. trump wants more from china. does this still appeared to breakthrough in any way? it is the start. we are talking about not high level officials like previous talks. this is a feist commerce
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minister and that undersecretary of the treasury, so not the same level of talks. it is just the beginning. it looks like they are trying to broker a truce. rishaad: talks about talks. >> that is what it appears to be. it will lower the temperature, certainly on the chinese side. their markets reacted well to this news yesterday. president trump is trying to make this about china wanting to come to him, to set up this kind of optics. rishaad: give us a sense of the politics behind this. where are we between trump and his chinese counterpart on the rhetoric? >> trump is continuing fairly harsh rhetoric. not acceptd we will a deal that is not fair to us. we expect them to come to the bargaining table with something. he said he was pleased there would be talks.
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on the chinese side, they appear to be moderating the rhetoric to being more open to talks into making the case that they are opening markets to other countries and other places in the world, and they welcome the chance to do this with the u.s.. rishaad: what else do you think could play out here politically? >> the midterm elections are part of the backdrop in the u.s. and changetwo months to go until the november 6 elections. president trump wants to continue his america first rhetoric and does not want to be seen as being weak on china, yet he recognizes the tariffs could continue to cause pain in parts of the country, including the farm belt. soybeans have been a casualty. play that carefully, keeping america first rhetoric at the same time not wanting to cause more economic pain. rishaad: thank you very jodie
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snyder there. trump,tick with donald on turkey.the heat he has tweeted the united states will pay nothing for the release of an innocence man -- innocent man. here is our managing editor dan kincaid. easing up, at least. >> they are digging in, put more sanctions on turkey. they see this as something they will not back down on. you have a test of wills between trump and president ever want. neither one looks like -- was to look like they are giving in. as of now, there is no end in sight. rishaad: we have heard from the finance minister and capital controls am a but he has been avoiding tough questions in news conferences. about the reassurance of the market?
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what are we getting out of this? >> he is saying he wants a balanced policy mix, but he is hamstrung the solution would be to raise interest rates, which is not on the cards. there have been calls for them to do that. they have inflation soaring at the moment. that traditional policy prescription of hiking interest rates, president erdogan is not a fan of. there has been the lack of details. rishaad: a lack of action fundamentally. >> he said they want to save money and tighten the budget. investors are waiting to see if that will materialize on the fiscal side. rishaad: we have ankara on berlin and paris, not sure of some of the old allegiances, i suppose they don't want to see articularly angela merkel meltdown in turkey. >> that's right.
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they have had their own tensions between germany and turkey. it is europe's biggest economy. they don't want to see a meltdown on the doorstep. there is no talk of aid yet. turkey does have a $15 billion atar, butom powder -- q that will not last forever. there is a sense they need to adjust their physical that fiscal and monetary policy. rishaad: thank you. our asia government editor there. let's move along and look at the other stories making headlines. here is first word news. >> the aussie dollar weakened as the rba governor said he would prefer a lower rate, making his semi annual testimony to lawmakers. he said a weaker dollar would help the economy by stoking inflation and a stimulating growth. he added it would be problematic if it was depreciating in a crisis situation but overall
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would like to see it weaken. >> i don't addict the currency. it is a difficult and to do. a lowereen saying exchange rate would be better than a higher one. the reason is that a lower exchange rate would lift inflation, getting a closer to the target, and also stimulate the economy. >> the latest r.b.i. minutes show policy makers may cause after back-to-back rate hikes. the governor says domestic growth looks reasonably strong, but warned of the escalating trade work that could hit investment and exports. the rupiah is the worst performing major currency and sank this week on the crisis in turkey and a widening trade deficit. workers from bhp suggests the industry will avoid a damaging strike. members union said the
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received the latest offer with "complete satisfaction." voting will finish friday. they reached an agreement after three months of talks to avoid a repeat of last year's strike. or'sec asking tesla direct what elon musk told them ahead of the tweet last week it about a potential deal to take the company private. the wall street journal cites a source saying regulators are investigating whether elon musk intentionally misled investors. tesla is suing the government of ontario for canceling electric vehicle incentives. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. bloomberg. still too,, contingency plans, taiwanese tech suppliers in these rising trade tensions. and, discussing the yuan
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other emerging-market currencies with jp morgan as the dollar rises and the central banks tighten policy. this is bloomberg. ♪ erg. ♪
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rishaad: this is "bloomberg markets: asia." i am rishaad salamat. set to bonds looking come out of this week's turmoil with minimal damage. the 10 year yield sticking around 3.5%-three .6%. guest, and is our sophie as well. sophie is looking at signs that could point to more appetite for onshore bonds. >> yields elevated after being driven higher by the deleveraging campaign. we have the yuan being compressed over time.
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foreign buyers have stayed the course for 17 months straight, even as the spreads have narrowed. after the trump overnight in the yuan, on this chart you can find in the gtv library, jumping the most since 2011. is this a bump in the road, or have we turned the corner? i want to pose this question. in the forward curve, three-month and 12 month, are they still looking cheap, or would this make you rethink your view? >> in terms of forward curve movements yesterday, that is interesting. market forces have driven it up. the past five years, we are near the lows. , there is still fair amount of optionality for hedging costse
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are at the cheaper end of the spectrum. you could put it can dollars. if you believe valuation is sufficient and seven is a big psychological handle, that would imply valuations are nearing attractive levels. >> this is why foreign investors are still looking to buy in. we have seen a pickup of 34%. >> outstanding has increased over the past few years. that is where we see the most interest in terms of the flow. the fort outstanding is 6% 2%,all, and that number is 3% higher compared to the prior year. , thelk about the offshore onshore hedging costs of the fort curve is negative. thatvestors have access,
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is potentially attractive for investors to consider. >> where are you finding opportunities? >> we look at it from a total return context come one of the key expertise that we have. in terms ofun lower the strategy, which makes sense that you do have a federal reserve that has continued to hike. the conviction is on the lower beenor us, but china has one of the most interesting duration positions. that is one of the more attractive opportunities. 6.88 94, the reference rate against the dollar. tell me about that. it is in line. reference to yesterday's close to provide a guidance towards the fx rates. it is within our expectation, so on the stable end of the range. have 6.93 intraday.
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>> yes. if you were hedged on the investors side and look at renminbi year to date, it has declined 5%, similar to europe. most asian currencies are down by the same percentage, so we are seeing regional pressures. renminbi specifically, if you think you have an investment thesis where it does not break seven,think you then it is somee should consider for investment purposes. rishaad: the thing is sweet to have a currency caught in the crosshairs, yuan -- euro weakness coming dollar strength, and that is where it is caught. >> it does sound like you are in a negative perspective or spot.
