tv Bloomberg Markets Asia Bloomberg October 26, 2016 9:00pm-10:01pm EDT
♪ kong.is 9:00 a.m. in hong i am heidi lohan in hong kong. this is "bloomberg markets: asia." lun in hong kong. this is "bloomberg markets: asia." ♪ samsung third-quarter profit falls, but beats estimates after the note 7 smart debacle. manages more profit, but the outlook for big players remains gloomy. third-largest bank
beating estimates despite lenders facing higher costs, ow margins, and rising that loan charges. a after claimstat of wrongful dismissal and write-downs. a look at how this asian trading day is shaping up. big week of earnings, particularly when it comes to the chinese session. not breaking that profit, but a lot of concerns over bad loans and a mounting pile of debt when it comes to the chinese banking system. we will take a look at how they trade when trading begins, but in the meantime, singapore, taiwan, and malaysia starting trading. let's get over to david. right, we talk about the bank, how do you find the
balance between profit growth, planning for future bad debt? environment, rate cb not thet from o most ideal spreadsc,. . equity markets not very interesting, a lot of macro risks further down the road, traders reacting to earnings, so you are getting a checkerboard across asia-pacific markets. markets like south korea sold off quite heavily yesterday. samsung under pressure given earnings as well. let me flip my pages here. there's nothing much to say when it comes to the equity markets. currency, more consistency, the u.s. dollar still pushing up. have a look at the ringgit, down .4%.-
the other currency pushing to the downside is sterling. have a look at that. 122.25. you look across other majors as well, weakness coming through for the euro, 109.04. op, ae dollar, big p little bit lawyer. i want to mention something about oil. this is something you need to watch closely. have a look at brent prices. signal, what this show shoe is we are calling it the secret signal of oil. it measures the spread between , the different contracts
time spread, if you will. this measures the spread between the price of the december contract and what you have next june. what it shows you is that further down the road, contracts further down, much more expensive this time around, so there is an incentive created to sit and store oil instead of selleck. that is something you want to watch. thanks, david. some breaking news out of south is out withotors its third-quarter results. this is what we are looking at. 12.7lidated sales of trillion won. throughg profit coming just shy of expectations, 525 billion won.
net profit consolidated coming in at 664.4 billion won. tg seeing reaction in the share price. this is south korea's second-largest automaker. shares car platforms with hyundai motors and terms of getting costs down, and has significant ocean are in china and europe. we will try to get a breakdown of those earnings when they become available. meantime, let's go over to sydney, where paul has first word news for us. paul: thanks. with lossesres after cut full-year revenue and operating profit forecast. the success of pokémon go failed to offset sales on its game platforms. nintendo sees profits of $288 million, one third below previous estimates.
investors were underwhelmed by of the switchunch console. tesla jumped after its first profit in eight quarters. was $.71 a share compared with the loss of $.58 a year earlier. the bloomberg survey estimated an average loss of $.54 a share. it has cut borrowing facilities by $180 million and its giant battery factory is on track to produce batteries this year. operating profit came in at the equivalent of 249 million dollars, just below the forecast. service ising popular in japan, but missed estimates. operating profit was 47 main dollars, less than $49 million analysts were expecting. sales also fell short.
profit for southeast asia second-largest lender was 943 million singapore dollars, $670 million. income from wealth management jumped 34% from year earlier. its nonperforming loan ratio climbed by a third to 1.2%. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. haidi: bank of china with a small rise in profit, but nonperforming loans means the out of looks fairly dreary. how is it looking? the specter of nonperforming loans is still out there. bankingin the chinese
system at a decade high, and keeps on rising, howbeit incrementally. bank of china third-quarter net income of two .5%, so a profit gain year-over-year in the quarter to 41.8 billion yuan. also through the nine months this year, net interest margins to narrow to 1.85%. in those nine months, up 13.4%. the only silver lining was that in the third-quarter the increase was narrower than the previous three months, so they seem to be trying to get a grip on this, but the big banks and government are trying to rid the system of bad credit. thanks for writing office bad loans. they are also selling that bad credit to asset management companies.
