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tv   Bloomberg Markets Asia  Bloomberg  January 3, 2017 8:00pm-10:01pm EST

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singapore.. in i rishaad salamat. this is bloomberg markets: asia. rishaad: takata is the big winner as japan returns from the break. a settlement is near. equities entering a bull market.
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critic is a china trumps trade representative. first over in tokyo, we have china and hong kong starting off in about half an hour. singapore, taiwan, they are just starting. . bit of the tailwind coming correspondent: certainly something for the bulls to put their hats on. when you look at europe, let me get started there. closing get a record. europe in general entering a bull market. we are adding a little to those gains. have a look at wall street. s&p 500, nice deck and the dow jones -- nasdaq and the dow jones up. when you look at asia, there you go. japan is very much doing the
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heavy lifting. just a few hundred points. we are just about 100, 150 points short. we get about 19,500. that takes as well and above the peak that we saw as we entered the last few days of 2016. these markets opening up have decent gains. in a bull market. good.lly has been -- rsi is well above, that is a market to watch. the sort of rally we have seen. the other thing of want to focus on is the currency market. toppinghe dollar index a 14 year high overnight. addingseeing the dollar
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to the strength that we saw. below oner back dollar four. dollar ring get very much in ringgit veryar much in focus. we are the dollars strength come through. renminbi will be the focus. have a look at what happens in the overnight yesterday. 17%. well over 400 basis points. that comes out two hours from now. that is something to watch in the currency markets. let's get you up to speed with what is happening in the first word news headlines. heidi, a very good day.
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a red alert for smog and provinces across the north and east, treating the closure of factories comes and construction. there has been choking smog since the new year. conditions are not expected to improve. air-conditioned -- air pollution in north china well above safety levels. have taken aexit turn with the unexpected resignation of london's ambassador to the you -- to the eu. that is just weeks before the government is set to trigger article 50. he had been expected to oversee the first talks. it could take a decade for the u.k. to hammer out a trade deal with europe. president-elect donald trump is claiming another jobs victory. the plug on alled
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project, saying they spent some of the $1.6 billion saved on new jobs in michigan. the peso weakened against the willr on word that trump persuade investors to go. >> we see a more positive manufacturing environment under trump. we see progrowth policies he is outlining in tax and regulatory reforms. this is a vote of confidence that he can deliver on those things. news 24ndent: global hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. u.s. president-elect look like he is following through when it comes to trade matter. he has top that she has picked a top china critic. >> he has on the trade front
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picked three very opinionated, strong-minded individuals on the trade front. rishaad: i can imagine and of those being friends of china. >> a lot of opinions being thrown at him from wilbur ross. desks credited with your with reviving u.s. steel and coal. he has railed against bad trade deals. he has warned against china bashing. he has this new trump white house, a national trade council, peter navarro. pretty much a china critic as well. he has also railed against china. what he says, constantly rigging trade in its favor. he has many times accused china of unfair trade practices. he is a former deputy in the reagan years. fairly young man, 69 years old. he must have been in his 30's
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and the reagan administration. say aboutat he had to lighthizer. and strike agreements that protect some of the most important sectors of the u.s. economy, and has repeatedly fought in the private sector to prevent bad deals from hurting americans. he is the former national treasurer for the bob dole campaign. he has deep connections to the republican establishment. rishaad: should we really be looking at semantics when it comes to donald trump? >> he is following through. he is putting people in place to do what he said he is going to do on day one. whether that means he is going to name china a currency manipulator on day one, whether he is going to slap tariffs of as much as 40% on chinese imports, we do not know. rishaad: there has been some narrative that donald trump is taking a reaganesque approach
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against japan. he is that of using that against china. >> look what reagan did in the second term of his office. he imposed quotas on japanese steel imports. he protected the u.s. autos to a certain degree. , what harleyuctors davidson. this might be -- china might be trump's japan that reagan had. coming fromquote highs are -- lighthiz using tariffs is a republican tenet. they have pretty much laid out the blueprint. rishaad: thank you very much for that. china has made unprecedented as capitalinto this
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outflows accelerate. we have the details. what do we know? correspondent: another sign of the pboc plugging the gaps that continue to flow out of the financial system. .e have a terminal chart we are talking about medium-term lending facilities that the pboc has set up. the balance has increased more than $100 billion in the month of december alone. that is the biggest jump since we got data back and september of 2014. it highlights and underlines the growing pressures from these capital outflows. the yield when dropping. it is fueling these capital outflows. to the role of the contortionist the central bank is having to play. on one hand it as having to keep the funding going to support the financial system. tryingother hand, it is
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to tackle these risks associated with very high corporate debt levels. more neutralto policy in light of what is overall a stronger economic picture. rishaad: we know that beijing is taking itself the line when it comes to foreign interaction. is there an impact? at the end of last year, we suck capital controls in the form of restrictions on the amount of oney that could be spent acquisitions. also the amount you can move overseas in terms of you want conversion. there is a $50,000 u.s. conversion quota. now chinese citizens have to jump over or through more loops sent troops to do that. they have to pledge not to use their foreign currency to buy property, securities or insurance products abroad. i have to outlining exactly what
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they will be spending their money on. the context is around $750 billion worth of capital outflows in the first months of 2016. extrats say these requirements will probably ease some of these capital outflow pressures and another sector taking a hit. the casino sector in macau suffered fairly badly toward the end of last year. there are fears these capital restrictions and controls will restrict the amount that their customers are willing or able to spend on the blackjack tables in macau. we saw stocks trading slightly lower yesterday. rishaad: thank you very much. looking ahead, the former r.b.i. government says they will do the heavy lifting. we will hear the opinion later this hour.
