tv Bloomberg Markets Asia Bloomberg June 4, 2017 9:00pm-12:01am EDT
haidi: i am haidi lun in sydney. rishaad: i am rishaad salamat in hong kong. ♪ haidi: market are subdued at the beginning of the trading week, down because of u.s. job numbers in the terror attack in london. theresa may will seek new powers if she wins the election. she says extremism has been tolerated for too long. china's biggest coal
miner and one of its top power generators talking about a $267r the could be worth billion. rishaad: noble facing another difficult day after its new york listed shares tumbled, it singapore listed stock at a 17 year low. indeed, noble sure starting trading again, but let's start off with the big stories of the day. sterling, the at election in the u.k. taking place on thursday. what we have been seeing is that these terrorist attacks have not had that much impact when it comes to the polls, and indeed by influence, what is going on with sterling. sterling has been beholding to the polls in a different sense. show how as the labour party has been doing better in recent weeks, recent days even, we have seen of oars weakness for sterling.
true when we had of course the pound weekend for the tories, so an inverse relationship if you will. it seems these terrorist attacks do not have a huge political implication running into that thursday poll. side: i suppose the other you could look at in terms of risk appetite, you are getting ing dynamic with global stocks hitting record high after record high or it at the same time, you are seeing this play out when it comes to treasury yields. the u.s. 10 year falling to the lowest since november. not a lot of appetite. you can see that gap in november, it looks like a double top as well. be seeing a signal of lower rates ahead after that nonfarm's number. there is some question as to
on his the fed continues trajectory of another to hikes this year. do we just get one instead? in the asian session, we see this playing out when it comes aussiestrain bonds, the 10-year tracking its u.s. counterpart in that friday's session, yields slipping to a seven-month low as well. we are 30 minutes away from the open in china and hong kong. singapore, taiwan, malaysia coming online. marketswe don't see all tracking those gains from wall street on friday. sophie: we had quite a weekend when it came to trading this monday. in asia, we have some traction, about .2% higher for the taiex. the asx 200 leading the drag in asia, down point 1% with banks and energy shares the biggest drag. we are seeing that slip in treasury yields as well as oil
falling to november lows. we have seen the yen holding near a two-point five-week high, dragging on japanese stocks. losses are also deepening on the kospi, down .3%. a risk off sentiment on this monday. outt for traders to look for. the policy under pressure, down .2% ahead of an rba policy decision and gdp report. in the bond space, we are not seeing signs of fear in the aussie on's face him at the 10 year falling to a seven-month low, and a drop in 30 year yields as well. space to look at the g-20 as we highlighted earlier, you were focusing on what is going on with the u.k. with the election on june 8, and we did have the pound react somewhat this morning in early asian trade, but paring its earlier drop, now down .2%.
the mexican peso in focus, down .4%, this as a key state election is considered too close to call. with singapore online, i want to show you noble group shares in the lion city after sliding 5.4% on friday. we are seeing it unchanged on the open, but we'll take a look at the stock later today. in stock has lost over 75% may. take a look at what else is happening beyond singapore. stocks fell on his 14% in new york on friday, extending the drop there for noble to 83%, sending shares to their lowest in nearly 17 years, this as noble group is asking vendors to extend its credit financing. i want to pull up the board to show you elsewhere this going on. share suspended from trading in shanghai, but this is how they closed on friday. the whole players are set to be
in merger talks. players are set to be in merger talks. rishaad: good one, sophie. we have an interview with j.p. morgan and jamie dimon coming up at noon. headlines, aws word of caution for beijing coming from camera via singapore. canberra via singapore. yuan malcolm malcolm turnbull said smaller nations could bound together in the face of a bully. >> a co-worst of china would find its neighbors rescinding demands they cede their autonomy and strategic space and look to counterweight beijing's power by bolstering alliances and partnerships between themselves and especially with united
states. the pboc is committed to plotting a neutral policy course according to one of its deputy governors. speaking at a conference in beijing, the bank said it will continue to neither loose nor tight monetary policy in order to ensure stable liquidity. his comments, mid of drive to reduce financial leverage which has sparked concern of excessive tightening. drawn up a $10 billion supplementary budget to help meet the president's drive to boost jobs and wages. if passed, the government will billion for $4 jobs, the majority in the public sector. south korea is struggling with youth unemployment. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.
haidi: thank you. claim of been the responsibility for the terror attack in london. at death toll now stands seven. we are following events in london. what is the latest that we have? >> islamic state has claimed responsibility for the attack. it saw the election campaign halted for a second time. broken byruce seen theresa may as she addressed the country from her downing street residence, getting tougher on topping the rhetoric as she vowed to seek wide ranging policies to combat terrorism. this is the third attack in as many months, so it is something that will be at the forefront of voters minds as the into the polling booth is thursday.
