tv Bloomberg Best Bloomberg December 23, 2016 8:00pm-9:01pm EST
>> coming up on bloomberg best, the stories that shaped the year in business across asia. china's economy showed signs of stability even as growth sometimes seemed to sputter. >> i think we have a hard landing in the stock market already. >> the old economy drivers are back in action. it's the new drivers stalling. >> japan's leaders went back to the stimulus well again and again with mixed results. >> we have to continue our monetary policy. >> japan has become a test tube for the rest of the world. >> it was an eventful year for asian companies. smashing successes to corporate
crises. >> this is a huge deal. >> asia made its mark on global markets as economist reckoned with the region's ups and downs. liters 16% growth, you get 6% growth. t-rex you can't have your balance sheets grow faster. >> join us for a look at the best of 2016. just ahead. ♪ lau.llo, i'm angie have this program, we will all the news we brought to you on bloomberg asia in 2016. as the year began, china was the focus of concern for investors around the world. growth, aout slowing
sliding currency, and an economy in transition. the anxiety came to a head with market rout in january. year, a new roller coaster for chinese markets in particular. it would have to be early. >> do you think the circuit breakers that are designed to mitigate volatility actually contributed to it? >> some are saying it did. >> china is having a night. eating to work very early in 2016. sources say the nation has taken steps to support equities and currency following yesterday's 7% tumble on the shanghai composite. >> sweeping intervention today by the government, intervening to shore up the stock market. they intervened for currency. and the bank putting into the system to keep a lid on borrowing costs offset capital
flow. >> you're not seeing a hard landing, right? >> i think we see a hard landing already and we had a hard landing in commodities. we might have a hard landing in the economy. the chinese government soft land the economy without a big disaster? yes. meeting as theed worst start for chinese markets in decades. the reference rate by the most since august and a forced global exchanges to shutter early. circuit suspends the breaking rules that have not kept investors from panic chinese stocks. >> do they have control of the capital markets right now? >> in the short-term, i don't think they do. it not in the next few days. it's not connected to fundamentals.
either profits or the economy. theoes no one knows what proper level is, it's a casino. chinese stocks in a bear market for the second time in seven months. is china has china a serious challenge and set of challenges to convert from exports and construction tomulated by easy money domestic consumption of goods and services. it is a serious problem. is is something easily armounted or is it disaster? people have gone from the first to the second. angie: january's worst-case scenario did not come to pass. year, thehout the financial world kept a close eye on economic data coming out of china. let's look at some of the most significant numbers. >> a day of dramatic headlines
with china headlining the news. silence.his long what did he say in what was significant about it? >> we not going to push the currency down. [indiscernible] we do expect volatility along the way. we have seen it go by. >> china is signaling it's open to more easing. they say they have multiple policy instruments to address any downside risk. we know there is a need to ease. interest rates, real rates are on the way up. the most important answer is how they plan to do that. >> cutting the reserve 17%,rement ratio by reducing the amount of capital banks need a hold in reserve. this hot on the heels of one of the biggest months of new credit
growth in china. >> this is both a significant surprise and a significant move. china thisding at of morning showing exports falling to the lowest level since february of 2009 during the global financial crisis. >> there are seasonal distortions, but still a significant number of exports down 25.4% year-over-year. this is the eighth consecutive month we have seen falling exports. >> the latest eco-data from china likely to keep more pressure on the leadership is a try to beat this year's growth target of 6.5%. industrial output both slowed. sense of project this call him at this annual press conference on saturday. what message is he trying to send? no rush to buy u.s. dollars.
