tv Bloomberg Daybreak Asia Bloomberg May 15, 2017 7:00pm-9:01pm EDT
say they were hit by the firms thirdack as on the expectation of more. we will be in beijing and china. in tokyo to see why japan's biggest banks are forecasting a fourth straight dip in profits. washingtonwill be in as the of work continues over president trump's dealings with russia and james comey. this is "daybreak asia." i am betty liu. betty liu in new york, where it is just after 7:00 p.m. yvonne: it happens to everyone. it is just after 7:00 a.m. in hong kong. i am shery ahn on tuesday. i have got to say, it is a live -- it is a live day.
nothing, to be honest, as as whatg happened in the u.s.. the s&p 500 is close enough 2400. betty: maybe because there was also a lack of economic news or any really comments in the fed that investors went back to focusing on some old standbys, which, for instance, oil prices. oil prices routed. and energy shares zooming higher. we also saw it on the nasdaq as well as the dow, closing up. it sets us up very nicely for gains in asia. shery: let us see how they are early tuesday morning. new zealand, the only market .2%, after losses. the kiwi dollar gaining around 68.89. do keep an bang on the commodities and currencies such
as the aussie dollar. oil of course surged. in the 200 barely moved last session, but when it comes to futures, they are pointing upwards .3%. the aussie dollar not doing much at the moment, but keep an eye iba.he the -- on the iva. the nikkei barely moved in the last session. the japanese yen was the only g10 currencies to weaken against the dollar overnight. we are seeing some strength now. 113.65. what wean early look at can expect in the regions this morning. betty. how did it look this morning and the u.s. with that first half of the s&p 500? betty: as you mentioned, the new high for the s&p and for the nasdaq. let us take a closer look at how we got to these records.
su keenan standing by with more. su: we got a big boost with oil and we will get more for the optimism over the opec in a moment. if we go to the closing numbers, what we saw is not a big jump. there is a lot of green on the screen and fresh records. behind that, a combination of factors. earnings are still a driver. ae cyber attacks now entering third day have put the focus on the company's that prevent them. and other companies. we have a deal in the works. apillon ipo.po -- p the movement in the s&p has not been large. let us go into the bloomberg and take a look. chart, where you
see big spikes going several years. it is not unusual on any individual year to see wide moves. if you go to 2017, hardly any moves above the 20 day moving average, which is that white line. in the last 30 days, there have not been any moves that have hit the 1% range either higher or lower, so we are kind of in a zone of calm. shery: and of course, all of that had to do with what is happening in oil. interesting long-term projections as well. what is the story here? su: oil rolled back on the gains it had made because of the opec record, going down $46 and 1.3 we are coming back almost 250. we had 49 at one point -- almost to $50. we had $49 at one point. russia and saudi arabia trying to extend the output agreement
until march of next year it when they meet indiana at the end of the month, perhaps there will be more on that. there is an optimism, so if we look at where oil is going, let us go to the bloomberg again. the longer-range projections together and they all seem to spell the $50 range, where projections converge. it happens to be very close to where we are right now. shery: let us get the first word news with nina melendez. nina: bloomberg has been told that jeff sessions and his deputy have met eight potential candidates for fbi director. they include republican senator john cornyn, the acting director of the fbi agents former government officials. a lawyer, and a judge. the white house declined to say whether president trump would hold personal interviews before leaving for the middle east on friday. the state department has flatly
denied media reports that president trump revealed higher classified information to the white house last week. the new york times and washington post said the president jeopardized critical sources of intelligence on the so-called islamic state. however, secretary of state rex tillerson says the report are completely untrue. anddispute between toshiba western digital is moving to another level. toshiba wants to block its partner from the venture that they share after threats of legal action over who made by the unit. buy the unit. the joint venture agreement stipulates that a partner does not need to seek permission from the other to transfer the ownership or the joint venture itself to a third-party. western digital did not seek our consent on the sun this ndisksition -- su
acquisition. the sale is not in violation of any existing agreement. nina: the nikkei news adds that adding #name to the chip unit may ease concerns about going abroad. seeking --id to be foxconn possible investment from other american companies. under the plan, they may maintain a profitable state in the unit. the leading japanese companies say they are victims of the global cyber attack come with computers hacked at least 600 locations. he taught she is among those -- hitatchi has been among those pure no ransom has been demanded. business is barely affected. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries.
i am nina melendez and this is bloomberg. let us go straight from washington, where the white house national security adviser, h.r. mcmaster, is holding a news conference. let us listen. [crosstalk] well, he just had conference in fact. you can see him going back into -- i see house, saying only a couple of headlines. the story on trump disclosures is false. this is the story we mentioned earlier about trump possibly releasing classified information to russian officials. sources andligence methods were not discussed. room, and thethe trump disclosures did not happen.
