tv Bloomberg Markets Asia Bloomberg March 19, 2017 9:00pm-12:01am EDT
new fears of a bubble. haidi: beijing and washington prepare for top level talks over tensions and trade in north korea. rishaad: the secretary of the state turning up the heat on pyongyang, saying the gears of patients are over. let's look at the markets, no trading in tokyo. , some data coming through, reaction to house price numbers out of china. also the followthrough on this trip by secretary of state rex tillerson. that: a lot to impact from tillerson visit. , currencies seems to be off the agenda and that g-20 communicate. forwonder what that means
that fear of a currency war between the u.s. and china. we are 30 minutes away from the we are 30 minutes away from the open end the mainland and in hong kong. -- sophie: we do have new zealand stocks leading the drop, voice for the biggest fall since november, down 1.2%. aussie shares are snapping a four day advance. the year-to-date rally is a repricing for an old-school economic recovery led by shipments to the u.s.. take a look at currencies, the dollar did reach a year to date low. the singaporean dollar
appreciating against the greenback. baht extending last week's rally as foreign funds pile into thai bonds and stocks. week, there were stronger inflows into korean assets. is strategist says the won shrugging off geopolitical concerns and domestic politics to make it the region's best performer year to date. below $50 a barrel, take a look at this. we are seeing an exodus of oil price optimism on this chart. you can see how net long positions for wti have tumbled. that is the line in white on this chart. of a furthers
price drop have doubled and they managers head for exit. this is on top of growing concerns are brown u.s. inventories. the opec minister is looking at extending cuts, but russia said it was too early to discuss an extension. we will find out if they agree to disagree later this month at the upcoming opec compliance meeting. rishaad: thank you for that. let's get to first word news headlines and joined paul allen. one of south korea's most powerful corporate families will be together for the first time in years later on. the trial of the lotte chairman, his father, and two of his siblings begins in seoul. they face embezzlement and fiduciary breaches amounting to $250 million. rare asamily reunion is
the two sons are battling for control. the latest opinion poll in france puts independent emmanuel macron in equal place ahead of next month. percent support, the same as marine le pen. haservative francois fillon 17%, with the left wing candidates on 12%. is seen beating marine le pen in the second round. japan and russia are said to have agreed to begin direct flights to disputed islands to allow former japanese residents the chance to visit. kyoto news says the two sides have discussed proposals for joint development of four islands. the proposals are said to include health care, fishing, and tourism. prices rose in february and more cities despite increased restrictions on property transactions. prices of new homes rose and 56
out of 70 cities tracked by the government, compared with 45 in january. on friday, beijing raised down payment requirements for second homes 10 points to between 60% and 80%. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: the trump administration made its mark on the g 20 finance ministers meeting in germany despite coming "ill-prepared." kathleen hays is here, to what extent is that final communiqué seen as a statement as a victory for washington? victory considered a because the g-20 agreed to remove language, anti-protectionism language, that is typically in their communiqués, because the trump team pushed against the
traditional wording to signal a new position on trade potentially coming. had in theirthey communiqué, a simple bland a sentence that does not tell you much, so the other side is that the victory is not completely won yet. "we are working to strengthen the contribution of trade to our economies." had thischin also to say on saturday in germany. in free trade and are one of the largest markets in the world. we are one of the largest trading partners in the world. trade has been good for us and good for other people. having said that, we want to re-examine certain agreements. saideven mnuchin and also he would like to see a win-win situation for everyone on trade. here is what the u.s. is looking at.
let's look at this bloomberg #4785.this is the top part of the chart shows the trade deficit. the blue part is services, usually a surplus in the u.s. trade balance. the white bars, that is trade in goods, manufactured goods, and that is where the u.s. has a large and persistent trade deficit, and that is why you see the bottom half of the chart, the overall trading deficit staying at 42.5 billion dollars, too much for the likes of donald trump and his team. did other global officials reacted to all of this? >> it is like the student telling the teacher i did not have time to study. in this case, the german finance minister said it was clear that stephen mnuchin did not really have a mandate to sit down and do detailed negotiations you need to do on trade if you want
to make a change at this kind of g-20 meeting him about the team has not been in place long. australia's treasurer scott morrison said stephen mnuchin met people, talk to people, performed well and was constructed, so he gave steven mnuchin a bit of a thumbs up. the eu minister for economics and finance though said ultimately that there has to be an agreement that protectionism does not work. >> we must all share the view trade, has toir thehared, to take on board losers of globalization, that trade is good for our economy and protectionism cannot be the solution. >> some good news being reported that china's finance minister and secretary mnuchin have agreed on economic corporation, making it more efficient and effective.
it looks likeugh g-20 officials will have to wait until their july 20 meeting to hammer out issues because they ran out of time and had to go home. mainly the trump team, there was a sense they have not been in ever very long and what the final position was on trade, they weren't ready to negotiate it just yet. yvonne: we know what happened last time when we had weaker fed speak. our week during up to do it again this week? think you make a good point. we could see the markets moved a lot, seven fed speakers, janet yellen on thursday. -- charlierrow, neil coach evans, a voter from chicago speaking as well in new york. also ahead on monday, a number of things are going on. let's look at this interesting
list for the french candidates for president debating on television. prime minister shinzo abe abe and angela merkel are together talking trade. a lot of global leaders will go head to head. nicola sturgeon, scotland's for aminister, is asking sec. 30 ordered so she can go to the u.k. and say we want to , so we will see how that goes. she wrapped up a two day meeting. also this week, the reserve bank of new zealand will issue its rate decision on thursday, so all kinds of central bank activity all week to keep our eyes on. yvonne: a lot of event risks looking ahead. kathleen hays there for us in new york. secretary of state raising the stakes when it comes to north korea, rex tillerson saying the
i am rishaad salamat in hong kong. you are back with "bloomberg markets: asia". singapore listed as rough holdings has filed for bankruptcy. ofhad been facing weeks hostile action from creditors as it struggled to recover. says its assets are worth $1.3 billion. ownedors say they are half that. shares are down 70%. the stock has been suspended since march 15. rishaad: deutsche bank expected to raise $8.5 billion as it
asues 690 million shares at 35% discount to the close on friday. deutsche bank announcing the project on march 5 two boost growth and shore up finances. john cryan said he did not want tapap shareholders -- shareholders. yvonne: proprietary work is expected to begin on the carmichael mine after given final governmental approval. the chairman expects as early as may. it is to feel power generation and create 10,000 jobs in queensland. brand-new trading week, there is something of a risk appetite blackhole as we started new week. high risk, low
volatility environment we have seen. our next guest suggests investors should take advantage of australian stocks. cmc markets asia-pacific joining us from sydney. are you optimistic with weaker somepeak, that we will get rebirth of volatility in the market? >> not particularly. generally speaking we are in a situation where markets are fairbly fairly close to five you. unless we see something to dislodge that commit we may see a continuation of this low volatility. traders andr investors, it is a matter of being prepared for where you do want to be if we see volatility and the ready to act when it comes along. yvonne: i'm looking at your previous polls from early february, buy gold ahead of
political volatility. i want to bring up this chart that we pulled from the mliv markets blog. it suggests that high in january, was that a long or medium-term top for the dollar, or was that is good as it gets, and how does that feed into your position on gold? >> the u.s. dollar has declined quite a bit. i don't think it is a long-term top. i think that whilst this selloff in the u.s. dollar and correction may go a bit further, i think it will be a buying opportunity. it is one of my premier calls. i think we will see the interest rate differential widen between the u.s. and other central banks , driving u.s. dollar strength.
that will be a negative headwind for gold, but the point i was making last time we met, the political risks. i think political risks at this stage will put a floor under gold, so even if we see u.s. dollar strength driving it down further, that itself will create an opportunity. rishaad: i think what you're doing is you have to be on the other side of that trade if you are buying dollars. i think you're not a fan of the aussie, are you? >> that's right. of aussie looks to be one the good places to the good places to be if you are a u.s. dollar bowl. -- bull. there is good resistance for the aussie of two 78.5 cents. i don't dismiss the possibility of getting to the 78 level, but
form where we are now, it is a decent sell. i think the austrian economy looks like one of the comparatively weak economies in the next year or so with problems and our property market , and that whilst commodities may stay up, they are unlikely to go much further and could be removed as a source of support for the aussie in the not-too-distant future. rishaad: tell me something, what's your view on the bond market? changedo see if you are or you are revisiting this after what the japanese authorities taking downo in their holdings of french treasuries and getting back into the u.s. treasury market. no, i think that will create
an opportunity if it goes further. i don't discount the possibility of u.s. bond yields falling further and prices going up. that sort of rotation by the japanese could be one of the main reasons, but the big the fedremains the fact moved in march rather than later , the fact that u.s. wage growth is now 2.9% really make the most likely scenario to me that we are going to see a total of three or four rate hikes this year and next, and the fed also moving to begin selling down its 2008, and if in that is the case, we will not see u.s. on yields languishing around 2.5%. ory were more likely be 3.5% 4%, and this is providing an opportunity to sell u.s. bonds.