managers also packaging it up insecurities. the cabinet earlier this month approved the debt for equity swap getng people to buy that equity. down through bank of china, inmate, they sold securities backed by 1.2 billion yuan of nonperforming corporate loans. also in the backdrop is that in china, some of the least risky loans or mortgage loans. a lot of banks had been focusing on mortgages, which sounds counter intuitive because what we saw in the united states was subprime, but lenders are pumping more money into mortgages to try to sustain the profit growth of a record 10.2 trillion yuan in loans, almost half of that in home mortgages. haidi: what could possibly go wrong? it sounds familiar. bank of china getting things
started. the other big lenders, a similar pattern. china construction bank out later today. tomorrow, the rest of them. analystsull year, surveyed by bloomberg are expecting a 2% fall in combined net income for the big five banks. the big animals. haidi: thank you so much for that, steve. we will talk more about the loanse banks and the bad crisis or impending crisis perhaps facing them. we have jonathan corniche from fitch ratings. let's move to the top story of the day, the note 7 crisis had an impact on samsung with profit fallings of 18% three september. we have been going through the
numbers. there is little surprise that the note 7 has earned a whole in earnings. rosalind: if we look at the crossed in the third quarter. some breaking news from an e-mail statement from samsung which says -- it talks about jye, the vice-chairman of the current chairman who had been hospitalized after having a was nominatedjye to the board of directors, and this morning, sure orders were to vote on that nomination. aat would allow him to take lot more responsibility and make strategic decisions, be involved in those, things like samsung says, and lection will allow him to take responsibility. samsung commented on the changes, saying it is seeing
significant changes to quality assurance and changes are aimed at regaining customer confidence. back to those earnings for the third quarter, we can see that the net profit for the third quarter came in at 4.4 one , higher then estimates of 3.9 trillion. had to after sam's son pull its note 7 smartphone. -- samsung had to pull its note 7 smartphone. the company didn't say mobile unit operating profit was 100 billion won. that is of record low for that unit, and down from 2.1 billion dollars a year earlier. it sold 89 million handsets in but seasonuarter,
sex down .25%. the nikkei 225 holding flat as well. an uninspiring session from wall street overnight. south korea of 5.2%. a lot of earnings to get through in this part of the world as we digest those. let's get a quick check of the latest business flash headlines. a park will reopen in australia on friday. significanting a earnings impact, with 34% of revenue coming from team parks. the ceo would not answer questions about a performance bonus approve this morning. >> i'm not going to discuss anything to do with that at this stage. i don't think it is appropriate under the circumstances. four people died recently, and we are all -- this is not
something you deal with very easily. i do not want to discuss transactions at this point. i'm not getting paid $1 million. china's biggest offshore oil and gas producers sees oil around $50 a barrel for the rest of the year and says it will remain cautious on output and spending despite revenues plunging 15% in the third quarter. said third-quarter numbers will be better if oil stays above $50. estimatesst-cutting have not helped it to offset lower prices. following a fell 4% disappointing holiday sales forecast. apple is facing its own setbacks. it has pushed back its much-anticipated air pod to
ready the wireless headphones. no technical reason has been given and no new shipment date announced. the markets.k to our next guest says relative valuations remain attractive. with discuss that and more the head of investment from citibank singapore. great to have you. i want to get started with this call you have on emerging markets. do you think emerging markets have further to run? >> sure, what i will say is that all three asset classes, investors have been faced with a value trap over the last five years. this year has been a good year for emerging markets. we have been overweight the sector. notrationale is that we do feel the u.s. dollar will be significantly strengthening. feel the commodity complex is
strengthening, a big plus for emerging markets. from about uh wishon's perspective, things look good. moved upmarkets have 15% in the equities space, but we feel there is further space to ron as long as those i discussed are in place, u.s. dollar not significantly increasing in value, commodities remaining stable. i am interested in your call on the banks. surely that is selective in terms of which banks are not facing these systemic risks that may be plaguing european banks of the moment. and terms of asia, what are you liking? that ini will say general we like banks because from a valuation perspective, they are attractive. we feel that risk premiums have and you arebally,
right, large, systemic banks -- one would be well advised to stand back from. we do like banks that are more local and regional in nature. in the united states, we like banks as we see rates potentially increasing. again in asia, we like banks with more of a local or country focus. haidi: i want to move on to the u.s. elections, you have a 70's percent probability of a clinton presidency. are the lessons learned from polling leading up to brexit give you a little concerned that markets are again underestimating the potential for a downside risk? great point. if you look at current polling, you will see hillary clinton holding roughly 85% to 90% chance of winning.
