tv Bloomberg Markets Asia Bloomberg April 16, 2017 9:00pm-12:01am EDT
♪ it is 90 4 a.m. in hong kong, 11:00 in sydney, 9:00 p.m. in new york. i am haidi lun. rishaad: i am rishaad salamat coming to you from bloomberg's asian headquarters in hong kong. this is "bloomberg markets: asia." ♪ haidi: mixed messages for asian markets, trading in japan the kospi forging ahead. extending the growth seen in the preceding four
months. haidi: the u.s. rebukes plans for north korea following the weekend show of force. china urging coma on both sides. the lira jumping as president erdogan claims sweeping new powers, the biggest changes in turkey. dump in ans data hour, looking at first quarter growth, 6.8%. let's bring up this chart, #6839 showing the potential for further gdp growth looking ahead, the blue line indicating that target the government put andlace, anticipating 6.5% 2019, a six .8% handle, but the data dump continues and we have industrial output, retail sales, and fixed asset investment, all of that out in 60 minutes. not exactly the most surprising of indicators.
we were expecting that 6.8% for a second quarter, but the question is whether it is sustainable, and also at what cost good we had credit numbers showing momentum in terms of money supply, shadow banking still running hot and china, so we dig deeper into that within the next two hours. we are 30 minutes away from the open in china, that singapore, taiwan, malaysia coming online and sophie taking a look at how markets are faring. a thin session with a number of market selloff on holiday. liquidity, hong kong, australia, new zealand close today. up .5% despite geopolitical tension given the dis-as failed launch over the weekend come the nikkei 225 declining .3% as the guinness picking up pace, new
five-month high against the dollar, but looking at southeast asia, stocks and kuala lumpur rising after a two-day drop. singaporean equities falling .3% after exports grew more than expected on your on your bases are take a look at taiwan, up .2% after falling on friday. we do have the taiwanese dollar rising about .2%. on labelingaround china currency manipulator is investors in for asian emerging forex, the taiwanese dollar among them. taiwan is being kept on the u.s. treasury watchlist even though its currency has appreciated 6% against the dollar in the first quarter, the same for south korea. looking at taiwan for a moment, slippinge the taiex below the 10,000 level as traders hold off on popping champagne.
it's tak biggestck loss given a stronger dollar has changed the earnings outlook for exporters. we have the g-20 view, the u.s. dollar continuing to decline. lira, look at the turkish up 2% after president erdogan's victory in the referendum vote this weekend. check out treasuries. we do have the jgb and focus, sliding.ar yield slowin when it comes to u.s. treasuries, that did fall further to 2.2% this morning after it came back online from friday's market close. i look at what's happening with wcrs his is the
function. it is gaining against all peers except the kiwi. rising along with haven demand given the geopolitical environment, rising 2.3% against the greenback last weekend trading at its highest in five months. up on theet's pick president erdogan story, let's get the latest headlines from haslinda amin in singapore. haslinda: the turkish president has called his victory with a warning to opponents at home and abroad until critics to prepare for the biggest overhaul of the country system of governance since its founding as a republic 93 years ago. president erdogan has the authority to appoint ministers and senior judges and call elections anytime. the main opposition once a recount of a third of the balance. alibaba's financial arm is stepping up its pursuit of moneygram, raising its offer to
$18 a share from $13.25, $320 million of extra cash return to shareholders. closed at $16 51 cents on thursday, the share consideration represents a premium of 64% to its boeing weighted average share price over three months ending january. china's credit taps remained open in march with the broadest measure of lending increasing more than estimated. aggregate financing was the equivalent of $305 billion, well above forecast of $220 billion. much of that was down to growth in shadow banking, which policymakers have pledged to curtail. new loans float for a second month as the money supply expanded editsand still live. -- since july. approval for a restructuring plan, 175 million dollars worth of bonds maturing this month. korea's national pension service
has agreed to a plan for daewoo shipbuilding. the company is meeting creditors have gonehas would into receivership of the plan had not been accepted. shares have been suspended since july. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. . am haslinda amin nice one. japan's prime minister saying he will push china to play a bigger role in north korea, president trump also urging beijing to do the same thing. brian faller joins us from tokyo. the u.s. indicates military action is still on the table, but shinzo abe has a little influence when it comes to beijing. >> that's right. there have been a few developments this morning. as you said, prime minister abe
was talking about the need for diplomacy with north korea, but also said when he goes to russia in 10 days he will put this topic front and center on his agenda with mr. putin. things, he has mentioned evidence that north korea has substantial chemical weapons facilities. that is a dangerous topic, and certainly going to get attention after syria. one other piece of fresh news is we had a survey over the weekend that showed 64% of respondents in japan said they support the added pressure that trump is putting on north korea, and more than 50% of them said they hope that japan should get some sort of right to act militarily if there was any clear evidence of an impending missile attack on japan. this is time to with the vice president tenses visit throughout asia. pence's ice president
visit throughout asia. . the main thing is reassuring. >> vice president tenses visiting a military base south of the dnc that separates the north and the south. this of course one day after north korea's failed missile launch. vice president pence call that act a provocation that highlights the risks on the peninsula and assured military personnel that china is on board with trying to resolve the situation in north korea, so i think the bottom line is he is trying to show there is a united front and that diplomacy is the step, the preferred policy, but that does not mean that there could not be some something more severe as a plan b. certainly a fast-moving story there. thank you so much for that.
mayany and softbank cooperate with apple or hon hai. toshiba needs the money after losses at its westinghouse nuclear unit. won approvale has to test itself driving car software on public roads. california's department of motor vehicles granting trials, giving apple software and existing vehicles. haidi: reports from japan say sharp may reenter the personal computer business after seven years. the nikkei news quotes the president and says sharp may return to other technology equipment sectors, although not smart phones. and due to with true declining profit margins, but many the vices under the sharp name.
theident trump is tying decision not to brand china currency manipulator to beijing in bracing for your trade and working with the u.s. to deal with north korea. globalet over to our economics and policy editor kathleen hays with a bit more inside. what did we learn from the treasury department's foreign currency report? gave andonald trump ur days before the report takes some surprise out of it, but it is surprising with the did say in the report. no major country that the treasury department tracks was branded a currency manipulator, watchlist, on the china, south korea, japan, and taiwan, germany, and switzerland. the three criteria
the treasury department look set to decide whether or not you are a currency manipulator. big is your, how trade surplus as a percentage of gdp. is it a material trade surplus. 1.7%, but do you have a significant surplus with the u.s., i think that means a big one, and that is where china is criteria.these have you been intervening to weaken your currency, well china has been doing the opposite, so the long and short is they are on the watchlist but not branded a manipulator. #5913 toing to look at put this trade surplus question in some visual perspective, because the white line is the and those deficit, yellow bars are what china represents good you can see what a large part of the u.s. trade deficit china has become. turquoise bars are japan,
also a big exporting nation, but still much less of the u.s. trade deficit. donald has explicitly more and more tied a u.s. china trade deal with cooperation on north korea. let's look at the famous tweet again, donald trump's tweet carry such clout around the world and certainly on this. "why would i call china a currency manipulator when they with us on the north korean problem? we will see what happens." china not responding on this yet. rishaad: the question is where does this leave the u.s. and china on trade, and in fact with these other countries? germany is one of them. >> it certainly is. china gets so much attention for being trade dependent as an is even, but germany bigger in this category when it comes to trade dependency. #7801 to compare
china's trade surplus as a percent of gdp with japan and germany. , lookis the white line, at germany, its trade surplus is more than a percent of gdp, one of the most trade to connect countries in the world. that is why this is what the treasury department had to say to germany. one thing it has to to is take global responsibility for this and used fiscal policy to boost demand so it's citizens buy more stuff from overseas. again, germany singled out as well. it is not just about asia, so they did tell taiwan, japan, and south korea to minimize currency intervention and be more transparent. kathleen.ice one, right, let's get more on that u.s. treasury report an impact on markets. guest, eisukeial sakakibara, otherwise known as mr. yen.