yvonne: there has been a lot of exuberance over where emerging markets are heading. haidi: it is that the new area we should be concentrating on? investors have been traumatized by it emerging markets over the last couple of years or so. >> look, i think there is an opportunity at the moment. we are in a world as you said of relatively low volatility, so unless we see some big political risks come to pass, assuming that doesn't happen, it will be a matter of being a mild contrary in and taking advantage of the moves as they unfold. as you say, emerging markets have then a bit out of favor and is creating an opportunity compared to u.s. stocks at the moment potentially. haidi: we appreciate your time.
coming out with a special come itself ofua 15% premarket. you also have other things in , #6907, showing you how shenhua energy has not been keeping up with the coal price as it has risen over the last two years. we had a big fall back in iron ore last year. i'm watching a stock that has not moved as much as your stock pick. this is the world's biggest bank by assets, a political story. whnn -- gary co.
planning to sell his stake according to the disclosure document obtained by bloomberg. he is the ax president of goldman sachs, worth more than $15 billion. separately planning to do fast $260 million when it comes to goldman stock. end up in the firing line because it is a top 10 it in trump towers and is up for renegotiation. you can follow the story and all to days stories at mliv get a market run down in one click. there is commentary, ongoing analysis the help you find out what is affecting your investment whatever they may be at any given moment. rishaad: thank you.
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9:29 a.m. in hong kong. we are counting down to the start of the trading day. fromrishaad salamat bloomberg's asia headquarters. haidi: i am haidi lun in sydney. the, it is a funny start to trading week when the biggest mover in asian markets so far today is new zealand. volatility,ot of not a lot of action is the week starts. rishaad: absolutely, just looking at what we have in store, some ppi gauges coming through come but it is second to economic data after that draft
of political news, the fed decision playing out, affecting markets. we are looking at that u.s. secretary of state visit to this part of the world as well, japan, south korea, and over to china. let's look at the hong kong and shanghai open, over to sophie kamaruddin. sophie: kicking off with stocks in shanghai, reprising for a fifth day, up .1 percent, although shin jen stocks are falling slightly. climbing, andes the exchange of little unchanged. on, stocks in singapore have swung into gains, but dbs falling .3%. the bank says it has suitable
provisions made for exposures to ezra. oil services firm did file for bankruptcy in the u.s.. to hong kong, property stocks telconks falling while and energy stocks on the rise. at what isoser look moving in particular. rising 16.5% after its profit eat and a special dividend announcement. following theding latest home price data out of castingising prices doubt on the efficacy of cooling measures by regulators. curvessays strict or will put pressure on property stocks in the short-term, but could be a rebound of potential positive sales data. we have seen property stocks
resilient throughout the year so far. country garden leading the rally of chinese property stocks in hong kong, although we are seeing that taper, but there is some resilience despite hoppity curves, country garden seeing stronger sales, so we have to look out at how sales continue throughout 2017. more on let's get china's rising property prices. our chief asian economics correspondent enda curran is with me now. this seems quite relentless. ticking up quite nicely despite the property curbs the government has put in. they were seen as a threat to the economy last year. it bodes well. rishaad: that may bring in this graph #4099.
nonperforming loans, the blue line, they have tapered off a little bit. ,he situation is not worsening but probably prices continue to go up. the data is emerging and there is a sense that china's economy is in a good place. output isdustrial doing well, factory prices are better, exports aren't bad, so from a cyclical viewpoint, their latest real estate numbers as to the sins the china's economy is doing ok, for now at least. haidi: is this the sweet spot the government wants to hit in terms of not putting the brakes on massively when it comes to property sector growth, but also trying to get rid of some of this potential for a property bubble, or do you think they
need to do more to get these prices down more? >> the language from the npc suggested they were comfortable, happy to see inventory clear, and they're not too concerned about the big growth in mortgage lending. badall mortgages are for properties so to speak. it certainly is a concern however that if we saw a run-up in prices like last year that there is a risk that we are getting back into instability. let's not forget the external risks facing china, rate hikes, , capitalfrom the won outflows. we have that shot over the now at the g-20, soak it is hard to say you can turn your back on what is happening in the property market completely. you bring up what the fed does, which has implications for the pboc, and we did see the
pboc for separate reasons tweaking its rate on the money market last week. want to go way they if they want to be gentle on these property developers who have quite a bit of debt? >> there is a softer approach going on in general. is in no hurry to choke things that might cause social unrest or cause mass unemployment and the property market falls into that. they don't want to curb prices to the extent that it hurts the wider economy. nonetheless, they have to remain cognizant of the risks. china's economy might be ok now, but none of these structural issues have gone away, and some cracks might appear if we saw a faster than anticipated pace of rate hikes. cyclically things are are ok,
but there is stress under the bonnet that we have to be careful about. rishaad: indeed, projections of a hard landing again are greatly exaggerated when it comes to the property market, but we have these third and fourth tier cities that have so much excess supply, and the reverse when it comes to the top to tears. onyou have to look in at it a region by region basis, that's why it will be important to watch what local governments do to contain their own local property markets. firstl have the imf review of the china banking sector out in five years do into july, and that will give us a deep dive into the nature of the china's bank sector is. rishaad: thank you so much.
there.rran let's get your the first word news with paul allen. may bank expects transactions in southeast asia to rebound from a five-year low on the back of an improved outlook for the regional economy. the ceo says share sales and rights offerings are likely to come from power, infrastructure, and consumer products. geopolitical issues and volatile commodity prices could affect the coming months. investors are being urged to make funds available to take advantage of opportunities and junk bonds and emerging markets. prices el-erian says will eventually become more attractive as bond buyers grasp the range of risks. >> investors overreact when certain companies go under pressure, so it can leak, and that is investor behavior. we have seen it over and over again. a few names have problems,
,hough index gets contaminated contagion, then an overreaction. the right thing to do is to have dry powder and wait because certain sectors of high yield corporate markets will come under stress. paul: cooper has confirmed jeff jones is leaving the company following reports he had grown tired of the controversies at the company, ranging from allegations of sexual harassment and combative behavior from the ceo travis kalanick. the company is facing a lawsuit from waymo for allegedly stealing secrets. environmentalists have spent years fighting the rise of the battle with traditional passenger vehicles is all but over, and the suv has one. in australia, sales overtook passenger cars last month following a similar picture in the u.s.. suv's there outsold cars and
and in both december january. in china, suv sales surge 45% last year. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thanks for that. coming up, rex tillerson's 24 hours in beijing ahead of next month's meeting between the leaders of the world's two biggest economies. we will be live in beijing for a debrief. this is bloomberg. ♪
levels. last year, cathay announce the first loss in eight years and announced it will cut jobs by 30%. it says it is reviewing the eu ruling. coal prices have allowed china's biggest producer to post its first profit growth and four years in spain -- and pay a special dividend. net income rose, although shenhua had flag to the rise in january. coal prices and china surged after the government reduced production in order to revitalize the industry and curb overcapacity. groupd: the dalian wanda is entering the cloud business by forming a partnership with ibm. ibm will introduce watson computer services to the mainland, allowing chinese businesses to have access to its cloud and the structure and language services that allow consumers to talk to apps.