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seen as the main threat to global economy in the year ahead. ♪
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economists try to protect the year ahead, there is one thing certain -- the effects of 2016 global shocks likely to continue to be felt. says investors are underestimating the risks of donald trump's incoming administration. >> i think it is a moment of extraordinary uncertainty, to the extent that markets seem not to appreciate. there are prospects that they could not work out well, at least for some future. there are enormous risks for the global economy. rishaad: this year's french thation could in the end
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brings the end of the eurozone. graduals been in the process of slow-motion disintegration. if le pen comes to power in france, this could be the beginning of the end of europe and the eurozone. rishaad: despite rising uncertainty, eurasian group president says the markets will hold up. >> you can see an environment that geopolitically is by far the worst that we have experienced in decades in 2017. yet the investment into the u.s. markets and the strength of the american dollar is going to grow. rishaad: let's bring in the head of icc investments. thank you for joining us. what is your take on all of this? you are calling it 2017, the year of the pivot. , these thingsot take time. that always leads to a huge degree of uncertainty. indeed it does.
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that is part of the reason why they key investment is a ounce investment allocation. the number of opportunities we and anflation protectionism, some of these opportunities, some of them are risks. markets are taking a sanguine view. some of these may be overextended. some comments on trump, fiscal policy in particular. time toings do take come through into the system and show up in the economic and earnings data. overall we think it is a glass half full some area. we are cautious and optimistic. we are hoping there is a reflationary scenario. we want a bit of insurance in the back pocket in case things take a turn for the worse. rishaad: as you say, it is hard to say what the good things are and what the negative things are here. you have alluded to a pivot toward fiscal policy, from lost
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-- from monetary policy. on top of that, globalization to protectionism and more geopolitical risk. the letter to the latitude of other things is concerning markets. it really depends what stance you take. you are clearly sing in the u.s., that is a matter of degree and positioning. it is one of the reasons why we still think equity markets should do well. we believe there should be beneficiaries in domestic sectors. they are more exposed to global flows. more so in developed markets versus emerging markets. to us, that is a degree of positioning. the geopolitical side we think is one good reason to have insurance. a lot of research shows from acally, moving
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unipolar world to a more multiple world does tend to bring instability. asia, investors have not been used to pricing in our preparing for geopolitics related volatilities. we think that is the reason why having a bit of balance in investment allocations. balance in investment allocations. positioning an upside it makes sense. equally having a bit of protection against what we think would be inevitable out some volatility. -- bouts of volatility. yuan reference rates has been set. we have a number of 6.926 against the dollar. the what a making of this? how much more weakness can there be? is it all contingent on where the dollar goes?
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we actually think it is much more about where the dollar goes the necessarily what is happening in china emerging markets. if you look at the dollar the past rate, over year or the past couple of years, it has been the dollar. during periods of dollar strength, you are seeing it weaken. during the dollar pullback, you are seeing it flat and out. is central to weaken a bid on a basis. , tryinge strong dollar to achieve some sort of equalization. that it's going up in the u.s. is a key factor behind us. that move could potentially extend after a brief period of pullback. environmentt in a should relate to moderately stronger dollar strength. mean a slow, critical
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lower in the remnant be should continue. that should not come as a surprise. historically, this environment is one where the dollar does well. some countries do face more capital outflow than inflows. rishaad: this is actually the since mayan fixing 2008. thes find out if you put ficc hat, let's put the commodity side of things and the commodities complex in focus. what is your view on that? a lot of for the dollar goes will also affect gold. on the base metal side, what are you making of things, especially when it comes to iron ore? >> base metal, i think it is a mixed bag. a lot of it still depends on chinese economic growth. a few specific commodities, iron ore in particular, are important
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for the australian dollar. things are not getting worse. we have seen stability come through in chinese growth data. we have seen stability in some of the industrial metal data. lookingot necessarily for a massive bull market in industrial metals. if we get one, fantastic, that is a bonus. couldelated commodities return based on a view of more stability. those are reasons to stop adding in on the positive side in investment allocation. that is something we are more comfortable with, but in a sort of selective way. definitely well within a greater balance. rishaad: thank you very much. have to take a break. but next, why asia's richest families are turning away from hedge funds and looking to private equity instead. ♪
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rishaad: we're back with bloomberg markets. funds aren't risk of losing more top investors. the richest families are said to be disappointed with mediocre returns. tell us a story. indeed, thet: returns have been disappointing. 0.8% funds on average made last year. compares to global returns of 3.4%, and returns an america of 6.5%. asia disappointed last year. to turn are starting their backs on hedge funds and investing more in private actor he -- private equity. rishaad: we often have michael
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price who looks after the wealth advisors. he is seeing all of this. the families are generally younger than their peers in europe and the u.s. does that play a role? indeed it does. most of the money in asia is first or second generation money. families is older in europe and the united states. as a consequence, there is less of a separation between the let -- between the wealth of the family and the business of a family in asia. the patriarch, the owner of the family office, is still more return oriented in asia. he or she is more aggressive. they want higher returns, better than the united states or europe. , thedea of family offices
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mandate is much more about capital reservation. it asia, they want higher returns. that is the reason why they are not happy with the returns of the hedge fund. effective?rticularly correspondent: it is the smaller hedge funds. assets of about 100 million u.s. dollars to get coveted money. size, toto reach that reach that $100 million, you office. family you don't get the money from the offices, you have a problem. rishaad: thank you very much. capital flight from family offices. has a up, indonesia pointed message for j.p. morgan chase.
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we have hong kong and shanghai starting up their station. hong kong looking like it will have a marginally positive start. ♪ with the xfinity tv app,
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private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. rishaad: this is bloomberg markets: asia. we are just about to start the session off in hong kong. it is the day we are seeing gains. the yuan fixing coming in just a short while ago. lowest and weakest since may 2008. we have positivity coming from new york. correspondent: let's talk about the yuan fix. 6.9578 is the offshore exchange rate.
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you saw been a strengthening here. a lot of this is semantics. levels lastches seen 15 years ago, inevitably we will get record. we're focused on the basket. a lot of that obviously has to do with the fact they are shipped away from the reception. is remnant be is put -- 6.9578, the weakest fix since may 2008. what are we seeing here? it is generally up across the region. that puts you at 100 over at europe. a record high going back to 1983. can we get futures? hang seng up a fifth of 1%.