and the yenan figure into this in your view? >> well, this report does not affect the japan that much. general policy of to depreciatep the u.s. currency has resulted in a slow appreciation of the japanese yen. that will probably continue. one dollar, but i would not be surprised at the rate came close to dollar 100 by the end of the year. that is something you have maintained, because since we talked to at the end of january, the yen has strengthened considerably -- weakened considerably, now again strengthening comes so what
would be behind this renewed vigor for the yen? would it be dollar weakness at the end of the day? exchangedollar-yen rate has been sort of influenced by the relative stance of the monetary policy of the two countries. as the boj eases their monetary depreciatedhas towards 120. now bank of japan easing has come to the final stage, so that the impact is now slowly disappearing. the u.s. tightening of the monetary policy is not probably as much as the market has expected. those two factors combine has resulted in the gradual appreciation of the japanese yen or gradual depreciation of the u.s. dollar these of the the japanese yen. right, i bring up a
chart while i'm asking you this question, #7744 questioning whether japan is an fx manipulator. as a percentage of gdp, 4%, the middle one is where we are when it comes to begin itself, and that is the trade surplus with the united states. you could make an argument could you not that after comments made by donald trump last week, he said the dollar was too strong and we saw the dollar fall, you could say he is the pot calling the kettle black and given the dollar move in some would argue verbal intervention in the market, and other words currency manipulation. think hiseah, i remarks have affected the currency markets significantly. has not been manipulating
the exchange rate. movement of the exchange rate as i said has been the result of the latest stance of the monetary policy the between two countries, u.s. and japan. this: i'm curious about statement in the treasury report saying it is difficult to see that there is any evidence the yen as overvalued, the real effective rate is 20% weaker than the historical average. not disputed, but the fact it is out there as fact, does that deal a body blow to dollar-yen and do we risk going beyond 100, perhaps much lower and much earlier than the end of 2017 forecast you make? >> that's quite possible. it is now moving towards 100. depending upon the remarks of president trump, it could go towards 100 fairly quickly.
i don't think it's going to happen soon, but depending upon the relationship between the two countries and the remarks by various people, it could move towards 100 fairly quickly. stay with the spirit we afteret more from mr. yen the break and talk about the implications of geopolitics on the currency. plenty more ahead. this is bloomberg. ♪
we have been talking about the treasury portman, dollar movement, impact on the yen, but how much of a driver to assigned to geopolitics and this threat we have seen from north korea playing out driving the safe haven demand and the yen? think u.s. china corporation does have an impact. to cope with the north korea problem, u.s. chinese corporation has increased, and that will probably weaken the pressure of the united states on the chinese renminbi, so geopolitics does affect, particularly between the countries like china and the u.s. we have been talking about currency intervention. at what point do think yen the
strength becomes too painful to tolerate? at what point do you see the boj doing something beyond just jawboning? haeadst breaks 100 and -- heads towards 90, there would be concern on behalf of the boj the den has become too strong. if the u.s. feels the dollar is weakening too much, if it is around 90 and so on, then it could intervene, but intervention is only possible when two governments agreed to intervene. just quickly, do you see normalization on the cards for the boj this year? >> normalization of what? haidi: of monetary policy. what policy?
rishaad: 9:29 in hong kong. as usual in shanghai, shenzhen, and tokyo. i am rishaad salamat coming to you from bloomberg's asian headquarters. haidi: i am haidi lun in sydney, where it is a holiday. we do have shanghai coming up, the open, looking ahead to china gdp numbers and domestic activity numbers as well, fixed asset
investment a key one, as well as retail sales and industrial production. that is coming off the back of these robust loan numbers from friday suggesting this effort to deal-levered the system might take longer than policy makers had hoped, so all of this food for thought when it comes to the pboc on their selective tightening drive. let's look at the shanghai open, a little move with that yuan. for thought when the china data dump comes through at the top of the hour. first-quarter gdp beating, 6.8%. of thatalling ahead friday decline. hong kong closed today, but to put this on the radar when the hang seng resumes trading, we are looking for a resumption of trade after posting a net loss for 2016.
only .6%, leading the drop in asia even after non-oil domestic exports rose for a fifth straight month in march, the longest winning streak in six years and helped by the recovery we are seeing in chinese demand. despite that drop in equities, the singaporean dollar strengthening and helped by dollar softness, lower treasury yields weighing on the greenback , lifting asian currencies today. bydo have the korean won up .3% despite geopolitical risks. the southeast asian currencies are also on the up or the taiwanese dollar up .2%. on the u.s.ing treasury watchlist when it comes to concerns around potential currency manipulation, but we do have a read on this, saying the
trump turnaround on labeling i and thea win for x emerging asian space. yields,and i on jgb close to 0%. for iron oretures falling, putting pressure when it comes to the outlook for this metal. rishaad: thank you so much for that. right, let's get to first word news headlines and join i am rishaad salamat --haslinda amin. haslinda: north korea's failed missile test is not expected to change washington's plans. sunday's launch was a medium range missile, not an icbm, and it exploded after five seconds. we are told president trump is
prepared to take the lead and rein in its unpredictable ally. president trump said the decision not to label china a currency manipulator came as the result of beijing helping to deal with pyongyang. the treasury department stopped short of pointing the finger and its much awaited foreign currency report. instead, it urged beijing to embrace more trade and let the yuan rise or fall according to market forces. austria's opposition leader says an application for a $600 million government loan should be rejected. labor leaders say the case has not been made for taxpayers to loan to anow rate indian multinational. carmichael: mine ishae viable, it should not need support. and this railing mining magnet is suing george soros, claiming
he lost $10 billion of business to a defamation campaign. that george soros funded groups to ensure his mining company lost the rights deposits and other business o around the world. george soros has not commented. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. am haslinda amin. haidi: thanks for that. we are half an hour away from data,s latest gdp expecting 6.8% in the first quarter, underpinned by property market, investment, and industrial production. tom mackenzie joins us from beijing, not exactly the most volatile indicator, but suggest the immediate threats to stabilization have faded. for now at least seems to
be the consensus. leading up to 2017, there were key risks outlined by economists facing china's economy, one was real estate and aggressive curbs and second-tier cities and concerned that could lead to a property crash. happened.ot investment has ticked up in the real estate sector. then there were capital outflows but those have slowed and fx reserves as well for february and march have picked up, and there were the u.s. trying to trade tensions. those appeared to have eased and has not impose any tariffs yet. so those are the dark clouds that did not form over the economy in the first quarter for now, and the other positive driving momentum in this economy, things like investment come industrial production, and producer prices as well continuing to take up.
we may see nominal gdp getting near double digits largely as a of that inflation. to key question according bloomberg intelligence is how sustainable is this growth momentum going forward. they are expecting around 6.8% for first-quarter gdp growth, then we also have the march numbers on retail sales, fixed asset investment, and industrial production, and those should give us some kind of guide as to what to expect in the second quarter as well. should we expect any change is coming from the central bank, the pboc? get this 6.8% number or a number that fits into the government's target of 6.5% or more 42017, and of course surveys suggest we will get a number in that range. bloomberg intelligence inks the pboc may continue to nudge rates
higher in the money markets, so the reverse repo rate. they have pushed those up twice, 10 basis points each time. looking to risks further afield, key risk is the debt pile and credit. withw those friday numbers new credit way above forecast, and a lot driven by demand in shadow banking, and every of the economy policy makers say they want to get a grip on. it looks like it is taking them some time to do that, so that remains a risk longer-term for the chinese economy according to many economists. we heard from capital economics, saying so much of this growth momentum is underpinned by big spending, big investment spending, and how sustainable that is in a monetary policy where we see monetary policy more prudent come a tighter fiscal policy and it remains to be seen. as i said, we will get more details at the top of the next hour. rishaad: nice one.
tom mackenzie for us. right, president erdogan claiming victory in a referendum on the most sweeping overhaul of the country's government since its founding 93 years ago. voters narrowly backing plans to give him wide-ranging new powers that he will safeguard security and kickstart the economy. today's constitutional changes will be good for our country. our nation once again showed maturity by voting with free will on changes which have been approved by parliament. haidi: our bloomberg reporter has the latest from istanbul. we will get what we know so far on this story. are closely watching his next move. they seemed relieved when he pulled out the prospects of early elections in his victory speech sunday evening.
he did voice other sentiments that might give investors alarm. hey said he would immediately consider a referendum on reinstating the death penalty. that might cause problems with , which turkey has been trying to join. the results after complaint not about that proposal, but about the constitutional package that turks voted to approve. they said it could cause problems and even halt the session process, so political uncertainty is not entirely over. what thelking about likely reaction from the eu is, they have called this referendum are the an election environment in turkey as unfair. what sort of reaction are we expecting? not the only ones that have called this referendum unfair. the opposition parties have said they will contest it at the high election board that oversees turkeys voting process, but it
did not sound like they would get a sympathetic year from that body. that board appeared live on television this evening to say we have heard your complaints, but yes is ahead with over a one million vote margin, so nothing to see here is the implication. that this not mean turkeys partners aren't worried, erdoganly as president said he will revisit the relationship, a cryptic phrase, revisit the relationship with the eu after the vote, so it is unclear what it means exactly. our bloomberg reported there in istanbul. coming up, tensions rising in korea as the north attempts another show of force. we will be ssa the implications -- assessing the implications. this is bloomberg. ♪
markets: asia." it is 11:42 in sydney. rishaad: 9:42 in hong kong. changing itses policy of employee travel and will ensure that crews are booked at least an hour before departure. mediaange follows social backlash following this video showing a united passenger being removed from the aircraft. that went global. he was taken off that flight to make way for an airline employee. haidi: the first u.s. bank earnings under president trump shows a split between wall street and main street. j.p. morgan and citigroup beat first-quarter estimates. which focuses on traditional consumer and business banking, reported sluggish results and the decline
in total loans. rishaad: bp is trying to close an oil well on alaska's north slope after a leak was discovered. it is venting gassing crude and the epa has yet to determine size of that leak. ep saying the problem is contained and no oil has reached the ground. production rising to 565,000 barrels last month, the highest level since december 2013. haidi: tension remains high in korea following the show of force of the weekend. presidentice continues his visit to the south today while an american battle group is expected to arrive early next week. china is urging everyone to keep calm. let's talk about the implications with the senior partner and head of asean in singapore. what should we be concerned about?