haidi: getting back to one of our top stories, rex tillerson using a 24 hour trip to beijing to lay the groundwork for a presidential summit over raised tensions regarding trade policy and north korea. tom mackenzie has more now in beijing. how close are we to these top-level talks? as yet have not had any official confirmation of these top-level talks will happen, but it does seem to be baked in from both sides, so we are waiting for that official confirmation. part of the role for rex tillerson here was to reassure his chinese counterparts that meeting would go smoothly and tried to dollar back some of the language we have heard from washington. it is interesting to hear rex tillerson use of phrase taken from chinese government speak as
it were when he met with the foreign minister. he talked about mutual respect and win-win cooperation, which is straight out of the government chinese playbook. he received some criticism, and positive reviews from china analysts on that. it is about getting some level of understanding before meeting that rex tillerson said is important to set the agenda for the next 50 years in chinese relations. he said the new priorities need to be laid out how that they are at an inflection point. did rex tillerson make any progress persuading the chinese to take a tougher line when it comes to north korea? tom: he had constructive talks, at least that's what we heard inm the state department terms of his conversations with the foreign minister. they talked about the need to attempt to do everything in
their power to a void in the korean peninsula, but clearly tillerson came here to add pressure on china and make use and use ofnctions the economic and trade leverage china has with north korea. china did say that they would be approaching the north koreans to see if they could sway them once again to move away from their nuclear weapons program. china sees this as an issue between washington and pyongyang and wants them to sit down to a dialogue. the u.s. says they will not do that and tell north korea moves away from its nuclear program. agreed that diving down the tensions is a key aim of both sides. it is just about how they go about doing that, which is the key question. rishaad: let's discuss all that with the vice-chairman -- thank you for joining us. visit,d you make of this
these three countries, specific messages for each one, but i suppose north korea was perhaps the one we can start off with first of all. i think the good news is that the visit of rex tillerson has gone smoothly. there was some anxiety that the wrong things might be said and noses might be put out of joint, but he seems to have navigated that successfully come a which is what we should expect from an experience global businessman like a rex tillerson. on the other hand in my own opinion, i don't see any of the other major issues of the region have moved closer to solution, but having people talk with each other as always a good step in ae right direction to avoid conflict or something like that. is always going to be a bit of a fact-finding mission for rex tillerson to a certain extent for the countries
he is visiting as well, that you say he is a seasoned businessman, but this is the top diplomatic post in the world, and there is a lot of grumbling as to what was said behind closed doors and what he actually said to the media, a lot of criticism that he was too soft towards china, that he should have defended the interests of seoul a little more strongly. >> there are a couple of observations i would make about that. first of all, it is not in anybody's interest for the u.s. to be overbearing in asia or attempt to play the strong man with china. at the same time, we have a huge weakness and south korea because there is effectively no leadership in place to participate in this kind of dialogue, let alone participate in the critical policy issues that are rattling around.
north korea is an issue that has been around for over 60 years and it is one of those global stalemates that in general we in seoul don't get upset about, but recently we have had the arrival of this thaad missile system which is distasteful to china, and that's creating a dynamic at the moment which seems to have been gently sidestepped and this particular visit by rex tillerson. rishaad: tell me something very quickly. not surprised by the continued saber rattling from jan gang with this new rocket propulsion system being announced over the weekend as well? there doesn't seem to be in the appetite for dialogue or détente. >> korea is famous around the world for its korean dramas. north korea is probably the longest running drama in the inld after the mass trap
london. i think we have to give pyongyang credit for managing to come up with some sort of distraction in the middle of rex tillerson's visit with the test of this new rocket engine, and we will carry on with more of that. i would be concerned if they were to quiet rather than too noisy. rishaad: thanks. stick around with us if you would. we will continue our chat and just a couple of minutes from now. ♪
is to all thehaad parties involved, particularly china. theou look at the fallout, economic fallout, will this worsen at a time when south korea does need these trade links regionally? a i think you are touching on critical point here. first of all, korea today is leaderless and effectively rudderless. this is a country that needs to be led from the top. that is its history and dna. system has significantly upset beijing and china in general, and for good reason to be honest. tension foresents a north korea to test it. let's send the missile and see if thaad can catch it. to be frank, i don't believe the th will be that successful in preventingaad a missile attack,
but it brings a lot of surveillance equipment that basically gives the ability to penetrate deeper into china than srobably the u.s. and outsider have ever had in this neighborhood. the has not only upset leadership in beijing, but it has spilled over into the social sector and to ordinary people. there has been a restriction on travel and korea, and korea depends heavily on growth and chinese tourism to drive its economy. exposed lot of products to that market and the backlash could be significant. ,t is not a healthy situation particularly as there is no adult in the room to supervise this thing and address the issues that go with it. are you optimistic that a leadership shakeup in seoul will be constructive when it comes to
resetting policy economically and regional security wise? sensitive touch a subject. now a disclaimer, i don't do politics. unfortunately i do not see a potential leader in this country at this present time or the foreseeable future that is of the caliber to lead korea and the way it needs to be led today. i came to korea 20 years ago and when korea needed an enlightened leadership it found the right moment. an equivalent today when korea needs to make a massive transition from what i call the perspiration economy of hard work to the inspiration economy where you become a creative society and your economy is driven by things other than large factories and physical products. this lotte have trial about to kick off. what is the general mood and is
there a sense we have to change the economic model of south korea with the conglomerates having their influence reduced? hand what is the mood? the korean people don't fully understand how they have upset their neighbor, and that is unfortunate because it means they are not paying attention. most of the energy has been going into the pursuit of getting president park out of office, and i'm sure it will continue to pursue her through the courts and the rest of it. we have an election in may which will be a distraction, so lots of things are distracting korea and the korean people from what really matters. the conglomerates have never been has important as they like to pretend, representing less than 5% of all employment in the country, but the conglomerates tend to have a knock on effect in other sectors, but the real
message is the one you mentioned. this is when korea needs to make a transition in its economic dimensions from being a manufacturing center, just exporting to the world, to being a global participant, to being a service sector driven economy, and the service sector is large, but always neglected. it is not always so easy for the bureaucrats to understand how you drive the sector. the main driver of korea's service sector is china through tourism and many other forms, and that has hit the rocks if you like because of this bed issue. james, thank you so much for joining us. talking about the state of play when it comes to korea, also looking at rex tillerson's visit over the weekend and how that has been playing out in seoul and his views as to what has been going on there with a relationship with the north as well. here ontill on the way
rashad: -- heidi: the state features warring siblings and allegations of corruption. rishaad: new fears of a bubble. g-20 changing its you on protectionism. the implications of the jp morgan international chairman. it is a pretty mixed picture, trending really low when it comes to the asian markets session. it big week my comes to what traders we are looking out for. that's all week long as well as potentially more geopolitical activity from europe as well. training in indonesia, that trading in indonesia -- trading in indonesia. a look at how we are faring.
sophie: it is a mixed picture in asia. stocks in hong kong rising .1%. shanghai marginally higher. new zealand the biggest slacker. that is due to the drop we are as 30%.falling as much certainly skimming the index has been faring so far this morning. i want to highlight southeast asia, we are seeing now in the red, swings between gains and losses on the benchmark stoxx. today, highlight here up .4%. indonesia stocks surged to a record. outperforming peers as you can see from this chart. friday marked the biggest daily foreign inflows since august.
the feds helping to fuel the drive of emerging assets. these equities may continue to attract foreign money and investors. the rally continuing with somebody the index breaking 6000 points by a year in. some signs of weakness at the boating wellyear, for invitation accept, equities, and bonds. andng a look elsewhere, mixed picture. what is going on the chinese coal. --rch on initially, those the most in eight years. annual profit to thanks to the rising coal prices. chinois's largest listed in china.
this is the second biggest coal producer in china, and john joe third-largest, given the most since february 22 today. analysts say that producers have little incentive to boost production, the has fallen in the last few months of 2017 to the lowest since may. give her side of the equation we do have the likes of the fletcher building falling over 10%. anothero point out stock that has been on the decline. it is not being reflected so far. , china -- china automakers concerned that deeper discounts may weigh on earnings. not of the thing that we are seeing so far in the markets. rishaad: thanks so much.
the first word news. paul allen. japaneseela merkel and prime minister shinzo abe have called to defend free trade. merkel held inconclusive talks with president trump in washington, she and he said markets can be open and fair. speaking at a technology show in hanover. a new report says u.k. lawmakers we have to pass as many as 15 pieces of legislation even before the country leave the european union. calls a huget it burden. the report authors say the additional workload will leave him these little time for any other bills. india asking private is pretty in a to invest
state-controlled company. the country aims to earn $11 billion from asset sales over the next financial year. india has the widest budget deficits in asia and is -- being its target five times since 1998. equity firms have yet to buy a in theling interest strategic circles run by the government since 1999. apple says it is not have a specific goal for market share in china. tim cook says china has unique characteristics with a mobile payment back ahead of the u.s.. china is the head of the single overseas market. apple revealing plans to set up two more research centers. global news 24 hours a day powered by more than 2600 journalists and analysts in more , i am pauluntries and -- allen, this is bloomberg. rishaad: one of the most powerful families in the south
korean business faking -- facing course. spotlight intensifies on the giants collaborate -- conglomerates. all he accused of embezzlement and other criminal charges. joining us now. toer, this is unconnected the ousting of the president. what is it about? >> it is unconnected but it goes to a broader issue related to corporate corruption. ofb always been allegations business relationships in government and while this does not involve the president it basically involves allegations they embezzle money, tax evasion, basically was able to influence the way cosmetics were displaced that the duty-free shops. host of corruption allegations has been widespread.