>> he basically said china's economy is steady as she goes and that have their hand firmly on the teller. and not to panic. >> first quarter gdp was in line with forecasts. property sectors rebound and surging in credit. industrial production was ahead of estimates. >> it is a big bumper headline. it is the old playbook. they're going along quite nicely. >> will they be using this? we mentioned it a few times a signal for improving conditions in the may factoring for the third month. recent evidence of stabilization in the world's second-largest economy. >> showing improving conditions for the manufacturers. >> it could prove to be one of
the more interesting developments in the year. >> maybe we are driven by the so-called old economy. the latest survey says the government's attempt to we the country off manufacturing resources may have stalled. >> the old economy driver back in action. the property measure and also commodities. but it is the new drivers that are stalling. .etail, services, transport >> china economy stable in the third quarter putting the target well within reach and paving the way for policies to rein in excess credit. >> china's policymakers have a little bit of time in which they can start making some of the painful changes needed to prop up stability in the financial sector and to rebalance the economy away from the state enterprises toward a larger role for the private sector. later in the program, we
will play back some of the most interesting interviews on the topic of china with insight from christine lagarde, mark mobius, larry think, and others. disney's biggest foreign investor ever, a huge bet on the chinese consumer. turning to japan. stimulus toorts of make a positive impact including negative interest rates. >> in fear he, it should spurn some sort of action but people put their money in the metrics. >> this is bloomberg. ♪
relative economies. ask a think there is more to come, jonathan. if you look at the statement, inflation will remain too low going forward. >> scott morrison delivered a budget he says is focused on jobs and growth after the rba cut rates for the first time. in eight years. it's going to 6 billion by 2019 or 2020 but it relies on optimistic assumptions on the price of some commodities. >> australia's central bank have cut rates, they hope to counter disinflation and underemployment. >> they cut interest rates again may., earlier in 50 basis points this year. >> unchanged at 1.5%. it is the statement that is key here. keeping the cash rate of 1.5%
is consistent with beating the cpi target overtime. this is also consistent with what the new government has been saying. he described the rba as not being inflation nutters. loomedmonetary policy large in 2016 and japan's central bank may some of the biggest headlines. the governor promised the boj would continue to take bold action to combat deflation. bank tole expected the move is dramatically as it did in the january meeting, setting the tone for an intriguing year for the world's third-largest economy. >> the vote 5-4. a very slim margin to adopt negative interest rates. timing ofdelay the when they think they can reach this 2% target. whene surprising thing is
they did this because there is risk they pass on at some point. the other thing that is surprising is there are suspicions that the boj is running into resistance buying bonds. it's even harder for the boj to try these bonds free. it might actually make quantitative easing more difficult. >> look at japan. it's as if the boj -- >> negative interest rates should spur some sort of action reality, people take money out of the banking system and it doesn't make them go out and spend. >> the bank of japan holding the .nterest rate unchanged at -.1% >> japan has become a test tube for the rest of the world. we can all see what happens. they didn't manage to get their economy going despite early
versions of qe because the government doesn't do enough. way is itnse any real going in the right direction. 110,e yuan burst through unexpectedly keeping its stimulus program unchanged. press governor is at a conference the last few hours and underscore the fact that there is more that can be done and he will do more is needed, including with negative rates. they just took effect in january and he wants to give more time for that to have an impact. >> the prime minister, this is a big deal, folks. he will retract a national sales tax. abe has been talking about that leads to higher wages and spurs more consumption. it's not happening.
kickstarting that with a boost to consumer spending. >> no change in the annual rise in monetary policy from the bank of japan. >> the thing to keep in mind is that there are reasons to delay both internally, given that they are trying to allow the negative rate policy to gauge the effect on the economy. and there is an election coming up in july. japanernment bonds in have set another record. is there no end in a co what is causing this? back of the u.k. vote to leave the european union. it is worried about the italian bank situation. and a lot of the money pouring in the japanese bonds. >> the japanese prime minister has promised economic measures
after a swift win. >> doesn't put him in a stronger position to move forward? like he's heading for a two thirds majority. you have to see in the months and weeks ahead if he will knuckle down and do more economic reforms. keeping keyof japan monetary talks unchanged. do for the uncertainty of inflation. it >> it is minimal and they had to do something. they did the bare minimum. the real dark course here is the comprehensive policy that the governor instructed his staff to start working on. we're really at a crossroads here. government take the running for a while or does the double down and hit the gas pedal? >> increasing spending by $45 billion this year including the
prime minister's ruling party today. trillion stimulus package. 7.5 trillion in new spending, about $74 billion. contracted.spending it is a gloomy and cloudy morning in tokyo. puts pressure on the prime minister to get his stimulus package in gear. >> the governor says the base target which was previously fluctuate in the short-term. >> the main focus is on the yield curve. they have come out and said a yield curve is bad for the
economy. >> [indiscernible] and the policy you have been has had significant impact on the economy. recovering,has been but still, there is a 2% inflation target. our monetaryntinue policy. boj left policy unchanged walk cutting the inflation forecast for the next fiscal year. governor kuroda does not see the target being met before april 2018. >> how it you described governor kuroda's credibility? >> people were not expecting the banks forecast to be realized in the time horizon that the bank was predicting.