w concerned should we be with the rhetoric, now appearing closer to working together than 2-3 weeks ago? good morning. >> that is true. it is certainly one of the things we can expect that will be discussed in great detail at the summit between president xi jinping and president trump, and now you mentioned the visit of vice president pence to south statementsome of the made by president trump that china was going to help the united states to try resolve the issue on the korean peninsula. obviously the main concern is there is a conflict somehow between the parties involved, the north and the south, the is inin japan, and it everybody's interest, including china's, to ensure that does not happen so we have seen of the last few days comments from
china and the official media in other places where they have bed that both sides need to very cautious in their moves, and some very delivered statements made towards north particularly saying that some of their activities were not helpful, particularly things like testing missiles and nuclear tests. a crucialcomes at time for south korea, the first week of presidential campaigning proper, but i want to bring up this chart which shows exactly the risks facing seoul, korea, 7804 on the bloomberg. even though korea is rated five notches higher than thailand by moody's, you are looking at a spike when it comes to the credit default swaps, costing more to ensure aikens korean bonds defaulting than thailand thailandy -- essentially. it is remarkable, and do think
the story will continue to play out across korean assets, which are popular in 2017? >> it is a good point. the north-south issue is there and has been there for quite a while, but the other thing you touched upon is the election and south korea. south korea has been going through and next essential crisis for the last year with the removal of the president, with some of the biggest conglomerates involved in that process, corruption investigations, major companies , andg product failures issues with some of the other , so amerates, like lotte lot of volatility is reflected in the markets. theall of it has to do with north. a lot of it has to do with governance issue south korea has been going through, and part of vice president pence's visit to south korea is around what we can expect from a new president.
right now, there are others in the mix, so what can we expect with respect to not only the north, but how he will manage the south and the economy in terms of labor issues, conglomerates, and things like that. there is a lot of volatility there were not go away anytime soon. rishaad: tell us a little bit about the weekend events. some people did see what happened, that there was no nuclear test, but that was seen comingaps kim jong-un back from the brink here. tell us about that. what is your view? well, they did attempt a missile launches we know. heaved a sighody of relief when it did not work, because the united states had statements about what we might do if there was another missile launch.
everybody expected something because of the anniversary of the leaders birth. they displayed a couple of new models of their icbm , so probablyent better for everyone involved that that missile launch did not actually work, but that is not going to stop i don't think kim furtherfrom provocations, because at the end of the day, what he wants his a nonaggression treaty, a peace treaty with united states. he wants assurance that he will be allowed to remain in power, and his trump card for that is nuclear capability and a mechanism with which to deliver that capability, which is a missile program, so that will not go away anytime soon. i think everybody hopes china
will exert some influence on him, but the question is how much influence they have. they don't have as much influence over him as they had over his father, but how much influence they can assert over town yang regime in to ensure they ratchet down the -- inns on the peninsula pyongyang to ensure they ratchet down the tensions on the peninsula. rishaad: you could also argue there is a double game being played by visioning because they do not want the u.s. at the beijing because they do not want the u.s. at the border. they don't want american or korean soldiers allied with the u.s. right there next to them. >> that's absolutely true. one of the values that north korea brings to china as a buffer between u.s. troops in the south and their border. you could imagine that the last thing china wants is a unified
korea because that would bring american troops in theory up to their border. it is also dangerous for japan, because historically when you have a unified korea, you have a more powerful threat from korea in neithero it is japan nor korea's interest -- china's interest. fori: they are not pushing reunification or toppling the regime. they just want a more cooperative relationship with the north? what the united states is looking for is a situation where they are not having the number of missile tests you have had in the last year or two, certainly no more nuclear tests, so a lowering of tensions is what china wants and japan bonds. everybody is interested in having that, so the question is what does the north want exchange, and what the north wants is a recognition they will be a found to exist as a regime
and that nobody will threaten kim jong-un's regime, and a formal peace treaty, which does not exist, so the question is what will china do to affect bet and what will be the quid pro quo, and if china is going to take some measures with respect to the north korean economy, then probably the quid pro quo is the united states needs to sit down with north korea and negotiate some of these issues. rishaad: great talking to you. right, coming up, navigating a way out of debt, how the world's biggest shipbuilder was thrown a lifeline. this is bloomberg. ♪
hong kong. let's continue our conversation. thank you for sticking around. let's start off with kim jong-un. very sleek described as a sociopath, even a psychopath. the north korean dictator with a ballistic missile failing on such a vital day sending out a message, how much of a loss of face would he take it has? has happened before. this is not the first time that one of their missile tests have failed, so obviously there will theepercussions within missile program, possibly individuals, but it isn't bursting that it -- embarrassing that it happens on the birthday of his grandfather, the biggest national holiday, and i am sure they will make some adjustments so the next one comes off more successfully from that perspective.
haidi: one of the things pointed out is the way trump has converged the two separate issues of trade, currency, the financial relationship with china with this idea they should step in and help out with regional security issues. do you think that is the narrative that will be continued in asia? i think absolutely. this is not only focused on the security situation. i'm sure he will be talking about trade in korea and japan and other places he visits, but you are absolute right. -- absolutely right. president trump was only about trade and did not mention much -- strategicictest situation in north asia, other than to say we would fix north korea if china did not help. now you have this linkage made by president trump between the economic trade issues and
rishaad: almost 8:00 in hong kong, 10:00 p.m. in the eastern united states. haidi: this is bloomberg markets: asia. ♪ rishaad: asian-pacific stocks pressed by geopolitics ahead of gdp data from china. yousef: the yen strengthening, extending gains made in the previous session. it is hovering near 108.
rishaad: apple may rescue toshiba in there flash memory chip business. haidi: and the united states reviews plans for north korea. china trying to urge for calm from both sides. rishaad: let's talk about that data coming out of china. gdp numbers should be up for the last quarter. 6.9% for the first quarter. that compares to estimates of 6.8% in the fourth quarter last year. looking back at the numbers, that is the biggest quarterly q1 increase eight gdp since the fourth quarter of 2015. 6.9% is comfortably within the target range of 6.5% or higher.
we have been talking about the risks being pointed to leading up to 2017. risks are around the real estate sector where we continue to see investment, and in the capital outflows. then, risks around the u.s./china relationship, the trade tensions that have eased. no tariffs imposed cap. the 6.9% number, driver's including the factory gate numbers. we have seen stronger exports as well. the question is how long this is going to be sustained for. we have at numbers coming out as well this morning. they have all been, as well. 10.9% for march.
be on the retail sales. asset investment, we will have to break it down as to private versus public sector investment. the number for march is 9.2%, beating the estimate of 8.8% health of a. then we have industrial production taking over strongly, 7.6% for march versus the estimates of 6.3%. those suggesting that we are going to see continued momentum in the chinese economy going into the second quarter. what this means for the central thesethey expect with stronger numbers, the pboc will keep edging rates up.