rishaad: a company with revenues $80 billion. hugely significant for south korea. for business. peter: the fifth-largest conglomerates in south korea and it has reach globally. if you look at the belgian chocolates, the palace hotel, own hotels, they supermarkets, and as you know they have been hit hard in china because of their issue with allowing the u.s. deployed missile system on their property. retaliated by suspending many of the stores that they operate in china. also a major crisis for the company. this trial is happening in the context of significant activities. negative impacts happening all
around. heidi: we have this playing out, the well documented fall of the president in relation to her links with these as well. heralding a difficult era for some of these family? peter: there certainly under attack. they've been under increased scrutiny. the case against the president's and his allegations clearly have raised attention to these. here is also a sentiment that before there was this sense that the public basically turned a blind eye to some of the , convictedscandals previously but were pardoned,
the sentiment is seems to have changed because the environment itself is not so good. economy is sluggish. high on appointment monday youth and as we saw hundreds of thousands of people gather on the streets over the last two months, every weekend calling oust her.ster -- to and dismantle the conglomerates. heidi: a lot of different areas in which we are looking at downside for companies. obviously there's the geopolitical tensions of these by chineseositions consumers against the government as well. peter: this is probably the worst company, the worst company in crisis. this all started from sibling
rivalry in which the two brothers had been jockeying for control of the company. younger brother one at the older brother has been trying to overthrow that, that has resulted in increased intention the scandaled in probe and corruption allegations. a host of other issues. last fall i think people have also forgotten that they are the number two -- there number two executive committed suicide as he was about to be questioned related to the corruption scandal. heidi: so many elements. looking ahead to the rest of this hour, making the first visit to australia this week. what's will be on the top of his agenda. rishaad: more on china's housing market. prices are rising again.
♪ heidi: this is bloomberg markets asia. rishaad: let's have a quick check in on the latest business flash headlines. useiers may be able to japan's airport for free for a wild. the airport will waive landing fees for the first year of operation for mid-to-long distance routes. heavily discounted in the second year as it looks to boost routes to the united states and europe. details likely to be allowance -- announced this week. heidi: deutsche bank raising $8.5 billion after passing a new -- 619 new shares -- six over 19
million new shares. if i percent discount to friday's close. i capital raising project on march 5 two short finances and boost growth. rishaad: prices writing -- rising in february despite increased restrictions on prices. cities struck by the government, compared with 45 in january. beijing raised down payment requirements by 10%. between 60-80%. thank you so much for joining us. we still see this. nothing the authorities can seemingly do to see this inexorable house price rise go away.
tao: there are some things the authority can do. we have a huge amount of liquidity. money has no morals to go so that the money piles into the property markets. the government is trying to use administrative measures to slow down the rise of property prices. what are we going to do with liquidity? the real economy could not really absorb so much liquidity and it goes somewhere else. the point is how does it all play out? a big divergence between the andnd tier cities -- third fourth tier cities and the top two tier cities. you can see how that is playing out. it is difficult to come to grips with. >> that is true. the fact is that most of the job
opportunities are in a tier one cities. maybe in some of the strong tier two cities. job opportunities are not quite to there. people are leaving for the bigger cities. this is one of the key reasons for that. authorities trying to push liquidity into the third, fourth tier cities and use that to absorb a real imagery. we only see limited success. i want to get your view on what this means for developers so that stocks. goldman says they are priced to sell, a bargain. take a look at this chart 55 -- 5884. because to the 2008 record lows. you have pretty highly levered the pboc is in its
way tightening as well. already probably have described the situation. on one hand the city property prices continue to go up. the purchasing power is there and ready to buy. on the other hand the liquidity has started tightening. the interest rate in china, i am talking about more than thep dollar interest rates. pboc did more tightening although it did not move the healthy rates. this highlights that perhaps. the best time for liquidity in china is after is already. do you expect the pboc to domore also tightening or you think we will get a flexible
stuff tightening in the money markets? money markets is the most likely option. the issue here is that while the prices robust the real economy is not doing well. symbolicallyid significant policy moves such as official lending rates. we see quality trying to push up much ofet race, not so the immediate market implications. if the market rates keep going mortgage rates will probably follow. we have to continue our chats with him right here in a few moments. trade relations to the united states, a visits and more.
♪ heidi: this is bloomberg. i'm in hong kong as we get back to our guest, a senior advisor. let's get back and talk about this visit by rex tillerson. a lot was said and has been said about trade. not much frustrated this meeting if anything. a get to know you meeting. probably not a lot is going to be done in terms of power. tao: it is going to be quite different when you use the campaign language you try to push this as dramatic to you. real tradees to the
negotiation, i think it takes more diplomacy to get there. clearly the u.s. administration prefers bilateral trade talk instead of multilateral trade talk. the trade deal has not even started talking you think that is going to be one that china and the u.s. needs to deal with. rishaad: the point of being also that in a bilateral trade agreements, it is always going to favor the u.s.. tao: u.s. has the largest market in the world. they have the upper hand. try to get more out of the deal, that is pre-match his strategy. this is so far we have seen. terms of currency, it was interesting that we were bracing for something about currency to be on the agenda but by all
accounts they stepped away from that. they did change the language in the communique but it comes to trade protectionism. what is your take away one -- from what was discussed tao: i is beingateral trade processed. clearly from the g-20 finance minister and the central bank governor meeting we get that the learning that trade protectionism was not condemned. those going to be a big blow to the global economy and this is theainly a claw to u.s.-china relationship. heidi: do you think there are leaving currency alone when it comes to beijing?
the strategy has changed compared to what president trump said during his campaign. u.s. will notthe use the current conditions to label china as a currency-manipulator. they will tighten the criteria so that china will from time to time be mentioned. sanction against in terms of subsidies. rishaad: the jets china has been producing have been what grassroots voters have been buying. if you do have sanctions or trade tariffs, those go up. it would make him deeply unpopular. your rights. the point is if the u.s. put a 45% tariff against the chinese products the u.s. consumers lose
as much as the chinese producers. this is the u.s. moving back from the old clock and trying to pick specific products. try to hammer that and get a better deal across the board from china. rishaad: america does not produce those goods anymore because the wages are too low. tao: it depends on what times of products. if we about iphones, maybe. maybe that's. the u.s. could bring some of the jobs back. toys, twos, etc., there is no way the americans are going .o produce these things all the u.s. would be able to do is push out of china and buy from somewhere else at a higher cost. try to get a better deal from china and the other major
countries that the u.s. imports. heidi: on the chinese side how well does the corporate sector hold up? 400 billionat the dollars that threaten to two -- that went in last year, businesses are not really diversified. but companies going out of business? tao: lots of export oriented companies going out of business at this moment because of labor costs. because of shrinking global markets. on the other hand, we are seeing the market share for the time being of chinese and -- exports holding reasonably well. my guess is for the time being is china's major challenges the shrinking market globally. in the meantime the cost side is also. heidi: i appreciate your
insights. one of the many speakers at the 20th asian investment conference in hong kong for the 27th through the 30th of march. all of the interviews and insights right here on bloomberg television. coming up, chinese premier making his first trip to australia this week. what is on the top of the agenda. this is bloomberg.