a very short press conference by the national security adviser h.r. mcmaster trying to dispel some of these reports. a new twist in the comey firings. at a: all of this coming time not only on the fallout from comey's firing, but also at a time when they are looking into a new fbi director. also just before donald trump heads to his first foreign overseas visit later this month. of course, mcmaster did update us on that trip earlier this israel, theg to vatican, and saudi arabia. we will have more on this breaking story, as we get it later in the show. let us had to china right now, because more than 60 countries involved in the belt and road a jointve have issued communique, promising to expand trade and investment. it comes after xi jinping says the plan is already in full
swing. tom mackenzie joining us now. tom, how much progress has beijing made to move this hugely ambitious plan forward? , and manyy ambitious would have argued that it was very ill-defined. what we are getting now is a solidification of some of these parameters, clarity on some of the parameters around this initiative. still lots of questions that need to be answered. the communique was put out by the belt and road members. the members who came to beijing vowed to continue to push forward with globalization, trade, and investment. they said they would cooperate on everything from e-commerce to smart cities. details arounde financing proposals. 26 countries signing up to a document on up by china around the financing of some of these initiatives. there was some policy lenders
in the private banks as well . concerns been voiced by the likes of the germans. the bidding process may not be transparent. it may not be fair. the germans are pushing for more therapy on that. detailsare getting is about some of the deals we heard from the indonesians. they secured $5 billion in credit. we heard from the chairman of the biggest oil and gas company that he signed about $20 million worth of deals, so clarity on some of these issues, some movement, bilateral cooperation as well. aroundgest idea is whether the u.s. will give their participation. their backing of this initiative -- mark mobius said it is time for the u.s. to get on board with this initiative. take a listen. mark: there is no question the u.s. will be impacted. i believe they will have to join in this effort and join the one dull, one road program. there is a lot of benefit to the key to buy u.s. companies in
this program. the chinese i think are going to be very, very careful not to favor chinese companies unduly, so there is going to be enough for everyone, let us put it that way. to therkets reacting initiative, and the end of the summit, with a bit of positivity. we saw shares taking up upginally -- ticking marginally. will help thehis renminbi. anchor: tom, how much was this about xi and his image on the domestic and international stage? did this really help? i think it is worth putting it in context of what is happening in washington, really, because what the president is trying to do, and many are saying, successfully, demonstrate that he is a leader
that is respected and in control both domestically and internationally. all the machinations in washington, all the navelgazing, all the controversies, not to mention the fact that the u.s. has pulled out of tpp and is focused on america first, has given china this space, and president xi this space to carve out this image. not just increased political influence, but burnishing president xi's credentials. it is coming out of this crucial part of congress. interesting to note that president xi took personal credit for this initiative, saying he launched it in 2013. that is unusual in a leadership and system where it is usually the collective leadership at the fore. many are saying he is the thengest leader since 1990's. this summit helping to move this forward as the dealmaking, the horsetrading, goes on ahead of this party reshuffle. you will not be surprised to
hear that state media hailed this event as a triumph, and it was all in the context of a wonderfully and bizarrely manicured beijing. the air was suspiciously clean, the shrubbery perfectly pruned. that offsetting the fact that slogan lined the road. as boring as you can imagine, many believe. the optics were pretty positive for president xi. shery: i do wonder how north korea will affect that image. thatn, they just fired ballistic missile hours beforehand. tom mackenzie in beijing. thank you so much for that wrap up your looking ahead, more than 70 countries being hit by the cap. we will have -- by the hack. we will have an update by the security company mcafee later this hour. betty: australia courts a new agreement with hong kong. we will hear from a trade
betty: this is "daybreak asia," and i am betty liu in new york. shery: i'm shery ahn in hong kong. a pet trade mr.'s are heading to c tradehis weekend -- ape ministers are heading to hanoi this weekend. minister told us australia sees opportunity from the chinese initiative. for us to betunity able to work in a cobbler mentoring away with this initiative. australia of course has a great relationship with china, especially when it comes to trade. we have a lot of knowledge and its variants we can share, so i'm confident going forward, australia will be able to play its role as part of the broader initiatives being executed across the various countries and throughout asia and into europe.
shery: you are in hong kong at the moment. you are there to launch trade negotiations with hong kong. what are you hoping to achieve out of this deal? steven: there is a lot more to trade than simply goods trade. a number of initiatives we can undertake. what i am focused on, especially in a highly developed economy like australia, is making sure we can maximize our export potential. basically, around 75% of australia's economy is service-based. we have tremendous opportunities to boost our exports. only about 22% of australia's exports right now our services are services exports are there is a real opportunity to a great work around services, modern and comprehensive free trade agreement that touches upon areas like the digital economy. that is what i am focused on. shery: you are absolutely right. you make a great point here
about how service exports seem to have lagged behind some of the harder exports, like how we traditionally think of australia with commodities, for instance. so how exactly is hong kong going to help you in this respect? what exactly in the services side do you think australia can make a name for itself in the trading world? steven: look, i mean, hong kong like australia of course is very focused on services as well. there is not a heavy or large manufacturing base in hong kong course so there is of things for them and australia. australia has a very creative people. australians are very well-educated. we have got tremendous resources that we can draw upon in terms of the creativity and the ability to develop and design. take for example the work that ford is doing. they retained a large proportion
of their design team in australia. it is picking up on those sorts of skill that australians have that i am very confident we will be able to use in the future to exporters, push by whether it is architectural services, legal services, health services, so many different areas. anchor: that was steven ciobo speaking earlier on daybreak australia. now, the u.s. attorney general has interviewed potential candidates for fbi director -- this is following the sacking of james comey. in washington, there are reports that president shared highly classified information with russian officials. bloombergs justin joining d.c. the line from we just heard from mcmaster, the national, saying that all these reports about disclosing information, they are false. who do we believe here? >> it is tricky.