assigning onlye 70% chance of winning because we have learned lessons,'s rushing the vote on grexit. we feel there may be a section of the united states that will pull the lever for donald trump, but will not be actively admitting that the pollsters. signing a 70%re probability to the u.s. presidential vote. feel a great focus going forward will be on control for the u.s. congress, because despite the fact that clinton has a strongly, she will only be able to enact our policies and policy agenda if she does have strong support in the united states congress. haidi: all right, very interesting. the next two weeks will be very interesting in the. -- interesting indeed. up next, all strays third largest lender posted better-than-expected profit. will we will be live in sydney next. this is bloomberg. ♪
haidi: this is "bloomberg markets: asia." i am haidi lun. are shaping up in terms of hong kong futures, a flat start at the moment. at the pretrade session, not a lot of momentum, a mixed session. we did not have a strongly from wall street overnight. an earnings have the session here and in asia. , investorsig banks sidelined ahead of these numbers coming through. the aussie dollar, three solid sessions of gains, and we are now seeing a decline of .2%. lows,vering at three-week
energy shares driving the asf slower. we did give robust earnings in the banking sector. we had a better than expected full-year profit. that stock is up over 2%. let's get over to paul allen in sydney. cash profit was up 4% for billion,year two 6.4 8 beating estimates and off the back of a strong performance for domestic banking and wealth management for national australian bank. of two $800ad debts million, due to write downs on a small number of large loans. the net interest margin is getting cramped, down two basis points due to higher wholesale funding costs. the dividend a healthy $.99.
the payout ratio above 80%. over are some questions how long that can be sustained. here is what the ceo had to say. our board considers our dividend payout and the life of our capital position, our earnings, and the outlook. determination this time, we are very comfortable paying out $.99 a share. performing well this morning, up more than 2% now. goldman's was bearish ahead of earnings season for banks, but has not turned out to be that bad. paul: if you look at the cash profit, no. the net profit was not so great, down 94%. it was higher funding costs, lower interest margins, rising bad debt charges as well, so goldmans was right in that
this is "bloomberg markets: asia." a pretty mixed session in asia at the moment. so far, not a lot of conviction with oil at three-week lows. some massive earnings stories coming out, and investors are distracted with that. , one ofook at samsung the big players we were waiting for. it does look like that note 7 with a $6 billion bill for samsung and is weighing
on the company, as 17% decline when it comes to revenue. a roller coaster when it comes to samsung stock. a lot of people are saying by on still a because it is solid blue-chip stock and they will be able to get past this current crisis. when you look at third-quarter earnings and what the stock is doing today, there are concerns how quickly samsung can move past this unfortunate episode on the recall. let's get over to the opens with david. markets just opening up into a mixed bag, like a checkerboard. is what you get when the main theme is earnings and you're not getting consistency day in and day out. some days you get good reports. days like today sort of disappointment,
especially some of the numbers out of south korea and australia. the hang seng flat. shanghai down. fixing 15 minutes back, weaker from the pboc. they are also in checking some cap back into the system, 210 aboutn renminbi, roughly $32 billion into the system come as that's according to one trader. have a look at some of the movers across the region. hong kong, earnings are in focus, 26 chinese companies coming out with reports in the next 18 hours. these are the big three you want to watch. some other things we are following in hong kong, china
mobile, an interesting note from bernstein. they are lowering the price target for the stock. 130 hong kong dollars a share. they are lowering it to about 100 and saying that if you did have to pick one among three in the telco space, it is still there top take. ou're looking at -- top pick. we have one company -- of trading debut on the chinese mainland, raising just over $500,000. go, 44%. different day, same story.
thanks for that. let's get over to sydney. paul allen has the first word news. samsung says it is making changes and quality control to regain customer confidence following the note 7 debacle. 17% atuarter profit fell $3.9 billion. $88le profit fell to billion. $235ng says it is taking a million stake in a marketing firm. he am motors third-quarter operating profit missed estimates. the carmaker says it expects difficulties to continue. the 461 million dollar result was down from $595 million a year earlier. sales narrowly topped estimates. he'll workers will stage a walkout later thursday in a dispute about pay.
thates have told bloomberg out.as pulled the sale could fetch as much as $2 billion. other contenders include bain capital and greinke hospitality. has been hit by a series of strong earthquakes two months after a tremor killed 300 people in the same region. initial 5.4 magnitude quake was followed by a 5.9, then a 6.1 quake. the tremors were strong enough to be felt in rome 120 kilometers away. only one minorat injury has been reported so far. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thanks for that.
