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tv   Bloomberg Markets Asia  Bloomberg  April 25, 2017 9:00pm-10:01pm EDT

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yvonne: i am haidi lun. this is "bloomberg markets: asia." ♪ rishaad: china promises prudent
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policies, and employment at a 14 year low. macau finally bouncing back from china's crackdown on corruption and excess. rishaad: beijing is to relax the rules on foreign carmakers. local,something fairly the diversions between u.s. rates and hong kong rates. #8081,ring up this chart the cap the highest since 2008, a widening gap, putting pressure on the hong kong dollar, and as result this is what we have going back a year and a half. band and don't forget the
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7.75-7.85, weakening here as we have pressure coming rate not being passed bor not reflected. haidi: it always reacts on any move out of the fed, but relief rallyreall turning into this global reflationary rally. we are waiting on the tax plan from president trump, giving optimism to u.s. markets, close to record highs overnight, trickling through when it comes to risk appetite in asia. 30 minutes away from that crucial open. chinese markets in the green
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yesterday, but trading to four-month lows. singapore, taiwan, and malaysia coming online. sophie, buoyancy from tokyo equities and the yen. sophie: risk appetite, look at 7036, the global stock rally continuing. we are looking towards chinese markets to see whether that could spur e.m. investors to take profits. looking markets resilient. a measure of risk aversion among emerging-market asset classes is decline, the blue line here. the global index, the white line, heading towards the zero line, some catalysts here going back to donald trump's win and his inauguration in january, but
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look at how equity markets are faring so far, shares and wellington gaining 1%. 5900, stocks back above rising for a fourth day as i.t. and banking stocks advance. aussie bond yields higher ahead of inflation data this morning. 2% expected coming into the to 3% trading range expected for the first time in nine quarters, yields ticking higher. the hong kong dollar trading near a 14 month low as bears have it in their sites. we are seeing an explosion of volume when it comes to fx options around the hong kong dollar. chinese bond he hills, we have seen them pick up, helping chinese financial shares, insurers and banks. this amid speculation they will
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benefit from that pickup in bond rates. the 10 year yield for china bonds the highest in nearly two years, so the msci china financials index rising the most since march 16, the line and blue. rishaad: thank you very much indeed, a quick check on first word headlines. a san francisco judge blocking president trump's plan to withhold money from so-called sanctuary cities that protect undocumented migrants. the second to be declared ononstitutional after a ban citizens from six muslim countries. china has joined the u.k., brazil, and other nations questioning whether the u.s. is doing enough to meet climate commitments under the paris accord. several countries have as the united nations to scrutinize
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american progress, illustrating humiliation orumanizatio retaliation could face. rishaad: freeport-mcmoran surging, the prospect of lower output freeport preparing to ramp up production. copper climbing to a year-to-date high in february on supply disruption and has since fallen back. cut full-year copper guidance by 18% after production fell at its chilean mine. workers have returned, but will resume talks on an unresolved wage dispute. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg.
