tv Bloomberg Markets Asia Bloomberg March 20, 2017 11:00pm-12:01am EDT
sees four hikes this year, another says, what is the rush? triggers brexit next week, launching the process of leaving the european union. shery: lots of risks, lots of noise. rally seeing asian stocks for an eighth consecutive day, the longest rally since april last year. it is not affecting the markets. david: a lot of money coming out of the dollar and developed markets. i will rejoin you. have a look at this chart. very simple, msci in white. eight days of gains. tencent. line is
as money piles into the emerging markets phase, they have to take a position in $.10 if you want to mirror the market. it is the 11th biggest company top 10,orld outside the all of which are listed in the u.s.. earnings are coming out tomorrow out of tencent, so pushing higher. this is a normalized chart. you know things are good in the emerging market space when malaysia gets inflows. the biggestd for net inflow into malaysia as things stand going back to august last year. these are your inflows year to date, $3.7 billion so far. how does that look longer-term, and the reason i bring malaysia is that it has been a laggard. the index has not gone anywhere. we will be talking about the story and whether or not we will
continue to see a leg up. see moneyarted to come back in, so lots of to talk about this hour. south korea's former leader has begun hours of questioning. she apologized to the nation when she arrived at the prosecutor's office in seoul and said she would answer the questions. these are live pictures from seoul, where supporters are gathering. chicago fed president says he sees up to four hikes this year. his minneapolis colleague says there is no need to rush and that there is no imminent high inflation threat and the fed can afford to be patient. he was the sole dissenter when
the fed decided to raise rates last week. >> i look at us as repeating the same mistakes. behaving ase are though 2% at the ceiling rather than a target, so i'm hoping to remind my colleagues to take a step back and not keep repeating the same errors. leon cooperman facing a lawsuit after the sec accused him of receiving four main dollars in illegal profits. the sec sued, accusing cooperman of obtaining confidential information. he has not been charged with criminal wrongdoing. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. david: the u.s. planning to ban mobile electronic devices on flights from 12 countries in the
middle east and africa in response to information related to "terrorism and national security threats." it were only affect direct flights to the united states. shery: the directors of the fbi have dealt president trump two heavy blows as they testified at a congressional intelligence hearing. david: russia meddled into the obama whiteut the house did not wiretap trump tower. acrossocencio has been the story all day. any reaction from the trump camp? few hours,e past donald trump held a rally in louisville, kentucky in front of thousands of people, but he did not talk about russia at all or that wiretapping. you would have thought he would have uses platform.
he gets energy from these rallies. he did talk about north korea, the repeal of obamacare, and bilateral trade ties with other countries. he did not talk about russia, so interesting there. why is he doing that? is sidestepping the controversy that has engulfed his young presidency in the past 16 days, one of them being those tweets he sent out in early march. it is something of his own making, him dogging these allegations that russia has been campaign, and it turns out that the fbi has been ever sincehis probe the last nine months or so since late july. this news came out earlier today when fbi director james comey thetake a stand in front of house intelligence committee and
said they are looking into connections and on a deeper in thehether there was coordinating between russia, russian officials, and associates in the trump campaign. that mr.esting thing comey said was the motivation for mr. putin behind why he actually supported trump, and he did say he supported trump. take a listen why. hated secretary clinton so much that the flipside of that coin was he had a clear preference for the person running against the person he hated so much. a gutturals motivation to make sure anyone other than hillary clinton got into the white house, and that did indeed happen. this put the white house on did say and sean spicer to a lot of journalists after the fact that that there is no collusion or evidence of a trump-russia collusion and pointed out the obama cia director and the obama director
of national intelligence said so. thing, he saidg that if you think 2016 in terms of the presidential election was the last time you might see russian meddling, think again, for the mere fact that they succeeded in causing a lot of disarray, so looking ahead to 2020, we might be talking about this all over again, if not 2018 for the midterm elections. shery: when it comes to that wiretapping allegation, that is a clear no. is a do factor debunking of any claims mr. trump put out on march 4 in the three tweets, one saying barack obama was a bad or second guy. another one saying he had sunk into a new low, but basically the nsa and fbi directors both saying there is basically no evidence. take a listen yourself.