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shanghai composite, 1% gain. well over 85% of shares on the way up. what does that mean? it was the worst performing market in 2016. the bigger picture is the money coming out of china. we talked earlier about the record amount of injection to basically maintain these levels. back here to hong kong, we were talking about these fixes, the overnight. about two hours, we will get the latest fixing on just how much borrowing costs in renminbis. just something to watch. nothing there. top three, bottom three. any sort of reaction to the other data. retail sales following --
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falling for 24 straight months. more than expected. that data in hong kong is generally good. china is concerned markets are losing a bit of momentum. a session high over in japan. it was a good day yesterday. are seeing some consolidation. it is too early to say. take a look at how some of these markets have flatlined. thank you indeed. first word news headlines. haidi lun is in sydney for us. president-elect donald trump has again signaled a tougher line when it comes to naming a china critic as the head of the u.s. trade representative's office. he will replace michael froman, 11 talks on the transpacific
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partnership. he said they undermine american jobs. a bank run by donald trump's pick for treasury may have engaged in widespread misconduct. this is from a memo from the california attorney general's office. they're accused of manipulating the results of home auctions. debts they say it is unlikely medicinova about the conduct. to receive anyly other concessions from india to start making iphones in the country, after it was said to have sought discounts on import and export duties. they say they cannot be eased for just one company. india has already relaxed rules. british airways is taking action next week.
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a cabin crew walkout will occur on generative, threatening widespread disruption to flyers. they divided their action after conciliation talks. accuses them of forcing recently hired staff to live on so-called poverty pay. i am haidi lun. this is bloomberg. indonesia has been fighting back at j.p. morgan chase, the take issuing a downgrade -- the bank issuing a downgrade. first of all, a background? after donald: trump was elected, j.p. morgan issued reports which translated -- the bank said it was a
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tactical response to donald trump's election. j.p. morgan chase is that report indonesia, saying it is not accurate or credible. they said they would stop using j.p. morgan is a primary dealer and as an underwriter. there is a way of actually seeing where indonesia sits on all of this. deutsche does have a lot more. j.p. morgan is ranked at six in breakdown of underwriting for indonesian funds last year. about $850bounce million. indonesians by companies will no longer be routed through j.p. morgan chase . the finance ministers said there are economic reports that could influence fundamentals.
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rishaad: how are they taking this, j.p. morgan themselves? correspondent: at the moment, they say business continues as normal. they said the impact on the client is minimal and they will continue to work with the ministry of finance to resolve. they do handle a fair out -- a fair amount your j.p. morgan was part of a underwriting syndicate in june of last year, where indonesia sold 3 billion in funds, about one million u.s. dollars. they were not listed as a syndicate. has there been impact already? you could look at that and say yes, but there is not really concern. one, it did affect -- trump won, it did affect emerging markets.
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bonds,ian stocks and investors sold off some $2.8 billion. really, for many banks, if they're going to issue independent analysis of what it's been going on, they're not going to be happy about it. it is approaching levels we have not seen since the crisis in 1998. thank you very much rosalind chin. rates,tuce -- latest fed and the pace of rate hikes. there is room to keep policy accommodative. >> i think we're in the process of exiting with the federal seeing limited room for
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continued accommodation and starting to raise interest rates. i think you will see the pressure on other central banks also come off, as much as it has been over the last few years to continue accommodation. my guess is we are in the process of a kit. how fast it will be will depend to some extent on conditions in the united states. what policies the new administration brings. how comfortable the federal reserve feels with those policies, and whether it feels like it needs to move past her or slower.- faster >> as one pressure comes off, another comes on. we have heard the rhetoric about during the campaign. we are seeing what is happening on capitol hill. many are hell-bent on changing the relationship between congress and the federal reserve. how is the new politicalization? across theportant
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world. because central banks have been the only game in town for the last few years, they have also acquired a sense of political power that certainly creates apprehension among political establishment. of course, they would like to control that our. unfortunately, it is coming at a point where increasingly, central bank independence will become important, as perhaps inflationary pressures rise and central banks are asked to do the normal thing, which is control inflation. years getting an apparatus which ensures independence and insurers they can raise rates at the time that is needed without feeling somehow constrained by political pressures. time whensures, at a it is a delicate time for central banks. >> the backed up to this is of course a possibility we could
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see policy changes, tax reform, infrastructure spending packages. it is a real day and if you do, dammed if you don't when it comes to raising rates. given as you said the political situation, this is a time they have to tread very carefully. i have no doubt that given the tradition they have established, the fed will do what it thinks is right, rather than cater to political opinion. a look ahead. trump's new trade representative is a china critic. could we see a trading war in the year of the rooster? ♪
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rishaad: china's capital outflows and yuan depreciation
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are no longer disruptive, but donald trump will make it a key risk. give us your thinking. correspondent: if you look at the current situation, it has been fairly stable. i don't think there is so much of a concern about near-term economic perspective in china. currency depreciation and capital outflow has been something on top of everybody's mind. by the external, the influence coming from the u.s., as opposed to what is going on in china's domestic condition. they may be trying to move toward a domestic economy based on consumption. a huge deal of the economy is based on exports. how worried should beijing be,
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especially given the makeup of the cabinet so far? correspondent: the appointments of key trade related ministers and representatives feature a china.stile panel for that is major needs to watch carefully. they may be more diplomatic, sort of play game between the two sides, in order to make sure there is no disruptions and conflicts. in our view, even though trump has sounded a very hawkish and tariffs, weraising trump is really going into the white house and becoming president, he will be more realistic. selective,u will be terrorist being imposed on