moves on that to each time. they have talked about laurie economists have said that the pboc is entering a prudent phase. that is likely to continue. it seems that the chinese economy remains on a surefooted longer-term. there will be questions about how much this is driven by , thoseent by that credit numbers that we saw on friday that aggregate credit increased above expectations with money being funneled into shadow banking. those are likely that concerns going forward. but, these are strong numbers. for march.ll beaten another strong number on
the back of the blowout numbers that came out last week. let's have a look at market reaction. reporter: we did see shanghai easing losses, falling 0.7%, .ame for stocks and shenzhen despite at 6.9% first-quarter gdp growth, that is not really creating optimism when it comes to the shanghai composite is playing out. let's look at the breakdown according to sectors. despite the retail number, we're seeing consumer staples down 0.2% and real estate down 1.5%. that segment of the economy has been a focus for beijing given upcerns around eight heating . the chinese yuan rising, by the
way. let's look at elsewhere in the region. rising got korean stocks today while we have japanese stocks and singaporean equities leading the drop. miners slumping as prices continue to slide. we have the likes of consultancy minefield research calling for dryreturn to $40 for try -- iron. iron ore entered a bear market this month. i just want to highlight some equity movers today. this is the mrr function. kb financial rising 4.5% in tokyo. their insurance arm surging as much as 70% after they announced
plans to buy all shares. goldman sachs says this deal could mean higher dividends. , concern over unemployment. -- thoseuri been sold are up in seoul, south korea. right, let's get to singapore for the first word headlines. north korea's latest missile test is not expected to change washington's plans for .ealing with pyongyang sources in korea and the u.s. say the launch was in medium-range missile, not an icbm. we are told president trump is prepared to take unilateral actions if china will not take the lead. says the trump decision not to label china the
currency manipulator came as a result of beijing having to deal with pyongyang. the treasury department stopped short of pointing the finger in the foreign currency report, encouraging beijing to that the yuan rise or fall according to the market. president erdogan has followed his victory with a warning to his opponents. he told critics to prepare for theirggest overhaul of government a 93 years. he has the authority to appoint ministers and judges and call elections anytime. the opposition party wants a recount. remains open in march with the broadest measure of venting increasing more than estimated. aggregate financing was the equivalent of $305 billion, well
above the forecast. much of that was down to growth in shadow banking. the money supply expanded at a slow to space since july. global news 24 hours a day part by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. we do have some comments commensurate some the united states following his visit to the korean dmz. he is telling reporters that china will deal with north korea or the u.s. and allies will. he says he is hardened by the signs that china may help out, again suggesting warmer ties created following president xi jinping's visit to washington. mike pence also say that the options are not just military
and economic, although there are personal options. he says that all options remain on the table when dealing with pyongyang and he says that the bond between south korea and the united states his personal good start in the u.s. and its allies in asia as largely expected. we will bring you more of those comments and that story as they become available. begince presidents reporters following his visit from the korean indians he. -- korean dmz. you can find our interactive television function online to watch previous interviews and dive into any of the functions or securities that we talk about. you can catch up on some of these interviews we have been running on bloomberg tv.
it is expected that sales will be around $7 billion. the taiwanese company faces rising competition in android devices along with the strong tiring dollar. josh taiwan dollar. -- taiwan dollar. rishaad: sharp may reenter the personal computer business. the company president says they may also return to other technology equipment centers. the company withdrew from personal computers in 2010 but heir apparent -- but there parent -- haidi: apple has won approval to test self driving car software on public roads. will useays they software in existing vehicles.
they are attempting to take on google and tesla to focus on underlying technology. rishaad: china's first-quarter gdp growth coming in ahead of estimates. we were looking for 6.8%. retail sales and industrial production -- those numbers reinforcing that better than expected growth. let's crunch them. us.k you for joining you were looking at 6.8% as well . this is confirming that this economy is doing better than the government things. guest: that data confirms a strong start to the year with .dp at 6.9% the government isn't in a good position to achieve their annual growth target. think the gdp
growth may have peaked and in the south throughout the year. we forecast growth of 6.6%. rishaad: you have just come back from a tour of financial institutions in china. -- feeling is that guest: the message we get is that the growth risk is low but that people are worried about medium-term problems. at difference quarter, several positive factors are driving growth. 7%-8%.is continuing at secondly, we see in infantry restocking. that provides a short-term boost to growth. afters also rebounded
external demand. .hese factors are positive for the rest of the year, we see headwinds. car sales may disappoint because of expiration of the tax incentives. so, the infantry cycle appears to have run its course. haidi: further to what rishaad was asking was that this better than expected acceleration in growth isn't the worry that is going to reduce the sense of urgency in terms of structural reforms in financing -- tackling the risks already -- that horse has already pointed sort of
thing. is that the concern? it is that congress, we do not expect a reform acceleration. the priority would be financial stability. seen monetary had policy has taken a tightening since last year. if we look at the monetary data this month, the m2 growth was below 7%. the growth decelerated to avoid the annual target of 12%. china's leverage is still too high and he remains at risk to the economy. haidi: i want to bring up this chart. -- there is still clearly momentum. i would argue that what you are
seeing is more than being made up for, perhaps disturbingly in shadow finance. matters is total social financing. if we look at both the money and inuired growth and funding the money market, the central bank has been withdrawing liquidity for most part of last month and that has contributed .o grow our -- a slower growth according to our estimates, china's total has already exceeded 260% of gdp and increased more than 10 percentage points and that is a risk that the government is aware of and i think they will
put a -- great importance to this task. [speaking simultaneously] we think the tightening of the policy is here to stay. like: collective that look ? is it still tightening? more as one central bank adviser said there is a possibility that they do something more wholesale . guest: i think the tightening is respective to that aspect on the quantitative side. we will see slower growth of .to -- the central bank already raisedm2. policy rates twice this year and
we expect another 20 basis points increase of the monetary operation rate including the the restrepo rate for of the year coinciding with the rate hikes. one statement says the quarter sets a base for the year which is clearly obvious. china is doing well. i am sure you are not learned. -- not worried. guest: although it will not lead to a financial crisis right away -- is little risk. rishaad: coming up, could apple to toshiba's rescue? ♪
rishaad: you are back with "bloomberg markets: asia." sydney.2:22 in apple may come to toshiba's rescue. let's go to tokyo. why is apple now interested in toshiba? guest: if you have ever had to make a decision between purchasing a 64 gigabytes iphone 128, you more for a would appreciate that flash of materialshunk for apple which does not make its own hardware. toshiba is the third largest maker of flash behind samsung.
apple has always been careful to not rely on a single supplier. since him is also apples biggest competitor -- samsung is also apple's biggest competitor. course, they are not interested in purchasing the entirety of the toshiba chip business and they are likely to look for a partner in bidding. haidi: as you say, they are other bidders. who are we looking at? they started with a list of about 10 companies and they have narrowed it down to three. listn is at the top of the , ¥3 trillion. this is the company that makes a lot of equipment for apple.
the speculation is apple coming in as a group. japanese and u.s. regulators have expressed aversion to allowing these manufacturers to fall into china's hands. apple may assuage those fears. could raiser antitrust concerns. in third place, silver lake and broadcom, offering the least amount of money but they nice be the most power -- palatable for regulators. a big.have yet to put in -- bid. rishaad: how does it all shake out? guest: toshiba really needs the money in the bank by the end of march 2 thousand 18 because it
is going for a bankruptcy filing and it is looking billions of dollars in losses so to make the deadline they would have to apply for antitrust sometime during the summer and the next milestone will be may 19 for the second round of bidding. rishaad: thanks. looking at the possibility of apple helping toshiba. right, like trading day. several markets closed, hong kong and sydney observing the easter monday holiday. even though with a good gdp growth figures and other data, not really helping the shanghai composite. to nikkei to 25, cash nikkei 25 -- we have this visit by mike pence taking place in south korea, moving on on to this european
♪ it is 10:29 in singapore. china's growth accelerated for second straight quarter has investment take up and retail sales rebounded. gdp expanded 6.9%, while fixed asset investment grew above 9%. furthersales up 7.6%, cementing a rebound has investment is fueled. the world's biggest ship builder has won the backing of bondholders after a restructuring plan put forward by the korean national bank
agreeing to a proposal for 175 millionup with in bonds maturing this month. the company met creditors and could have gone into receivership that the plan had not been met. the death toll in sri lanka 26 with 20 still buried. came down asp people were celebrating a local new year. 78 homes destroyed, and 150 damaged. say they have been protesting for years about the danger of the site. magnet suingning george soros, claiming he lost $10 billion of business to a defamation campaign. fundedges george soros law firms in the groups, and officials to ensure his mining company lost the rights to an
iron ore deposit. george soros has not commented. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. i am haslinda amin. rishaad: i am rishaad salamat. let's look at reaction to this blowout gdp numbers from china. the data was better than expected. sophie: a down day in asia apart kospi aul, korea, the .4%. we have chinese stocks falling, continuing to decline even after the numbers beat estimates when it came to gdp, retail sales, industrial output, and fixed asset investments. .3% lower onres
the nikkei 225, eyeing a six straight day of losses. singaporean stocks leading the drop in the region despite the positive non-oil exports report for march. shares in taipei also on the back foot following a fall away from that 10,000 level. taiwan, south korea, and china currencies on the up, remaining on the u.s. treasury watchlist. they are pricing than what we are seeing with the u.s. dollar, which is on the decline, even the ringgit and peso, the region's underperformers this year, are also making gains. now checking on the commodities continuing toe slump, dragging on mining stocks in sydney with php and fortescue on the decline. also slipping, oil as u.s. a drillers add weeks. new york crude below $53.