i think today's announcement doesn't really come as a huge surprise to anybody. >> the bank of japan capping a momentous year with an upgrade on the economy. but due to the yield curve and asset purchase programs, they are unchanged. >> they are saying that the recovery continues for the japanese economy. they are looking at a pickup in exports. and improving business sentiment. up on bloomberg best asia year in review, disney brings its magic to mainland china. the new park looks like a hit. >> the prospects look really strong. >> this is bloomberg. ♪
league accounting for more than shellird of the offshore company set up worldwide. what is the latest? >> just the significance of the china market in terms of setting up these offshore entities. said, it's almost one third. they set up 16,000 offshore companies. there are relevant political leaders in some cases. it has attracted attention. the most important market in 89 and hong kong, they made good use of their presence here, it seems. bloombergcome back to best. i'm angie lau. we continue with a u.s. company's big bet on china. disney's long-awaited shanghai theme park opened its doors in 2016 amid uncertainty of the strength of chinese consumer demand. -- the $5.5 billion going to
roger going to resonate? the $5.5 billion project going to resonate? apparentr became immediately. disney'sw park is first in mainland china and is three times the size of hong kong disneyland. 50 million visitors expected to walk through the gate. -- ass it is important important as opening orlando. disney has certainly been there with its films in the past but it has not been there with parks and resorts. beens historically forecast for disney. >> one of a thousand performers before disney throws open the doors on the most ambitious venture today. >> i feel proud and honored when
i tell people i work for disney. >> the challenges and really about the stunts. >> in terms of china network to our vantage, clearly establishing a move from the manufacturing to a service economy. we benefit by that and we contribute to it. one of the reasons we got -- and theto do this message was sent. cost 5.5 billion dollars in disney unlocking the gate to the shanghai version of the magic kingdom. >> 600,000 visitors just in a test run. they're hoping to get 10 to 12 million by the end of the year.
you can see a sunken ship behind me complete with noise effects. they make out the disney castle. >> give us a sense at this point early on if you are on track with what the plans were for shanghai. >> it's more than a labor of love, it's one of the most important steps the company has ever taken. and one of the most populous city in the country. the reaction in china has been great. the visitation has come from all over china and has taken great advantage of shanghai as a tourist destination, particularly in the summer. well over a million people visited the park. the prospects for this business has looked really strong. have broken ground with
expansion. we feel great about it. there is still plenty left a comment the bloomberg best year in review. we will revisit some of 2016's most compelling company stories from the smooth ride and the samsung note 7 flameout. and the election of donald trump has already had an impact on asia. up next, influential leaders should have thoughts on doing good business in asia in 2016. >> china welcomes foreign investments. company should also welcome foreign investors. >> this is bloomberg. ♪
volatility caused by global uncertainty was a consistent theme for investors during the past year, and along with rags it and the u.s. presidential election, and concerns over concerns in china rattling the market. andpoke with business political leaders and got expert perspectives on the world second weakest economy. here is a sampling of those conversations. china recently had its national people's congress. there was some concern that the chinese government is focused on stimulus and growth at the expense of reforms. what is your take on that? china willve continue to grow, number one, and our assessment is 6.3%. we have to assess the decisions made by the chinese authorities to factor in those decisions and see whether we forecast a little more growth, possibly. >> how concerned are you on
china right now given what government has said and reiterating its commitment to o 6.5%? >> a lot of people don't understand the nature of the chinese political and economic structures. it is a planned economy, so when leaders say we want 6% growth, they get 6% growth. it may be highways that go nowhere and buildings unoccupied, but they get that growth. now they have come to the realization there has been a lot of waste and they want to make a transition to a market economy, but they are not there yet, so i am not worried because the government has control of some of the key elements, such as currency, such as control and so i think theyth, so
are in good shape in that sense. >> i would give the chinese leadership some of the best marks and trying to transform their society. we are in the fourth year of the 10 year plan to reorient china away from manufacturing, away from an export dependent economy to a much more resilient domestic economy, a service economy. that is a very hard thing to do. it takes many countries 50 years to do that, and recessions during the transition. china policy behaviors overstepped, the market is saying that china's dependency on death and leverage of the balance sheet is a continuation of investing in some of the unproductive state owned companies and not a good long-term solution. i would say indeed that it is