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chinese products, as opposed to a full base of 45%. rishaad: there is room for a lot of accommodation on the chinese side, is there not? correspondent: absolutely. look at the u.s. trade relations with china. china exports a lot to the u.s. china is the largest export market. do impose punitive tariffs on chinese exports, china could easily retaliate. , think during an aipac meeting they had quite forceful, that of trump follows through. if there is retaliation from the china side, then the u.s. could get hurt as well. rishaad: you say this affects the depreciation and capital outflow stores, no longer disruptive. if it is not disruptive, what is it? correspondent: look at the
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impact of the capital outflows. the reason that a lot of people are concerned about this type in the emerging market is that the emerging market countries tend to have high external debt. you have capital outflows and depreciation, that ability will deteriorate quite significantly. that was the late 1990's financial crisis in asia. condition.liquidity china, the at domestic situation seems to be stable. rishaad: why get the money out of them? correspondent: the reason is that the wealthy chinese individuals have reached a certain level. behavior fortional them to diversify their assets globally, particularly during the time that as it returns is reduced in china. at the domestic
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situation, the economy is stable. it has been a bit jumpy lately. the trend has been fairly steady as well. china does not really have a lot of external debt. they don't have to worry about a classic debt crisis coming from currency depreciation and capital outflows. overall, i would say that so long as the pboc is a managing market expectations and being transparent with the folks picking mechanism -- >> we have this breaking out of china that says they're going to be considering options to support the yuan and curb outflows. moodes come against this music getting louder and louder, surely? correspondent: they have been putting their money where their mouth is. there has been major capital outflow channels, restricting .eoples products in hong kong restricting money and how -- in
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our desk in macau. the, there is no change to , they're now reporting -- thexactly this is on top of things they have in place to support the currency, yes? is a will, there is a way. they will get their money out somehow anyway. correspondent: right now, the whole situation could become tricky for the chinese government to manage. this isthe nature desk a negative consequence of opening up capital accounts. that helps you to get your currency and nationalize the r&d. there is a lot of external influence coming from the u.s. that you do not have the traditional tools to control. it is all about bouncing between the pros and cons. rishaad: it has opened up the
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floodgates, which i want to straightaway. where would it go? correspondent: it is everybody's guess. we know that in the currency markets, traders don't trade based on fair values. rishaad: there's no such thing is there? correspondent: exactly. in 2017, this is the year when we have the leadership -- sition, where stability rishaad: do you think authorities have become a bit more transparent? correspondent: i think it terms of forex and the fixing mechanism, they have a lot more transparent. at what is driving the october 2015 episodes and early 2000 16 episode, it was really the uncertainty and can of what theknowns
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pboc is trying to achieve. we have the fixing mechanism methodology being released and a much more transparent fashion. we have a more official communication from pboc, from the government on the china's yuan policy. all of this helped to make authorities and tensions more predictable and well-known to the markets. i think that helps with the conflict. we have a quick check of the latest business headlines. two of india's largest technology services companies are warning employs about the threat of political and economic conflict around the world. the chick does the chief executive is -- asia's biggest providers of i.t. services have lost business as customers rain and spending. in spending.
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$249 available october, but it is now expanding its horizon. they're trying to find a way it -- expanding to europe with at least five x in 2015. capital flow after deliveries fell shy. totaled just over 76,000 for the whole year. has left has been aiming for at least 80,000. it has been trying to maintain sales of the model s and the model x ahead of the less expensive model three, which will not begin production until late this year. coming up, one of china's biggest search engines is considering a u.s. share sale.
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biggest china's third search engine is targeting a $5 billion ipo. we're in beijing. why do they need the money? basically, its parent company at the moment is so rich, it is not making much of a profit these days. it needs a lot more cash to continue operations. thatrch engine like sogou was to go up against giants like have betterto services and products to entice users. rishaad: that is such a dominant player in the search market. is there a chance of actually beating them?
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correspondent: it is hard to say. baidu does dominate both the desktop and cell phone market. ou has an advantage that baidu's market share is slipping. users are willing to change the providers of their services. as long as they are providing better search engines on the mobile area, they can attentively stand a chance that potentially stand a chance to get market share. rishaad: that is the battle here. how do they differentiate their product to that of baidu? that will be key here. correspondent: one of the key areas of differentiation is language. -- ra of a wider away translation services. you can type something in in mandarin and you will get all the responses from the english-speaking internet back to them in mandarin. that is something baidu can do,
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but it takes more steps at the moment. thank you for joining us from beijing. talking about sogou and its ipo plans. let's look at the indices which are trading in hong kong at the moment. shanghai just barely higher. , with the the yuan weakest fix since may 2008. japan coming back up to the holidays. they yen actually on the way down in a three-day slump. that is helping to propel the exporters. up nikkei is about to put 1% -- 2.1% up. cannot retain the top spot for 2017? to someone with
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a new report on the very subject. this is -- success stories of hong kong ideas. ♪
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♪ it is almost 10:00 a.m. in singapore, one :00 p.m. in sydni, 9:00 p.m. in the evening on the eastern seaboard of the united states. i am rishaad salamat. this is "bloomberg markets: asia." ♪ japan leaving the region higher on its return to trade with the yen continuing its gentle slide. 65% in threeined days on rumors of a deal.
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donald trump underlining his tough line on china, his pick for trade leader is a longtime critic. all right, let's get a look with the japan leading equity gains, oil on the way up, the yuan since may lowest o 2008. just sing a day of advances. sophie is taking stock of what is going on. sophie: take a look at what is going on in asia. indonesia the only red in a sea of green, investors upbeat following robust manufacturing summers warning of global risk from a trump presidency. on theseeing again shanghai, reversing losses.