gold having a good day, getting a boost while u.s. treasury yields trend lower. investors consider the geopolitics at play. rhetoric and dollar strength, indicating lower interest rates are preferred, also a boost for gold, so spot gold, the line in blue, tracking higher, contesting $1300 soon enough. if we can pull up the full screen, one of the movers and shanghai, h-shares resuming trade after being halted last week after the share price surged almost 80%. this stock has been favored given plans to develop a new economics own that will link cities with beijing. the hopeful rally continues, sophie. thanks for that. japan's prime minister says he
will push china to play a bigger role on north korean issues. president trump has also urged beijing to do the same. we have just heard from the vice president pence speaking in china saying that either would deal with north korea or the u.s. and its allies will let's get over to bloomberg news managing editor brian fowler from tokyo. shinzo abe emphasizing diplomatic efforts even as the u.s. indicate that despite what happened over the weekend, a more subdued reaction to that missile test. vice president pence sang all options come not just economic and military, but also personal comes still on the table. korea is very much on the minds of japan. major dailies this morning, the front page is dominated with news of north korea at a time when we are
waiting for north korea to conduct what would be its sixth nuclear test. satellite images show preparations have been completed and that could happen at any time. an importantmes at moment, and i think the bottom line is vice president pence will seek to reassure all the allies and to build a collective korea topush north ease back on its weapons development program. i guess the pressure is on beijing to do something, perhaps mollify pyongyang and bring them back into line, but they have their own interests here too. >> that's true, rish. t things weimportan have seen as the they have tried to tie geopolitical bola till the concerns, saying if china
withhelp the u.s. to deal the north korean situation, some of the rhetoric surrounding other issues like trade and currency could be softened somewhat, so that only the pressure is on beijing to help, and so far vice president pence board,d that china is on a little vague, but at least a little reassuring. also, shinzo abe saying he will lobby beijing as well, but his voice is often is not listen to integrate holes of power. alls of power. >> that's right. he said he will put it on his agenda when he goes to moscow, so if beijing is not willing to listen, perhaps russia will listen, but it looks like everybody is trying to play everybody against each other in an effort to solve this problem, and we will see how that works.
brian, thank you very much indeed. is tyingident trump that decision not to brand china a currency manipulator to beijing in bracing for your trade and working with the to deal with north korea. now.een hays has more what did we learn from the treasury department foreign currency report? thatre keenly anticipating the thunder was stolen some days before. >> it was wednesday when donald trump had an interview with the wall street journal and the headline came out that donald trump said he would not render china a currency manipulator, but the question is not over yet. the united states still has a lot to say about trade with china. its trade deficit with china and other countries. chinaly did it not random a currency manipulator, there was nobody who was branded
thusly, even though the remains six countries on the currency watchlist. japan,south korea, taiwan, germany, and switzerland, so it is not about asia. it is about europe as well. let's look at the three criteria to determine if you are a currency minute later or not. first, how large is your own traits surplus as a percent of your gdp. 1.7%, japan 3.8%, taiwan 13%. this is what is most important to the u.s.. do you have a significant surplus with the u.s.? and finally, have you been intervening to weaken your currency and make your exports cheaper? let's jump into the bloomberg criteria numbercrate syri two, the surplus with the u.s., because this is one area where china is violating one of these
factors, and if you look the white line, the u.s. trade deficit come the yellow bars is the part that goes to china, the trade deficit. it is about half the trade deficit. japan is that the bottom, the turquoise bar. one place where the u.s. noted china has changed its ways is intervening to weaken its currency. they noted that for a decade that china had intervened to weaken the yuan, and it is not doing that, but they say they wanted to last and say the policy must be durable. than $1s spent more trillion in foreign currency reserves since 2014 to keep the yuan from weakening, so on that score, they look pretty good. this interesting phenomenon where trumpism linking trade with geopolitics with regional security issues. trade and security deals. it is all part of one big relationship. why are they doing that? >> because i guess they think it
will work and it is time for two of the most powerful countries in the world to get together and find agreement in many areas. the tweeted that really sums up donald trump in his call china auld i currency manipulator when they are working with us on the north korean problem. we will see what happens." so what does donald trump to gain with china. we spoke to build roads, a former vice chairman at citigroup. yes,id after mar-a-lago, the u.s. wants progress on trade, and they also definitely trade progress of north korea with china helping, but that is a complicated question. here is what bill said. >> he is not particular you happy with what is going on in north korea. i heard him say that personally, xi jinping. problem is the chinese have always been concerned that they don't want american influence in the area. if you have a combined reunified
korea, you will have fat, so re are mixed signals out of the chinese. >> he said one of the things they could do to help rein in north korean was pulled back on cultural exports and pull back on bank lending. there are a number of economic steps china could take to put the pressure on north korea. haidi: right, so where does this leave the u.s., and not just china, >> but some other countries that came up on the watchlist? let's look at germany. everyone talks about china and the big trade surplus, germany is more trade dependent in china. look at this bloomberg chart #7801 to compare trade surpluses as a percentage of gdp with three countries. the white line is china, down 1.7%, japan 3.8%, the yellow line is germany as a percent of gdp, over a percent, much larger than either japan or china, so
this is what the u.s. said to germany in the u.s. treasuries report refers to ball, germany has to take responsibility, mobile responsibility for your surplus, putting things out of balance. you are the largest economy in europe and need to do something to use fiscal policy to boost spending and get your people to buy more goods from overseas and correct your trade surplus that way. that could put pressure on the euro and curve german exports. said to taiwan, japan, south korea, minimize intervention and be more transparent about what you are doing. we will see what the response is because we have not gotten one just yet. haidi: mulling it over perhaps. kathleen hays in new york. coming up, 25 years of growth, one of australia's leading economist brings us his take on how the country has managed to avoid a recession for a quarter century. this is bloomberg. ♪
rishaad: this is "bloomberg markets: asia." i am rishaad salamat in hong kong. in sydney. haidi lun ian harper is one of the best-known economist. i met with him in melbourne and ask if all stress quarter-century century without a recession was due to good design luck. of goods been a mixture luck and good management. we have had episodes where economic reform has been sense ofnded, and that purpose has delivered us growth and progress. that waxes and wanes to pending on publicly and circumstances, but politics and economics go hand-in-hand. not that economists have a
right to impose policy on the people. they need to be convinced that the policy is worth its costs and benefits. haidi: what is your take on the aaa rating debate? it seems to be a political obsession holding on to it. is that preventing decisions from being made? >> i don't think the government is driven by the credit ratings. after all, it is a sovereign and makes its decisions on what it considers best for the people and it is not necessarily clear with the ratings agencies will respond, so my view is you should run government policy on the back of what the ratings agencies might or might not do. i don't believe the government is doing that. haidi: property prices, particularly melbourne and sydney, have been on a tear. is there a concern that despite macro financial measures put in place that we are setting up for an asset bubble? prices are property
growing strongly in sydney and melbourne, but it is not a nationwide phenomenon. is restricted to the two major capitals, driven by significant population growth in both capitals, and restraints on supply. haidi: it is clearly a headache for policymakers to be setting one monetary policy for what is quite clearly a multifaceted, multispeed economy and property markets around australia. >> the reserve bank is focused on inflation of goods and services prices, not property prices. what it is concerned about is financial stability. if there were to be any property bust, and that place up negatively for financial stability, so the reserve and keeps an eye on that come up the interest rate this constant across the country as you rightly point out in different parts of the country are operating at different speeds and in different places on the economic cycle. the instrument was never
designed to be the only instrument to control that. there are other instruments which the regulators are reaching for come macro prudential controls. with the popular backlash with brexit, trump, there has been a perceived shift away from free trade, globalization, backing out of things like the tpp and nafta potentially as well. onyou see the impact australia as being extremely negative given the exposure and phone ability to trade this economy has? >> if there were some sort of retreat from trade, particularly amongst asian nations, that could have a negative impact on us. on the other hand when other countries trade with third parties, you benefit even if an aggregate around the globe it is a negative influence. pockets oftill be gain from trade diversion in our favor even if there is trade disruption overall, but on
balance we would all be better off if there were more trade. an antitrade sentiment coming abroad, that is something we would prefer to see less of, that is clearly true. years of have had 25 uninterrupted growth in all straight without a recession. what do you see as the biggest downside potential that could interrupt that? of risks.re a range there is policy uncertainty around and geopolitical uncertainties. i think we have to navigate our way through with good strong domestic policy. over theworked for us last 25 years. we have had uninterrupted growth . there have been ups and downs financially throughout the process. global through the financial crisis and came out the other side without a recession. we went through the asian financial crisis and the tech wreck, so there have been challenges we have faced, and good strong policy with strong