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rishaad: right, well, china saying it will maintain what a kohl's prudent policies after the economy saw an unexpected pick up in the first quarter. -- what it calls prudent policy after the economy saw an unexpected pick up in the first quarter. what you making of it all? >> the authorities have no intention of stepping back. consider the party congress towards the end of the year, the authorities will continue to ensure fiscal and monetary support to keep growth on track. we heard the same comments from the central bank that the economy is on track to meet its 6.5% target. when so much of this
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growth has been dependent on infrastructure investment and credit growth, we know the mandate is to avoid systemic risks this year. we have seen seizures and bond markets, money markets, and equities as a result of curbs on leverage. how does that balance with maintaining gdp growth? >> it is quite a conundrum for a authorities, tightening money consideringcially the growth of shadow banking and reliance on interbank funding, so it will be interesting to see how they can navigate their way through modest to tightening without triggering wider stretch in the credit market -- stress in the credit markets. they are talking about prudent policy making, but at the same time, credit continues to surge and there is no signs of the
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debt story and china contained just yet. rishaad: it is kind of a chicken and egg situation. you need a growing economy to get off that leverage. certainly we had some unofficial data, did we not, the official stats underplaying economic growth in the country? >> this is true. ,here is no doubt growth looking at the official and unofficial gauges, and an important pickup and nominal gdp , and on theical other side, one of the great risks china was facing was the risk of a trade war with the u.s. concerns wereg, less and we are back to standard , so that isanguage
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a major plus for china's economy as well. rishaad: thank you very much. enda curran there. beijing will ease the limits on foreign automakers. we discussed the implications. bad, andus, the good, ugly, assessing the state of chinese banks with ubs wealth management. this is bloomberg. ♪
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haidi: this is "bloomberg markets: asia." i am haidi lun in sydney. rishaad: i am rishaad salamat in hong kong. apan pros holdings booking $3.6 billion charge on its investment in the austrian logistics company toll holdings. $360 million loss, cutting 300 , 1400 more by next
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march. japan post paid $5 billion in 2015, a price the president now admits was too high. toll was a great by given the significance and the asia-pacific, however we miscalculated the austrian economy and paid a little too much as soon after the economy slumped. haidi: netflix search to a record on news of a potential deal and china, soaring by 6% in new york. the company says it isn't talks with baidu streaming to distribute programs and china. adhere strictly to chinese regulations on film and tv imports netflix expanded into 130 countries last year. 15 boardwells fargo's members never leave surviving in
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the wake of the false account scandal, although the partners may follow. directors winning support from 99%.ittle as 53% to investor was thrown out after demanding to know when the board knew it and what they knew. haidi: china construction bank, the of china, ag bank among names we are waiting for. our next guest is positive when it comes to vibrations after a strong performance this year. he is the head of equity and credit for asia-pacific at ubs wealth management. we have seen this reaction across various asset classes in china, largely due to tighter regulations as they tried to clamp down on over leveraging,
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products proving to be a headache when it comes to viewators, but how do you bank profitability and china going forward given that they are struggling still with that lens -- bad loans? >> a quick distinction is important to make in terms of systematic risks in the chinese banking sector. there is a defined between the smaller ones, especially the big ones. they had their share of issues, but the source of risk is more modest. in that respect, the activities happening earlier on from the central bank and more recently brc 2-d riskshould be welcome. tothey do too much -- de-risk this space should be welcome.
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generally speaking, we are increasingly positive on the asian banks as i listed share class, and part of that indeed situation, and we it is not coming down very fast to be sure, but given that the banks have slightly underperformed in asia, into an we are moving mid-cyclical scenario where the banks of the next area where we should see earnings upgrades. npli: there isn't that stabilization flattened by higher nominal growth? yes, that is part of the reason, but since two years, we have seen that if we look at the balance sheets of the companies across the region, not only china, they are healing, and it is not surprising because more hidden in the cash flow
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statement, across the region they have started to be more capex.lined on that is one important aspect. the most problematic areas, materials, minors, steel factories and the like, with the prices rising, it eases the interestingly for these listed areas like materials, energy to some extent, we have seen significant of grains -- upgrades, so who is next? next should be the banks. thesed: you can look at banks and their balance sheets and have a look at return on equity and see dividend yields, and i want to bring this up in showing how#8044, the four big banks, icbc, cd g bank allina, ac