on the one hand, mcmaster was denying the administration leaked sources and methods. that is not actually the thrust of the washington post report. they say the president in concerns over laptops being possibly used as weapons on plans, said what city kind of those concerns were radiating out of. that is something that is not public and could have revealed inadvertently the source of the information. the white house is denying this strongly, but not denying the merits of the washington post story, but kind of a separate issue. shery: the post also says that the president does have authority to declassify information, so why is this an issue? steven: it is an issue because the intelligence community gets this kind of information from our allies. according to the post report, our allies asked for it not to be shared. not only is sharing it with the russians a violation of that agreement, but sharing it with
russia, which has ties to syria and the assad regime, even further deepens the concerns involved here. anchor: justin, thank you so much for joining us and giving us a brief summary of what is happening in this very interesting story. justin sink joining us from d.c. coming up next, top fund managers lost large tech stock, while warren buffett boosted his apple state. details of the findings, next. this is bloomberg. ♪
in airlines and tech and pulling back from 21st century fox. its portfolio no longer lists fox holdings in american airlines. warren buffett previously disclosed he boosted a bet on apple the first quarter, as he pulled back from ibm. betty: the largest shareholder in ubs is flashing at holdings, offering a 2.4% state that is worth about $1.6 billion. singapore's sovereign wealth fund gic will have less than 3% of the bank after you the sale -- after the sale ubs is managing. they are purchasing bonds that converted into stop when ubs needed capital to cover losses. being bloomberg's told that a hong kong billionaire is exporting options for his fifth lines on business, including a potential sale. which is a global commit occasions is engaging interest from a range of potential buyers. the company offers hong kong corporate access to its
fiber-optic network. we are told it could fetch one billion u.s. dollars. betty: the people's bank of china says it has created a new units to address emerging financial security challenges sparked by technological innovation. the central bank says tech driven ideas have injected vitality into finance and is causing security issues. of measures up use such as bigoted, artificial intelligence, and cloud computing to increase surveillance of financial threats. shery: we are counting down to the opens in japan and south korea. we saw the japanese yen be the only loser among g10 currencies overnight. all right now, it is gaining u.s.d .1% against the dollar. the yen has 113.57. nikkei futures unchanged at the moment. it barely moved in the last session. we had the carillion kospi also trading inospi also
anchor: it is 7:30 a.m. tuesday in hong kong. we are 30 minutes away from asia's first major market open. anchor: that is right. clear skies ahead. it is seven: p.m. -- is 7:30 p.m. here. i am betty liu in new york. shery: and i am shery ahn in hong kong and you are watching "daybreak asia." first word news with nina melendez. opec nations and independent producers may find that room for it to maneuver when they meet in vienna next week. oil prices jumped after saudi arabia and russia backed
extending the production cut curves into next year with brent above thech rising average is. analysts are asking whether the outcome of next week's meeting is already priced in. saudi aramco has promoted eight executives to senior positions as it seeks to double refining operationsd refine ahead of its anticipated ipo. the appointments come in an internal memo seen by bloomberg and are effective may 1. aramco declined to comment, but its website confirmed the promotions of two senior vice president. saudi arabia plans to sell 5% of aramco next year. the european union governments have tightened their brexit negotiating positions as they prepare for first talks with the u.k. draft documents show a tougher stance on helping countries adjust, and clarification on the role of european courts. chancellor merkel and president macron both say they want a
deeper you but are calling for reform. and president macron also signaled his program in domestic policy, naming a conservative politican as prime minister. is center-right mayor charged with driving the economic and social changes the president of france needs. the rest of the government will be announced tuesday and they are expected to be a mix of centrists, moderate left leaders, and entrepreneurs. pictures of the latest missile launch, boasting it was a new medium long-range weapon that a nuclear warhead. outside observers saw a technological leap forward. korean industry in beijing held a press conference accusing the cia of putting to attempt the leadership in john yang. global news, 24 hours a day, powered by more than 2600 euros an analyst in more than 100 20
countries. i am nina melendez. this is bloomberg. anchor: nina, thank you. we are counting down to some of the major market opens. david, we saw the rebound in oil. just the s&p 500 closing above 2400. first time ever. are we going to see gains continue here in asia? david: good morning. there is certainly an execution that we will see some of those gains feedthrough into trading in asia when things get underway in just under 30 minutes. traders say they are looking for more strength in the hang seng and india's nifty 50. a lot of that being driven by the gain in the oil price. 500,w the nasdaq, the s&p hit that overnight. stocksportantly, energy at the 2% gain.
has all been given by the agreement between russia and saudi arabia to extend the production curves for nine months, which is certainly more than expected, so yes, we are seeing expectations that those a stronger oil prices will feedthrough commodities markets. we have heard from anz bank in australia. as i said, traders looking for those gains to feedthrough into other indices here to do not forget, we have had a weaker u.s. dollar. the bloomberg dollar spot index fell for the fourth straight decline, so that is helping some emerging-market currencies, so things are quite well set up for more gains here. anchor: they are indeed. what about the changes, david, in china's holdings in u.s. treasuries? what is that telling us about the strength of the world's
second-biggest economy? david: betty, that is right. there was interesting data released yesterday by the treasury in the u.s.. we have been looking at that. if we dive into the bloomberg and pull up a chart, we can see china's holdings of u.s. treasuries rose to just under 1.1 trillion. that is the most in two years. it is certainly a further signal of strength in china's economy. we are seeing china's economy stabilizing somewhat and rising inflation's for factory profits, factory output. this is a further signal of strength. we saw total foreign holdings of u.s. treasuries rise to about 6.08 trillion in march. that is the highest since last september, and looked, that is down from a peak a year earlier in 2015. pretty interesting data there.
betty: thank you so much on both of those, david stringer. off to japan. japan's three megabanks forecasting a fourth straight falling combined annual profit, despite an easing in the impact of negative interest rates. what they are still made of appear for more, gareth allan joining us from tokyo. we had the big banking conversation yesterday on japan. it is a lot of the same, right? they are still suffering from negative interest rates. >> that is correct. negative interest-rate policy is still in play. despite the environment, the results were not too bad. they were a fraction down year on year. again andorecasting should be slightly down again next year. individually, mitsubishi and oruho or slightly up, -- slightly down. down onthey had a right their subsidiary the year before.
the environment, [indiscernible] he said he sees the fall in interest rates are coming to an end, a view that has been shared by a few analysts, the geopolitical climate. north korea keeps shooting missiles at us, so there is still some uncertainty in the 11. i think banks are figuring that -- incorporating that into their forecast for next year. shery: at least when it comes to their stock prices, shares do seem to have stabilized from that low in march. if our viewers can take a look at the bloomberg, they can see mitsubishi, mizuho, how their shares took a dip in the month of april through they started stabilizing after that surge since november. election victory of donald trump. if you take a look at mitsubishi, it gained more than 30% since then. theire we expecting
shares to react, not only today? what will future dependence -- gareth: they're valuations are still very low. they are around .6 at the moment, a low value, which is historically low to their peers. it will be interesting to see how the markets react this morning, in 20 minutes or so, when the market opens. so far, the reports generally said the impression is positive, so we may see that there is a slight uptick with the banks this morning. betty: thank you so much for joining us on japanese banks and their earnings. you also have to sift through what are some of the money managers holding? do they hold these? we know what he is holding 13fuse yes, it was the
filing. they have their holdings by the end of the first quarter. i thought it was interesting gold, whicht out john paul said he has not had many great years since the big bet on housing. gold has been doing well ly enoughng because of what it has been going on in washington. he held onto his gold holdings in those 13f filings -- those 2 3f filings. let us bring up that chart that , you perhaps is it time know, to take some profit here, because some of the other money managers, they have been reducing their long positions in gold, but not polson. shery: you have to keep in mind that these 13f filings do not show the current position of these hedge funds, so who knows what they did after increasing their holdings or keeping their
holdings steady in the first quarter. it is a fact. investors did pour in a lot of money. $460 million into as pdr, gold sdpr gold and other money. ok, let us look at what other holdings outside of gold we saw among these money managers. ramy inocencio standing by with some other interesting factoids we found out from these findings. ramy: it is interesting to see what kind of knowledge we can glean from these holdings. you know, looking at the fourth quarter of 2016, financial stocks actually had their quarter, but in the first quarter of this year, it turned from finance into technology shares. at apple,ing a look symantec's, facebook, as well as alibaba. through year-to-date, the s&p
sector is up 18%. as you mentioned earlier in the past hour, the nasdaq as well as the s&p hit record highs with snapple, seeing a lot of interest in the first quarter of this year. take a look at what is happening. this is the one week here. you remember last week that shares fell by more than 20% when daily active users came in less than expected. today, they are up by 8.4%. we are seeing a retracement of one third of what they lost last week. this is in large part because of the 13f filings. i want to show you exactly which hedge funds, which money are actually throwing money into snape right here. fidelity investments are number one. they are holding 33.2 million shares. coming in number two is this company.