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equities lifting markets today. the financial segment leading industry groups higher, but auto stocks are the hero right now. 15 stocks in the auto's face rising on the nikkei 225, led by suzuki motor up by 4%. the yen nursing a three-day slump against the dollar, and the rise and dollar strength. a have seen the advance for third month now, and bullish bets rising ahead of the fed datang, as well as payroll due friday, the dollar surging to a 14 year high against the euro. on dollar strength, we are seeing yuan weakness. fixing thepboc currency at its weakest since 2008. lows,nggit, 19 year
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reaching 450 a dollar in the next couple of days. dollar strength filtering through into softness for bullion prices, gold dropping from its high. gainst comes to oil, resuming after the slump on tuesday, brought on by concerns majorutput cuts by producers, but we are seeing a rise ahead. we are expecting a decline when it comes to inventories. that is the picture here today. rishaad: thank you, sophie. sophie kamaruddin there. the u.s. president elected looking like he is rolling through on his promise of a tougher stance with beijing. heiser?obert light straining trade ties,
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particular with china. donald trump is following through on what he promised to do. he is putting the people in place to do that, whether 40% tariffs on chinese imports or naming china a currency manipulator, we don't know, but he is putting people into place who are noted china critics. wilbur ross, is not a china basher, but has been against these large trade deals. he was a u.s. industry first person when he consolidated and revived the u.s. steel industry. robert lightheiser was in the reagan administration some 30 years ago. he is the treasurer of the dole campaign.
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this is what donald trump has to say about lighthizer. 2011, lighthizer wrote that using terrorists promote american industry was a republican tenant harking back to the pro-business politicians who established the party. rishaad: and reagan, let's not forget. n in the to reig relationship with japan. was the trade bugaboo at that time because of semiconductors, automobiles, steel. in the 1980's impose quotas on steel imports, protected harley davidson from japanese competition, restrained imports of japanese semiconductors and automobiles, so lighthizer may be taking a
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similar approach to what he describes as const is constant rigging up trade in its failure -- favor. it's not just the trade representatives, also the policy advisor. the choice for commerce department, against free trade and so on. administration that will be significantly more protectionist where there is backlash against trade, immigration, and globalization in general. >> let's go old school. this is my cheat sheet of donald trump's. . rishaad: you are having trouble reading it, aren't you? council on economic adviser still has to fill out, agricultural secretary, and veterans affairs. rishaad: there we go.
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thank you very much. right, let's get you up to speed with some of the first word news as we head over to sydney. president-elect donald trump is claiming another jobs victory with ford now scrapping a planned car part in mexico. the company said we spent some of the 1.6 billion dollars on new jobs in michigan. news,hares jumping on the while the peso weakened beyond 21 to the dollar on concerns that donald trump will continue to persuade companies to cut investment in mexico. clearly, we see a more positive u.s. manufacturing business environment under donald trump. policiese program of he is outlining, and the tax and regulatory reforms, so this is a vote of confidence that he can deliver on those things. haidi: the u.k. plans for brexit have taken a turn with the
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resignation of the ambassador to the eu. he had been expected to oversee the first talks, but has been under pressure since saying it could take a decade for the u.k. to hammer out a trade deal with europe. unlikely to receive any more concessions from india to start making iphones in the council oner this excise duties. india has already relaxed rules requiring at least 30% of components the source locally before a tech company can open a single brand outlet in the country. red alert fored a smog and provinces across the north and east of the country, triggering the closer of factories. a huge part of the country has been blanketed in choking smog since the beginning of the new
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year with conditions not expected to improve until later today at the earliest. pollution in china remains many levels above safety levels. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: thank you very much indeed for that. indonesia hitting back at j.p. morgan chase and doing so by cutting business partnerships, all in retaliation for the bank issuing a downgrade. we have the background. rosalind: the indonesia finance ministry says it is not accurate or credible. the report downgraded toonesia's equity markets underweight, and called it a technical response to donald trump's win. the indonesian finance ministry says it will stop using j.p. morgan is a primary dealer and
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underwriter of sovereign bonds. let's take a look to see how j.p. morgan chase ranks in all of this. this shows a breakdown of underwriting in indonesia sovereign bonds last year. j.p. morgan chase tied for sixth $850, more than 800 a.d million. finance ministry saying that the banks should take responsibility for economic reports that could influence fundamentals, so indonesia not happy there. rishaad: you have to be careful there. i suppose this is the fine line to go down, isn't it? you don't want to offend them and lose business, but at the same time, you don't want to be seen as a patsy for them. right, so what is the response of j.p. morgan chase? rosalind: the impact on clients is minimal and they continue to
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work to resolve the matter, what they said in any male statement. jase wasan part of a syndicate when indonesia sold 3 billion euros in bonds. and yene two other ones and u.s. dollars, and j.p. morgan chase was not listed as one of the parties in those syndicates. you can read into that what you will, but at the moment, j.p. morgan chase not in the good books for indonesia's finance ministry, but we know that after donald trump's win, emerging markets were not in favor anymore, investors selling, indonesia took a hit, selling off $2.8 billion, dropping the currency lower, and forcing authorities to step in to stabilize the currency. there has been an impact from trump's win. the happens this year with on what happens to
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the rating going into the future of your j.p. morgan says there may be better opportunities for indonesia into the future. to, difficult for banks provide independent advice while remaining on the right side of authorities. rishaad: thank you very much. still ahead, stemming the outflows, will china's crackdown stifle mergers and acquisition in 2017? hong kong top the world and fundraising. we look at what is ahead for this year. ♪
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a quick check of the latest business flash headlines, british airways facing strike action next week after staff rejected a pay offer. cabin crew will stage a 48-hour walkout from the 10th of january, threatening widespread
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this russian of flights. using british -- accusing british airways of forcing staff to live on so-called property pay. nomura saying sales will jump by 5% for starbucks in 2017, but starbucks won't pass its rivals this year. says there is more room for growth when it comes to the beverage industry. china's third biggest search engine is planning an ipo of $5 billion to chase by do. we are talking about soguo, and the ceo saying the company aims to offer 10% in a sale later this year. about 45%, alibaba had 21%, soguo third on 16%.