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below book value. it screams value for some, but it is cheaper of reason. what would it take to buy them? would it be absolute clarity npl's orcomes to i does it go deeper than that? >> you can argue whether we will get absolute clarity, but big chinese banks are showing they 's, owning up to the npl almost twice as high as what they were showing five years ago. you can argue if that is enough, and that is the reason why investors are skeptical valuing them below book. dogmaticot be too about this. many of the most problematic customers are seeing healing balance sheets, earnings going up, interest coverage ratios are improving, so may be still and black box, but within that black
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box, we can assume something is improving, so i would not wait for that last piece of certainty to engage. rishaad: absolutely, and we have 's are7289 showing how npl flattening out. does this heart and you in any way? can you repeat, please? rishaad: we have a chart showing how these nonperforming loans are flattening out. i'm asking whether that harkens you in any way? more likely tou look at these banks closely? >> yes. at this point in the cycle, --eral drivers for the banks i don't think our positive case on asian banks in general is about net interest margins. i don't and they will go up significantly in the case of china in particular. if anything, we have seen them
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come down and that may not stop. it should not matter so much. the other big driver's loan growth, and markets like india and indonesia stand that because they -- out because they are likely to accelerate. china is not likely to accelerate. se are seeing falling npl' uniform across the region, and that should be the most important at this point in the cycle. if your cost of credit starts to fall, usually banks start to re-rate up haidi:. i want to get your views on where the on markets are globally. the chinese 10-year falling the most in 10 years, u.s. down for five straight sessions. templeton, franklin a star bond trader, but he is saying u.s. treasuries are one of the biggest financial bubbles there is right now. take a listen to what he had to
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say. >> it is in our view one of the biggest financial bubbles out there. if you look at economic growth, inflation, foreign buyers starting to walk away, these numbers don't make sense. it is like walking on a lake in april, still frozen, but eventually it will crack. we see then how much bond trade in negative territory, is this a mini selloff is that search for yield continues? >> on government bonds specifically, the treasury, our view has been for a couple of quarters irrespective of trump, people underestimated inflation, at it now, they no longer do that. inflation has room to go up a bit, so we replaced some u.s. treasury positions, a couple of years
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potentially. we put that into inflation-protected treasuries. treasury yields have a little bit to go up. we targeted 2.5% by year end, but it is not something in my view that is to worrying, but within the bonds, if you look at what the central banks are up to , we are overweight u.s. high yields, underweight as an offsetting position in european high yields, so that could be interesting trade within the space. especially with the ecb this week. always great to have those insights. up, wynn macau delivering a better than expected profit. we will watch how the stock reacts in premarket coming next. this is bloomberg. ♪
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haidi: this is "bloomberg markets: asia." i am haidi lun in sydney. inhaad: i am rishaad salamat hong kong. we count you down to the start of trading here, china, and we are looking at the premarket session on the way up by .4%, hang seng on the futures similarly higher. resortshe stocks, wynn came out with figures overnight, wynn macau helping, up 4% in premarket. let's go into this chart showing blue hasmacau in outperformed its peers. we have the recovery in macau after being in the doldrums. declining gaming revenues, and it has turned positive against some basic facts as well. well -- basets as
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effects as well. haidi: headlines for all the wrong reasons, suspect wealth management products being sold to clients in one of its branches in beijing to cover up another fraud. it turns out like it is a more mundane case of forgery than anything else involving one ranch manager, but not a good look when it comes to internal controls. that stock is up 11%, but trading sideways, certainly underperforming for the hang seng. we do have earnings coming out after the market closed today, so we will be watching. aboute talking nonperforming loans, the ratio looking better, but again, is that being flattered by higher gdp growth? coming up, economists expecting australia's first quarter cpi to hit the rba target range for the
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first time in a few years. we will get the latest numbers up next. this is bloomberg. ♪
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hong kong shrouded bicoastal fall, nine: 20 9 a.m. here and in singapore as we count down to the start of the chinese trading day. i am rishaad salamat coming to you from bloomberg's asia headquarters. lun in sydney,di awaiting the latest cpi figures are australia, waiting for australian inflation to up take into that ban. we did have chinese stocks closing the green yesterday, still languishing close to four-month lows, tightening onuidity, a clampdown