these companies are all pushing snap shares higher today. with all of that said, i want to go into this new function here pure not really new, but something we do not really talk about so much. this is the hlds function, the holdings function. this is specifically for berkshire hathaway. you know how i was talking about what is happening in terms of technology versus financials? the graybar, financials, is down 1.8% of the first quarter. but on the flipside, look at the orange. technology up 5%, and we have been talking about how apple was one of the big pushes. 72 million shares is what berkshire hathaway's put in. we are looking at serious holdings. -- switching over, the greatest financial three technology is orange. we are seeing this give and take. forthomas a cold and --
betty: this is daybreak asia. i'm betty liu in new york. shery: i am shery ahn in hong kong. a quick check of the latest business flash headlines. top analystsy's revised the projections of how much cash they will burn through as more prosperous rivals encroach on his business. adam dunn is now sees operating
losses persisting through 2018 and estimates the company will consume more than $3 billion $3 millionup from -- this year, up from $2.3 million. betty: nikkei news is inciting the head of the appliances division as saying consumer electronics will come under his department control. the changes would match the structure of sales operations in india and china. panasonic is also announcing it is planning to start making air-conditioners in vietnam. aery: videogame maker -- videogame maker is suing samsung such audits claiming it used its virtual reality technology without permission. zenimaxmax -- claims half $1 billion in damages. they say it is powered by oculus. betty: walt disney says hackers
claim to have stolen and unreleased movie and are threatening to put it online a mess a ransom is paid. the ceo spoke ahead of the season presentation to advertisers on tuesday in new york. the threat received by disney is similar to one encountered last month by netflix, which hackers stole after stealing "orange is the new black." after disneym pat underscore as with other security firms are saying, that the threat of attack should be a topline concern. tech security companies jumped on the expectation of more demand for their services as hacks increase. take a look at this cross-sectional function on the bloomberg. what i did was go into the fireeye u.s. equity and then gx . and you can see the price change, this huge jump over here.
these are all tech secured companies. this begs the question, is this just a reaction to the latest cyber attack or will we see fundamental changes, real changes in this industry? thiss conside continue conversation with the mcafee ceo. thank you for joining us this morning. we have to discuss this cyberattacks, but first of all, i want to know what mcafee did in response as soon as he realized that this was going on. shortly after we heard about the attacks going on on friday, we mobilized our research teams and proactively spoke to all other customers across the world. advisorieso release and messages, blog posts, and updates to our software to make sure all our customers were
properly protected. betty: and mcafee is just one firm in this last cybersecurity business. how fragmented is this sector, and should there be a re-think of how we approach cybersecurity in the future? ian: well, we have certainly believes the industry should work together, so our relaunch as a new mcafee is about making sure the industry's work together. certainly in responding to the ransomware tax over the weekend, -- attacks over the weekend, we and worked with companies, we are working with government relations, and some of our peers in the industry, to make sure we are responding together as an industry against the attackers out there and the criminal element. betty: certainly some scary stuff for anyone. ian, has the majority of this
passed?- has it are we over that threat i know? -- right now? ian: we are certainly over the first wave. a researcher in the u.k. accidentally found a kill switch. that topped the spread of the wave of attacks on friday and over the weekend. we have since seen a couple of variance. again, there was a kill switch there. it does not stop someone from taking the code, modifying it a bit, and releasing versions that are a lot more damaging without that kill switch. that makes it a lot harder to stop. betty: obviously, this is -- this is not even the first or the last cyber attack. so when you say that, you know, at least we have taking care of this one, i mean, what are the chances we are going to get another one in the next couple of weeks? high, so the work is
ongoing. it is a developing event, so we may see some activity this week. it has been a flurry of activity on both sides in terms of people tried to find out who has done this, and also, i'm sure certain criminal elements are looking to i guess expand and build on the success of the first wave. anchor: right, microsoft has called the attack a wake-up call for governments to stop dog piling these tools. how should these digital weapons be approached in the future? ian: well, we certainly require more coming occasions, so i cannot speak for myself, but what they are saying, certainly holds a bit of weight. their common is on if they specifically needs to be taken a good hard look at in terms of what we had here, weapons grade cyber materials, developed by a
nationstate, so that goes into the hands of criminals which may otherwise have not had the resources to build it. it is very bad. we need to make sure that communication lines are more open, government departments, private enterprises, and those of us trying to come you know, fight against the cyber attackers, are a lot more cooperative in the future and will share more information. that is what needs to happen moving forward in terms of line with least in the attackers instead of a little bit behind, which is where the industry has more or less been at over the last couple of years. betty: right, and you alluded to a point where we know cyberattacks -- we know cyber crime is out there. often inertia to take care of this, spend money on this. i'm curious about microsoft's side. how damaging could this be on microsoft? enough to want even companies to
say, you know what, maybe we do need to get off of the microsoft os and move onto something that is much more secure? there is a lot of different kind of systems that organizations use today. i do not think we necessarily want to go down that path, because microsoft certainly runs a lot of organizations. hybrid environments out there. it is more on the lines of major as an industry, microsoft included, we come together and build more secure software, more secure operating systems, and makes sure that these gaps in security are not so prevalent and easy to find. certainly a busy time for you, ian yip, chief technology officer of asia-pacific at mcafee. we have much more ahead. you can get a roundup of the stories you need to knows or you get your day going, including this one on the malware.