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from a total return context, chinese government on's in the first half have returned a positive 2%. in the first half have returned positive 2%. asian indices come up bond indices, are down over 4%. china bond investments don't come across as that negative to me. you get outy can if of the sovereign and hit the corporate space. especially outside of the aaa comfort zone. ,> over all, generally speaking default rates on that segment nominally sound high come that in the context of china gdp is not that high. we tend to focus more on the cbg's and the policy banks. it does not change the way we look at those. from a somatic perspective -- a perspectiveee magic
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-- we started to see interesting developments about fine-tuning or selective policies that adjust to segments of the economy. plus credits and so on and so forth. what we are seeing is fine-tuning within the overall bond markets. rishaad: what happens looking ahead? we won't get cuts come a we will perhaps,y easing, rrr a bit on the fiscal side. how does that affect credit? >> has liquidity easing or rrr cuts continues, the easier the liquidity function, the better it is for the environment. credit growth and deleveraging don't sit hand-in-hand together. is that factore
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at play. at the same time, as liquidity easing measures come through -- for example, we have is that see onshore plus credit spreads tighten. most rate markets onshore have come down significant late -- significantly. the overall liquidity measures to provide some degree of easing benefit towards the credit segment as well. that is something we should acknowledge. over time, if you expect additional rrr cuts, it will eventually find its way into the credit markets. rishaad: we have seen this policy where the regulator, the authority, allowed the currency to weaken, depreciation taking place. seven is a psychological level, not technical. given how they have been sanguine, does seven matter?
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>> it matters for onshore investors psychologically. it is not a hard level from a technical context. that is something we acknowledged. you can see there has been they arel measures considering since we broke the 6.9 level. rishaad: such as? >> the fx forward 20% requirement was introduced on sure. there was the news about the free trade zone adjustments for onshore yesterday. of perspective, there has been increasing adjustments by the policymakers. seven isthe danger is at these levels where we start to see capital flight, and that is the danger. >> generally speaking, you could look at it where there is a significant degree of foreign
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reserves that china can engage to intervene in the currency. you could say there are risks, but if you look at foreign reserve data, it has not come through in a meaningful fashion. that is not a function we should look to closely at. rishaad: what is the question you are asked the most i clients currently? >> on renminbi, where do you think it goes? that one will come up frequently. as i mentioned, you have the optionality. use that to your advantage. that his critical. you can engage in currency, if you want. the hedging costs are still relatively cheap. hedge, it is not bad to fx exposures for the china bonds. basically the capital gain potential and the carry on the
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duration side of cbg's and you are stripping the assets, that is how i would think about it from an investor perspective. rishaad: thank you so much. have a look at what is going on. talking at the moment, reserve bank of australia governor talking about 2% to 3% inflation is the right .lace in quotes it does not see an argument for changing targets currently. he expects the voluntary job turnover to increase. that is what we have. remember bloomberg users can interact with the charts using gtv . catch up with key analysis. save charts for future reference. ♪
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rishaad: you are back with bloomberg markets. the wealthiest families are $11 billion richer today. boostingales, surging, the fortune of the walton family. they collected $163 billion. to improve products, and also this drive into online orders, which came in higher. bricks and mortar under threat from amazon and others. sayingng earlier losses, soft july sales have picked up the pace this month. higher expenses there. investment in technology and logistics could affect profit for the year. the net loss is searching to the
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equivalent of $320 billion in the quarter through to the end of june, eight times more than analysts expectations. gloomy forecasts and greater than expected demand for chips used by crypto miners. third quarter should come in at $3.25 billion, $100 million short of the estimate. nvidia had expected increase sales. , the total was $18 million. a look at the upcoming trading day. here are the companies we are looking at. hang seng premarket up 1%. all china ftse futures .8% higher. the yuan's recovery taking place. 6.85. onshore, 6.88, so gradual strengthening. a couple of companies in the
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mix. swine fever could hurt this company. still 1%. ,encent after a toward week 2.8%. a miss by king -- ♪ xfinity mobile is a new wireless network
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rishaad: it is so dark outside. technology modern these cameras have. 9:29 in hong kong. counting you down to the last trading day of the week. having a look at the action. the yuan making a comeback against its american counterpart, strength after recent weakness, but is it the calm before the storm. ..13 for a yuan -- euro
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100 1087 for the yen. the yen.7 for theave relief elsewhere in part of the world. emerging markets still in bear terrain. that is from the peak to where we are. the shanghai open is upon us. the screen after a four-day decline for large caps, but still set to lose 3.5% on a weekly basis. some prospects of talks on trade talks at the end of the month between the u.s. and china. we are ignoring the dismal weather, the hang seng rising 1.3% as tencent set to snap a five day slump, gaining 3%, but one broker cutting their view on , whichck to add from buy
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lowered its price target. that brings the tally for the stock to 49 -- an good doctor gaining ground. we will be waiting on the impact of the jd.com loss. and one others company. in the currency space, the offshore yuan at that level, strengthening and adding to that overnight trump. this after the pboc set a lower fixing. rishaad: thank you for that. sophie kamaruddin. let's talk about the weakness for the yuan with our guest from blackrock, head of china equities. those this affect coverage are looking at equities in terms of other asset classes? >> the currency is an important driver in terms of performance.
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people have weak memories from the 2016 episode. when there is a market move within a short time for the see cny, people have more bearish views. in this case, we are in a different situation because i don't think the economy is that bad. a lot of the movement is about risk premium and not necessarily about where fundamentals could go if the worst case scenarios play out. rishaad: nobody knows what the worst-case scenario is. just seeing the implications here. i got this chart from our gtv library, ford's pointing higher because we have tighter liquidity. they are trying to open these gates of liquidity.