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leverage, and these shocks going through money markets, bond markets, equity markets in china, whether that will have a prolonged bearish sentiment effect when it comes to the chinese markets, risk. h. rishaad: bank of japan, growth numbers out of the u.s.. on top of that, bank earnings season starting, also automotive ownership on the cards. we are getting cpi, indeed, let's get it to paul allen. the cpi numbers crossing now, .5% for the quarter increased. not quite as much as analyst had been estimating, looking for .6% for the first quarter. that gives us an on your figure of 2.1%, so just scraping into to 3% target band for inflation, the first time we have been here since september 2014, some of the rba can
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breathe a sigh of relief on that front. meanba watches the trim for the quarter, also .5%, on year 1.9%. the aussie dollar coming off a little in the wake of these numbers. is consensus that the rba has its hands tied in terms of what it can do. inflation is taking up, but it has this worrisome situation with the property market. >> it does. they do have other problems, particularly in terms of underemployment. there is a column in one of the newspapers criticizing the finance minister about not speaking about the underemployment problem. week wages growth, some encouraging inflation numbers here, but it's a translating into wages growth? possibly not. the other thing i keep looking
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over my shoulder for is a headline on petrol prices. there was a feeling among analysts that higher petrol prices in the last quarter might have inflated the cpi figures, perhaps artificially, maybe not sustainable, so we will have to wait and see. haidi: you have to wonder whether this is a seasonality effect, a one-off situation. thank you for that. we will get more details as they become available, but in the meantime, let's take a look at how things in fx land are going. it is kind of all over the place. sophie: take a look at the aussie. out, not much in the way of a big move in that cpi number, coming within the trading range there, so the aussie at 7528 against the greenback. when you look at the reaction when it comes to aussie stocks, we are not seeing them bunch too much from how they were faring
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earlier today and the above 5900. also chinese markets, we are seeing stocks in the mainland breaking away from the global the gainly, snapping we saw yesterday, that shenzhen sliding into the unchanged territory for now. take a look at chinese h-shares, gaining .6%. i want to take a closer look at that space real quick when it comes to the h-share market. i want to focus on financial jump byecause they did the most in five weeks on tuesday, tracking that rising bond yields, picking up .8%, leading gains on the chinese h-share index. a stronger economy and efforts to clamp down on leverage stoking yields, sending the 10 year rate to the highest in two years. if you recall yesterday,
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h-shares in one property developer were suspended after it became the target of a short seller, which warned of a crash since the stock has surged more than 800% in the past three years. we did see china's biggest bad loan manager caught in the crosshairs as it tumbled on tuesday, owning 13%. 2.93%.mbing above in aeport is the latest series of attacks on hong kong listed firms, but before it had on tuesday, itd became the most shorted stock on the msci china index, surpassing dairy company that captured headlines last month. haidi: thank you for that. let's get you up to date with first word headlines.
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china's leaders say they will improve support for the real economy while maintaining prudent monetary policy and a proactive fiscal stance. growth accelerated in the first quarter, driven by domestic demand, and there are signs market sentiment is recovering. official unemployment fell below 4% since 2002 despite pledges to cut jobs in industries plagued with excess capacity. goldman sachs chief economist says the bank does not expect president trump's 3% growth target to be met this the or next, still near-term risk of a u.s. recession is quite low. -- thects the president white house will release initial tax proposals later on wednesday. >> we do expect something that is not deficit neutral and does increase the deficit relative to what it would have been. that increases disposable income and taxes come down and delivers
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a modest boost to growth. haidi: syngenta says the planned merger with chemchina will close on time in response to concerns about the deal winning approval from india. met indianpanies regulators on friday to see if the merger would be subject to a further investigation or whether the commitment will be accepted. chemchina's extended bit close on may 4. syngenta closing up almost 1%. rishaad: the japanese reconstruction minister has resigned of remarks he made about the devastating 2011 earthquake and tsunami. he said it was "good the disaster happened in that region." and said theacted disaster would have been far worse if it was around tokyo. shinzo abe condemned the comments. 2600 journalists scattered
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around the world, we have the world of business covered. hast, a new casino in macau and byt for wynn resorts an improvement in las vegas. wynn shares up by 4%, 3.4% at the moment. bloomberg intelligence joins us now. good news story for wynn resorts over all. >> much of that is attributed to a new resort they opened late last year. a first-quarter revenue up 13%, mostly driven by vip, up 17% versus mass at 8%. with the new premium oriented -- they are not stopping there. there will be more to cater to that demand. rishaad: i have to bring this chart up. wynn macau has been doing better