>> i have no information that supports those tweets, and we have look carefully inside the fbi. the department of justice has asked me to share with you that the same answer is true for the department of justice. the department has no information that supports those tweets. ramy: just to hit home that point, mr. comey also said let's say barack obama did want to do a wiretap, even if he legal. he would have to get authorization from two other branches of government, the legislative as well as the judicial, meaning he could not do it alone. he cannot do it unilaterally. ahead, it is interesting to see if donald trump will retract the statement or come out with some evidence that he says is out there, but even some republicans on his side are now saying donald trump retract or prove your point now. david: thank you for that.
time to check in on the markets. we've gathered a little bit more memento as we head into midday. we have. even though japan is not really joining in the party. at the moment, generally regional stocks tracking higher, up by .2% despite the next lead from wall street. you had oil falling significantly in the new york rebound andittle energy stocks up by .2%. some solid buying in health care stocks. most of these solid moves coming from korea and the hong kong market. look at the korean kospi up by over 1%. we have seen a lot of positive moves coming through in the stocks rising, analyst saying this is on speculation that the hedge fund elliott management has
purchased a stake in hyundai motor. you are seeing hyundai motor rising to its highs level in a year, trading blames five times the 30 day average for this time of day, and other stocks in the group also doing incredibly well. wia is the strongest performer on the regional index. chinese stocks listed in hong kong continue to rally the hang seng index up by .3%, solid moves on the hong kong -- csi 300. news even coming back after that big drop we had coming through in its session yesterday. seeing a retreat coming through in these fields, on's tracking generally higher across the board. the motto these, not such a great day, copper continues its losses. we had that run of six sessions of gains, then copper retracted, down 2%. still the wind you look at the big picture, we are not seeing the declines in the materials
space we were seeing across the region yesterday. you so much, thank for that. looking ahead, taking on amazon in india. we examine the strategy of the largest e-commerce site, flip card. david: before that, is this rally at risk of being overbought or are they there already? we would talk about that next. this is bloomberg. ♪
now employs 36,000 people in australia and new zealand. billiton and striking copper miners have held their first talks in months. the leaders accepted the invitation to meet but said they would only discuss maintaining benefits, keeping current working hours, and not different shading between existing and new workers. the two sides moved closer last week when bhp in proved its payoff and strike bonuses. more: we will bring you details on that, the world's biggest copper mine. we are getting a drop today and shanghai after six days of gains. freeport indonesia says they have announced based on a spokesperson that they will be restarting the copper concentration mill come increasing got to 40% of capacity over the near term. it does seem the mine produces 25,000 tons of ore every day.
shery: let's continue discussing that. it is all about supply-demand, how commodities play into the reflation trade story as well. tinker, he joins us now. you have called the reflation mostly to do with commodities. explain this. >> this time like year ago we were thinking about china, the economy and currency collapsing, but a lot of that is down to the commodities were week. that must mean china and has not got much demand, therefore a big slowdown coming and a hard landing, etc. what happened was there was too much stuff, oil, iron ore. what we saw this time it year ago after the national congress was some efforts to restrict supply in china, and that really helped commodities autumn.