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i suppose they will have more rrr cuts looking ahead. there seems to be a short squeeze taking place, perhaps. that could settle things down nicely. how are you looking at it? want to builds support into the economy, and that comes through infrastructure and government leverage. this is not ame, replay of 2009. china has neither the capacity nor the desire to repeat that episode. i don't expect credit growth will increase or agree accelerate. in termsl be a shift of the credit source from shadow banking and act door more towards the front door, which is opening up as corporate want and ranked lending. deleveraging,g having credit growth at the same time -- >> the focus has shifted towards
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stabilizing leverage rather than aggressively reducing leverage. we don't expect there to be a massive reacceleration. they need to balance stabilizing the economy against much more reviews.ely negative there is some intervention to restore to weigh expectations for the currency. to let: you don't want the genie out of the bottle where it is a one-way bet. >> exactly. that is why we see the changes on fx hedging and so on third rishaad: this is -- and so on. rishaad: this is all well and good. we have all the geopolitics of a trade war. his that being treated seriously by the chinese? >> absolutely. rishaad: on the other side, and on the american excite have they been treated that seriously given the respective markets and
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how they have in behaving? thehat the sound -- downside risk outside the u.s. are bigger for the time being. any impact on the u.s. economy in terms of inflation are more likely to be reflected only in the second half of next year, so the risk premium has risen more for emerging markets and exporters to the u.s., and that is the key catalyst that has tilted policy intentions from hawkish deleveraging to slightly more dovish and supportive of economic growth. the key thing people are watching and what is indicative of market direction is not so much monetary policy, but what happens to consumption. consumption is not something they can control within one or two days. in the market is pricing in an
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aggressive deceleration in consumption. rishaad: partly because of manufacturing. a saw three for retail sales this week. been watching indicators closely and talking to the corporates. ,he message is still resilient but people are cautiously optimistic, thinking the some of the lower end stuff is becoming mixed or the stuff affected by lower tier property cycles. that is where people are most nervous. we don't see evidence it is collapsing, but that is the area people are most worried about because you can reverse that quickly. owners areoperty nervous, and they have a right they? haven't let's look at what happens next with not just china, but the emerging-market space. has the rot stopped?
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>> a few things could reintegrate confidence towards emerging markets. the chinese delegation has started discussions on the trade war again. i don't expect immediate resolution. china does not want to sacrifice on key strategic issues. the u.s. does not have incentive to come to a quick and dovish a solution. if some of the trade tensions, agricultural, and import tariffs ease off, that would be more positive in terms of emerging markets. premium.s that risk over the next couple of months, if credit supply improves and we see consumption numbers are not that bad, then people feel more confident, and that risk premium goes down. those would be the two key
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catalysts for china and emerging-market sentiment and performance. rishaad: earlier this week, the reason why we are seeing this rough patches because the policy mix is wrong in the first quarter and second quarter. that they have it about right, and we should see the proof in the second half. >> in the second quarter, trump completely reversed on the trade deal that stephen mnuchin had negotiated. that was the turning point in terms of people feeling like global growth and china growth might he had risk. creditincided with week data and people thinking policymakers were to hawkish. the tone was not that hawkish. it took a couple of months to change direction. policy wassay the wrong. the market perception is that it was taking a long time.
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rishaad: the policy mix. you have been quoted as saying that china should become its own asset class. isn't it? >> i would say people are looking at the longer-term potential for china. right now, china is a relatively smaller percentage of emerging-market and global indices. china his 3% in the global indices, which is underrepresented, versus gdp, economic growth potential, etc., so that would take time to emerge. structurally there is tremendous potential has an asset class. uncertainty,ime of but china getting there, the key is not reacceleration gdp growth -- no one is expecting that. the key is economic reforms and making sure the quality of growth at a lower level is higher, more sustainable,
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opening up, and that will increase foreign participation interest in the waiting in the asset classes. rishaad: which should lead to consolidation in other fields. that is the idea. where will china the in five years? >> where will china be? a morechina will be of market-oriented economy. that significant progress in terms of soe reforms, in terms of shifting to support of private sector, significant progress in terms of opening up the financial markets. that is where the policymakers are intending to go come up sometimes as policymakers have emphasized come things don't happen in a linear way. sometimes you see one window
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closing and you have to open another window. right now china is trying hard justoid one step back, but cause to stabilize things cyclically. rishaad: we have a free-floating yuan? >> fully free-floating is difficult to say, but china is committed to making further steps forward in that direction. cell phone has we don't see a significant economic collapse, global economic collapse, i think there will be significant progress in that direction over the coming three years to five years. rishaad: thank you. first wordturn to news headlines. staff itogle ceo told ands to return to china they are still merely exploratory. addressedder
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employees, saying google will not come from eyes it's in schools. reports surfaced it was developing a project for a mobile search cap that would be in compliance with beijing. president trump's military parade will probably not happen before next year at the earliest. missid it will now likely the november 10 deadline. it gave no reason for the delay. the last military parade in washington was in 1991 after the gulf war. group and talks to sell a manhattan skyscraper under scrutiny. it is tied at $452 million in the deal, which would mean taking a loss. it paid $463 million for the building two years ago and has
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been trying to find a buyer since february. investors have grown immune to economic bad news that has traditionally driven gold as a demand. that is why gold has slumped to despite turkey.rown immunea 19w , while the dollar strengthened as the fed prepares to hike again. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. rishaad: trade tensions prompting tech suppliers to consider expansion outside of china. this is bloomberg. ♪
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rishaad: you are back with
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bloomberg markets. we take a look at the chip industry and taiwanese manufacturers are preparing to move production away from china to avoid getting caught up in this trade war. our taipei bureau chief has details. what steps are they taking here? at the investor briefings, manufacturers, pegatron, companies that make everything from iphones to pretty much any laptop you care to mention. lookingd they are seriously at shifting production away from china into other parts of the world such as southeast asia, north america, and taiwan. the background is the trade war between the qs and the china -- the united states and china, and
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while consumer electronics are not part of this yet, they are preparing the ground in case they caught up in the next round of tariffs. rishaad: is this going to cause their costs to rise? to might -- it might make them competitive is the argument, so will it be worth it? >> there is always a trade-off when you are deciding where to put your investment dollars. if you are going for economies of scale, then you go for china. if you want to mitigate the to produceou want products closer to the end consumer, then you may look at producing in north america or europe or southeast asia. there is a trade-off to be had they are. chinese labor costs have been rising, and that has made the
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case stronger for moving investment away from china for a long time now. rishaad: and that was probably madehing this trade spat it more attractive to do it now. the question is what are we talking about in terms of impact? what are people telling you about the impact on the chinese economy? six largest 2017,cturers overall in combined revenue was $300 billion. that is the same size as pakistan's economy. it is not going to be a minor impact, but looking at the scale of the chinese economy, it won't be too bad and china will overcome it. these decisions to move production away from china is
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merely acceleration of a trend we have been seeing for many years now. taiwan's investment in china peaked in 2010. it has been declining as companies have looked at places like mexico, the czech republic, and southeast asia to expand capacity. e a fantastic weekend. let's look at what we have at the moment. a rising feeling for a stock that has been in the doldrums. let's find out more. good tencent friday, rising 3%. halting a five day slump and shrugging off regulatory concerns. bloomberg intelligence telling tencent may find support from its ad segment. chinese developers rising in hong kong. china vanke due to release
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earnings next week. analysts are expecting strong profit growth and improving margins. l jumping the most in two years after the purchase of a company that will create austria's second-largest mining services company. 20% as thee government has decided hit can keep its business license that was at risk amid the crackdown on the family that owns korean air. the new route approval will be withed for some time along approvals for new flights, but the stock gaining ground, up 13%. somead: let's take you to of the stores trending across the bloomberg universe on bloomberg.com. walmart's results show it is
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putting up a fight against amazon. is it putting amazon on notice? ondtech talk, and explainer a proposal to legalize marijuana in thailand. the surprise gift of free tuition for all. those are the headlines topping the bloomberg terminal. have a look at those stores trending online or on the terminal. more on the way. ♪
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rishaad: i am rishaad salamat in hong kong. that this is flash headlines. dealers in china seeking compensation for unfair sales practices that has seen them suffered huge losses the last three years.