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absolutely, well, we have global uncertainty, fragile recovery, brexit, trump, rate hikes, they all contributed to a somber ipo atmosphere last year. hong kong led the world when it came to funds raised. benson wong, we heard about company looking at listing, but tell us about what happened in 2016, characterized where hong kong was and how it did against the rest of the world. >> in terms of the global upket, what we have done has to the ipo to fundraising. was a drop ine total fundraising by 30%. ,s compared to other markets
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hong kong was still reactive. rishaad: $28 billion? >> the fundraising in hong kong, hong kong dollars around 195 billion, and there were two -- companies listed in hong kong. we are optimistic about 2017. we expect the numbers will be more or less the same, 130 versus 126, but in terms of fundraising, we expect a 10% increase 220 billion hong kong dollars. about $28hat's billion. there is one thing, you know, we look at soguo, but it's not looking to list here. it is looking to list in the u.s. stocksthe new economy tend to avoid hong kong in favor of new york? >> there are a few reasons.
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rishaad: or even shenzhen. i were the owner of a tech company, if i plan to go for the ipo, the most important is i want to make sure i get a high valuation and a stable ipo process. if you compare hong kong to the u.s., they are much more like high-tech stocks in the u.s.. that is one key factor. the other thing, the topic during the past two years that everyone has been discussing, each share can have different rights. in hong kong at this point in time, we cannot do it. for the tech stocks, it is a ,ommon structure, the system which hong kong does not allow. that's what we found when jack ma looked at hong kong and decided to go to new york, because of that very thing. >> that's correct.
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hopewe propose is that we that we can consider to have a new board, like a third board, to attract high-tech companies, new economy companies, which is what we are lacking. we need more. week called to what like the nasdaq him a week and still not have a deal plus. it can only have one class. rishaad: isn't a good practice not to allow it? >> there has been a lot of debate about the legal structure and the class action, etc. it will be like a good topic to bring up again to open about a third board, which may be can a sophisticated investors to invest in that
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slowly educate our investors in hong kong, then open up the entire market. rishaad: let's talk about the hong kong-shenzhen connect. dismal start in terms of volumes, but designed to help in this process, isn't it, to allow hong kong to invest in new economy stocks in shenzhen, and shenzhen to do some of the stocks that the mainland has on offer here, a-share provisions. the hong kong stock through train put forward from 2007 2 now, we have the shenzhen stock connect, shanghai-hong kong stock connect, this represents a huge opening for the china capital market, but the reason the launch of the shenzhen-hong kong connect, we believe it will take some time. in the long run, it will bring
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different types of investors to hong kong, and also help them to invest into the new economy, and also high-tech stocks in which hong kong is lacking. rishaad: you are pretty keen that hong kong will be number one, if not the top two or three in terms of them amount of money raised in ipos. what is the attraction of hong kong? seeing hong kong maintaining top three. one of the key reasons is that we have a strong pipeline. in december 2016, 126 applications have been processed by the hong kong stock exchange. january 2017, the will be at least 16 companies listing in hong kong, the numbers we had in the first quarter of 2016. rishaad: liquidity to keep stoking them? >> we believe so. we cannot compare to a few years , a lot of liquidity
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available in the market, but if we are comparing more or less last year, we to believe the market will be able to absorb all these companies. rishaad: any chance that hong kong gets aramco? >> we hope. rishaad: all right. thank you so much. benson wong from pwc. as the: capital outflows people's bank of china injects money at record levels. ♪
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china's considering further measures to support the yuan and curb capital outflows this year. let's talk to tom mackenzie. what is going on? we are getting lots of headlines on this today. headlines breaking a little
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under an hour ago. officials are considering contingency plans to support the outflows,ase capital including asking state owned enterprises to temporarily conserve foreign exchange into yuan, and may trim u.s. treasury holdings to support the yuan and maintain a stable exchange rate. these lines coming after january 3, requirements put in place for chinese citizens looking to make use of this $50,000 conversion quota. have chinese citizen sign a pledge to promise not to use that converted currency to buy property, insurance products, or securities abroad. chinese citizens also have to detail what they will be spending their money on, and it points to the pressures officials are under to maintain
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or pull back on capital outflows . the context of courses that in the first 11 months of 2016, around $760 billion worth of capital outflows were recorded, according to bloomberg intelligence. rishaad: tell me something, the pboc injecting a record amount of funding into markets come all coming after that, right? tom: that's right. plugging the gaps as capital continues to flow out. were talking about a particular funding mechanism that the pboc -termet up for a medium liquidity facility. again, it points to pressures from capital outflows and the steps that policymakers are having to take to pull some of these i can, and a contortion
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effect. on the one hand they have to keep the funding to support the systems and clear the banks that are seeing deposits depreciate, and on the other hand, they have to rein in the risks we talk about so much, associate with high corporate levels of debt. the pboc moving to a more neutral stance in terms of monetary policy as the overall economy is showing relative levels of strength. rishaad: thank you very much indeed for that. our very own tom mackenzie from the pboc asking at it tries to curb capital outflows and faces a weaker yuan as well. the weakness today being confirmed by the fix, the weakest since made 2008. unchartedmbing, warders at the same time as
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asian shipping executives are facing a sink or swim outlook for 2017. the point is can they reversed the declines they witnessed last year? ♪
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>> it is 10:29 a.m. in hong kong. i am haidi lun with first word headlines. president-elect donald trump has signaled a tougher stance on china, naming robert lighthizer as head of the u.s. trade representative office. replacing the person who led the talks on the stalled tpp. and nafta,es tpp saying they undermine american jobs. a bank run by donald trump's pick for treasury may have engaged in widespread misconduct involving homeowners.