we had -- commodities bottom. as we move into 2017, commodity prices are strong, this is because china is growing fast now. again, mixing up demand and supply. last week with the congress, again, what are they doing about supply? it is getting this balance. it is not that supply is fixed and demand is verbal, it's more supply is verbal and demand is fixed, and we seen that across the commodities space. all i'm saying is don't use commodities prices as an indication of demand and extrapolate that to broader views about the economy. it is actually the other way around. david: it is easy to measures apply. oal, theyomes to ca restrict the number of days, but copper demand? >> he can't always manage
supply. china appears to be buying stuff, it actually it is putting it all in storage and using that as collateral to borrow money. up by china and copper a few years ago. they imported a lot of oil in february, and that got people excited about the oil market. they didn't follow through on it. if china is not buying it, we can't measure either side, so it is fair important to recognize the tradable prices. we are coming to the end of the quarter. which just had all the futures rollover and everything gets very technical, so as an investor i step back and say what is noise and where is underlying demand. now we are seeing the correlation between emerging
markets and commodities fall to the lowest in two years or so. >> yes, again, the same issue, were saying16 falling demand, therefore some emerging markets. strongbeginning of 2017, dollar, worried about trade, sell emerging markets, and that has been a great contrarian trade. we are not going to be as disastrous and you can't extrapolate from a commodities price to demand for emerging markets was so bottom-up is go tog us that we have to the bottom up, talk to companies and get a few of where demand and supply our in balance. there are some great companies in emerging markets doing really well in an environment that is not too hot, not too cold. the yield inout the u.s. 10 year? breakout, then back to 2.5,
and now a days of gains across emerging markets. we have a chart that shows is this. what drives this above 2.6? what is the trigger that that becomes the floor? ,> the end of the quarter was what was going on was very technical. 2.6, doesn't become the floor? we had same with the oil market in particular. technically we have not broken it, which is an important factor for broader stability. we do not have a distressed seller there. the idea that upon market needs to sell up because inflation is coming through, i think we are early on that. what we are seeing is much more about technicals and within bond markets come the steepness of the curve, what is happening at the short end. libor has been over 1% for months now. in the real world come you never
got below 3.3% on prime borrowing, so in terms of what is going on in the cost of money, what changes is the cost of money for the banks. in other words, the leverage structured products. when i look at the u.s. 10 year, it's not about the inflation environment. who's brian money to buy it the long end, and at what point do they change their mind and are forced to sell? that's what we have to watch. technically last week was comfortable that it did not break. it is telling us about the market positioning. shery: can it to you about where the dollar is going given the dollar has largely tracked the 10 year yield? one of the things affecting the dollar ironically has been european qe. the european central bank has bought all available bonds and
assets that european investors want for their balance sheets, so they have been forced to go and buy u.s. european qe he has been a big driver for the dollar and driven flows into the u.s. at the same time u.s. investors pulled everything back because i don't trust european politics, so what we are seeing is the dollar weaker because u.s. investors have had a fantastic run in u.s. assets. why am i so scared of emerging markets? china look stable and normal. if china is stable and normal, the fed is telling me it's ok to raise rates, maybe i will put a few dollars abroad again now, and that is what is driving the dollar. they are now coming out again. i will have a little bit if europe, a little bit of emerging markets. to thewe want to get bond connect in china.
shery: with that the goal of strengthening its position as asia's top wealth management, ups keeps its eyes firmly fixed on china. david: the president of ubs wealth management spoke earlier. china is obviously one of the key markets and is here to stay. there is a large fundamental trend on wealth being created, and we want to capture that by going on sure. owne markets have their dynamics. we felt looking at the china equity market that there is more
potential and we think the valuation gives more room and there is a secular trend from growth. we are long china. would be the biggest concern voiced us by your clients right now? much should geopolitical risks do we have. how much will the rally be sustainable? when you look at the clients institutional clients have been cautious, and people question whether this will be sustainable. >> there are very few options for diversification in the chinese market and that's why everything has been cyclical. what sort of options do you see. is that inevitability driving the fact you are overweight on china equities.
i believe china is a strong plenty ofconomy with opportunities. within the china context, it is important to use all asset classes available. long ons been a market real estate only. i think the equity markets are developing, but the alternative markets are growing as well. investors need to first of all have a global asset allocation. even if you think about tactical overlays, they should use all the asset classes. there is a lot of investment advice that is still needed, and also for an investment come of legitimate way to have money outside their country, so they can fully display the and if it's of a fully global diversified investment portfolio. we will be here to advise them through the cycle. david: it is chilly and brainy
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something for everyone is awesome. find your awesome with the xfinity stream app. more to stream to every screen. is 11:29 a.m. in hong kong, and 12:29 p.m. in tokyo. the fbi has confirmed it is investigating links the twin president trump in russia during the election campaign. but says there is no evidence to support his claims that he was tapped. with respect to the president's tweets about alleged wiretapping direct it at him by the prior administration, i have no information that supports those tweets, and we have looked carefully inside the fbi. >> the chinese communist party is rolling out new controls.