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shery: this is "daybreak asia." i'm shery ahn in hong kong. betty: and betty liu in new york. plenty more still to come. we have a lot to watch with the asian markets to open. we have a lot of impact coming from the oil rally we saw in the u.s.. shery: whether or not that will be sustained here in asia markets, that is the key question come a at least when it comes to new zealand. it is unchanged at the moment.
let us see how they do when they open in just a couple of minutes. let us bring in sophie to tell us what we should be watching any open in australia, japan, and south korea. sophie: you have been watching japan three megabanks following their earnings reports come all three looking at a combined annual drop in the next fiscal ufj islthough mitsubishi more optimistic than its peers, seeing profit rise 2.5% for the current fiscal year, and asahi marie quenching the first. that income grew 30% for the last year. they are going to sell bonds. australia's crown completed its stake at resorts. bigoil patch certainly a theme for asian markets today. let us take a look at the futures board here. asian contracts said to follow wall street higher, given the push for the s&p 500 above 2400 for the first time given the commodities rally.
♪ betty: asia-pacific equities set to extend gains after wall street sets new records. oil surges and the dollar is weak or. yvonne: we are watching megabanks in japan after a straight fall in combined profits. betty: more companies say they were hit by the ransom where hacks -- by the ransomware. officials deny the president gave classified information to
the russians. the democrats now runs an inquiry -- now once an inquiry. this the second hour of "daybreak asia." it is just after 8:00 p.m. here in new york. a lot to keep our eye on in d.c., but that didn't stop the markets. the markets shot higher today as you mentioned on the back of energy prices, oil in particular . that energy rally got the markets going. we had the records again on the s&p and nasdaq. surprising given that about 90% of the s&p 500 companies have already reported earnings. -- out ofse 78% those, 78% beat profit projections. there is some followthrough here in asia markets. the ones that are starting to open in the green.
let's get the details from sophie kamaruddin. rishaad: let's take a look -- sophie: let's take a look at the commodities space. that is a huge theme for the session today given that jump we saw and u.s. stocks thanks to that rally in oil prices. those are expected to continue into the asian session. here,ntinuing to gain rising to 4966 before easing. let's take a look at the commodity space broadly. we have other metals on the rise. china iron ore rising from a seven-month low. we have equity markets mostly in the green here in asia. ,hen it comes to the kospi reforms we are likely to see among the moon agenda. getting closer to that key 20,000 points.
-- up aboutof about 1/3 of 1%. let's take a look at the currency space to see how that should be up. we had dollar weakness overnight. take a look at emerging currencies. we had the south korean yuan surging. the dollar-yen short-sellers will be watching how trump handles the latest news that he titled classified information with the russians. slidd see the dollar-yen after that report, but it hasn't that any serious damage just yet , with monday's new york low not yet reached. a son dropped for the pair could spiral into broader yen short covering. we will keep an eye on this. betty: certainly a distinct weakness in the u.s. dollar despite not that huge drop you
mentioned on trump. sophie kamaruddin there on the markets. japan's three megabanks are rallying today despite forecasting a fourth straight fall in combined annual profit. it comes as the impact of negative interest rates eases. more, garrett allen joining us from tokyo. you see the various bank stocks are writing, including mitsubishi of about 1.5%. why is that? reporter: the markets are going to respond positively to the results this morning. they are forecasting up to $950 billion. their take on things is a little more upbeat than perhaps the other two, which are forecasting lower profits. the market is showing it, certainly.
also expecting some announcement on structural reforms and new business plans as some of these megabanks. did we get them? reporter: yes. they also announced another structural reform plan with includes a number of measures to shave some expenses. they're saying their profit level and five years should generate about $300 billion in games. -- in gains. they are renaming themselves. that will take place next year. they're really trying to tighten in on that brand. one of the features of their tenure business plan is
ratcheting up dividend payouts. host: gaining about 1% right now. the banks werer, having some challenges weathering storms in japan and overseas. why are they expecting another profit fall for a fourth consecutive year? the bank of japan adjusted their policy back in september and they are focusing more on the yield curve. there's a less chance that they are going to be deepened. that the ceos say squeeze on interest margins they have had over the last year is probably coming to an end. the environment is still uncertain. there are geopolitical issues, north korea still remaining an issue. we have brexit and a u.s.
president that is somewhat unpredictable and there are question marks about what regulations will look like. that japaneset banks are operating in is still pretty severe, and i think it reflect that -- they reflect that in their statements. host: gareth allen, thank you so much for that wrapup of what is happening at japanese banks. let's get the first word news with ramy inocencio. ramy: first we had to washington, where national security adviser h.r. mcmaster has denied media reports that president trump revealed highly classified information to the russian foreign minister at the white house last week. and"new york times" "washington post" says he jeopardized a critical source of intelligence on the islamic
state. >> the story that came out tonight as reported is false. the president and the foreign minister reviewed a range of common threats to our two countries, including civil aviation. at no time were intelligence sources or methods discussed, and the president did not disclose any military operations that were not already publicly known. has been toldg that attorney general jeff sessions and his deputy have met eight potential candidates for fbi director. they include republican senator john cornyn, the acting director , other fbi agents, one lawyer, and one judge. the white house declined to say whether president trump would hold personal interviews before leaving for the middle east on friday. slumped in the open as its dispute with western digital turns increasingly better. toshiba wants to block its partner from the flash memory venture they share over
threatening legal action over who made by the unit. they invoke the arbitration clause in their unit. toshiba plans to bar western digital workers from its chip facilities in japan. >> the joint venture agreement stipulates that a partner does not need to seek permission from the other to transfer the ownership or joint venture in itself to a third-party. western digital did not take our consent on the acquisition. i point out we will make an effort to convince potential bidders the sale is not in violation of any existing agreement. ramy: the nikkei news report 's namehat adding sharp to the toshiba chip unit may ease concerns abroad. possibles exploring investment from apple and other american companies. toshiba may retain a partial
stake in the profitable unit. north korea has shown pictures of his latest missile launch, boasting it was a new medium long-range weapon that could carry a heavy nuclear warhead. outside observers saw a technological leap forward with the rocket flying higher and for longer than any previous one. the leader of the north korean embassy in beijing out a press conference accusing the cia of plotting to attack the leadership in pyongyang. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm ramy inocencio. this is bloomberg. ♪ betty: thank you. still ahead, a global cyber attack hitting hundreds of thousands of computers and at least 150 countries. it seems to have subsided for now, but we will talk about the financial fallout. host: up next, ubs asset management says it is time for investors to consider alternative investments. find out which one from the groups regional head. this is bloomberg.