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memos from the california attorney general's office call for onewest to be sued. the memo does not say if steven of the was aware alleged misconduct. u.s. factory saw a pickup in december, manufacturing rising the most in two years. the isamu growth for a fourth straight month, topping estimates that 54.7. new orders search the most in more than seven years, and up to businesshove confidence. up to the holiday season, not much joy for hong kong. the 21st straight month of declines. the deeper than expected fall is being blamed on reduce spending by tourists on big-ticket items. the hong kong retail management association says he slump is
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near the bottom and expects fewer store closures this year. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: this is "bloomberg markets: asia". i am rishaad salamat. having a look at what is going forarket wise, great day them as they come back from christmas holidays. sophie. sophie: happy morning for japanese markets. we are seeing some buoyancy and asian markets, although weakness in the hang seng and the kospi. jakarta equities deepening earlier declines. i'm looking at the japanese markets, adding over 2% heading into that lunch break. we also had governor kuroda saying the central bank will
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continue its easing program. i want to look at some equity movers, particularly the japanese phase, given the action we are seeing there. ta hits the daily limit for a third session, advancing over 65% over the past three sessions following reports it is nearing a settlement with the u.s. recovering, plunging 6.9% this morning after a newspaper reported regulatory concerns about the company's earnings. esas electronics rising. this after the nikkei newspaper reported tuesday that the company has developed a self driving car prototype using its own semiconductors to five buys, nine holds, and zero cell calls on that stock. thank you very much
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indeed for that. shipping companies continue to struggle with weak demand and depressed freight rates, and following the collapse of hanjin , some say the industry is sailing in uncharted waters here. a lot ofeen consolidation among asian companies. how will that help them? >> you have to consider that among the top five, it is pretty much dominated by the european shipping companies. of -- ine been a lot asia. what has driven a lot of the asians to do consolidation is that they realize they cannot survive on their own, so there have been consolidations within the japanese shipping industry, consolidation in china. we have seen a restructuring in
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korea. sometimes working to gather can be better in a very competitive landscape. all of thish restructuring over the last year or so, has that been able to do anything to put the shipping industry on the road to recovery? >> there is a lot of hope in the market right now that with fewer attempts by other shipping lines to undercut each other on freight rates might end and we might see some recovery in rates. that could send a positive signal for the industry, becoming a bit more profitable or cutting losses. the only real problem right now still is the overcapacity issue. that will not go away anytime soon, so it comes down to how disciplined the shipping lines will be after all the consolidations. rishaad: right, thank you much very indeed for that. deals with huge m&a
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at&t's acquisition of time warner leading the way. what is ahead for this year? excitementsing much or expectation? >> we are. 2017 could be a block buster year for global m&a. some of the bankers we have spoken to are starting to work on bigger and bigger transactions as confidence returns to the corporate suites. theaad: valuations with equity rally have become a bit top thpy too. >> that could affect it, but the positive elements outweigh it with the trump administration coming in. they will take a softer stance on antitrust issues, so industry consolidation that had been attempted had been rejected in the last year or two.
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we may see some of those deals coming back now. rishaad: if we continue to see dollar strength, that means cross-border mergers by american companies become cheaper and perhaps a big value proposition. >> cross-border mergers will continue to be a theme this year. the trump administration is encouraging repatriation of funds parked overseas. having those funds offshore was one major reason that has been driving the overseas deals for american companies. onthey bring that money back shore, they may shift their focus to america. rishaad: they will also bring the money back and increase the value of the dollar, which feeds into the narrative that i was presenting to what about chinese deals? >> chinese deals could be a dark spot this year. there has been a crazy wave out of china in 2016, but now the government is cracking down on less strategic deals.
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most make a deals of $10 billion or more have been banned. tryinge curbing deals, to stop acquisitions in overheated areas like film production and hotels, so we will see companies focusing on the deals that make sense. rishaad: thank you very much indeed for that. now, 2017 may prove more kind to companies seeking to list in malaysia. less than five years ago, the country was the top ipo destination in southeast asia, then it lost its allure. forwas last year so slow companies coming to the market there? i think there was a multitude of factors. there was actions, lot of uncertainty, the global commodities market did not do too well as well. the volatile ringgit was another factor. a lot of companies planning ipo's in 2015 and 2016 have had
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to postpone it until later. what is theht, so thinking at the moment? either expectations of a rebound? we have a lyrical uncertainty in malaysia, which can't be helping. , thelitical uncertainty prime minister has proved he has staying power and has regained control of his party after some turmoil in the past couple of years. we are seeing that there could be a rub off affect. if some of the ipos do well, it could encourage more companies to go public as well. rishaad: thank you so much. the we will be hearing views of a visit for investor on -- views of a professor on brexit and economic risks. that is on the way. ♪
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of india'sth two largest technology services company's warning employs about political and economic conflict around the world. totold staff to innovate survive, while the chairman said geopolitics is a risk to industries. providers --est asia's largest providers are cut as they rein in spending. the latest smart phone in north ,merica and europe by huawei dual cameras, 249 dollars. it has been available in asia since october and now broadening its horizons. it expanded to europe and north america with the five x in 2015. an extended in
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session, fourth quarter deliveries falling short. the total of vehicles sold just over 76,000. tesla had an aim of 80,000. it has been trying to maintain sales ahead of the less expensive model three, which isn't designed to begin production until later this year. as we try to protect the year ahead, the effects of 2016's global shocks will be felt. spoke tooubini bloomberg about geopolitical risks and what donald trump might make of a post-brexit case. >> i think that first of all that u.s. policies will be more protectionist. u.s. will havehe a trade deal with the u.k. is --
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brexit will become more cumbersome. it will take much more than two years to reach an agreement with the eu, and we will go to a situation where there is limited market access, and that will damage economic growth for the united kingdom at a time when europe and the eurozone is in slow-motion disintegration. if le pen comes to power in france, this could be the beginning of the end of europe and the eurozone. that is the biggest risk for the u.k. and europe. about the 1930's, 19 40's and what the world looked like after, i'm trying to understand what is the best way of understanding this. i'm just wondering whether mutually assured destruction still works or those cold war series can be applied to this new world you talk about? is a risk the there
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that eventually if we become to -- moreal us unilateralist, there is a chance for conflict. there is a rising number of powers becoming nuclear. gives up on europe and its allies, you'll have russia on one side becoming more aggressive come ukraine, baltics, balkans, middle east, at a time when europe and the eurozone is in the process of disintegration. my biggest worry is le pen will come to power in france. >> guy johnson has this front and center. >> the potential of the cold war is low, but you will not see block behavior. when the cold war happen, the united states had allies that wherewith the u.s., and clearly trump is setting up for a u.s.-china confrontation that won't be well managed, but american allies in asia are looking at the united states and saying that this is not a safe route for us good we will have
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to work more closely with the chinese economically. traditional allies will also have a problem. >> i must ask you about your turkey. difficult 2016 for turkey. can turkey coalesce away from terror as they move into 2017? and thenk the police army after the coup are weakened, and now there are the challenges of terrorists coming from ice is, inner turmoil. isis, inner turmoil. europe is challenge because it does not want turkey to become a member of the european union. that means that forces that are more moderate are becoming less moderate.