unwantedgroup making headlines with its chairman warning of billions of dollars in write-downs due to unprofitable operations. mistry was removed without having a chance to defend himself. what else did he have to say? haslinda: let the slugfest began. mistry says he was wrongfully dismissed. all he wants to do is put it right. out fromhat we found an e-mail he sent to the board after his ouster. group faces 18ta billion dollars in write-downs due to unprofitable businesses. words, "legacy hotspots."
are still challenging. if you assess the fair value, you will see the right down. disclosures suggest deeper corporate governance issues, a company known for good governance built over the years. was trying to turn things around at tata. how is it going? it was clear it did not go down well. he faced constant interference. that made him a lame-duck chairman. eventually he said he tried to do several things, scrap the na are but the venture consistently lost money, $150 million lost his peak.
he also tried to turn around a power plant. the payment of more than $1 billion due for failing to uphold a contract. mistry says the agreement was questionable in the first place. it will cost as much as $5 billion to make and exit from that business. a revelation, a power struggle, it continues to unfold. haidi: very much. we will be waiting to see whether developments come out of this ongoing crisis when it comes to tata. pokémon go was huge hit for nintendo, but it was not enough for thet sales company's other platforms. shares looking like this, down .3%. what happened? >> good morning. as you said, this would be the
finallywhen nintendo released the impact of pokémon go on earnings. they did have a $150 million , butall, which is not bad nearly not enough to make up for the continuing slowdown in its core business. on top of that the impact of the strengthening yen, and the company had no choice but to cut its full-year operating in revenue forecast. new consoleo has a in the works, but that one not be available and tell, so investors are looking at a holiday season without any hits in the works. haidi: what can they do now? falling,business switch met with a muted market reaction. can it convince investors that it will be a turnaround?
>> that's right. nintendo shares are down 10% since unveiling switch. was impressedss with the console, but by the looks of it, you can see how nintendo hard-core fans would buy into the console, but it is hard to imagine a broader market going for it. your grandma and grandpa playing with the switch, so in a sense it is up to the mobile games like the upcoming super mario and other titles to broaden nintendo's audience to the cattle market. a good day for tech in general around the region. line is trending lower in tokyo. what did we learn from their earnings? >> this will be the second time
that line reports earnings since it's ipo. quarterlyted a operating profit and sales that fell short of analysts targets. shifting their business model to an advertising-based model, and while they are showing steady progress, it seems like a slump and the sales of stickers as well as the slump in games has been more than people expected. thateo reassured investors on a full basis, the company w sales growth and ad revenues will continue to grow. haidi: you have to send more stickers when it comes to line. up next, china bank earnings with fitch ratings and how much of a problem these nonperforming loans are. this is bloomberg. ♪
haidi: a quick check of the latest business flash headlines. the world's number two gold newmont missed estimates. shareluded a 13 sent charge. newmont expects the $1.3 billion sale to close this quarter. a chinese delivery company set to make its trading debut this week. the money raised is also the most by a chinese company in new york since alibaba. three quarters of the business comes from alibaba and the stock will trade on friday.
mainland companies have abandoned u.s. markets and head home. ank of china has reported 2.5% gain in net profit. the lender is the first of china's big banks to post third-quarter earnings. $6.2 billion.e to they have managed to increase profits every year since 2004 despite rising bad loans and pressure on lending margins. fitch ratings says china's latest debt for equity swap is unlikely to change structural risks to any significant extent. let's talk to jonathan corniche. to a certain extents, is it just papering over the problem? is it a different type of similar financial engineering? >> it is. it is one of the many solutions
that the banks and regulators are looking at. the problems are very significant in our view and unlikely to resolve soon. peoplethere are a lot of that call into question the veracity of these numbers on nonperforming loans. how far off are these numbers to what is really happening? down,is difficult to pin but we did run an exercise and under the scenario, our estimates are that nonperforming 21%, sould be 15% to above the officially reported numbers. haidi: have you think that debt to equity program will play out? they have refrained from saying they will commit public funds. where is the incentive for them to pick up the slack? unlikely that is it will be of day exercise.