♪ betty: this is "daybreak asia." shery: let's get a quick check of the latest business flash headlines. the largest shareholder in ubs is offering a 2.4% stake worth about $1.6 billion. -- singapore's sovereign fund will have less than 3% after the sale. gic bought into it early and the financial crisis when they needed capital to cover losses. hathawayng berkshire spent the first corner fine-tuning investments in airline tech and pulling back from 20% three fox. they no longer list fox -- from 21st century fox.
a stake in delta was cut. warren buffett previously disclosed he boosted on apple in the first quarter as he pulled back from ibm. globalsources say communications is gauging interest from a range of potential buyers. the company offers hong kong corporate customers access to its fiber-optic network, and we are told it could fetch $1 billion u.s. shery: let's get a check of the asian markets right now. all of them right now in the green. we are seeing japan's nikkei up 6/10 of 1% and the kospi gaining. a lot of this has to do with what is happening in the u.s. we saw the s&p 500 surpassed the 2400 level and close above that
mark for the first time ever. that on the back of a oil gaining ground. those energy material stocks leading the s&p higher. betty: indeed. i guess the big question is, how long is that going to last? are we going to see that throughout the session or will other factors come into play? let's talk more about investing. investment returns around the world are declining. money managers are looking beyond traditional asset classes to diversify their portfolios. our next guest suggests asian investors should consider alternative investments. head of umb asset management is joining us from singapore. you say a strong component we should be looking more at alternative investment. what you mean by that? guest: good morning, thank you
for having me back. basically what you see as we have seen record inflows into alternatives across all asset classes, and that is particularly relevant as investors are still chasing. we see this across the region where equity has been fairly solid. they are still looking for yields. it is time for investors to consider alternatives for fixing common investments, in particular. betty: where exactly in fixed income? guest: our recommendation is that they should consider switching out some of the money into alternative assets. we are hosting this week our alternative summit here in .ingapore we want to consider four asset
classes -- real estate, hedge funds, and private equity. shery: the last time i spoke to you about alternatives was about a year ago. -- or howllocation much should be allocated to alternatives changed since then? guest: what we have seen is that asian investors have significantly allocated to real estate, in particular. we have seen quite the solid flow in private equity. , despite mutede returns, reached record numbers in terms of aum. i think the asian investors are definitely looking at it. how much is a function of how much risk investors are willing to take. how comfortable they are with the alternative investments.
from our perspective, every investor should put up to 25% of their portfolio in alternatives. that considers the overall yield expectation they have. shery: hedge funds have had a challenging 2016, but have done better in the first quarter of this year. what are your expectations for hedge funds and asian investors using them in their alternative allocations? guest: what we see is that opportunities for hedge funds is significantly improved. we see divergence monetary and fiscal policies across the growth. that is where hedge fund managers can finally thrive again. we see opportunities in microstrategy's, very solid corporate fundamentals across the globe, which means companies have cash. overall, the outlook for hedge
funds is better than for a better long time -- a very long time. in asia definitely look at this asset class, and we dubious asset management for many institutions last year and this year. quickly, let's take a look at this chart on the dollar. i want to get your view on this. the dollar, which had this nice rally, and the rally has been petering out. you are seeing that position fall to the lowest level on the dollar since august. the dollar certainly getting a little less love. how is weakness here and the dollar, which we don't know is going to continue, playing into your view on alternative
investments? guest: i think a lot of emerging markets were very afraid of the dollar in the recovery and fiscal divergence he rates. a lot of people are afraid of it. they should not relax too much because we believe the rates will end up diversifying their overall portfolio. betty: speaking about rates, here in the u.s. was the fed that is what we are really focused on. what have you baked into your own outlook? guest: from my perspective we see a very gradual downward
dependent recovery of rates, and that is very positive for emerging markets. it allows the asian central bank not to go in lockstep necessarily with the u.s. fed. it is a very constructive outlook for emerging markets. from that perspective, positive for markets. rates, youing about do like dollar asian credit. for our viewers on the bloomberg, they can see the emerging-market dollar bonds have been gaining since last month. china dollar bonds have rolled over. how much of an opportunity does china still present for you for investors -- for you and investors looking for alternative exposure? guest: very good topic you are bringing up. one of our functions we will address at the conference is how the alternative market in china is developing.
we have a look at where the opportunities arise. our outlook on china has been very constructive and positive for a while. clearly they are trying to balance out the credit slowdown without stopping. i think if you invest in china, you need to be selective. we like stockpicking and china because we believe that is the way you need to play this market. i am not concerned about the china development on the interest rates. wea diversified portfolio, believe that as an opportunity to consider, particularly if china is opening up their convertibility and access. and they do have the roads projects going on. we see this global infrastructure boom. what are the opportunities you see there when it comes to alternatives? guest: i think is a very interesting and timely subject. we are addressing it at the
conference, where are the infrastructure needs in asia around power plants and transportation? and indeed, i think the government is looking more and more into the contribution of private markets and private investors as the banks are lending. i think you featured yesterday on your program some of the challenges around the financing. we believe that infrastructure offers a very interesting , buttunity for long-term you have to do euro and work on selecting the right infrastructure investments. that is what you want to address in our conference in the coming days. betty: sounds great. there are a lot of details still to be ironed out in this. thank you so much, the group managing director and head of ubs asset management asia-pacific. thank you for joining us. coming up, toshiba and western digital maybe partners, but the relationship has turned increasingly better. more on their chip unit, next.