not a good long-term solution. hopefully, this is a short-term remedy and they get back to the basics of trying to build a better domestic economy. >> are you worried about the debt in china? >> we have to be. mind, if the economy continues to grow six plus , you can't grow at 6% and have your balance sheet's growing faster. in the future, i would prefer to see the economy growing 6% with some form of deleveraging. >> would you make of the market reaction with what we saw with the currencies? investors overreacting, do you think? >> first of all, what the world saw was something that was confusing and not well communicated, and it gave rise that the chinese
economy was in a week or place than it appears to be, always perceived by policymakers to be. economy is not as interconnected to the global financial system as the u.s. and european economy. that will surprise some people to hear. >> what is connected are the flows of imports and exports. if you are an exporter and a developing emerging-market and you think growth is dropping even faster than it is, that has a huge impact on what you think the future looks like. >> fact is china exports more than it imports. from manufacturing, there is also the service industry, as well as many other channels of income. but people can only see the debt in a state owned enterprise. when they need to recognize that china is a big exporter and the
in flow from foreign exchanges are also positive for china. exports exceed imports, that is a fact. a lot of is also generated from the service industry, so in the long run, china's economy looks good. and there are a lot of chinese companies who are looking overseas to acquire businesses, but they keep getting shut down by regulators, including yourself. what is the impact for chinese companies in the future? how do they fix this? fair.needs to be china welcomes foreign , so other countries should also welcome chinese investors. >> this is a massive undertaking, the transition of
the economy, but you can see, the research side, the consumer side, the tech side is going very strongly. the chinese firms are beginning ageinvest in lower-w economies in the same way that other businesses used to invest in china, vietnam, myanmar, africa, and effectively replicating the stage of development they went through and other countries and building infrastructure to create trade flows, trade corridors. as ever when you're trying to do something very ambitious, you worry that it could be interrupted, but i think china has managed it extraordinarily successfully so far. >> how many nonperforming loans do think chinese banks have? >> you can see what they report through many think there may be of investment
companies yet to be recognized. lessnk it is relevant what it is. managing is about managing it in a smooth way without causing disruption. china has not borrowed heavily from the rest of the world, so it is an internal issue. can you manage it without causing disruption and unrest and economic slump, so far they have done it. i am relatively confident they will continue to do it. their model is different from ours and it is difficult to say you, they won't do it in the same way it has been done in the u.s. or europe, but they know what they have to do to manage the recycling of capital efficiently. they have the capacity to do it. coming up, the most interesting company stories of 2016, including the worldwide
♪ >> we think we will double our putunt in this region and ,ur businesses in equities investment, and banking across the board. we plan to expand the service companies that are giving outsourced functions to our groups, so i think china is a great opportunity like it has been for the last 20 years. >> tim cook is setting his sights on this massive market called india. during his trip to the country, he will be unveiling a development center and
introducing an accelerator program. >> india is one of the world's fastest smart phone markets, and apple wants a piece of the pie. >> is there a straight line to tech ipo success? line,ooking that way for the japanese messaging company that went public today. raised $1 billion in this ipo, what you going to do with this money? >> first of all, we will focus on investing and strengthening our services, everything. the number of asian companies in the spotlight in 2016. let's have a look back at some of the most interesting stories of the year. sharp is surging this morning as foxconn makes a case for a takeover. a funds also talking to
and may need another month to make a decision. 5-6 businesses. i can't imagine anyone wanting to own any of those. all their businesses are losing a ton of money. in sharp have tumbled 16% after foxconn said it would buy the troubled electronics maker and then postponed the deal. >> foxconn issued a statement saying new material information has come to light and they require more time to discuss it. both companies have said nothing else, but our sources are telling us the point of contention is something called contingent liabilities. these are costs related to possible restructuring and layoffs. >> is there a risk now that the deal could fall apart? up on a monthng since sharp's board approved the proposed deal from foxconn. list of issues
that foxconn is going through before it signs this definitive agreement to proceed with the deal. that are reports out there foxconn may try to decrease the amount of money it is putting equityarp in additional that was originally proposed as 480 ¥9 billion, so we may see that number go down a bit. rishaad: this is a drawn out pursuit of sharp over with a big discount on the original price agreed in february. billion. bill at $3.5 he managed to get a big discount. >> that month of wrangling and pushing the deal to its breaking point was not for nothing. he is getting about a ¥100 billion on sharp. chinese ridesharing app didi has received a $100 billion strategic investment from apple.