haidi: this is "bloomberg markets: asia." it is 12:51 p.m. in sydney. rishaad: 10:51 a.m. in singapore. business flashhe headlines. united airlines changes policy on employee travel and will ensure crews flying as passengers on its planes are booked at least one hour before departure. the change follows the social media back last caused by this video which shows a united passenger forcibly removed from the aircraft. images did go viral and they were seen globally as david dao was taken off the flight to make way for an airline employee. the first bank earnings show a split between wall street and main street. j.p. morgan and citigroup beat political driven by
turmoil and rate hike. wells fargo focusing on consumer and business banking reported sluggish results and a fall in total loans. rishaad: bp trying to close an northernon alaska's slope after a leak was discovered. it is minting gas and crude. the epa has yet to determine the size of that leak. bp says the problem is contained and no oil has reached the ground. rose toope production 565,000 barrels a day last month, the highest since december 2013. as we mentioned earlier, the past's biggest ship older one bond holder backing for a restructuring plan of 760 $5 million of notes maturing this month. our industrial reporter joins us now for what is going on here? >> the bondholders are meeting with daewoo to get approval for
the debt restructuring plan daewoo that the biggest shareholder of has come up with. the first meeting has concluded and the bondholders have agreed, so we have two coming up this afternoon. that will be closely watched. indeed,losely watched how quickly could we expect to see some sort of resolution or approval or finalization of these debt rescheduling plans? the biggest obstacle for this was the national pension reached but they have an agreement to agree to this it set uping plan, so a green light for the plan to go through, but we still need to go through the proceedings where each meeting will have to get approval from all bondholders before this restructuring plan can be approved, then the next
step will be taken. a long timehas been coming, right? take us through how we got here in the first place. if they fail to reach an agreement, we are looking at court receivership. is that likely to happen? which holdsthe nps, a big chunk of on's that mature up to 29 teen from with that theoval from nps, likelihood of going to thereptcy is slimmer, so are high expectations that the bondholders will agree to this restructuring plan, which will be good for daewoo going forward. haidi: we will be watching that story. we are expecting to hear more. thank you so much for that. ahead, the big stories of the dominating nots
just today, but for the rest of this week. shery: that is right. we are talking north korea, but also turkey. first of all, china trade numbers out this morning. dissecting first-quarter numbers, up 6.9%, the seventh month of acceleration. we will also be talking turkey, residentcal headlines, erdogan firming his rule with a referendum, a narrow victory, but we will go live to istanbul where yousef gamal el-din will update us on what that victory means and talking about -- and its earnings. this is bloomberg. ♪
almost 11:00 in hong kong, 1:00 in sydney. welcome to "bloomberg markets: asia." ♪ china's economy accelerated for a second straight quarter as investment, retail, and factories pickup. furtheren strengthening as geopolitical tensions weighing on markets, near 108. shery: alibaba's financial arm steps up its suit of moneygram.
david: president erdogan claims new powers in turkey, warning critics to prepare for changes. australia, hong kong, new zealand closed today. to watch open, a lot out for, geopolitics, turkey, china trade numbers, and the bond markets with a chance to react to u.s. inflation data. much softer than expected, finds life, but we are watching the bond space and currencies. right now, when you look at the u.s. treasury market, yeah, we broke through several key levels. conversation a lot of people will be having this week's do we now have to start rethinking the range? higher, butill go do we then adjust everything lower as we make our way down the yield ladder.
these are some of the levels j.p. morgan this watching. we are 2.2% at the moment roughly. below 2.15%,eak which is the bottom most line you see right there. we are roughly 2.2 at the moment. once we break below 2.15, that bottoms to 1.88%, the right here, which would signal if we fall below 2% a bullish break, a bearish break, it seems like that is so far away from us now, 2.6% a lot of people were arguing a few weeks back, so we were watch this closely as markets in europe and the u.s. get underway over the next few hours. right, the other thing, gdp numbers a bit later on, but this is another way of looking at it.
this is your official rate of gdp growth out of beijing, six point 9%, better than expected, but have a look at the white line, that is a private measure of growth, the li keqiang index. it is not rocket science. a stark diversions between the two. do we look at the middle? let's see. we will talk later on about what this means for investments, especially china-related currencies like the aussie dollar and singaporean dollar. a lot to talk about as we get underway of this new trading week. in the meantime, here is first word news. david, north korea's latest failed missile test is not expected to change washington's plans for dealing with the regime in pyongyang. sources say sunday's launch with
a medium-range missile, not an icbm, and that it exploded after five seconds. we are told president trump this prepared to take unilateral action if china won't take the lead and rein in its unpredictable ally. president trump said the decision not to label china a currency manipulator came as the result of fishing helping to deal with pyongyang. the treasury department stopped short of pointing his finger in its much awaited annual report. instead, it urged beijing to embrace more trade and let the yuan rise or fall according to market forces. the turkish president erdogan has followed his referendum victory with a warning to opponents at home and abroad. he told critics to prepare for the biggest overhaul of his country's system of governance since the founding as republic 93 years ago. he now has the authority to appoint senior judges and ministers and call elections
anytime. the main opposition party wants a recount of one third of ballots. elderrld's biggest ship has won the backing of bondholders after a restructuring plan put forward by the korea development bank. the national pension service has agreed to a proposal with $175 million of on's maturing. met creditors today and could have gone into court receivership had the plan not been accepted. 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. story, china's economy etc. rating for a second straight quarter. we saw investment, retail sales, factory output all above estimates for march. david: our china correspondent tom mackenzie has the numbers and what they mean. another strong set of numbers
out of beijing. it certainly looks that way, 6.9% for the first quarter eating estimates, the biggest uptake and quarterly growth in china since the fourth quarter of 2015. we have been hearing from the national bureau of statistics about the data set we got this morning, saying it does set china up for the year ahead strongly, a good base on which to go forward. they talked about the fact that consumption made 77% of that q1 gdp number, which is a positive when it comes to that repeated goingof the rebalancing on in china that the government is trying to push through. also, the jobless numbers fell national and the bureau of statistics pointing to below 5% from major cities, so the 6.9% is a positive and we heard a reaction from the greater china economist at
standard chartered earlier in the show. take a listen to what he had to say. >> the data confirms a strong and with gdpyear expanding at 6.9% in the first quarter, the government is in a its position to achieve target of around 6.5%, but meanwhile, we think the gdp growth may have heat and may soften through the rest of the year, we forecast 6.6% annually. so questioning how much this strength can continue into the year ahead. beenconomist we have speaking to say this is supported by investment, also property sales, the real estate sector still playing a strong role here. we will gather numbers, retail sales numbers eat estimates, and that points to consumer confidence, also suggesting
concerns that the auto sector would drive down that number as a result of the tax hike we saw for smaller vehicles is not coming into play as much as some had feared. industrial production numbers also beat estimates, then fixed asset investment as well also ticking up strongly, and these numbers following on in terms of what we saw from producer prices continuing to rise, consumer price inflation remains soft, so no major concern for the central bank around inflation, and we have the stronger export numbers, so setting china up for a strong start to the year. it is hard to argue with them on these numbers. shery: i do wonder if this is coming on the back of more leverage. we have seen china new credit increasing more than expected in march, so could we expect to see more tightening given the stronger gdp data? you have hit the nail on the head in terms of longer-term risks and those who economists
would .2, the credit situation. we saw that in the aggregate new credit number way above forecast. into shadowt fed banking, a key area of concern for policymakers. it seems they are struggling to rain that end. in terms of the tightening you .2, it still seems bloomberg intelligence economists tell us the reverse repo rate -- we have seen the pboc hike by 10 basis points. areconsensus remains we unlikely to see benchmark rates rise, but maybe economists will change on that my colleagues in the team behind me have been analyst who says a lot of what you seek around the deflationary aspects of the gdp numbers and property sales and investment, saying it is likely
this number will give the pboc confidence in terms of their decision to move to more tightening. as you .2, key concerns forward point to,forward -- key concerns going forward. strong numbers and a strong base as we had towards that party congress at the end of the year, party members no doubt smiling about this. david: it has been more about public rather than private. ,hen you look at markets equities being offered up, sophie is her to break it down. tensions between beijing and washington dc -- pyongyang in washington dc unnerving investors. the kospi looking resilient in
the face of tensions. stocks,lated consumer this admit talks about the potential timing of the missilent of the thaad system as won vice president mike pence visit south korea, and the also on the rise with other asian forex given the softness in the dollar. even the philippine peso and the inggit are getting caught up that tied advancing, the tide retreating as treasury yields extend the drop. also in the bond space, we are keeping an i on jgb 10-year gilts creeping closer to 0%. asn after gdp strengthened investment picked up, taking a look at the breakdown by sector. i'm going to pull up the index for the shanghai composite on the terminal here. you can see we have the likes of
real estate, utilities, and tech come and companies that did gain after china announced plans for that new economics own, some on the retreat. when you take a look at some of the best performers in shanghai today. maker pricing only 7%. it resumes trading after being halted last week given that it had risen 80% over six days. i want to look at the mliv blog. our colleagues had indicated for despite the gdp beat china, we are seeing the shanghai composite closer to its 200 day moving average has tensions mount around north korea, so we will keep an eye on this, and a last look at the commodities complex. haveelow $53, and while we