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were madesaid dealers to stockpile cars and offer discounts to offload them later. signedeep dealers have the letter, but others did not out of fear of retaliation. volvo pressing ahead after indications from investors that it will hit the $30 billion valuation sought by the chinese parent. stockholmg will be in come up with a secondary one in hong kong. that would come at a later date. banks have been have not been asked to offer a formal filing. tesla, the trauma goes on and on. -- drama goes on and on. the sec is asking what elon musk told others ahead of a tweet to take the company private. asiae joined now by her
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autos editor. what is the latest on the probe? >> it seems the probe is .radually becoming more serious according to the latest wall street journal report, one key focus for the sec is to determine how much the board knew and when about elon musk's plan to take the company private. the focus is on elon musk's claim that he had funding secured for the potential transaction. the sec will try to determine how much the board knew, and the idea is that could help engage musk's along elon conversation with his potential investors were before he posted on controversial tweet august 7. the piunpardon upon --
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, but what might an sec investigation look like, how long will it take, and what are the next steps? >> this will take some time. the average sec investigation takes about two years. we don't know the exact details of what they are looking at, but it will take some time. tech,ill want to look at emails, phone records. then they will make a decision on who they want to depose for questioning, so it is bound to take time. another thing adding to the complexity is the fact that the four his controversial tweet, the sec was looking at his claim , production targets that he made earlier in the year. rishaad: thank you very much indeed for that.
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joining us in singapore. loads more to come. markets, andrging apparently lots of value. details on the way. ♪ xfinity mobile is a new wireless network
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rishaad: hong kong leading asia higher with investors opt mystic about trade talks. the union seeing big swings there -- yuan seeing big swings there. the white house isn't convinced. trump saying china must offer a lot more if a deal is to be done on trade. in kirky, the lira appearing gains. but washington is wanting more sanctions in the pipeline. this is bloomberg markets.
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we are moving to the upside as well. emerging markets, as etc. of course this week did -- assets. of course this week did enter badtory. what are people making of this? it is that time of the year where we see volumes a bit lower than they would be as people are in holiday. we have a ewe an which has been quite volatile. it's a situation with one eye on trade. we've also got all these other geopolitical tensions in play as well. but let's get a look at what's going on. certainly investors today have decided that the glass is certainly half full. >> that would be the case after a bruising week and a topsy turfy one at that. asian stocks are gaining ground. led higher by stocks in manila. the p.s.c. up .8%. want to highlight what's going on in hong kong as well. hung sang gaining ground as ten cent is -- tencent is set to snap a five-day slump. the commodity space is mixed. oil prices resume losses.
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sticking below the $72 a barrel mark. gold gaining some ground but still looking fairly weak after it fell below is $1,200 an ounce. i want to check in on what's going on with the currency space. we have a softer dollar that's helping lift some of the sentiment for regional currency. the korean yuan gaining. aussie, sticking to 72 zone as we heard from the governor earlier this morning. he said that there is not a strong case to move on rates for australia. lastly, looking at the offshore, we have it lower by .2%. despite the pboc setting a lower fixing, signals perhaps that the yuan depreciation has gone too far, but even then the yuan is still holding onto those overnight gains that we saw. rishaad: certainly but it is pretty much up and down on c.n.h. at least for the moment. let's get to markets like. this mark, quite big gyrations here taking place.
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the onshore yuan, certainly perhaps we're just seeing a short squeeze, if i venture to say that. >> yeah. absolutely. there's been a real big shift in here in the funding market for the offshore yuan. in particular. so i think we've seen the long points rocket in the last 36 hours. so yesterday we saw the really big move. that's making it hard to short the yuan and that's helping see the yuan strengthen again to add to yesterday's gain. i think yesterday's gain was the largest against the dollar since january last year. so it really was a big turning point. and it was just as investors were getting very excited about possibly dollar of c.n.h. trading above 7. positioning was very much the other way. there had been this acknowledgment in the market, the pboc is going to leave the yuan weakened and leave market forces dominant. people were complacent about that heading higher, especially since the broad dollar index was strengthening. so this has caught people offside. that's why i think it has some
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follow-through. rishaad: this is it. and is seven the real psychological level and the level that pboc does not want breached or is it just something that people have concocted? >> i think it's a little bit of a mixture of both. it is an arbitrary level. we tend to get excited about round numbers just because they're easier to state and they do provide this kind of psychological barrier. does the pboc particularly care about seven? probably the only way we're excited about it. it's a psychological number and they're worried if it goes above that there will be this media story around it. they know there will be financial commentary around it and that may fuel a capital outflow story. they're concerned about it but it's one of those circular things. they're only concerned about it because we're concerned about it. not because that's suddenly some detrimental level for the economy. rishaad: thanks for that.
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you can follow more on that story in the day's trading on the blog there. mark's blog. you can get a market rundown and look at some of the commentary and analysis coming from bloomberg's expert editors and look at what may be affecting your investments. let's get more on the -- [inaudible] -- and talk to adam reynolds. he's in singapore. what do you make of these gyrations for the yuan, first of all? >> morning. yeah, i think what mark just said is interesting. is correct. the 7.50 level is becoming very important. maybe because it's a round number and psychological for the mark. with the pboc and the government really starting to look like they want to defend that level, i think it's going to become a lot more important. i do think the market has been long dollar against the c.n.h. and with the funding squeeze that the government is putting in place, i think there's potential for us to trade back down to around the 6.75, 6.80
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level. but overall that level, you have to look to buy dollars again for another attempt at the 7.006789 i don't think that the -- 7.00. i don't think at all that the battle is over yet. i think the strong dollar is here to stay for a few months before the u.s. elections. rishaad: the two months and change away, i suppose, those midterms. but how do actually these trade tensions yet play into this? because we have on the one hand an equity market in the u.s. which has been trading very near to record highs and we've got one in china which is really in the doldrums. the thing is, are investors in both camps effectively taking a view as to which one -- which side is going to be hurt the most in a trade conflict? >> yeah. i guess investors are. people are very concerned about china overall. and about the damage that can be done to the chinese economy. i think the chinese stocks myself are very cheap at the current levels and i'm buying at these levels myself.