♪ it is 10:29 in hong kong, 1:29 in sydney. i am paul allen with the first word headlines. one of south korea's most awful corporate families will be together when the trial of lotte chairman, his father, and two siblings begins in seoul. the four face charges that include embezzlement and fiduciary breaches that amount to $250 million. a shin family reunion is rare as a two are battling for control. aiming to raise as much as $2.4 billion in an ipo, netmarble
selling 17 million shares when it goes public. it is the ninth largest game will usher the world. tencent is one of its biggest backers. lineage to of revolution brought in $180 million in one month. bitcoin continues to fall after losing a fifth of its tide you over the weekend. the decline blamed on a spat within the developing community that threatens to split the virtual currency. the fight is over the size of transactions processed on the bitcoin network. currently that means blocks of one megabyte currently. some want to increase to a higher network capacity. the appointment of george osborne as editor of london's evening standard newspaper is prompting questions about whether lawmakers serve of voters by having multiple jobs. also born has more than one paying position, including and a device reroll at black rock that pays $800,000 a year for four days work a month.
some mps want a review of parliament's rules. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. i am paul allen. thank you for that. i am haidi lun in sydney. this is "bloomberg markets: asia." rishaad: i am rishaad salamat. , aing a look at markets public holiday in tokyo for the spring equinox. for the rest of the action, here at sophie kamaruddin. elsewhere, a mixed bag in asia, new zealand stocks down over 1.3%, korean stocks down .5%. we take a look at the gainers, mostly southeast asian stocks. indonesian stocks up .3%, extending friday's rally for a
sixth day. shares in hong kong higher by .5%. the hang seng is seeing consolidating above 24,000 after that spike last thursday. this is #6915. appetite for emerging assets, hang seng futures could be in the early stages of a move towards a 26,000, so something to look out for. property stocks have helped to drive the gains. some of the movers and asia today, real estate in hong kong following the latest data out of china regarding the rise of home prices in february. ke down four .5%. china mobile up over 3%, rising for a third day ahead of its earnings report. bloomberg analysis expects
fourth-quarter growth may fall short. and china telecom may win greater market share thanks to their improved 4g networks and iphone 7 subsidies. on do have shares of ha hai down .2%. just checking some malaysian malaysia airports rising to a six-month high on reports alibaba will set up a regional , the stockn hub trading at an unusually low 80% premium compared to its peers. haidi: thank you for that, sophie. a pretty sluggish day on the asian markets. the chinese premier li keqiang
will make his first trip to australia to promote free trade. tom mackenzie is with us now for more on this. have a lot at stake, particularly australia, but what are they hoping to get out of this trip? thecois fillon this is free trade and globalization front and center in terms of what the old strains and chinese want to get out of it. the all strains still stunned by the u.s. decision to pull out of tpp. the chinese want to push ahead with rcep, and australia would form part of that. australia has to appease washington, it's strategic and security ally and balance that with its economic heart and are china.
economic partner china. there will be a lot to discuss during the visit come not least this white paper the austrians are drawing up come of the first one on international relations and diplomatic ties. it may be possible that li keqiang may want to influence the white paper and how much of a role china plays and its relationship with australia. so are a lot of issues to hammer out, big topics as the u.s. looks like it is taking a step back come up today in light of that g-20 communicate. about theselk behind closed doors discussions on trade and currency, but tell me about how the changing shift in tone is playing out and a grassroots way in china. we have been visiting
factories in southern china, and even before the rhetoric from trump is translated into real policy come up because the actual policy is still being worked out, it is having a direct impact on manufactures in southern china. we spoke to factory bosses. take a watch at what we found out. take a listen. glass on this scale is a delicately courtney to dance of molten glass, definitely wielded types, and danger. for the factory owner, it is worth it, at least it used to be. higher costs mean profits are going up in smoke, and now new trade tensions. the glassware made in this factory ins up on shelves in places like home depot and lows in the u.s.. the owner of this factory says
any tariff imposed would effectively kill his business. across town, past the shuttered factories, one owner has a ready made his decision. he plans to move his factory this year. the new u.s. president, the nail in the coffin. the uncertainty has been increasing ever since trump took office. we don't know what he is capable of for planning to do. if he takes any further actions on import controls or tariffs businesses will be forced to leave china. >> his factory, which makes plastic casings for companies used to employ 800 people. now there are just 50. , manyghboring dongguan factories closed. and many taiwanese bosses are looking to move.
>> it has become challenging to operate a factory in the pearl river delta region, particularly because of the ever rising costs, especially the labor costs. gearing its economy away from low and like this. other countries will pick up the baton. that means better jobs for the next generation here, these workers are on board. thertainly want my kid to doing what i do now. i paid for him to go to university because i want him to find a proper decent job in the future. re-molding of china's factory sector was underway long before trump came to power. the uncertainties over his policies are another potent catalyst fueling the change. rishaad: the question has to be how representative is all that of chinese manufacturing overall? tom: i think that is an
important question. this is the lower value in and of the food chain when it comes to china's manufacturing. those taiwanese bosses told us they have had no help whatsoever from the local or regional government in terms of subsidies or support. wet feeds into the picture are seeing in china. they don't want to cling on to those factories. is painful for the factory owners and employees, but the focus for chinese policymakers is to retool factories and get them up to move to higher value goods. we spoken with factories who have been given subsidies for robotics, a big clay now in southern china. so the medium size and larger manufacturing firms aren't doing too badly, particularly if they are benefiting from that kind of support, and the pmi numbers are looking ok, exports a little
wobbly, but import prices are helping some of the bigger factory players in the but it is the smaller guys who are suffering at the moment. it is interesting that they are looking to move their entire chain, logistical chain in some vietnam,om myanmar to but bosses still trying to work out what the next steps are. trumpg the rhetoric from has forced many of them to make the decision that the time now is to move. rishaad: thank you. coming up, a surprise a dividend energiesnding shenhua soaring in hong kong, but can it keep the momentum going? this is bloomberg. ♪
private equity firm kkr has proposed a plan to help india clean up $180 billion in assets. it said lenders should shift all debt of a certain amount to an agency created by the government and allowing private capital to revive them. india's bad loans are searching, the highest level of stress assets among major economies. clearance of an asset, a true sale of an asset, and the reason is -- there are many reasons -- but the real reason is the banks cannot afford to take the haircut. you have to get them the confidence to take the haircut, then they will take the haircut because they are sensible people. rishaad: uber is facing another aliance of rivals, dubai-based in china-based
teaming up to share resources. they will coordinate fleets and payments. passengers need only use one app, even when abroad. goober is already facing another four-way alliance. 's "beauty and the taking $170 record million, a near high for a family movie rated g or pg. the previous best was "finding dori." "beauty and the beast" is also this year's top opening and the seventh best release of all time for any movie. rishaad: let's look at shenhua energy jumping the most since 2008 in hong kong as china's biggest coal producer posted its first profit growth in four years. energy editorenny a
is with me. why the surprise today here? said after the surge last year that it would see a rise in earnings. werests and the markets expecting it, and then they came out and said the numbers were spot on for january, but we are giving a special dividend. as you can see from the shares this morning, it was a surprise. every analyst saw this as a positive surprise and we saw shares go up 20%. this is a state-owned enterprise, and some analysts ownedever seen a state enterprise give such a massive chunk of cash back to its investors. rishaad: were bringing up a and there is an underperformance in the cold price here. >> shenhua also has power assets
and railroads, so they are generating power but will still have to absorb that rising price. rishaad: there has been some talk of short covering taking place ahead of this. there is a question whether they can repeat this performance. >> morgan stanley sees this momentum continuing through this year. the company has flagged a 50% rise in the first quarter, that are a lot will depend on the policy response out of china. the effort to support coal producers helped to fuel that search and now we are to see what happens going forward. haidi: is this a sector wide trend we can expect to see with some of the other producers? we will all be watching with great curiosity to see what china cold energy and other companies say when they report
later. at the moment, we are watching the government's reaction to prices. will not said they implement restrictions on mining as long as prices stay reasonable or above the reasonable level, and from our analysis they are above with the government said. if prices start to fall, we could see them come in and force some support on the industry. analysts, looking at company output, even if the government is allowing companies to produce more, they are holding back because they don't want to kill this rally that has been rewarding their bottom line is we saw with shenhua. haidi: that policy versus reform balancing act of their in china. coming up, talking trade, j.p. morgan international chairman
raise $8.5 billion after pricing its new share sale. to keenan has the details from new york. su: the environment for deutsche bank share sale is almost perfect given higher interest rates and the strong equity market. the share sale is preparing to take place between march 21 and april for. the bank announcing in a statement on sunday they were pricing the shares, which will atse about eight alien euros a 35% discount on friday's closing price. initial investors can buy one wo theyre for each to the own. was initially opposed to get another capital infusion, which will be the fourth of the bank since 2010,
but when they sold the share price double from the september on to recently, they were able to find a car for a consumer banking unit, so the share sale is on. interestingly enough, the two largest shareholders for set toe bank, both are be lining up to purchase shares, and that is according to people close to the matter. right, there is one feature on the bloomberg we would like to bring you to our attention, our interactive tv function you can find that tv . there you can watch us live, catch up on interviews, or deep dive into the securities are functions we talk about. you can become part of the conversation by sending us instant messages during our show. this is a function for bloomberg subscribers only. do check it out, tv .
rishaad: we have been talking about the g-20, abandoning their former pledge regarding protectionism. to appear want extremely sanguine, but the fact economicis no sense of crisis, and now the challenge is how to move forward. how to innovate? how to increase productivity? how to make growth sustainable? and how to protect ourselves from the protectionism virus. left out that commitment to combat protectionism. how concerning is that? >> obviously i am concerned. am i extraordinarily concerned? i think we will have to see how the next g-20 meeting looks like an g-20 communicate.