exactly how it will impact the election remains to be seen. rishaad: people getting back to work this monday morning. situation?security how different will things be around town, london, and also the rest of britain? upsecurity being stepped around the iconic bridges of london, where the last two attacks have taken place, so london bridge still closed. police across the city, a site we have not seen in decades. police officers in london typically don't carry guns. more likely, we have seen 12 people rested, four properties arrested, for properties raided. hospitals reporting 48 injured, 21 in critical condition as they
continue to receive care. london bridge station for commuters is still closed, expected to open at 5:00 a.m. in the morning in time for the commute. large transport hub that brings a lot of people in from the suburbs in the southeast of england. rishaad: thank you. let's have a look at what is going on elsewhere in the world. china's biggest coal miner in talks to merge with one of the biggest coal-fired generators. they are in preliminary discussions to strike a deal with the potential $267 billion. our asia energy editor's with me now with the details. >> good morning. last night, we saw a couple of units listed in shanghai issuing a request for a trading halt. there have been discussions between the parent company, the china, coal producer in also a large power producer, and a very large power producer, the
second-biggest n. be huge is going to benefits between such a large coal miner and power producer. this fits into a lot of plans that have been thrown about recently of trying to get some of these power producers together. we have seen combinations proposed of power producers, coal generators, power producers , so this is the latest combination proposed in the xi jinping reshuffle. this is the latest in terms , butnsolidation for s oez is it meaningful in terms of the ship away from coal policy? >> exactly. one of the things that the government is trying to do is reduce the overcapacity and the use of coal in power generation and other industries. this rationalizes the cold
supply into the power sector and helps -- coal supply into the power sector and helps the government put a cap on a says capacity and production and help limit the supply into the system. we reported earlier that there orht be other merger talks other possible mergers between these power companies and coal producers. the first be one of one across a broader industry shakeup that could not only bring the industry in line, but help the government to reduce its use of coal overall in china, which is the world's largest reduce her and consumer. an interesting recent development which china becoming the leaders tackling climate change. thank you so much for that. policyhead, china's yuan
haidi: a quick check of the business flash headlines. foxconn chairman says apple and amazon are supporting his suit of toshiba's flash memory chip unit. have offeredwo financial support for the bid, the first time the foxconn boss has confirmed his interest in buying the unit. japanese authorities wanted domestic letter to step forward to prevent the technology from going abroad. rishaad: toshiba struggling division agreeing to a
three contract with the boilermakers union running coveringo may 2020, 172 employees who will return to work on monday. no details have been released as of yet. haidi: toyama to has confirmed has confirmed it has sold all its holdings in tesla. the company confirms the end of their collaboration for the time being. it bought a stake in 2010 to introduce green cars in the u.s. they developed electric vehicles in canada, but the relationship soured amid culture clashes and recalls. the latest u.s. jobs numbers on friday disappointing, raising doubts about the fed rate hike path, or does it? -- on theexecutive one hand, let's get a view to what is going on. numbers much weaker than
anticipated. a we reading too much into this? >> i think so. they are quite determined to hike rates again. given also the fiscal policy. rishaad: what fiscal policy? >> exactly. if the fed says we will wait for better things, and in between we a path thattensibly will push rates up in any case, it ishe fed might appear keeping back. i don't think that is a good idea. rishaad: it makes that fiscal program more expensive ironically. >> it does. the fed cannot possibly say what ever the fed is doing will push up interest rates, therefore we will hold back and see what happens. this is fiscal policy come in the other is monetary policy, and they are meant to be independent.
we will be squeezed once by higher fiscal deficit, and squeezed twice by higher fed funds. that is my starter for a monday. rishaad: we have not got into full swing yet. is, do fundamentals necessarily mean they should be raising rates? the second part is, or is it being done to give themselves more firepower looking ahead? >> you make me sound like an economist. what a horrible thought. it has to be both. the fed has already hiked twice. they cannot possibly be seen to stop. perhaps until they have possibly hiked twice to the end of the year. now is as good as any time because we have june, july, no fed meetings in august, then we
are pushing into september. in other words, it is for another quarter. it is a mixture of psychological and a female macho thing on the part of janet yellen and also some macros thrown in. how much risk are you assigning to the possibility or even the likelihood of further adventures from trump's white house. we have that tantrum a couple of weeks ago, and now james comey is testifying this week. marketct this will be a that remains pretty sanguine about everything that happens on capitol hill? >> apparently so, to the extent i am delighted now that we tend to ignore trump. it's like saying children in the playground are noisy but not in real mischief, because reality has taken a bite. -- and thes yes
answer is yes. the worst thing you can do to trump's ignore him. he will not go away, but he would lows it. progress is taking place. i like the five tweets he did following the sad terrorist attack in london, one about standing by the british, and the other four was how good he was with the travel ban. it doesn't make a great deal of sense. we will talk more about that. in the meantime, more in just one moment. this is bloomberg. ♪
warning investors to stay away from the hong kong property market here it how far are we away from the crash you are predicting? thatoblem number one is it's going to rain, going to rain, then finally it rains and i say, told you so. i have been concerned for two years, but it has not happened. there were two ways in which it would happen, people would wake up and find out that property is overpriced, that property sector equities are significantly expensive. there would be all kinds of reasons in which property will appear unattractive. what is happening, which for me is much more significant in that it has not happened so far, are you with me so far? the peg cannot change. china says it will.