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i think that u.s. stocks probably not cheap. but i don't think we're going to have a massive pullback in the u.s. stocks as a lot of people seem to think. the u.s. stocks will probably continue to move sideways for a while longer. rishaad: you have to be careful out there, though, because they have been sold off in a broad based drop, i suppose. you have to pick value here, don't you, ultimately. how do you find it? it looks value everywhere, but the other day, you have to look at why they're cheap for a reason individually. >> yeah. i think they have been sold off as a block. i think when you're looking to invest in a dip like this, you're right. you have to look at value. one of the things to look at is the external debt of each country and in asia in general, that's not a huge problem. except for parts of malaysia where the external debt is relatively high. the rest of asia has relatively low external debt level.
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looking at thailand and perhaps indonesia, you can see some value there. rishaad: absolutely. let's not forget the trade conflict between beijing and washington is perhaps one which is broader than just china versus the u.s. because the supply chain, it's not necessarily then asia against the united states in effect. >> yeah. it probably is. but i think that overall i think they will come to some sort of rev lose at some -- resolution at some stage. cooler heads will prevail on the trade conflict and i think it's a very good sign that the chy meese minister has headed over -- chinese minister has headed over for talks at the moment. while they both try to talk up, there are reasons for both sides. to come to a resolution on this. rishaad: all of this good could turn nastier if we see a recession in china. i'm going to bring up a chart from our library here. it's showing that 15% of
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respondents suggest there could be a chance of a investigation in the next year. is that something which has been increasing, so tell me something, with that in mind, you know, maybe a recession is not going to happen but a slowdown and a fairly deep slowdown. is that being factored into the markets rather than these trade wars? > i think >> i think the markets already factoring in slowdown in growth over the next five years or so from the sort of 6.5 level down to the low 6's, maybe even the high 5's, which is a slowdown. i don't think anyone really thinks that china's going to go into negative growth at any stage soon. but i think there can be a slowdown from the growth, just as comet gets bette bigger overall, it -- the economy gets bigger overall, it would be natural for the rate of growth to slow. rishaad: ok. let's look at also some of the countries in this part of the world as well, which you think i think have been unfairly treated
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by investors. you mentioned malaysia but there's lots of politics going on there. who are you favoring in the eamericanning markets space? don't just -- not just in terms of the country but the assets as ell? >> overall i'm definitely in favor of equity space. i'm not so keen on the fixed income space at the moment. i think we have rising u.s. rates. that's probably going to continue to effect fixed income markets around the region. but i think on the equity space, i do like thailand and i do like indonesia. specifically. i think as you said, malaysia does have the political issues with the new government settling in. i think there will be good value in malaysia coming up but i'm not sure we're ready to do that just yet. and i think with the rising u.s. rates and the rising u.s. dollar, malaysia suffers because it has a higher level of external debt in the companies there. rishaad: now tech in this part of the world has been sold off indiscriminately, it would seem,
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compared to tech in the u.s., which has held up very nicely after a bit of a hiccup. is that an area you'd be looking at? >> yeah, it is. i think the tencent selloff is pretty aggressive. 30%, 33%, 34% it was down to. i think that one has been down from the highs of 45%. alibaba in the 20% highs. i think they have probably been oversold on the trade tensions. but i also think that those firms will probably not -- were probably not as undervalued as the rest of china. i think that's probably a more healthy correction than they needed to come off a little bit more than the rest of the companies that make up the charter market. rishaad: let's talk a bit more after the break. we can talk about turkey and the comsumptions coming out of that
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which have -- convulsions coming out of that that have been felt globaly. let's move along and get you to sydney and join paul allen for a look at lance for a parade in the middle of washington, d.c. here's the first word news. >> thanks. president trump's military parade will probably not happen before next year at the earliest. the pentagon says it was initially pened in for november 10 but will now likely miss the centennial of the end of world war i. there was no reason for the delay. troops participate in presidential inaugurations but the last military parade in washington was in 1991 after the gulf war. the lira gained for a third day as turkey shores up alliances amid the worsening standoff with america. president erdogan spoke to leaders of france and germany, the finance minister held a conference call with international investors. washington turned up the heat with treasury secretary steve mnuchin, warning of additional sanctions of the detained pastor is not released. the aussie dollar weakened
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briefly as the governor said he would prefer a lower rate. making his semiannual testimony to lawmakers, he said a weaker dollar would help the economy by stoking inflation and stimulating growth. he added it would be problematic if the aussie was depreciating in a crisis situation, but overall it like -- he'd like it see it weakened. >> i don't predict the currency is a difficult thing to do. but for some time i've been saying that a lower exchange rate would be better than a higher one. and the reason i've been saying that is a lower exchange rate would lift inflation, get inflation closer to the meat point of the target and it would stimulate the economy. >> the s.e.c. is reportedly asking tesla directors what c.e.o. eland musk told them -- elon musk told them ahead of his tweet last week. the "wall street journal" cites an unidentified source saying the regulator is investigating
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whether musk intentionally misled investors. tesla meanwhile is suing the government of ontario for canceling electric vehicle incentives. global news 24 hours a day, on ir at on twitter -- and on twitter. i'm paul allen. this is bloomberg. ♪ rishaad: still ahead this hour, the business of e sports and how a league of legends tournament in the 2018 asian games could boost tech stocks. the next trump targeting turkey with a threat of further tariffs. we'll get the lira outlook. this is bloomberg. ♪
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rishaad: this is bloomberg markets. president trump once again turning up the heat on turkey over the detention of an american pastor. he's tweeted that the united
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states will, quote, pay nothing for the release of an innocent man. that after the white house confirmed it is prepared to offer more sanctions. it doesn't look like either side's backing down for the time being. >> that's right. we've seen the trump administration officials saying essentially that turkey had reneged on a deal to kind of exchange the pastor, saying that the u.s. helped turkey get one of their citizens out of israel, who was accused of abetting hamas. so trump is digging in here. threatening more sanctions on turkey if they don't back down. erdogan is saying he won't be bullied. no clear way out of this yet. rishaad: ok. e heard from the new finance minister saying capital controls is something they could have done, they can also increase interest rates which is something that the president doesn't want. he's not really answering the tough questions here.