don't forget it is the beginning of a new administration that is priding itself, trying to renegotiate improved terms of thetiation, so i think positive of this is that maybe it is a negotiating ploy. they don'te one is get into the habit of putting protectionism as a hostage to negotiations? >> do think markets are underpricing geopolitical risks? -- if governments are adopting policies that will project clearly how the path of adjustment will take place, even though it will be a long journey, the benefits will be seen in the market immediately. there are other geopolitical security, threaten
north korea is an important risk. talking to people who are engaged in policies and losing sleep when these matters are not settled, they point to north korea as a major source of risk. >> i know you have said there could be as many as four fed rate hikes this year, but what factor has the greatest chance of throwing that forecast off the rails? is willcan derail it inflation have a spike? will growth collapse? i don't believe so. the reason is the u.s. economy is like a heavy tanker. a heavy tanker is not moved around by a small wave. the big crisis we are familiar now.are not on the horizon what is important is to ensure that the global economy remains global, and that really is the major issue of my own concern,
how to ensure the benefits of globalization that have been immense are continuing. for this, we should really avoid and resist any fragmentation and encourage any integration. rishaad: the international chairman for j.p. morgan there in beijing. that is it. ahead, the big stories of the day. what is coming up? we break down south korea's efforts to improve corporate governance. we do have the lotte trial starting and a couple of hours. the lotte founder and his three oldest children are accused of embezzlement to fiduciary toaches, which could amount $250 million, a business empire that includes hotels, theme parks, duty-free shops, so we
talk about the impact of that trial. also, we break down china home prices, data showing prices re-accelerated in february, rising in more cities despite increased restrictions on property transactions, so will we see more measures to cool the market? beijing already raised the requirement for down payments on second homes on friday. we will ask that question of our guest. he says the issues that are driving global populism are going to be around until its root causes are dealt with. we will have the details next. this is bloomberg. ♪
shery: uneventful and quiet. we have japan close, so no trading there. could be, the key these chinese companies releasing earnings, including tencent and cnook. david: there's not much data or central-bank decisions. you have janet yellen coming out. rejoin you later. a few things i'm watching this week, this is simple, your dollar index on top. this is your u.s. 10 year yield at the bottom. we seem to be stock.
stuck. for thehological is 100 dollar index, and 2.5% here on the 10 year yield. go as far as rates and china are concerned? if you extrapolate where the fed goes from here -- this is a forward curve's data swaps and china. this shows you that when you look at the meeting midyear and the end of the year, this is january 28, and the other september 15, you look at where the market expects borrowing costs to be in china respectively for these two meetings, 10 and 20 basis points higher comes so when you look at the dot plot and extrapolate and assume that midpoint for the fed funds rate by the end of the year is correct at 1.37, it essentially shows you the pboc market expects the pboc
to follow in lockstep with the fed. important because if you look at the co-relation between where the currency goes and the spread between u.s. and china yields, they are more co-related. we are looking at a correlation the pbocin other words has reason to look at what the fed is doing to determine where they go with rates in hopefully stem more outflows out of china. here is paul allen with your first word news. chinese home prices rose in february and more cities despite increased restrictions on property transactions. homes rose in 56 out of 70 cities tracked, compared with 45 in january. on friday, beijing braced down payment requirements for second homes by 10 percentage points to
between 60% and 80%. uber has confirmed its president jeff jones is leaving the company. it follows reports he had become tired of the growing number of controversies ranging from allegations of sexual harassment to the combative behavior of ceo travis kalanick. jones adjoined uber from target less than a year ago. the company is facing a lawsuit from waymo for stealing secrets allegedly. south korea's largest maker of mobile games aims to raise as much as $2.4 billion in an ipo selling 17 million shares when it goes public. netmarble is the ninth largest game publisher in the world. tencent is one of its biggest backers, owning a quarter of the company. it's release of a lineage to revolution brought in nearly $180 million in a month. german chancellor angela merkel and japanese prime minister shinzo bay have called for a
concerted effort to defend free trade. two days after merkel held inconclusive talks with president trump in washington, she and shinzo obvious said markets can be open and fair. they were speaking at the cebit technology show in hanover. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. shery: thank you. u.s. secretary of state rex tour ofon in a short the way anding china for unexpected presidential summit. it comes amid rising tensions over trade and north korea. david: tom mackenzie joins us now. what did mr. tillerson achieve, if anything? tom: good question. he came here with two key goals. one was to pressure china on north korea, to get the chinese
to take a tougher stance on its ally pyongyang. the other was to lay the foundation for this likely meeting between president xi jinping and president trump in april. on the first count, it is not clear rex tillerson achieved in succeeding much. he did agree with the chinese and foreign ministry partners that they would make all efforts to ensure there was no conflict on the korean peninsula. this came after he said north korea poses an imminent threat. use ofnot ruled out the a preemptive strike against tone hisea, but did language down with his foreign minister counterpart. the chinese see this as a question of dialogue between north korea and washington. they want to sit down and talk about this. the u.s. are not prepared to do that until north korea moves away from its nuclear program, and it looks unlikely north
korea will do that, so there is still wide gap that needs to be close to get any real traction on this. washington and donald trump want to see the chinese using their economic and trade influence to rein in the north koreans come at then you have this presidential meeting that is likely to happen and it seems tillerson made some progress, using some language taken from the chinese government playbook, talking about mutual respect and win-win cooperation straight from the chinese government's and language, that one, which would have played well with the local media and analysts, but some criticism from china watchers that tillerson used to that language, so mixed results, but it seems like he has cal med nerves ahead of a meeting, and tillerson said he expects there will be a move towards a setting the priorities come up both by president xi jinping and president trump and we have
reached an inflection point in the u.s.-china relationship. shery: also we have the chinese premier li keqiang visiting australia wednesday. it has been quite some time since he has been there. what is he hoping to get out of this trip? tom: it is his first official visit and an opportunity to promote free trade and globalization, pushback against protectionism. since the u.s.ia pulled out of tpp has been reassessing as global trading relationships and partnerships. china is crucial to that. china wants to move forward on ofp, this regional set deals, and australia would play a role in that. actralia has a balancing because it is out lied the u.s. closely, but it also has a balance that with china. thisalia is forming
white paper on foreign policy, looking ahead at international relations and diplomatic ties, and it seems like the chinese want some input on the formation of the policy paper, so there is a lot on the agenda, including trade and how the countries realigned in particular as it looks like the u.s. is pulling back, in particular with that g-20 communiqué. david: thank you. good reporting. let's turn our attention to a family reunion. were talking about the founder group andorea's gary cohn three children. seen efforts by south korea to improve corporate governance, but at least this
trial of lotte has nothing to do our is not connected at least to the investigation for houston president park. -- for ousted president park. that's right. this happened before all the conglomeratese and their connections to president park came out at the end of last year. this is a separate thing, but allegede similarities, corruption, and a cozy relationship with big business and government figures as well possibly. corruption is a big issue here for some of south korea's conglomerates. ,ou have the founder of lotte 94 years old. his eldest son is also on trial today. andcurrent lotte chairman, their sister. lotte is south korea's fifth
biggest family-run conglomerate. it has most of its businesses and south korea, but has international reach. this company and includes hotels, theme parks, duty-free isrations, and a lot invested in tourism and that sector of the market. it generated revenue of $81 billion last year. the corruption investigation has taken a toll on the business with the stock down today. ae group had to put on ice $4.5 billion ipo of its hotel lotte unit and had to scuttle plans to buy a u.s. chemicals maker as well. david: it is funny what money can do. does the, how potential outcome for the trial affect who gets control of the company in the end? rosalind: depending on how the
trial goes. could figure out a way to take back control of the group, to he found a way consolidate power and oust his brother and father, but the mood generally and south korea is not so sympathetic to conglomerates these days. because of all the things coming , allegations of conglomerate corruption is just one factor facing south korea. conglomerate tends to have a knock on effect in other sectors. the real message is the one you mentioned, win korean needs to make a transition in its economic dimensions from being a manufacturing center, just
exporting to the world, to being a global participant. conglomerates are one caught in they are a the wheel and the economic and political relationship that south korea has in particular with china. shery: you were talking about the mood and south korea. no one is willing to forgive the conglomerates. the mood seems to be changing. thank you so much for that update on the lotte trial coming up. the markets looking mixed, but when it comes to the regional wrench mark, it is in positive territory. let's get the details from juliette saly. butette: japan on holiday, risk appetite and volatility on holidays as well. losses coming through in new zealand, that price down by 1.5%. off by 1.3%.