iron ore slumping, copper, sink, andaluminum on the advance, gold trading at a five-month high on avon demand. shery: thank you. right, still ahead, how the liquor kweichow moutai is getting a boost. david: we are looking at the u.s. continuing jitters over protectionism. we will talk about whether asian central banks will continue scaling back their u.s. dollar buying. this is bloomberg. ♪
discussions around currency no, maybe,n, yes, these kinds of things cause short-term volatility, but in the longer run, it is so the economic fundamentals that drive it. is more roomere for the market to price in those developments, and i think that those argue for outperformance from safe haven currency such as the japanese yen. that would be our preferred means of expressing this be you. i do think there is further downside for dollar-yen. as for the rest of asia, i don't think we will see quite as strong performance, perhaps even some weakening on the cross-ice if there is a further flare up in tensions between the u.s. and north korea. >> this does not affect japan that much. general policy of president increasesort of
exports are depreciate the u.s. currency has resulted in a slow yeneciation of the japanese , and that will probably continue. dollar from one way, but i would not be surprised that the rate would come close to dollar 100 by the end of the year. david: analysts try to map out where the japanese currency is going. thank you for joining us. the base for dollar-yen, 108 .50. we are closer to 108 right now. what is next? given 108.50, i'm looking for a base. there is nervousness in the market. we see that in the yen, gold, and u.s. treasury yields, but i
think we should put it in perspective and focus on the economic signals rather than the political noise. right now i think it is unwise to write off the dollar completely and expect, hoping to see dollar-yen around current levels. with: it has a lot to do what treasury yields are doing and after u.s. inflation unexpectedly fell in march for the fourth time since february last year, would you say that is the nail in the coffin and it comes to the reflation trade and what that bodes for the dollar-yen trend for now? is thedon't think it nail in the coffin in terms of lower treasury yields from here. the u.s. economy and put it into perspective,
yes, the cpi number was disappointing, but the u.s. economy is close to full employment, and given that, we should see gradually higher a graduallyd tightening path, and that should support the dollar, so the fed is not done with tightening. the u.s. economy is not done with growing, and u.s. yields are not done with going up, so therefore it is unwise to write off the u.s. dollar completely. david: i want to talk about that more. we know that will happen, higher rates down the road. the question is when does the .arket start pricing that in i have a chart that shows this. do we need to scale back our projections of what those new highs are going to be this year when it comes to yields? maintaining an outlook of two rate hikes by the end of this year. , in rate hikes next year
total six rate hikes, that is slightly more hawkish than what the fed is projecting, and therefore i think there is still room for it to go higher. near term, there could be downside pressure on the yields, at i do think if you look at 6-12 month horizon, you are still looking at higher u.s. yields. we do have the fx report from the treasury department out of the way. if you look at the bloomberg, when it comes to the onshore we have seen surprising stability, one of the narrowest ranges of trading since 2015. given the fx report is out of the way now, could china allow as wean to weaken further see improving relations with the u.s.? the chinese, if you
look at the report, china was not singled out. there was a maintaining of the status quo and that no single country was singled out as a currency manipulator. theink for the yuan itself, -- in terms of the yuan, there is less probability given that the chinese has been intervening to prevent the yuan from weakening, rather than intervening to strengthen. is too earlyre, it to dismiss the risk of trade protectionism but having said that, i don't see that and it is a sign of relief for central bankers in that the u.s. has been talking tough, but less confrontational in terms of its approach to trade, but i think asian central banks would still preventing,rant of
of letting the currency strengthen given that the u.s. maintains pressure on asian countries. 105, that's the level you say we make touch to the downside, but is that a floor for you? we have a chart that highlights this line in the sand. not a floor, but i think it is good support that 105. near term, we have the french election, which is on the 23rd, and the polls are showing that gap is nearing, but if is polls are right, there downside for the euro that is
financial in january. ant financial is big in china, growing in southeast asia, but a minute everywhere else pretty once to use moneygram as a platform to link up its users in china with fiscal shop fronts and remittance ayman ares around archorld, but moneygram's rival once to spoil the party, so today's news is a shot across the bow. t 36% increase telling eurone to back off. $15.20 was the offer from euronet. a lot of people saying the first was afrom ant financial lowball offer. ts there concern that eurone might raise its offer? >> it is hard to say.
is playing a dual strategy. we were have to wait and see what happens. i think the announcement was quite quickly timed for nighttime in the u.s.. we will see that develop. shery: just shortly, what happens to regulatory approval? euronet says they have a better chance to win that approval. >> we don't know an exact timetable. first off, we need approval from shareholders. there is about set for may 16. if that is successful, it will consideration for security concerns. david: thank you for that.
11:29 in singapore. china's growth accelerated for a second straight quarter as investment pickup and retail sales grew. 6.9%, while fixed asset investment group about 9%. expanded 11%,ales industrial output up 7.6%. producer prices climbed and certain credit fueled investment. tapsa's credit remained open.
aggregate financing was the equivalent of 305 billion dollars, well above forecast of $220 billion, much of that down to grow thin shadow banking which policymakers have pledged to curtail. money supply expanded at its slowest pace since july. the number of people killed in of the garbage don't in sri lanka has risen to 26. it came down on friday as people were celebrating local new year. 78 homes destroyed, 150 damaged. the site has is rubbish from the capital colombo, and survivors say they have been protesting years about the danger. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. a mixed session in asia when it comes to equities.
singapore and shares falling despite the nonoil exports report, helping the singaporean dollar. other currencies on the of given the weakness in the dollar. we are seeing the yen at a fresh five-month high. korean assets looking resilient despite the geopolitical landscape, but chinese stocks wavering in the face of tensions with north korea. the shanghai extending losses over 1%. taking a look at tokyo, we do have japanese shares closing out the morning session lower and continue that decline. the topix little change, but technicals signaling stocks in oversold territory. the 14th day relative strength index for the topix falling to 29, so we could see buying opportunities. another sign from the dividend yield on the topix approaching
the s&p 500, so we could be seeing that battering of japanese stocks making that space look relatively cheap, and therefore we could see interesting developments there. we are watching a lot of technicals today. keep talkingup, we this gdp report out of china. either you believe the numbers or you don't, or do you take something from the top and find something that fits your narrative? the official and blue here, the li keqiang index, freight, volume, loan growth, and consumption. those things measure different things in there should be an overlap. those two lines should move in lockstep, and we have seen a divergence starting from 2015. just an interesting thought. ,hery: something to ponder
given china's growing gdp numbers, accelerating growth, we have seen new credit gaining ground, so that could mean more leverage. we have seen the shanghai composite clawback some losses earlier, but right now at the lowest level in two months. let's discuss the details with bloomberg's managing editor for asian economies. strong,ers look very actually beating expectations, but how much is because of the leverage and adding more risk to the economy? been ae has certainly stimulus recovery, credit fueled , but it is starting to pick up with the prices recovery coming ,ack, rising power coming back somewhat to the downstream as well. at 7%.lation running that is good news for the debt
picture, because debts are counted in nominal terms bit if you look at the nominal gdp, today's number is more impressive, 11.8%, a surge according to bloomberg intelligence estimates, so this is a good news story. if the economy is reflecting, those gigantic that files become more manageable. david: you grow yourself out of the debt problem. else that stood out to you from the numbers? can be explained by the changing nature of china's economy come more services and more consumption driven. one of the numbers from the briefing today was 77% of growth during the first quarter came from retail, a big rebound in march and the retail numbers, january-february numbers, so that rebound in march has a late some concerns that maybe that key driver in china has
installing, but is not look to be. shery: what can we say about commodity prices we are seeing pressure.eel downward china is a big consumer of all these materials. >> the big question over commodities especially, but also china's outlook as we go into the next few quarters, is what is going to happen as the authorities are increasingly put on curbs. they don't want eight debt bubble and prices to crash out, but they don't want them to keep searching either, so property investment looks strong in the first quarter. they will probably ratchet that back and maybe some more curbs, and that should mean slower growth pace. david: the national bureau of statistics had a line where they said we could start to see curbs on investment when it comes to property starting in april.
one other metric was fixed assets. we normally don't look at that compared to other metrics in china. 9.2% was the actual figure. overnderlying concern china is we are getting a lot of assets.nt from public i wonder where that conversation will go because we have not seen a corporate pickup. >> i don't have the chart on me, but the chart shows this massive spike in public investment as the government stepped in because private investors left the scene. it was almost negative, as low as 2% growth, which in china is very low. it is coming back, so in the first quarter, we have seen a pickup in private investment which has been property-lead, but it does suggest businesses are buying into this recovery story, which is bullish for the near-term outlook. shery: with the pboc buy into
the story and continue to tighten leverage and credit? that is the question. the pboc has been ratcheting up money market rates and trying to step in and take some of the steam out of the speculative elements of the money market. up with realfollow increases in real berlin costs, that remains to be seen. rishaad: malcolm scott, the latest their out of the gdp report out of beijing today. shery: right, let's continue the conversation. is tying themp decision not to brand china a currency manipulator to beijing in bracing freer trade and working with the u.s. to deal with north korea. kathleen hays joins us now. a lot of people are wondering if this is a good decision. foreign policy tied to economics. what did we learn from the treasury department? did they make a differentiation?