local committees are using negative less to ensure only those with impeccable credentials can attend. excluded,ee members holding a foreign passport, involvement with illegal construction projects, or expressing doubt about official policy. indonesia will press ahead with 330 billionafter dollars of previously undeclared assets. the finance minister said discussions are underway with lawmakers about increasing the ratio. she also says potential trade tariffs and policies would not help anyone. >> in the direction of the global economy which is becoming more inward and protectionist, it will also affect indonesia, but we still have options in the short-term. will formally begin
next week. the u.k. government will launch the process on march 29 by invoking article 50 at stake is whether britain can read gain powers over immigration and lawmaking without derailing trade or threaten london status as a financial center. 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. we are seeing investors continue to pile on the emerging markets stocks. the msci index gaining for an eighth consecutive session. you can also see the largest have tracking that index now turned positive. last week, posting the most inflows since august, $225 million in inflows. we are seeing the correlation with commodity prices is at the
lowest in two years for emerging markets, so what could this mean for commodity prices come especially crude, going forward? that correlation broke, oil dipped to a decade low. david: this one in particular, this etf's 17% up from mid-december, not surprising when you look at the holdings, samsung, tencent, and you can understand why the kospi is close to that record high. south korean stocks up by 1%, holding at may 2011 highs. you have seen the yuan rally, although giving back a little today. we have been seeing positive momentum in south korean stocks. a look at some stocks in particular. hyundai motor is at its highest level in a year, seven point 5%.
trading vines five times the 30 day average. you are also seeing samsung electronics, supporting the overall kospi as well because it has such huge waiting on the index. $.10 lower ahead of its earnings results tomorrow. stocks doing quite well, the hang seng index up by .25% in the morning session, tracking it november 2015 highs. currencies are weaker across the board, the aussie dollar down .4%. the bloomberg spot dollar index flat after four sessions of losses, but coming back again, some of those currencies in the asian session. yields also being sold out today, so buying into the bond market. i want to show this chart if you blog on theiv
bloomberg. it seems traders are panicking because even though we normally like to see the yuan appreciate, normally there is more stabilization, so mark cudmore from the mliv blog saying weekend continues to but nobody is noticing because the dollar continues to fall there. we have japan coming back online, weighing on the regional index, but still seeing positive momentum and some of those asrgy players, particularly crude oil rebounds from that 1.2% drop in the newark session. thank you. the reserve bank of australia is highlighting a buildup of risks and australia's housing market. shery: the warning was in the minutes of the rba march meeting. paul: let's get it over to allen in sydney. what is the rba saying? joining the pile
on when it comes to the are strained property market. this is something mentioned in it's a statement when the cash decision was released, held at 1.5% as expected. mention of the risks posed by the housing market, but the rba saying the data continues to suggest that there had been a buildup of risks associated with the housing market and also the growth in household debt faster than household income, so the rba concerned about the impact of week wages growth on the spiraling house price equation. despite these warnings, australia's housing prices seem to keep rising also could more regulation be on the way? it's funny at the same time the minutes were released, we did get the fourth quarter
house pricing index, beating estimates come up 4.1%. we had expected an annualized increase of 7.7%. .he growth is patchy sydney, 5.2%. in perth, .3%. bubble,s calling that a but we have had regulators in the past 24 hours saying house prices are bubbly, but refused b go the full way and use the word. is talkingat the rba about a, regulators are talking about, and scott morrison is talking about it, also suggest that more regulation is in the pipeline and we are being softened up for it. david: absolutely. i think that's where macro prudential tools come in. denmark, atalk about ech in the in fint
black and eyeing further partnerships. the ceo spoke exclusively to haidi lun and the company's growth stretching going public. we have not considered an ipo in 14 years. that could be a way to get liquidity for private equity, so it is a viable solution. do however see a massive opportunity in the market and believe we have an interesting development because the whole industry needs to remove complexity, digitize and so andh, and we are strong that transformation, so timing for an ipo is later. what kind of timing and where would such an offering take place? >> we are a danish-based