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#8089.s peers, wynn suffered the most us we had this crackdown on conspicuous consumption, and now doing better than most. >> that is true. we need to say goodbye to the past in terms of that anticorruption phase. there is still plenty of wealthy chinese gamblers demand coming through in the form of direct business or through these junkets. wynn palace is certainly -- rishaad: we have another chart that will show us how, we were in the doldrums, guys, bring it up. it shows how bad we were. there we go. it is against ok, comparatives, which were bad here, but we are on the road to recovery. >> it is a turnaround, but it will take time to stabilize at a
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level. we can't say we will go back to this peak levels in the past, but certainly it will get to the point where it will stabilize. to grow.still room up and to the point where it gets to that stabilized level, there is more volatility in that segment of the business, which brings us to the fact that these operators are focusing on this mass-market, mainstream business that enjoys these non-gaming facilities. haidi: i guess my question is, if you look at an longer-term recovery, sustainability of the situation we are seeing, it is down to that structural transformation, isn't it? whether they will get mass-market clientele, families -- how is that effort going? >> particularly when it comes to wynn macau, they are targeting that high-end business. the families and the tourists
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that come to enjoy the rest of macau, there are other players in that space as well, and theirnly for wynn macau, advantages they offer that premium product, so they are attracting people who will spend are on retail, dining come bit more luxurious in terms of its product offering on the comes down ton it the overall mass-market driving that growth, it has not reached that potentially get because at this point they have blockaded the property, making it difficult for people to come in and out of that property. when they removed that, more palace,an access wynn and beyond that in 2018 when you see more of its competitors opening new resource around melco'slong with n city of dreams, you will see that esau develop and more
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people going to that cluster to support wynn macau's business and focus on that segment of the business as well. been a lot ofas excitement and chapter in the industry about the legalization of casinos in japan, and there is a long runway to get there, that would that be the next big threat when it comes to macau? up to now it has been all about macau. >> that is correct in terms of japan. when it comes to that specific market, we are still a long ways to go. it is not going to be the case for several years down the line. at this point, we are waiting within the course of this year in terms of the corporations involved, the partnerships, the casino licenses, the locations -- it is still unclear at this point. until we get some resolution in that respect, most of that focus would still be in macau, but
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very exciting prospects for japan, certainly more of that mass-market clientele, also options for visitors to japan, but until we get more details coming it will be difficult to say whether or not it would threaten macau at all. haidi: i'm sure the industry is just enjoying being able to talk about the recovery after such a prolonged period of negative headlines. thank you for that. next, china easing restrictions on foreign carmakers. we ask the american chamber of commerce in china about the road ahead. this is bloomberg. ♪
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haidi: a quick check of the business flash headlines. mcdonald's investors are loving the same store sales figures, 12% global growth, 1.7% in the
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u.s., shares hit a record at the biggest entered a increase in 18 ac ins offering the big m three sizes and aggressive drink discounting, earnings of $1.47 a share easily beating estimates. rishaad: mcdonald's saying also that it is shelving plans to sell a stake in its japan unit as it sees of turnaround from 15 months ago when mcdonald's was weighing a sale. the unit had posted quarterly losses since mid-2014 amid a series of food scares. since then, there has been a rebound and is seeing full-year profit at $76 million. haidi: japanese lawmakers will lobby the government to put the national interest of first in this sale of toshiba's chip business. it sees a security risk in the transfer of technology a brought if a foreign company buys the unit. toshiba is selling assets to raise money after the bankruptcy
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of its westinghouse nuclear unit. our next guest says u.s. companies in china are facing one of the most challenging environments in decades this year. let's go to beijing. chairman of the american chamber of commerce in china joins us now. thank you for joining us. tell us about this. how are these difficulties manifesting themselves? these difficulties are manifesting themselves as companies are facing challenges, and the biggest challenges they face is a lack of transparency in the regulatory area, protectionism, difficulty and certification, and to be fair, the companies are also facing rising prices, which also chinese companies face, and a lack of adequate middle-management talent.
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ok, well, let me ask you this as well. please see netflix allowed to possibly operate in china, also reforms for the automotive industry on the table. is china opening up, that is the question. >> that is a good question. issue, there are really no new rules or regulations that would allow netflix to come in. it still has to partner with the chinese company. automotive the s being investment cap lifted, i don't see changes in the immediate future, but on the other hand, it is a positive sign that the chinese understand they need to open up these investments.