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he's not coming up with a plan. that's not really helping investor confidence. >> yeah. and investors really aren't giving him the benefit of the doubt at the moment. they want to hear concrete details about how you're going to get this under control. we're seeing inflation, something like three times more than the target right now. and if you're not going to use certain monetary policy tools like interest rates that are quite conventional, to get a lid on inflation, then you really have to tighten the belt fiscally and that's always tough. erdogan has made big ticket infrastructure projects sort of key to his rule. rishaad: so thank you very much indeed. asia government managing editor. let's get you back to adam reynolds. he does believe the worst may well be over for the turkish lira. before we start, i'm getting this shot from our library. it shows how turkey has seen its
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goal,le et in its down vot -- the volume goes nuts as the lira has been plunging. people are looking for a haven. the thing is, while elsewhere in the world, people haven't been looking at gold as a haven, they are certainly there in turkey. i suppose that just shows how bad things are getting. >> yeah, i think so. there's quite a lot of panic going, when your currency loses 50% of its value over the space of a couple of months. there's good reason to panic. and it is a proper crisis, a proper currency crisis that's happening in turkey at the moment. i personally believe that we've probably seen the worst of the move in the currency at the moment. but i don't think we've seen the worst of the economic impacts of the move that we've had so far. so i think there will be certain fairly bad repercussions from the moves that we have seen and the weakening in the lira.
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rishaad: this has just come from a total incompetence more than anything else. >> yeah. it was interesting, dan just mentioned the markets are not giving erdogan the benefit of the doubt. and for good reason. he's certainly not trusted as an economic thought leader. his views on monetary policy have been very poorly regarded by the market and so i don't think that they should give him the benefit of the doubt. certainly he isn't doing anything at this stage to try and resolve the crisis that's been occurring. rishaad: what we're talking about is a country which has lost half of its value nearly since the start of this year. that cannot leave the people there without pain in the medium term and the longer term. >> absolutely. absolutely. i do think that there's going to be quite a bad economic shock from that move for the country overall, for the growth overall.
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probably for the popularity of the government overall. that's why i think he's talking tough and probably going to continue to become a bit more nationalist, to try and turn around those views away from the economy. and to the idea that turkey's being bullied by the u.s. and hat he should not back down. rishaad: the point is the u.s. could be also, if they don't play this right, losing a massively and strategically important ally in the region, which guards effectively the black sea. >> that's right. the geopolitical importance of turkey has gone back for many, many years, many centuries even. i think it's interesting that the u.s. seems to be very much favoring saudi and the u.a.e. access at the expense of sort of the qatar and turkey access. i'm not so sure that the trump administration at least sees turkey as important as the previous administrations have.
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rishaad: all right. talking about with regards to turkey. thank you so much. have a great weekend. you can catch up with all the interviews that we do have by using the tv go function. you can watch it live or watch on the go. you can also delve into the securities of bloomberg functions that we talk about. this is for bloomberg subscribers only. do have a look at it. tv go. ♪
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rishaad: you're back with bloomberg markets. have a look at business flash headlines. reversing earlier losses caused by a blowout loss saying soft july sales have picked up the pace this month. the loss coming from hiring expenses -- higher expenses and logistics could effect profit orecasts for the year.
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a disappointing sales outlook and concern about the chip market and that it has peaked. the company saying revenue through to the end of october will be $4.2 billion at best. that's $300 million shy of estimates. if it hits the midpoint of its forecast, that will be the first time revenues failed to grow in more than two years. having a look at inindividualia here. sinking in late trade. gloomy forecast. and a greater than expected drop in demand for chips used by crypto miners. revenue in the fiscal third quarter will be about $3.25 billion. that's $100 million shy of the average estimate. invidia had expected $100 million in sales of chips to currency miners in the fiscal second quarter and said the total was $18 million. talking about the likes of nvidia, let's look at japan.
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we're heading toward the one-hour lunch break, which is just upon us. we see what nvidia has been saying here. what about the likes of some of hese japanese chip makers? >> they are nudging lower on the back of those disappointing forecasts from nvidia, as well as applied materials. bloomberg intelligence saying this could be an inflexion point for semiconductor players. earnings growth has been growing but when it comes to some of the ratios, some of the valuations, the multiples, they're not looking as strong. we have screen holdings in that space in japan. up early 23450%. also i want to highlight what's going on with sony rising. this is a company that says to date it has sold three million playstation v.r. systems worldwide. also in the wake of china's freeze on game licenses, goldman sachs said that sony as well as nintendo remain biased given their low-profit exposure to china. and panasonic gaining ground
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after confirming it will offer solar sells -- cells to buyers aside from tesla. that stock up over 1%. kyowa kirin.k at rising for the first day in three. this as nikko says the share price drop sparked a report that the nesp treatment, that won approval, that drop was excessive. so markets seem to be concerned that a generic price could be launched about a year ahead of schedule and priced at half the original drugs cost. we're seeing reversal of losses that took down the stock earlier in the week. and looking at what's going on in markets in japan, just broadly speaking. the nikkei 225 rising for the first day in three. led higher by energy stocks, up nearly 2%. financials also gaining ground, up about 1.3%. so pretty much seeing most segments on the events here but we have some weakness coming through and the consumer discretion aerospace, along with
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utilities. that segment off by about .9%. overall, looks like a cheerful friday for japanese stocks after a rocky week. this is bloomberg markets asia. ♪
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>> it's 10:29 a.m. in hong kong. i have the first look at headlines. google c.e.o. is said to have told staff that plans to return to china with a reworked search engine are still merely exploratory. co-founder also addressed employees saying google won't compromise its principles. reports surfaced two weeks ago that google is developing a project called dragon fly for a mobile search app that would sensor results in compliance with beijing. feedback from workers at the copper mine. it suggests the industry will avoid the damaging strike. the main union says members receive the company's latest offer with, quote, complete
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satisfaction. voting on the proposal is scheduled to finish late friday. management and the union reached an agreement after three months of talks to avoid a repeat of last year's 44-day strike. china's debt-ridden h&a group is set to be in talks to sell
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phil low also says he'd like to see a lower australian dollar that will help the economy and the australian dollar rather unhelpfully rose on his words. rishaad: even though inflation is subdued, lowe's still worried about it. i suppose he has to be. otherwise he'd be abrogating his
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responsibilities as a central banker. >> yes, he said in the past that he and his fellow board members are not, quote, inflation nutters, but it is something that weighs on his mind obviously. particularly globally. we hear he has -- we hear him talking about the u.s. economy running hot and in that environment, president trump is injecting stimulus and he said, financial markets are relaxed about implications for inflation, but he isn't. he could see a potential scenario where the feds withdraw monetary accommodation more quickly. he says that could have disruptive quebses and -- consequences and he's also expressed or reiterated his concerns about the trade war, pointing out just how trade eliant australia's economy is. rishaad: thanks. let's get more on what's expected elsewhere and have a look at what we got out of malaysia. g.d.p. data is due later today. let's bring in bloomberg's southeast asia economics reporter. what are you looking at -- i think it's under an hour and a half from now.