♪ toshiba sinking at the open as its dispute was western digital moves up a gear. it is down more than 6%. at a director -- editing director for asia-pacific. reporter: toshiba has deep troubles because of albums in their westinghouse business. they have a multibillion-dollar lost in that business and they don't have enough assets to plug the hole in their business -- in balance sheet. their partner western digital is saying they don't want them to sell it to somebody else. they are trying to slow down the process by filing for arbitration. that could cause problems for toshiba because they need the
money quickly. shery: tell us a little bit about that. reporter: toshiba is in danger of being delisted from the tokyo stock exchange. there is a danger they could be delisted altogether. they need to plug this whole in their balance sheet, and he needs the billions of dollars they are likely to get from this chips unit in order to do that. western digital is one of the bidders, but the ciba perspective is that they are not able to pay as much as everyone else, they are using these contractual disputes to give himself a strategic advantage. shery: some sources are saying that some of western digital's workers do not have access to their networks and facilities. what is that about? reporter: toshiba has had this joint venture for a while. western digital got into the venture because they bought sandisk. they needed to sign a new contract to get access for their workers to this joint venture. they haven't signed that paperwork according to toshiba, and toshiba says that western
>> it is 8:30 a.m. in singapore. a beautiful, clear day. watch out for noble group. moody's has downgraded their rating by two notches. commodities seeing a strong day. i am in new york and you are watching daybreak asia. let's get to first word news. leading companies in japan said they are victims of the global cyber attack. hitachi is among those targeted but sees no major impact on operations. in male delivery has been hit and some files cannot be opened
but no ransom has been demanded feud -- demanded. opec nations and independent producers may find little room for maneuvering when they are in the internet week. while prices jumped after saudi -- intond russia jumps next year. analysts are asking whether the outcome of next week's meeting is already priced in. saudi aramco has promoted eight executives to senior positions after it ceased double refining capacity ahead of its ipo. aramco declined to comment, at its website later confirmed the promotion of two senior vice president saudi arabia plans to sell about 5% of aramco next year. and european union governments
have tightened their brexit negotiating sessions as they prepare for talks with the u.k. draft documents seen by bloomberg show a tougher stance on helping companies adjust, citizens rights and clear from -- clarifying from the court. angela merkel says she wants a deeper eu but is calling for reform. macron named a conservative politician as prime minister. thes charged with driving economic and social changes the president says france needs. the rest of the government will be announced later tuesday. they are expected to be a mix of --trists, margaret, left moderate and leftists. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. thank you cured a strong day for equity markets across asia. we are seeing asian currencies
run against the dollar. the dollar slightly weaker at the moment. let's see how markets are shaping up. >> taking a look at what is going on in asia, the oil rally is helping with appetites today as new york crude is trading above $40 per barrel. the regional benchmark, that is trading higher. 225, out the nikkei trading close to the $20,000 level. got to keep an eye out for impact from those reports. cost is back above 2300 points. global fund managers are betting that new president moon will succeed with reforms. let me show you what is going on in the equity space. hitachi was among those targeted by the global cyber attack.
impact is seen, but the company says it is unknown what systems -- when systems will recover. we are seeing shares of i.t. security players jumping on the back of these cyber attacks. they have climbed to the highest level in a year. we have to sheila shares falling ba shares falling for the third day in the wake of their suit with western digital. help -- bid is -- to >> thank you so much. bring us the will minutes of this month reserve bank of australia meeting policy makers kept the cash rate on hold at 1.5%. no supplies at all. paul allen joins us from sydney.
what is the commentary? what are we likely to expect from the rba minute? more i think we will hear on what the governor's favorite topics at the moment. he's made a number of speeches about the way that is heading. while i won't be reflected in the minutes, we had that on monday when we saw unexpected contracting but investment loans are rising 8/10 of 1%. obviously plenty of mileage in that are committed for the reserve bank governor. we're watching for commentary around the jobless figures, which has been nudging up and wage growth, which remains stagnant. we will also have more data on that this week. betty: the rba would also like to see the lower australian dollar. it might just happened.
-- happen. might get there. hedge funds have been changing their positions. we have a chart to show you. this is data from the commodity futures trading commission. he chose contracts on the australian dollar have slipped below 13,000. those contracts have been declining consistently for the last six weeks. they are down from a high of 53,000 in march. the two reasons for this is the cost of iron or. we've been talking about it a long time that it is falling away and hovering around $60 per ton. that has put pressure on the aussie dollar. of about 3.7% in the past few months. could be more pressure to come u.s. see oil prices in the come as one of the expected. betty: management continuing to push bhp on shareholder value.
what is the latest? last 30 minutes or so, elliott management has released this plan which recalls the shareholder -- calls the shareholder value unlock plan. it is publicly available. it is continuing to push bhp for what it calls chronic underperformance, calling bhp's approach to business "do nothing." it said bhp overestimated the cost of its unification plan and assist the petroleum strategy needs to be reviewed and that review should be disclosed fully . bhp has rolled out a glossy ad campaign yesterday, it is rebranding itself. coincidence is a and the rebrand has been in the work for a team months -- 18 months. it does -- elliott management does except bhp would retain its index listing.
treasurer scott morrison said dropping the listing could possibly be illegal. they are prepared to keep that. betty: that story is so much shipinteresting that the under -- more interesting than the shareholder value unlock plan. up next, more than 60 countries involved in the promise to expand come -- expand trade and investments. this is bloomberg. ♪
saying computer electronics company his department control. the changes would match the structure of sales operations in india and china. they plan toounced make air-conditioners in vietnam. cybersecurity stocks jumped as the cyber attack entered its third day, suggesting that higher corporate and government spending on technology will follow. oppenheimer says the most profile reaches happened in europe, and that is where the most potential is. walt disney says hackers claimed to have stolen and unreleased movie and are threatening to put it online and was a ransom is paid. ahead of the network's fall season presentation to notify advertisers in new york. the threat is similar to encounter last month in which hackers stole unreleased
episodes of a net like series. china and other countries have released a drink communicate promising to increase -- tom mackenzie joins us now. more than three years since the initiative was announced with the president. how much progress has beijing made? we have a timeframe because they have said they want leaders to come back in 2019 for the second belt and wrote for him -- belt and road forum. chance ofve a better getting success in two years now. what we have now is to communicate where the countries involved said they would promote globalization, investment, trade and cooperate on innovation.