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we think that opening investment is really going to help chinese development, not just american company development, but the chinese economic development, so it is a good signal, but not that substantive. haidi: part of this stems from a lack of certainty over how this u.s.-china relationship progresses. we know president does things differently. ,e has said things in the past if china helps the u.s. out when it comes to regional geopolitics, we might help you out in terms of getting better trade deals. these things are not historically, traditionally put together as one deal. it you seeing caution when comes to incoming investment interest in china in this year of political uncertainty? >> yes, indeed. -- we0% of our membership take a survey every year -- over 30% of the membership feel that
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the investment environment is deteriorating, the highest it has been since starting the survey in 1997, so the companies are seeing, as i mentioned, lack of transparency, i closed investment environment, and also innovation is actually come ironically being stifled by a lot of chinese policies, whether an overreaching cybersecurity law or a lack of ability to have international or even domestic free data flows and things like this. nowi: is the bigger concern -- you talk about the number one concern is inconsistent regulation, changes in regulatory frameworks, unclear or loss, but is the bigger concern the difficulty of doing business in china in terms of setting up business, the bureaucracy, or is it what happens when things go wrong, ip
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protection or lack there of coming to the picture? >> right, i'll of these things -- mentioned are certainly all of these things you mentioned are certainly relevant. one of the biggest challenges that goes along with this lack of transparency is what we are calling window guidance. i don't know if this is a term that is used universally, but what american companies face is, yes, there are written laws by the chinese government and agreements the chinese government signed, but then there are or there is unwritten guidance by which a lot of the regulators have the opportunity to act on or not act on these , and almost always it is to the detriment of u.s. companies, so this becomes a trade barrier, this lack of that the window
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guidance provides, and this is a big, big problem. ok, i want to bring up #7836. the second you can see it, but it shows global risk aversion is creeping up, but not when it comes to emerging markets. tell me something, is that something perhaps means china is perhaps, well, the place for the money to go to and emerging markets elsewhere are attracting the capital? that is the question i suppose. >> i think that is a good observation. ,oing back again to our survey over 50% of our companies have threeosen china as a top investment destination. one ofpast, china was
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the top three investment destinations for over 80% of our members, and that has dropped to a little over half come and that really is a good indication that investment is going elsewhere. of our companies have decided to not invest in the more, or actually reduce investment in china right now. much.d: thank you so commercecan chamber of in china there. coming up, automation driving up factory, but wyatt likes the rest of the g7. ♪
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haidi: japan's factory productivity top to the g7 for two decades after 2014, but overall productivity is the
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lowest in that group. , why do we see this dramatic emergence when it comes to manufacturing and services? >> well, there are several reasons for this. japanesewith, manufacturers of course have to to maximizeally productivity. on the other hand, the services sector has been largely protected from foreign competition. in japan, extreme levels of customer service are the norm, part of the culture here, so to highnot conducive levels of productivity. in the white-collar sector of forse, japan is notorious extremely long hours, each is also not terribly productive. rishaad: how important is it for
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japan to actually deal with this and improve productivity? well, it is critically important over the longer term. in fact, the oecd says it might be the most important challenge facing japan given its demographics. the sizable workforce is projected to decline dramatically in coming decades, so if japan even wants to maintain the size of its economy and its living standards, it will have to learn to do more with fewer people. , in 10 seconds, is there a plan in place? >> there is. it will be a challenge to succeed, but it focuses largely so far on robotics in manufacturing and the services
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side. so much fornk you that. loads more coming up in the next hour, including emerging markets across asia. we are talking to j.p. morgan asset management. ♪
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♪ announcer: from our studios in new york city, this is "charlie rose." charlie: we begin tonight with a series of programs leading up to president trump's 100th day in office, april 29. since the presidency of franklin roosevelt the 100 day mark has , represented an important symbolic milestone. as president trump nears his 100th day, the administration continues to pursue an ambitious agenda. the president is looking to move this week on a second effort to repeal and replace the affordable care act. in the face of a possible government shutdown, he plans to reveal information about tax reform later this week.


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