in fact, we were there last week talking to the banks. there is a lot of uncertainty with respect to what they are going to do. expected toe discuss how to implement what the authorities want them to do, but overall, it will not solve the problems. this: if you look at almost symbolic need for the chinese banks to maintain this record streak of profitability, is it missing the point? yes, you have bank of china, and i'm sure will see other banks with modest profits as well, but is it missing a point, that this market has structural issues that are continuing to build? >> from a credit perspective, we think so. from share prices and trying to support those, one can understand why the banks do with they do, but we would like to see the resolution of the bad debt problem sooner rather than respect, somehat
drops and profitability is not necessarily a bad thing for the long-term stability of the sector. haidi: are we looking at a systemic crisis? >> it is not our base case. as we see continued reliance on credit to support growth, there is the increasing risk of a crisis developing. haidi: how does the story end? do households eventually have to bear the burden? >> we believe that a lot of the credit problems will migrate their way onto the sovereign balance sheet, with a a lot of capacity to take on those problems, but given that the authorities are hopeful and trying to work through these problems, and we expect that to be the case rather than happening overnight. very uncertain really as
to how things will play out and who ultimately will bear the costs. terms of this signals from policy makers, it often feels like they are taking one step forward, a couple of steps sideways, one step back when it comes to implementing reforms, cutting excess capacity, because so far this year, we have seen them on the macro front get back to some sense of stability, but that has been the result of turning the credit cap spec on. next year, what would you like to see from china? >> you have to give the authorities a lot of credit. a number of reforms they have ,nnounced has shown progress but it really comes down to the execution, the implementation, so as you rightly point out, the first sign of trouble, they tend to take a backward step and maintain short-term stability rather than focus on the longer-term issues. we would like to see greater
execution of the reform policies they have in place, but also would like to see a strengthening of the fundamentals of the financial sector rather than the glossing over that we have in sing in recent years. yeah, certainly, great to have you on with us with those insights. next, we are taking a look at snapchat, seeking to raise $4 billion. this is bloomberg. ♪
billion and its planned share sale for snapchat. su keenan has more. su: the snapchat ipo could be valued between $25 billion to $35 billion, possibly as much as $40 billion. the company not officially addressing the matter, but those close to the situations they no final decision has and made. morgan stanley and goldman sachs have been take to lead the offering. that there will likely be an offering in the first quarter of next year. the papers are said to be filed confidentially. not talkng publicly, many in silicon valley are about the value of this company. >> i think for a company to have powerful, it needs growth and
engagement. leads to long-term retention, and that is something snapchat has demonstrated in spades, incredible growth, but incredible engagement. when you become a verb, you become an important and powerful company. su: a snapchat ipo would be the and couldnce twitter set the stage for a resurgence in tech listings. meanwhile, china is returning to the u.s. ipo market in a big way with zto express. the chinese delivery service gets 55% of his is this from alibaba. sinceo is the most raised alibaba raise $25 billion in 2014. 20 billion parcels were delivered last year alone. shanghai, there is a list of 800 plus companies waiting to have ipo's there in what is
being described as an epic traffic jam. the ipo here in the u.s., the details are that the company $16.50o price between and $18.50 a share. 26th,icing will be on the zto.ing under the haidi: we will be discussing tomorrow at ipo 9:10 a.m. in hong kong. china looking to hedge the cost of pork. the country consumes half of the meat produced worldwide. risk, china's biggest commodity player is featuring a all contract next
year. how would this work? >> we are still waiting for a lot of the details to come out, gs, but afterho more than a decade of researching how to do it, whher to do it, it is looking like next year will be the launch of the contract. as you say, some of those figures are just amazing. 450 million cakes and china, pork consumption is double the rest of the world, and there's no way to hedge risks. wings, and i price could feed into consumer prices. it has an outsized influence on the cpi. there is no way to hedge against it currently. haidi: what are the implications further afield? ogs are not h
widely traded. is in chicago,ct domestic focused, traded in the u.s. and does not influence china. is a huge commodity superpower these days. you just have to look at times for what is already traded their , metals, iron ore. the opportunity there is huge. to see then't wait retail answers when they introduce these futures. thank you so much for that. talking about the possibility of hedging the price of pork in china. next, prestige economics about the wild swings in china's commodities market. that is in the next hour. ♪
♪ announcer: from our studios in new york city, this is "charlie rose." charlie: join me in welcoming james clapp. [applause] charlie: i want to begin with the russia and the u.s. relationship with russia. the russian u.n. ambassador rice said in the last week that relations are as bad as he has seen them in the last 40 years. characterize the u.s.-russian relationship. james: it is not at its peak by