we also had 26 countries signing up through financing principles. that's after some of the banks and private lenders got on board and put together a framework around financing. there are still concerns about those. the germans have expressed their concerns about the wedding process. -- bidding process. there is some concern about transparency and fair access. the u.s., there setting up the -- a working group in the end the city -- embassy here. it is something that many people say the u.s. will have to get more involved with. we are seeing cummings like general electric, caterpillar and honeywell looking at the initiative. investors took some heart. andaw the offshore yuan
shares take up marginal yesterday. more questions need to be asked if we are looking at the two-year timeframe. here in the midwest, we also heard that news. sense that they make a big enough splash on the international stage, or did they wanted to be bigger after this weekend? tom: i think the chinese would always want things to be bigger. there was some obviously overshadowing by the north korea missile test. that took some of the shine away. generally the optics were positive from the president perspective you'd you had world leaders, you have the world bank, the imf coming here play homage to the plan. the optics played well for president xi, the state media
has done their role, and as you point to, this comes at a time from the chinese perspective where they feel they can carve out a niche, whether it is promoting localization and the president being a flat there -- flag bearer, and on the economic front as well. and in terms of the toationships, we look southeast asia, we spoke to the indonesians, for example, with -- about some of the things they are doing. they have been more reluctant to get on board the schema. we did hear from the chairman of their investment board about a credit line they have secured for a chinese backed high-speed rail line. take a listen. >> it has been tough luck, i will admit. it has been harder and got more slowly than we would have liked, but indeed we did reach an aportant milestone today, and
before thewas signed --sidents the funding presidents. the funding is in place. indonesiaojects have proposed and what funding are you hoping to secure? >> we have discussed to specific locations where we would like to have integrated economic core doors. it seems to be the approach that works the best so far. >> when it comes to belt and road funding, -- and funding, other areas have sucked in more funding than indonesia. what is that? >> you don't have to be first. it is sometimes better to be
second or third and one from the mistakes or successes of those left arm before rather than try -- we switch to a choreographed -- a geographic approach. what are the most promising locations? get all of the chinese companies, the european companies in all dimensions involved in that specific location. devicess been a ve election invisi jakarta. higher clinical risk in indonesia? >> unfortunately, we have bigger issues than political risk. overregulation and excesses bureaucracy and lengthy permitting and licensing corruption.
political spectacle might g the headlines, underground, investment continues. tom: different companies taking different approaches. the indonesians taking a more cautious approach but they are on board with other countries like pakistan taking a more bullish approach. fromve benefited probably -- probably the most from this funding. the china investment infrastructure bank is putting toward this and you have an additional $4 billion in funding that the silk road fund will be adding. this is part of the billions of dollars committed to the project.
in terms of judging the success, what people say is we will look at projects going forward that will meet the needs of the people in which they are being held. will they be sustainable? economically and environmentally sustainable? and will they meet the needs of -- needsation and meet of the population? factors judging whether they will be a success. it is interesting president she -- xi has taken credit of the failure or success of the project, it will impact on his legacy. >> heated take credit -- he did take credit or the initiative. thank you so much for joining us and giving us a roundup of what is happening in china with the belt and road project. you can get more on that and
some stories making headlines today. the people's bank of china saying it created a new unit to address emerging financial security challenges sparked by technological innovation. ideas -- they are going to step up use of measures to increase surveillance of financial threats. videogame maker is suing samsung, claiming it used its virtual reality technology without permission. they have also successfully claimed that facebook's oculus used the technology. is saying it's a
gear the are is powered by oculus. tesla fell after using a buy rating from atop supporter. and analyst revised his projection on how much cash asla will burn through rivals encroach on its business. lossesnes sees operating persisting through 2018 and estimates the company will consume more than $3 billion this year, up from $2.3 billion. china is losing its position as the world market manufacturer. some companies are hoping to build the gritty brands that focus on quality and design. our reporter is in beijing. disorders -- designers are looking abroad. why now? chinese manufacturers are
just kind of at the beginning of this process of shifting of the value added curve where they need to focus more on design and eventually to create branded goods. universities are have so far turned out engineering and hard science graduates, so there is a bit of a skill gap. i think these companies are bridging the gap and turning to foreign expertise to bring that together with their own manufacturing prowess. how crucial is it for china to make this leap? especially when it comes to them transforming rum middle to high income status as a country? kevin: absolutely crucial. chinese manufacturers have been rising wages and other costs for years. they are no longer competitive in low end goods against company -- countries like bangladesh.
to create their own brands is the only way they can shift to the next level of development. betty: not the first time we have heard chinese companies saying they want to build luxury, global brand. we know they want to do this with automakers. what is the future? how much of a struggle will this be? will it be a struggle? kevin: i think it is a struggle. it is a different phase of china's development. it is a core policy for them to in artp this expertise and design, for example. they are turning out about one million graduates per year. i think there is a brighter future, but there is a stick learning curve in the meantime. shery: kevin, thank you so much for joining us out of beijing. that is it for us from daybreak asia. time for a quick look at what is coming up over the next few
hours. we get the rba minutes. what are you watching? haidi: the rba is expected by everyone come leading rates. we're looking at language. passing that statement, taking a look at what the governor has to say about what has been his tech projects, stability and relationships in red hot markets. we will continue looking at this from the belgian road forum in beijing. essentially what it means for regional infrastructure investment, some of the opportunities. we spoke to the australian trade minister earlier this morning, he is saying of their many opportunities for china's partners. partnerspoke to a china in china. dealmaker,xperienced and we're getting his views on how this could hand out for the whatte sector as well as
it means for the global infrastructure boom and the attention shifting to that. theill also be speaking to head of asian multi-asset management. he is saying, if you see any corrections in this 12 month long bull market we've seen, is going to be pretty shallow and investors are still looking at opportunities to buy. you can see that with u.s. stocks, the s&p and nasdaq reaching more record highs overnight. we will continue to watch out for that as well as the impact of this oil story that is happening on the broader risk appetite situation. ♪
9 a.m. in hong kong, 11 a.m. in need. i'm in new york. haidi lun. this is "bloomberg markets: asia." asia-pacific markets extending gains after wall street hit near highs. the s&p 500 index closing above 2400. shareholdings in u.s. treasuries by the most in two years, yet further signs of stability and strict controls has stemmed capital. looking down the road,