company, and copenhagen stock exchange would be an obvious choice simply because that is where we are headquartered. i think timing wise realistically it is difficult to say, but probably a few years out. thei: it's not an ipo at moment, but what about the issuance of more debt from a more subordinated debt? >> no, i don't think so, but you should never say never. great capital position now and subordinated debt is costly, so i don't inc. we needed. -- i don't think we needed. what we are all into developing now our relationships with our clients, partners, and technology. we see a bright future ahead of us. transformation that is happening with regulatory changes, technology, mobile, it fits well into our dna, so we
believe this is a time of big opportunity. haidi: what is your target at the moment? we are digitizing, which means we can have less manual work. we had decreased the physical footprint on a global level simply because we believe it is better to have more critical mass in certain key hubs in asia, europe, and so forth, so still see room for reducing , and and complexities powering it with digitization come and investing into digitization, technology, platforms, products, better partnerships, people, risk management and so forth, so there is a lot to invest in, but you need to get room to prioritize your efforts. we are aware of that and try to constantly improve this. bank's ceo and
cofounder. if you want to watch that interview, go into are interactive tv function. you can find it at tv . you can find that interview, watch us live, dive into any securities or bloomberg functions we talk about. david: you can be part of the conversation, track markets. is for bloomberg subscribers only. that is at tv . coming out -- stress initical europe, global investors withdrew $113 million from one fund last year. will the french elections restore confidence? this is bloomberg. ♪
david: i am david ingles. , wall street journal for essential products investment has been scrapped. they have agreed to invest $1 billion in the vision fund. anty: alibaba's financial considering a new bid for money gram. said it is offering $13.25 a up to theash, but stakes to $15.20. euronet is worth just over $4 billion in likely to make another offer. kong: the owners of hong
life insurance have agreed to sell the company to first origin international. at least two groups had been competing to purchase the company. hong kong life saw a 38% drop in net profit last year. shery: joining me and david now our theguest for scotian. earlier we were talking about china, and last week's and thement by the npc bond connect, why do you think this is a long play? an international investor can buy into the emerging bond markets of china without having to have an account in china. see thens people can bond indices growing and i can get exposure to china if i
believe as people increasingly are that the economy is stable, currency stable. i'm looking at a big kerry versus what i could get in europe, and people are saying as an international bond investor, i cannot ignore it. this is a way i can participate. we have seen slow growth, but it is becoming more important after the stock connect. i think the bond connect will be more inbound and outbound. david: is it too early to talk about the closing of arbitrage? at some point this premium or discount will close, but that did not happen. in this case, is it something that is realistically option? risks pricing of something that gets fixed? >> china will move at its own pace. everybody got excited about the stock connect. ashas been more influential
chinese money comes out. china is building this financial system in real time. we must not lose sight of that. it has moved away from a capital markets system and not just government bonds, infrastructure bonds come all sorts of asset backed will be increasingly on offer and they do want the western world to participate. shery: exactly. you talk about what it would do for bond investors, but what will it do for china, especially hong kong? >> hong kong is fortunate that it sits in the middle as the portal. it has the rule of law, the infrastructure, and that has been a great advantage for hong kong. it is thenese put it, connection of the rest of the country to the rest of the world , and bond connect is part of this.
do want to lend in italy or shanghai? that will be the question investors will say can i do that easily now? if i can, i diversify my portfolio. that is the important thing about the bond connect. sophie: china would like the participation of outsiders, but there are other hurdles that need to be removed first. >> who does china want. i don't think it once hedge funds, speculation, and traders. it once long-term investors. the market should set prices where it can set prices. international investors can help set those prices by doing that arbitrage. it is a slow and steady process, and we have to be careful as we have been in 2015 where everyone was saying it would all open up -- that did not happen.