the lotte groups in the red. weakness in australia led i this downturn in copper. copper halting its six-day rally. it is leading industrial metals lower, and we have seen this rally that what at its highest level start to come off, down 1.6%. some of the copper stocks hit hard, there are quite a few underwater in the australian session. seen inkness you have material players weighing on the overall index today. we do have bonds back in favor come the weakness coming through in the australian 10 year and also the new zealand 10 year yields, but a mixed day for the start of the week. david: thank you. still ahead, beginner us against warren buffett
was that a form of tightening? >> yes, in a nutshell. david: they said it is not tightening. don't pay attention to it. >> since when have we paid attention to what officials are saying, particularly in china. a quick aside on that front, the g-20, china lionizing about the glories of free trade. it is one of the least free of economies out there in terms of major economies. into: we do want to get the trade issues later, but when it comes to money rates, does this signal a confidence in the okancial markets, that it is to tighten, and will markets take it as a sign of confidence? and they areo, wrong. it is not a sign of confidence. it is a sign they have to go where the fed goes. admittedly, the indicators and china are looking up, but we also know why.
just because they have pumped several trillions of dollars into the economy, all of has to be paid back with interest. ityou put up the interest, is more painful to pay it back. if the fed wasn't, i don't believe china would be. david: from the modeling you do, let's say we get high rates in china, which sector is most leveraged? >> there are so many mystery t dick nixon the chinese economy where we are not sure who has brought how much. i think the housing sector is looking vulnerable because the cost of credit from the developer side in china does not mean that much a lot of the time. it is about the quantity of credit. if they can get the taps turned property developers
in the private sector, they are more honorable to those ships. that can then taper off demand for properties too, so i would be looking and housing and construction. financial markets seem to be taking everything in stride. you can see this chart we have been showing all morning, a head and shoulders. when it comes to the hang seng index futures, we are seeing it consolidate about 24,000 come of favorable environment for emerging markets. when it comes to financial markets, could we see the rally continue and how much comfort can we get from what the financial markets are doing? we see the rally continue? absolutely. should we take confidence from that? none personally, whatsoever. the markets have a fantastic record of being completely wrong it major turning points. like 2005, 2mells
thousand six, possibly 2007, everything is great, markets continue to rise, the housing market continues to look good, then it goes horribly wrong. who could have guessed? who could have known? david: so valuations are stretch. why are these equity prices continuing to go up? valuations look stretched. you look at the levels on the s&p 500? >> you and me both. i think part of it is that algorithms are trading. tradingviduals who are have a short time span, and basically everyone is worried about making their quarterly target, so you keep following that momentum. you have a rising interest rate environment, which is not good for equities.
you suddenly come to this turning point and what goes up comes down again, very sharply. i can't take you what day or how much, but ultimately it will happen if we keep chasing this the way we are at the moment. will: what role protectionism play when it comes to the markets, we will ask you that later in the program. we help michael from rabobank for the all in group discussion. david: we will talk about curbs not really working in china, so what more can beijing due to cool the market? that is next. this is bloomberg. ♪
they are still confident in the and the of the chinese cooling measure can only so down the pace of public pricing, resulting and a contraction or downturn of the property markets in china. >> we have a huge amount of liquidity. money has nowhere else to go, so the money piles into the property market. the government is trying to use administrative measures to slow down the rise of property prices, but the key issue is what are we going to do with liquidity. the economy needs liquidity, but the real economy cannot observe so much liquidity, and so it goes somewhere else. david: those were some of the comments from our guests this morning on the property data out of china on the weekend. let's discuss more. we are joined by enda curran.
we have go through the numbers first. 70 cities, more posted price games. >> no doubt about it, good demand for prices, sales, investors, clearance of inventory. shows it's doing quite nicely against the backdrop of an economy doing nice as well despite the government curbs to take the froth off the housing market comes so positive start to the year no doubt. shery: will we see more property cooling measure taking hold? npc, you listen to the they were quite relaxed with respect to the property market. they are happy for some of the inventory to be run down. it's a question of how long can they sent back without having to intervene again. whatever response they take will not be uniform. it will be city by city in terms
of how they do first o respond. divertingare hearing it from larger cities to smaller cities when it comes to demand. david: when you look at guangzhou, for the longest time it went nuts, then you had billionaires literally running from debt and that market came crashing down. in terms of investment in the property sector? >> that investment will not go away anytime soon because the capital borders have been shut tight and it is hard to get money out of china. just sloshingis around inside the system because it is hard to get out. david: good one. enda curran on the latest property data out of china. shery: let's get a check of the
>> it is 11:29 a.m. in hong kong and 1:29 p.m. in sydney. korea's most powerful corporate families will be together for the first time in years later when the chairman lotte will face charges in seoul. as family reunion as rare the two sons are battling for control. the latest opinion poll in france puts independent emmanuel macron in equal first place. the survey gives some 26% support come the same as marine
le pen. conservative francois fillon has 17% backing, with left-wing parties on 12%. emmanuel macron is all seen beating marine le pen in the second round. a new report says u.k. lawmakers may have two passes many as 15 pieces of legislation even before the country millions -- the country leaves the european union. it has been examining the huge verdant that brexit will keep on parliament and civil servants. the report says the workload will leave mp's little time for any other bills. japan and russia are said to have agreed to begin direct flights to disputed islands to allow former japanese residents the chance to visit. kyoto news says sides have discussed joint development of four islands. the proposals are said to include health care, fishing,
and tourism. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. david: thanks. it will be a quiet week across markets. there's one stock are want to macau.ut, wynn where are we now? above a keyeakout fibonacci retracement level, the 23 .6% level and comes down to the fact you have a recovery in revenue. shery: we will be looking forward to the visitor arrival numbers in macau. the casinos they are reeling from those vip gamers leaving town, but we are expecting those numbers on thursday, and in january, those numbers were up 18%. arriving inpeople
macau for the lunar holidays. we will keep an eye on those numbers. david: let's check in on the markets right now. juliette: i love love fibonacci chart, almost as much as a bollinger. up and bonds are in favor, so you have seen the reversal and some of these yields, down by 4.4 basis points on the old strain 10 year. crude being sold off, down .9% as european contracts are underwater, so a mixed session across asia. a lot of these emerging market assets, malaysia up, jakarta still at that record high. the emerging market index is higher again for seven sessions come up by .3%, so the fed meeting last week giving
investors reason to pour into some of these high gilding currencies and assets, giving a good booster emerging markets. some of the stocks we have been following. shenhua has been on a tear, up 16%. felda in malaysia, saying it has a long-term goal to raise extraction. fletcher building is one stock under pressure, down over 10% at the moment. as it cut its profit forecast coming the biggest drop since 2011. japan on a holiday, so no movement there, but a muted start to the trading week. david: long weekend there out of japan.
in case you are the terminal ll .t is bo finance ministers and central bankers gathering with the trump administration's push back against global trade agreements at the top of their agenda. david: land communiqué there. the whole issue get to the result. kathleen hays explains the lack of taste. group of 20 finance cheese returned home from their first meeting with their counterparts from the trump administration, they are bringing home more unfinished business than concrete proposals. one reason why, treasury secretary steven mnuchin and left with a victory. convincing the
g-20 to remove anti-protectionism language from a final communiqué. instead, the statement offered this plan pronouncement, "we are working to strengthen the contribution of trade to our economies." >> we believe in free trade and are one of the largest markets in the world, one of the largest trading partners in the world. trade has been good for us another people. having said that, we want to re-examine certain agreements. trump ispresident pushing for bilateral deals over multilateral trade agreements, other g-20 official said it was clear that stephen mnuchin did not have a mandate or clear vision to sit down and start negotiating thorny issues. one official told bloomberg news that ultimately everyone must agree, protectionism does not work. >> we must all share the view that trade, fair trade, has to be shared, to take on board the
losers and globalization, the trade is good for our economy and protectionism cannot be the solution. >> for now it appears hammering out new positions on trade will have to wait until july. shery: right, it's crunch time for china's industrial landscape as rising costs and the threat of tariffs hurt business. has beenm mackenzie talking to factory bosses looking further afield for salvation. lowing on this scale is a delicately coordinated dance of molten glass, definitely wielded pipes, and dodging danger. for the factory owners, it is worth it, at least it used to be. wage hikes, more expensive raw materials, and cooling demand mean profits are going up in smoke.
and now they have to contend with new trade tensions. 90% of the glassware made in this factory ends up on shelves t inplaces like home depo the u.s.. the owner says any tariffs and pose would effectively kill his business. past the shuttered factories, one owner has already made his decision. he plans to move his factory this year, the new u.s. president the nail in the coffin. the uncertainty has been increasing ever since trump took office. we don't know what he is capable of poor planning to do. if he takes any further actions on import controls or tariffs and the more businesses will be forced to be china. >> his factory, which makes plastic casings, used to employ 800 people. now there are just 50.