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>> yes. so we're expecting to see another easing in the growth rate for a third straight quarter. but not by much. 5.2% is the call from 5.4% at the start of the year. still fairly strong fundamentals in the malaysian economy. as a net energy ects porter, they're enjoying the benefit of strong oil prices and calm inflation. one of the best currencies in asia. so not the sort of problems you're seeing elsewhere in the region. however, it is the first days of the prime minister and there's still questions about how their initiatives will play out on the fiscal side as well as the broader economy. they have zeroed out the g.s.c. they're scrapping infrastructure projects and they're looking at this big anti-corruption campaign against the former prime minister. so a lot of questions still remain. but i think it's going to look ll right this afternoon. rishaad: it's fiscal vs. monetary policy here at play, right?
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>> yes, certainly. that's part of the equation. not much happening on the central bank front in malaysia these days. looks like they'll hold for quite a while with pretty much a balance of risk on that front. but fiscal certainly the big spotlight right now. a lot of the ratings agencies haven't moved yet but they're questioning how all these deficit measures are going to play out, all this new spending will play out, while scrapping other big projects and still finding a new replacement for that g.f.c. that they zeroed out right when he came into office. rishaad: let's look at indonesia now. the president there announcing a record spending plan to boost growth. what's hoping to achieve other than secure re-election? >> that's what i would start with, actually. staring down that april, 2019, vote, certainly you want to cushion the coughers there and announce some -- coffers there and announce some big spending measures. where he used to be more focused on infrastructure and big projects, you could hear him talking a lot more about
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difficult measures on the labor market -- different measures on the labor market. get more high-skilled workers out there. i think there's been a lot of problem with underemployment, our team in jakarta has focused on that a lot recently. so he's really focused kind of more on the labor side ahead of those elections. but he did announce higher revenues as well. so there should be some shrinking of the budget deficit, was also kind of a concern. and overall, you know, he just has to show that he's a good stewart of the economy. so a lot of skepticism around that growth rate. he came into office saying we're going to get to 7%. even though it's the best in five years, growth is still -- has still stayed around that 5% handle. there's pressure to push that up through different initiatives and this budget might be aimed at doing just that as well. rishaad: given what's happening globally and this trade spat, how does his team see the balance of risk overall then? >> they're staring down a lot in indonesia.
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they're always at the top or near the top of the list when you talk about the most vulnerable economies. especially in a week like this with turkey kind of running risk of contagion across emerging markets. so they're looking at the strong dollar and trade war risks, both highly effective or have high effects in indonesia, as well as their vulnerability as high foreign detonation. they have to kind of reassure the investors constantly, the central bank has been very aggressive in trying to do just that. and yet the rupia is still among the worst in asia. so they're very different, we're talking about malaysia, very different picture in indonesia and they've got a lot of risk that they have to factor in and they say they have factored those into this budget. rishaad: thank you very much indeed for that. bloomberg's southeast asia economics reporter. coming up, gearing up for the 2018 asian games set include apparently esports for the first time. why it could be a big win for
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these tech stocks. this is bloomberg. ♪
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rishaad: you're back with bloomberg markets. we have a look at the business headlines. citigroup has been fined for multiple infractions, including allegations that staff engaged in unauthorized proprietary trading. a practice restricted after the financial crisis. the s.e.c. says three traders mismarked positions to cover losses from unauthorized transactions. they were fired. regulators criticize citigroup for failing to conduct the decision earlier. unfair sales practices have seen them suffer huge losses. the group saying the dealers were made to stockpile cars and then offer discounts to offload them later. it also says that while 78 dealers joined the protest, only 35 signed a letter over fear of
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retaliation. staying with things automotive. volvo reportedly pressing ahead with plans for an i.p.o. later this year. there are indications from investors that it will hit the $30 billion valuation sought by chinese parent. saying that the primary listing will be in stockholm with a secondary one in asia. probably hong kong. the report also says banks have yet to be asked to launch a formal i.p.o. process. forget your goggles, forget area running shoes. and when asia's top athletes gather in jakarta next month, expect to see game consules and beefy headphones. that's because the 2018 asian games have included esports for the first time. making it the largest showcase yet for computer gaming. as a precursor to the potential inclusion in the 2024 paris olympics. the athletes will compete for
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bragging rights across six titles cl -- titles including activision, blizzards, dark craft two. goldman sachs estimating that esports-related revenue will more than triple by 202 and sees this as growing up to a $3 billion market. some might say they're being fairly conservative in that regard. a large chunk of that, as much as 40%, of that $3 billion will come from the sale of broadcasting rights as the audience for events is estimated to grow to 275 million. that's a key challenge and another key challenge will be packaging the content. so it's interesting for nongamers to watch there as well. let's have a closer look at all of this. goldman sachs japan consumer electronics internet and game sector analyst here with us. thank you very much for joining us. this has a huge potential, this particular activity.
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tell me about it. >> thanks. we believe that esports is going to become one of the fastest growing segments within the games business. as you mentioned, we're expecting $3 billion revenue by 2022. largely coming from the media rights. at the same time $3 billion is actually in the context of hundreds of millions that games industry generate every year, it's not a very big portion. actually the bigger portion could be the publicity impact that esports could have on game titles. so as you mentioned as well, it's very important for games to be packaged so nongamers would enjoy watching ghimes and this would actually turn these nongamers into potential consumers for these games. while broadcasting, sponsorship, etc., is going to be a big opportunity, this is also a bigger publicity opportunity as well. rishaad: absolutely.
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so which of the companies most likely to benefit in the short term, at least? >> in the short term we're focused on companies with relatively competitive titles. which has been enjoyed by consumers for a long time. so amongst companies that selected for the asian games, activision blizzard, that's titles from tencent as well as japan, there's a soccer game from economy, and also i would add if you look at the games which are being viewed by esports watchers, there are and s like street fighter, others. so relatively established i.p.'s which are quite competitive, could become interesting under esports. rishaad: these asian games are going to be vital. it's the first time we'll see these gamers next to some of these athletes. swimming, etc. judo. a huge opportunity for them.