>> did they tie it together? no. department issued this survey a couple of times a year and it has been going on for some time. it focuses specifically on economies, trade, foreign-exchange intervention. ison't think it unprecedented for the leaders of nations to start looking at their relationships comprehensively, looking at their trade deals in relation to foreign relations. nowadays, it is cybersecurity. the important part of this report is that even though china was not rendered a currency out that in we find fact china is still being watched on the currency watchlist along with five other nations, top korea, japan, taiwan, germany, and switzerland. it is about europe as well. let's look at the criteria. they are three and
straightforward. number one, how big is your trade surplus as a percent of your gdp? is it more than just a little bit? is it a significant surplus? i think they mean big, and two big and, are you intervening to weaken your currency? #5913 come up and comes to having a trade surplus, look at china's trade surplus, the yellow bars. the turquoise bars are japan. i know the the person moving david, because he loves doing that for me. rant china a currency manipulator, but you have to get that trade surplus smaller and move from export led growth to consumption. one thing china has done well is they are not weakening their currency. for about a decade china did, and now they want a durable change.
$1 trillion in reserves since 2014, so china has moved in a different direction on that. david: i just look at my mouse and will that cursor to move. one thing that we haven't heard tied to this currency report out of the treasury is north korea, and that's being done right now by the current president, why? >> i don't think we have a trade becausewith north korea they don't trade that much. it is actually a poor country, but since that meeting in mar-a-lago, donald trump has said we had a great meeting and now we will help make a trade deal and they will help on north korea. this is what he tweeted. it says it all. i don't know if he is making a true by saying it. maybe trump can will xi jinping with his tweets.
this is a complicated thing. even if china wants to help solve the korea situation, which it is probably the most powerful player, and also in jeopardy in many ways, there are reasons why has a tough time. first of all, people talk about the fear of u.s. influence in the region if the two koreas got united again. earlier we spoke to a senior partner at control risk, and he said that there is a lot to be thinking about here. lowering of tensions us with china wants also. it is what japan wants. it is in everybody's interest to have that. the question is what does the north want an exchange. with the north wants is a recognition that they will be allowed to exist as a regime and nobody will threaten kim jong un 's regime, so the question is what will china do to affect
that, and what will be the quid pro quo. >> right now it would seem that any reduction of tension and threats inside north korea and the countries surrounding would be welcome. i think the big question is letting north korea exist as it is and go back on its side of the line. are the most powerful countries in the world going to be content with this now? cover then i used to foreign ministry, diplomats would say the only reason north korea exists at all is because of china. let's talk about the trade relationship. thee does that leave economic relationship between the u.s. and china, and other countries on the watchlist? >> i think it is important to go back to the fact that germany is on the watchlist. china against so much attention as having a huge trade surplus and potentially and relating its currency to achieve that, but do
you know that germany is more dependent on trade and running a surplus than china? at #7801 and compared three trade surpluses as a percentage of gdp. the white line is china at 1.7%, 3.8% is the turquoise line, but not anywhere near as big as germany, over 8%, so the report singles that germany as well, and this is what they asked them to do, suggested. first of all, take responsibility for a global issue, global trade imbalances cause a problem in the economy and you have got to take responsibility for that. the policy toscal stimulate demand so your citizens buy more goods overseas. exchange rates are supposed to euro adjust, so put upward pressure on the. when it comes to the asian nations, taiwan, japan, south
korea, the treasury says please be transparent. yen was talking about the fact that the yen is strengthening, which is a problem for japan and the bank of japan, but again, i think it is beyond the fact that if china wasn't branded a currency manipulator, there is still a strong push in the u.s. to reduce these large global trade surpluses. thank you for that. kathleen hays live for us here at i have been called a lot of things. i think that's the first time i've been caught a cursor. turkey,be talking referendum over the weekend, president erdogan wins sweeping new powers. we will see where this takes the country next. this is bloomberg. ♪
shery: this is "bloomberg markets: asia." president erdogan has claimed victory in the referendum on the weekend, the most sweeping overhaul in 93 years. voters back plans to give him wide-ranging powers. he warned opponents to expect radical change. i hope today's constitutional changes will be good for our country. our nation once again showed maturity by voting with free will on changes which have been approved by parliament. shery: yousef gamal el-din joins us from istanbul. great to see you. give us some details of what changes we can expect and when. this was a massive surprise for many. what a nailbiting finish.
most people would have taught this would go clear one way. the yes vote is what the market has been pricing in. as we got closer to the end, it became more narrow and the yes vote getting through with 51. 4%, perhaps not such a resounding victory as president erdogan would like to secure. biggest change to the constitution since the formation of the republic 93 years ago. it will include things like ad the party,e appoint ministers, dismissed thees come and give him opportunity to stay in power until the late 20 20's. the fact it was so narrow and we are hearing voices from the
opposition contesting the outcome, that tells you this story is not over yet from a political side of things, but then you have the economic side, because the question becomes what reforms can this administration and act going for and how will foreign investors react. you saw what happened to the turkish lira overnight, 2.4%. 3% was spot on, sing 2% to in the relief rally. i will be interested to see what happens with the other asset classes like the bond and equity spaces. he hasone other thing been afforded is more scope and say it comes to the budget and fiscal policy. as faru heard anything as which way he has told to terms of government spending? >> that is not quite clear. has thoseage, he additional powers.
those don't switch on overnight, so they will trickle in over the next few years. if you look at what the experts are saying who follow this story closely, the guys at ubs are saying you could see current account deterioration amid expanding credit and limited competitiveness. turkey depends on short-term capital inflows to finance the current account deficit, so they are cautious on the turkish lira, the bond, and equities trade. is saying the equity spaces under price compared to peers, so plenty of opportunity, but little clarity in terms of economic policies from this government. shery: do we have any more clarity when it comes to turkey's relationship with the eu? has been theship focus of investor attention in the people of turkey.
>> it has. it will be interesting to see the continuing fallout. we got some reaction from eu officials overnight, making it clear that they would not tolerate this kind of broad-based power grab in their view and also a reintroduction of the death penalty. we understand that could be put to a vote in the near future. president erdogan has always tried to capitalize on this populist theme in terms of standing up to the west end being a defender of islam. the question is to what extent he is willing to act on it and jeopardize one of the key trading partners to his country, an important source of capital inflows and tourism? it is not easy to brush off. the pragmatists would argue he will tread cautiously, but ultimately has other priorities and new ways of filling those
cap's and can afford to step back a little bit, so still plenty to come on the eu-turkey front. david: yousef gamal el-din live out of istanbul, markets open at 9:30 a.m. local time. shery: we want have more details at the top of the hour, but for now, let's get a check of the business flash headlines. apple may rise to toshiba's rescue, looking at investing in toshiba's flash memory unit, which is up for sale. options including partnering with hon hai and joining a bed with japanese investors. we are also told softbank may cooperate with hon hai or apple. david: this time, we are looking for self driving car software for apple in the u.s.
after one bad experience, i no longer touch the stuff. they seem to have found new avenues for growth after three years of slow sales growth as they saw their key market of , high margin premium liquor dry up amid a corruption campaign that started with the ascension of xi jinping to power in 2012. the height of the corruption campaign in 2013-2014 as well. they have found other ways to generate sales, looking more towards wealthier chinese dom in theficial private sector, and the middle class, so things appear to be looking up for them.
absolutely.: we have a chart that shows they surpassed diageo to become the world's biggest newsmaker. how much more upside for investors? even more thant a year, investors have been favoring these vice stocks, and that includes liquor makers, casinos. many of these have risen. another liquor maker like kweichow moutai rose almost 60%. kweichow moutai has risen more than 60% over the past year, so clearly investors have seen this coming. if you look at the market reaction to kweichow moutai's statement from friday, very little reaction on the market today comes to you could say this has been factored in. that said, bloomberg --