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>> turkey is the one where we will have a referendum and wins , but is moving the country in a different direction. to becomehe race china's google heats up as another search engine prepares to list in the united states. ♪
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rishaad: you back with "bloomberg markets: asia". a lot going on today, the weakest yuan fixing since may 2008. looking to curb capital outflows more as it seeks to protect the yuan from further weakness. what we do have is a day of rising equity markets. we also have the latest fed minutes, market moving as well, should give us an idea of policy direction and the pace of rate hikes, how many we may well have been 2017. the former reserve bank of india governor has been talking to bloomberg and told us the federal reserve sees limited room now to keep policy accommodative. >> i think we are in the process federalng with the
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reserve seeing limited room for continued accommodation, and starting to raise interest rates. i think you will see the pressure on other central banks also come off as much as it has been over the last few years to continue accommodation, so my guess is that we are in the process of exit. will be depends on conditions in the united states and what policies the new administration brings, and how comfortable the federal reserve feels with those policies and whether it feels it needs to move faster or slower and how quickly it will come in. as oneeems to me that pressure comes off, another pressure comes on. we heard the rhetoric about politics and the federal reserve during the campaign. we are seeing what is happening on capitol hill, many wanting to change the relationship between congress and the federal reserve. how does the bank deal with that new politicization? >> it is there across the world.
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have beenntral banks the only game in town for the last few years, they have also acquired a sense of political power that certainly creates apprehension amongst the political establishment. of course, they would like to control that power. at atunately, it is coming point when increasingly central bank independence will become important as perhaps inflationary pressures rise and central banks are asked to do the normal thing, which is control inflation, for which we spent many, many years getting an apparatus which ensures independence and ensures they can raise rates at the time needed without feeling somehow constrained by political pressures, so these pressures is reallytime when it a delicate situation for central banks. >> very delicate, indeed.
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the backdrop is a possibility we could see policy changes, tax reform, and infrastructure spending package. the fed isn't a difficult decision when it comes to raising rates, potentially blamed for doing the wrong thing whichever way they go. thebsolutely, and given political situation, this is the time they have to tread carefully, but i have no doubt that given the tradition they have established that the fed will do what it thinks is right rather than cater to political opinion. well, indeed, those fed minutes will be playing out in the markets over the next 24 hours on a day when we are seeing the nikkei 225, japanese traders back at their desk for the first time in 2017, gains of 2.2% at the lunch break as they resumed trade and about 40 minutes from now. -- four stocksp on the way down, 220 moving to
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the upside. , the asx, here we go 200 off the highs of the day. 200 remain the asx positive in bull market terrain, 122 stocks on the way down, 67 moving to the upside. let's look at singapore, the straits times index, there we have it at the moment, three stocks actually on the way down, 23 moving to the upside, the straight times index on what looks like a dull day in singapore at the moment, moving higher to the tune of three quarters of 1%. there we go. some markets showing a bit of , 20 one stocks declining, 22 advancing, the market flat on 22,141. ok, let's have a look at china's third biggest search engine.
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it is targeting a $5 billion ipo as it chases by do. -- baidu. we are in beijing, why does soguo need this money? basically it is up against the giants. baidu is a huge titan in the chinese search market. google is not allowed here. baidu,ne wants to unseat it takes a lot of resources to do. at the: well, you know, end of the day, david, baidu is such a dominant player in the search market in china. this this company stand any chance of getting to their levels and taking them on? >> it is tough to say. staff and more users, and it also has a lot of adjacent businesses. food delivery businesses that a control data from to build its
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artificial intelligence systems, is thet soguo does have benefit of number mess. it is smaller, can offer new products, changes pro-dex without it hitting too many people. as long as it uses money effectively and acquires good artificial intelligence companies, it should be able to offer new products faster, such as its translation software. rishaad: is that what differentiates it when it comes to the likes of baidu? artificial intelligence as something that it is trying to differentiate itself on. startingh engine's are to move towards using artificial intelligence to improve search rankings. everyone is in competition on this area, baidu in clued it, so have aninks it will artificial intelligence edge thanks to the money it raises from the ipo, and also believes
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that the area, especially mobile search, as well as translation services, will give it an edge that baidu cannot match. rishaad: right, thank you very much indeed for that. right, let's take a look at revlon, why? it rose the most in two months as it said it will cut 350 jobs, shares of jumping 2.5% on the latest cuts after elizabeth arden was purchased by revlon. revlon has promised to restructure its business by the end of 2020 come investors giving great cheer to that. israel's finance ministry says it opposes the sale of insurance companies to chinese investors. for agreed to buy phoenix $500 million five months ago, but the deal still needs approval from the israeli authorities. phoenix agreed to a takeover,
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but that deal collapsed after fosun disappeared. coming up ahead on bloomberg markets, updating you on the big stories of the day. what have you got going on? shery: we will be talking about the peso, not the mexican peso, but the philippine peso, also headed for another bad year. we will be talking about tencent , losing $35 billion in market share given the pessimism over china come a despite the fact there are many buy ratings. this is bloomberg. ♪
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