tencent and alibaba are also investors in didi. >> this is a huge deal. waseported that didi looking to raise $2 billion, but apple coming in and making the single largest deal investment ever comes as a huge surprise for us. telling bloomberg that uber's china rival may be considering a new york ipo as soon as next year. lulu chen broke the story. >> it comes on the heels of them raising more than $1 billion from apple, bringing the total amount of this fundraising to $3 billion and a violation of 26 million. huber said they want to hold off the ipo as long as possible. it means didi will race ahead of them to the u.s. for an ipo, so
there are reporting targeting the same pool of investors at the same time. di has agreed to buy uber's chinese subsidiary. it is a big and complicated deal. tell us how this will work. >> our understanding is didi will acquire huber china and form a new entity valued at $35 billion. let's turn to nintendo's newest game, pokémon go, because it is sweeping the nation and s stock has skyrocketed. >> you will see a multitude of people playing this game. >> nintendo's new game has their stock soaring, lifting the company by $7.1 billion. >> nintendo shares falling the most since 1990, hopes disappearing as investors realize the company's limited
stake in the game pokémon go. itit was never any secret had a 13% economic interest in pokémon go, an investor should have known this all along. rishaad: samsung smashing first-quarter profit estimates, the early release of the smartphone paying off. >> what samsung has done is take in thege of a lull iphone release cycle, releasing smartphone a month early. so far, it seems to be tracking well globally, but we will see. the iphone 7 is coming in a few months. rishaad: does this signal a turnaround? thing that apple has shown is that nobody is immune to the broader smartphone npc downturn. we will have to see. >> samsung is officially
recalling one million phones after the u.s. consumer product safety commission found they were to catch fire due to a battery flaw. handed appleearly a gift by having this massive, embarrassing recall just as the new iphone models were launching. and samsung and developed markets like the united states trade off market share, so you 7ve to think that the iphone line is going to pick up some market share from samsung. is ending saying it the production of the galaxy note 7 overnight, recalling the galaxy note 7. >> it is the combination of one debacle after another. they are basically scrapping the note 7, which means they will restart and maybe come out with another version, hopefully in time for the holidays, but i doubt that. i don't think most analysts lead that can happen, so this is a huge blow for samsung. a report from credit suisse
that halting the note 7 could translate into at $70 billion in lost a sales. can samsung absorb this hit? is hard on samsung is that this is their flagship phone. the note itself is probably of sales in any given quarter, 10% of their mobile phone sales, and so i think they can contain the damage, particularly as we roll into next year. my suspicion is that they will move up the introduction of the next note. record-breaking singles' day for alibaba, the biggest online shopping day of the year in china. the e-commerce giant said it had beaten last year sales mark of $13 billion. >> it underscores why we are seeing international companies
south china sea has been ruled null and void. to exert control has exceeded the law. hope they canhey resolve this diplomatically through talks. what is the likelihood of fat? by thea will not abide tribunal findings. what china would expect now is negotiations with the philippines. this is likely to happen. global politics had a profound impact on business and thence in 2016, capped by result of the u.s. presidential election. donald trump promised to confront china on trade and economic issues, but he does not take office until january. he has already made statements and decisions that reverberate in a show.
taken on trump has china via social media, hitting back at criticism of his decision to take a phone call from the president of taiwan. athe has been hitting out china over what he sees as the andluation of the currency over the south china sea. we have seen the offshore trade lower following these tweets, and the question is whether this is more empty rhetoric from donald trump or whether he will be taking a more confrontational line with china. >> the word out of beijing is that he is not president yet, and perhaps he is being badly advised. america's four-decade one china policy may be put to the test by donald trump, saying no one can tell him who to talk to.
he says his attitude will depend on securing better trade deals with beijing, so that one china policy he says may be china's policy, but not america's policy. what is the buzz on the ground in beijing as to how china is likely going to react here? >> there has been no official comment so far, but we have had the globaltion with times describing donald trump as ignorant as a child, saying the one china policy is not for negotiation and will not be traded away and calling for beijing to put obstacles in place when donald trump takes over the white house to show that china won't be bullied and pushed around. they are faced by a president-elect who is nominating and ambassador they see as a friend to the country, the iowa governor has had a long-standing relationship with president xi jinping. lambastingnald trump
them over tariffs, trade, trade, thee yuan, south china sea, so they have not divined what his true intentions are. >> what are some of the next steps here? >> i fear the u.s. and china could be on a collision course. fiscal stimulus will be bullish for the u.s. dollar, but his trade policy, he needs a weak dollar. does he want a strong dollar or weak dollar? here is the contradiction of his policy mix. i think he wants a weak dollar. the problem is that china also hows a week renminbi, so can china and trump have weak currencies? the more successful donald trump will be, meaning the stronger the u.s. economy, the stronger the dollar, the weaker the yuan, which will increase pressure on china. it is almost self-fulfilling.
that's what i worry most about, and how it plays out, i think this will be the biggest headache for investors for 2017. rishaad: 2017 should be very interesting indeed, and that does conclude this special edition of bloomberg best, our 2016 asia year in review. you can find more analysis on bloomberg.com, as well as all the latest business news each day, every day. thank you for watching. i am rishaad salamat. this is bloomberg. ♪
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