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i suppose they have to make this accessible for nongamers and package it up that way. that's one of the challenges, isn't it? >> yes. i think packaging is one challenge. another challenge that i would refer to, especially thinking of adoption in paris, right now this asia games is a demonstration. in order for this to become an official sport in the next olympics they would have to resolve the question of intellectual property rights. can a single company own rights to a sport, would be a question that both game industry as well as sports organizations will have to tackle before this becomes an official medal sport. rishaad: the curmudgen like me goes, hang on, is this really a sport? because those gamers are not athletes. the sport that they partake in
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is virtual. the content is owned by a corporation. it doesn't sound exactly like, let's say judo, pole vaulting or anything like that. >> i do believe that this question of whether esports is really a sport, i think a lot -- your impressions would change when you actually see all these esports athletes practicing. so these athletes -- rishaad: athletes? >> they're putting hour and hours on practicing -- yes, practicing the game. so in terms of this athlete side of esports, it's actually very similar to a physical sport. rishaad: well -- ok. be that as it may, but just recently we saw with tencent, one of the of the reasons why its share price took such a hit was because of the regulator changing the way that they are looking and licensing games.
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effectively a crackdown on new games. how is that likely to effect his segment? >> i believe we don't know -- we don't have enough clarity around this china regulation headline. that we see. there are several issues happening at the same time. there's the headlines of monster hunter, which -- to some extent it looks like a technical glitch and also there's the news flow on freezing of approvals. but this looks like it is happening in conjunction with organizational changes to the chinese regulators. i think there's several things going on at the same time. and it's sort of dangerous to combine them all, to turn them into a trend. rishaad: ok. what about japanese game makers? do they see this as an opportunity, if this ban should continue for any length of time, and how do they capitalize upon it and who capitalizes there in
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japan? >> great. for the japanese game companies, the exposure to china is surprisingly small. this is partly because of the way the chinese games industry is structured. because the foreign game companies cannot directly publish games in china, and also difference in tastes between japanese and chinese consumers make it difficult for japanese games to be simply translated and become commercially successful in china. that means japanese game companies have historically been getting a fairly small percent of the game revenues as royalties. for companies like nintendo or sony or capcom, the exposure to china is quite limited. i do believe that this trend will be similar in the future as well. rishaad: let's just finally ask about this inclusion in paris 2024, though. how optimistic or otherwise do you see esports being earmarked
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as a medal and not a demonstration sport at that stage? >> i think we have a lot of things to work on. so, this is -- my confidence will be contingent on how much of these issues could actually be resolved. so i'm still undecided about this. i think this has to do with packaging as well as intellectual property, to simplify. rishaad: maybe a medal for the product of human endeavor ran than a sport at the olympics, it might be different. thank you so much and have a great weekend. goldman sachs japan consumer electronics internet and game sector analyst. ok. let's look at ping and the doctor. having a bit of a good day of it. or is it? i think it's on the turn. let's look. >> that is the case. we are seeing it reverse again. we saw earlier, now down over
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5%. extending losses for a sixth straight day. falling further away from its i.p.o. price. the company did post a loss in the first half. albeit narrower than a year ago. but it did not propose a dividend. wuxi are also seeing biologics sliding. the chinese contract drug manufacturer may be caught up in the wider fallout from the vaccine scandal in china. we had a biotech sliding as well. losing 80% since july 13. and health care companies today on the c.s.i. losing over 2% this friday. and lastly i want to highlight korea aerospace won the biggest -- one of the biggest gainers on the asia pacific index, gaining ground. this as its bidding with lockheed martin with a project to replace the u.s. air force's aging training jets. just one of the performers to date in asia. rishaad: thank you for that. let's tell you about breaking news, wherever you are.
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and gregger, le going to pit their best chance against one another. you can access those charts on bloomberg. who should we start with? i think we're going to go with michelle. what have you got? >> ok. everyone's talking about turkey this week. but here in e.m. asia we're focused on two most vulnerable economy, india and indonesia. i want to start off saying these two have a lot in common. high foreign debt relative to reserves. they're using those reserves to help stabilize their currencies. and their currencies are the two worst in asia. so a lot there. they also have stable growth and benign inflation. this would all kind of seem to lead to you believe that they have similar interest rate strategies. but my chart is all about having a tale of two central banks. really you've got the rupe moving in similar directions but have a similar bank in indonesia that has hiked four times for a
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total of 125 basis points versus an r.b.i. so it just goes to show that in this risk environment, you have to do a lot more homework here on how they're tackling the strategy around the risks. of course a lot of headwinds these days, that we're looking out for. but i think looking ahead, you can expect bank indonesia to keep to be aggressive, true to their word, whereas the r.b.i. is not inconceivable that they would hold through the end of the year. and they also have different rate strategies in terms of the r.b.i. having a more focus on price stability, whereas indonesia is constantly focused on currency stability, even above growth. so i think these two, just another lesson in terms of digging deeper beyond some of the fundamentals that we're looking at. rishaad: of course that throws up another question as with about the efficacy of monetary policy in countries of a certain economic development. be that as it may, let's bring in gregger. what have you got?
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>> hi. so what you're looking at in this chart is the volume of terminated chinese m&a deals mapped against the chinese yuan. so as psych from the chart, in -- as you can see from the chart in 2015 and 2016 you had a lot of terminated deals and this was almost a policy tool that beijing used to shore up the currency during peard of capital flight. now, it's quite likely that they won't have the same latitude to do so this time around. there simply aren't as many deals outstanding. that's because people have gotten the message. fewer deals are being proposed and as a result there's not as many of them getting across the finish line. and the targets have changed as well. you're getting fewer trophy assets. you're not seeing the purchases of european football clubs, luck rijo tells, -- luxury hotels or hollywood film studios in the same way. at the same time sellers have become more weary too. probably because regulators in
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their home countries are getting more sir come speck. the u.s. for sure but also increasingly germany for the first time this month was looking at a chinese accessing deal to block. all that means that the authorities in beijing have one less avenue to defend the yuan but it also means they might not have to worry so much as well about capital flight. rishaad: i'm just going to follow you on one thing on that. i don't see the correlation there too clearly. but i do see the correlation with michelle. so i'm going to give it to her. i wish you good luck next time. because i know what you're trying to get at there. thanks for that. this is bloomberg. ♪ retail.
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♪ for emilym selina and chang -- in for emily chang. this is "bloomberg technology." coming up in the next hour, tesla has been subpoenaed by the u.s. regarding elon musk's efforts to take the company private. what's next for the electric carmaker? jd.com's very bad day. it missed second-quarter financials.

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