,n neighboring dongguan thousands of factories closed in 2015. he says many taiwanese bosses are now looking to move. >> it has become challenging to operate a factory and manufacturing is this here and the pearl river delta region because of the ever rising costs, especially the labor costs. china is gearing its economy away from low end manufacturing. other countries will pick up the baton, meaning better jobs for this generation here, these workers are on board. >> i certainly don't want my kid doing what i am doing now. i paid for him to go to university because i want him to find a proper, decent job in the future. >> the remolding of china's factory sector was underway long before trump came to power. hisuncertainties over policies are another potent catalyst fueling the change.
shery: right, and if you do want to watch that story again by tom mackenzie, go into our interactive tv function. you can find it at tv . you can watch us live in see previous interviews and dive into any of the securities or bloomberg functions we talk about. david: on the right side of your screen, you can be part of the conversation by sending us instant messages. if you haveus know any concerns or questions and any suggestions on how we can improve those graphics in the way we tell those stories. that is tv and is for bloomberg subscribers only. shery: some other stories making holdings files for bankruptcy in the u.s.. been facing hostile actions from creditors as it struggled to recover from the slump in oil prices.
its long-term assets are worth $1.3 billion and creditors say they are owed half that. the stock has then suspended since march 15. david: the asian energy company sitting on the biggest pile of cash outside of china, ready to spend. had $11 billion in cash and security send looking to invest theew projects to top off climbing reserves of oil and gas. assets thatng at have been sanctioned are ready for development. proprietary talks for work is expected to begin after given final government approval , expected as early as may. the project is expected to fuel power generation for 100 million
shery: we have breaking news out of india idea cellular approves vodafone india merger. it needs regulatory approval. this is $20 billion deal, a huge merger. david: vodafone already holds 45% in the combined country -- company. inres are 50% up from january. shery: a quick check of the business flash headlines. shares of singapore mobile operator extending gains after
they consider selling. they are working with an advisor to conduct a strategic view. has a market value of $1.5 billion. david: cathay pacific has been fined $61 million by the european union for antitrust file relations. the carrier says the fines relate to cargo surcharge levels, which the eu says breached competition laws. the airline announced its first annual loss in eight years last week and said it will cut mid to senior management levels -- salary levels, by 30%. it said it is reviewing the eu ruling. enteringe dalian wanda the cloud business through a partnership with ibm, allowing chinese businesses to have access to its cloud
infrastructure and language of that allow consumers to talk to apps. david: welcome back. i'm here. guests here as well. we were talking before the break , we don't know why these markets continue to go up. cloud of uncertainty is trade protectionism. it is hard to quantify the impact. when president trump meets president xi jinping, is there anything you expect them to do that removes the uncertainty? to seere all waiting what will come out of the meeting, but the best case scenario in a realistic set of probabilities as we kick the can down the road and the uncertainty lingers, but the status quote lingers with it. i'm not 100% sure that will be the outcome.
we could see something radical like the plaza accord, unlikely. there has to be some possibility of greater friction on the trade front than we have now. mackenzie was updating us on this summit, i was thinking to myself, could we see a gift from china ahead of the summit? especially in terms of dealing with north korea, and am just thinking out loud here. entirely possible. that is something on the geopolitical front, not the trade front, but it is a big loan they could throw trump as a political victory. at the end of the day, we have geopolitical problems like north korea and the balance of power between china and the u.s. in the region, but trade needs to be dealt with one way or the other fairly soon. g-20, they water down the communiqué. thing about how they
wanted to avoid protectionism. i think currency manipulation was barely addressed. does this spell trouble to you? there are two ways of looking at it. you can look at it like it does not mean anything, or you can look at it within the context that we know that there is a struggle going on within the white house between free trade and america first, and the media messages has been don't worry the america first guys are being shuttled stage left and we will be back to normal. the g-20 did not send that message. it was the u.s. is specifically said we don't want that text being used. what does that tell you? >> a lot of investors are trying to figure out if this will be the case with every single issue. we have difficulty getting the
health care act put together that will please all parties. you wonder about whether the deregulation come at of the infrastructure spending, and investors have to ask themselves, how much of that has driven markets and how much is been the reflation story and the growth underway last to summer? i don't think anybody knows. it is a big question. >> true. the reflation story is turning into the deflation story when you look at what oil prices and consumer inflation expectations in a survey they came out friday crashing to new lows, so we are seeing the global economy picking up, a lagging indicator on the back of all the borrowing china did. itn the effects wear off, will be deflation we are facing. >> i don't think the borrowing in china fed the recovery in europe, did it? >> not specifically, but these
things flow through in different paths. >> you actually think it's a fake recovery we seek globally? >> completely. >> all driven by the loan book? stature, but a big bear. recoveries are driven by the credit cycle at the end of the day. this one has been. most of that credit has been created in china. it will be hard to keep that up going forward. when that tails off, we can have another discussion and see how sustainable this upturn is. i have a feeling it will not be as strong as people think. shery: i know oil is reversing gains, but how about other commodities? it has fueled the trend, especially in asia. >> oil is decoupling. as long as china carries on with a policy of just building things
and not worrying about making money, you will see commodity prices hold up. is that sustainable? at the end of the day people are making investment decisions that have no capitalist criteria whatsoever. i find that a puzzling state of affairs. david: can you give us a genuine piece of good news. >> the weather has taken up in hong kong. had one of the most bearish forecast for 2017. is that stick? >> for the moment, i'm wrong. is proving sustainable around current levels. the dynamic and china worries me. they are just kicking the can down the road. the secondly for the u.s., very quickly going back to protectionism, if we see and america first policy, it would argue for a much stronger dollar.
if there is no u.s. trade deficit, dollars will be scarce scarce, meaning the dollar appreciated significantly. that will throw a spanner into the works. david: michael, thank you for joining us. theref market research rabobank. right coming up, the reclusive billionaire dubbed china's warren buffett. this is bloomberg. ♪
today? >> great to see you. i was in south korea and japan. i will take you story about that adventure later, but we are looking at key themes throughout the program, starting out with the fallout from the g-20 discussions. what does it mean for asset classes, but more importantly how does that threaten the how the globalf economy functions in terms of trade, and protectionism as a key risk of that? our guest is the extra chairman at deutsche bank middle east north africa. we will dive into a deeper discussion around emerging markets which includes egypt and turkey. plenty of news from that front, including economic growth figures from each of. we will look at why they came in slightly weaker at the top of the hour. shery: looking forward to that. and your exploits and south korea.
david: i don't think we should go there. shery: apple says it doesn't have a specific market goal in china. tim cook says china has unique characteristics where of the mobile pay market is well ahead of the u.s.. single largests overseas market, but faces competition from the likes of oppo and huawei. david: what about the name duan yongping? does anyone know who he is? reclusive billionaire who founded smart phone companies vivo and oppo. apple lost market share because it did not adapt to the market. tech: our bloomberg asian editor joins us from japan. we don't know much about this character. what do we know about duan yongping so far? >> duan yongping is the
billionaire founder of oppo and vivo. well known outside chinese circles, but in his home country, he is a local celebrity. amongst the first wave of chinese entrepreneurs who took advantage of him shall pains the liberalization reforms. he created some of china's earliest nationally recognized electronic rands, and he has scored his greatest success here with oppo and vivo. david: it kind of reminds me of xiaomi. how exactly did these two brands the apple, samsung as well? >> that's right. haveally oppo and vivo
cornered the market with huawei in the last few quarters through a combination of savvy marketing. they really knew how to go after the local chinese consumer, who tends to prefer in-store demonstrations. they like tricked out specs, battery life or charging speeds .r just sheer memory size also another advantage they had over apple was the really strong and broad local connections, so they manage to harness the power of tens of thousands of retail resellers across the country to plug their wares as well as provide in-store demonstrations that are so crucial. david: life for us out of beijing on this secretive and reclusive chinese billionaire. oft is it for this edition "bloomberg markets: asia".
♪ yousef: beijing and washington prepare for talks over rising tensions in trade in north korea. shery: the g20 changes their fillon protectionism. we will look at the implications. ,ousef: egypt's economy slowing putting pressure on the government's help for expansion by 2020. shery: netanyahu heading for talks with china but