find about thei chinese government's they tell us what they would do. they give us a five-year plan and they stick to it, which is refreshing when compared to the u.k., the u.s., in europe. the bigina aware, concern is you take money in, but you can't take it out. not that liquidity that's needed to invest in the market. west'sa doesn't need the money. the big issue is to make the money is cycling around the economy. a does not need more coming in, but what it would like is partnership with the west. we would like you to help us price our long-term assets. that is part of negotiations.
of course we are going to say we cannot get the money out. that's one of the other lessons we have learned about china. cap look at it like previous emerging-market crises where you have to import capital, then a sudden panic. it would like us to work with it is what i see from these actions. >> are we going to see panic in europe? were you watching the french election debate? >> macron did well. >> the euro seems to think so. >> nobody wanted to touch trade at the beginning of this year. this year that is all anyone thinks about. if you are a good small mid-cap european company, i think you can do well. i think there are opportunities in there. will the french leave the eu?
no. , lesshey leave the euro likely, but the big risk i have is the breakup of the euro rather than the breakup of europe. there is a lot of noise and drama, but right now what we learned from last year is it is not wise to put up at in advance with so much going on here, so i'm happy to go with small or medium size companies that i believe despite whatever happens broadly speaking i can sit down and wait for it to be over. shery: thank you so much for joining us. david: right, now, coming up, will one billion dollars be enough? we talk about this war chest of flipkart and whether it can stave off amazon in india. that is next.
shery: india's largest e-commerce company has said to have completed a $1 billion funding round and another one in the coming months. s backers include ebay, microsoft, and tencent. enough.1 billion ain't why so much money for flipkart? >> the e-commerce market in india is very competitive. flipkart was early in this game and is the leader and the e-commerce market and looked like it got the advantage over local competition, but then outside competitors showed up. amazon is the most notable. jeff bezos said they would spend billions of dollars in this
market to grab this opportunity. amazon loss out to alibaba holdings in china, and so it is spending a lot of money to grab market share in india. deepart this not have pockets like amazon, but was able to close this funding round for $1 billion, and looking to raise another $1 billion, offering customers discounts, better lineups, so they can grab more market themselves. shery: the violation on friday was $10 billion. market lower than expectations, but lower than its 2015 very wish in of $15.5 billion, so is this a cause for concern? >> it is never good when the valuation for your startup comes down. rounds.e down
it is something you try to avoid. there had been this double where valuations had run up quite a bit. a $10 billionat valuation is not as bad as it sounds from the outside. baidu chinese tech giant has revealed mounting pressure from hackers. shery: tom mackenzie reports. baidu's head of cybersecurity knows he has a fight on his hands. test baidu's defenses every minute of every day. in the most serious case, a gang was put together to try to steal baidu's price automated driving technology. difficult to know who would employ them to do that, but we know someone tried to hire them in the underground market to steal it from us. cyber attacks can come from
automated hacking or from sophisticated international gangs. baidu responded by boosting it cyber security team and backing what might be called ethical hackers. router, hacked the which means you take control of my phone. they showed me how they could open up my phone. i'm going to test one website now, and now we see hacked by blue lotus. supporting these guys is one way to keep china's best i.t. min ds onside. there is growing demand for ethical hackers. >> they probed for weaknesses that could be dangerous and then report them to companies, including apple. with do has teamed up tencent and alibaba to go on the offensive. >> the industries are getting
bigger and stronger, so we must help each other against the whole underground industry. tom: the threats are only expected to increase, and china's tech giants are gearing up for the long haul. we are seeing the kleins extending for a second day after that vodafone india deal was announced. that is a $20 billion deal. in fact we have heard not to of ideahe unification cellular and vodafone. david: absolutely. the merger relatively in favor of one of the groups, a 3% premium implied for idea, so from $113 as, back