the peg stays. if the peg stays come interest rates in hong kong go up. what ever the banks and money market tells you to do. competing, and that's why they're keeping interest rates down as far as mortgages are concerned. the hong kong dollar has gone into a weak trend, and the gap between the hibor and the fed funds is widening. it looks like the fed will increase interest rates. people say interest rates really don't matter. they don't really affect the property sector in hong kong. i'm going to sake a deep breath and say oh, really? the reason is we have five years of's deepening negative real interest rates, and that has been a huge boost. i'm not convinced it does not really affect. now you don't need to have
interest rates to 20%. all you need is to have a clear trend that interest rates will continue to be up. the hong kong dollar is weak, and therefore the monetary authorities are up. saying ishat you are that in a housing market already unaffordable, it will become more unaffordable when interest rate payments come up. it's not reflective of property stocks. this is showing a correlation between the hang seng and the property index within the hang seng because of the waiting -- weighting. property stocks are looking reasonable in terms of their price-to-earnings ratio, but that does not reflect the property market itself, or is it complacency? >> i am eating incredibly -- being disingenuous.
the markets are already telling you they are cheap. if they were very expensive, they would say prices have been put up. if something is cheap, there is a reason why it is cheap. the same when it is expensive. i will stick my neck out and say they are cheap because they should not be expensive given what is likely to happen. also, in the case of the housing , and i'm quoting bloomberg , tencent accounts for 17% of the index value. steeply up ormove down your respective of what is happening in the property sectors. we are having h-shares and related to the property sector. when i look at the two things together, i'm not going to simply jump and say you are absolutely right, properties are too expensive or cheap.
the first trading day of the week. i couple of companies we are watching. -- a couple of companies we are watching at the moment. we are live from bloomberg's asia headquarters. i am haidi lun in sydney. we are watching some of these related companies, the companies listed in shanghai that have requested a trading halt, but hong kong listed units were informed in that friday session. we are hearing about potential merger talks between a top coal
company and one of the biggest coal generators, a massive sle at -- soesle merger merger as they try to consolidate the sector. it's share price up over 21% in premarket. let's get to the open proper as hong kong and shanghai get underway. sophie: a mixed bag when it comes to chinese stocks. point 1% after rising .1% on friday, but we do have the shenzhen rising .2 5%, and h-shares on the up, tracking that gain on the hang seng, rising for a third straight day. the surge we have seen in the yuan is a positive for chinese stocks in hong kong.
the pboc set the daily fix at 6.7 935, stronger than friday. taking a look elsewhere in the region come the nikkei 225 swinging into the green ever so slight the. i want to point out what is going on with the taiex in taipei, up .3%, one of the biggest gainers in the region, tech heavy gainer of 3% this year, and taiwan saying production of semiconductor equipment will top $1.3 billion. you guys were talking about those coal players in china given reported talks of a potential merger. take a look at the shares listed in hong kong. up over 17% at the open, 2.6%, also on the rise here 4.27% as companies are said to be in merger talks. the shanghai listed shares are
suspended from trading. elsewhere in the region, seoul, korea, the share price swinging on its first day of trade following a restructuring. surging after a jump in same-store sales. goldman sachs sees continued strength in the apparels the vision. -- apparels division. let's get to first word news headlines. haslinda: theresa may will seek new terror powers if she wins this week's election. speaking after this saturday night rampage, she said there has been too much tolerance of extremism in the u.k. dead andk left seven 21 critically injured. 12 have been arrested. the election campaign has been suspended for a second time and also halted after the attack in manchester last month.
defense officials calling for greater security cooperation to counter the growing threat of extremist linked to the so-called islamic state militant group. the need to contain terrorist activity was high on the agenda at a three-day shangri-la dialogue in singapore. it came with the philippines fighting militants and news of terror attacks in london. the world bank has maintained its outlook for the global economy, forecasting a modest pickup despite uncertainty about monetary policy and rising protectionism. 2.7ees expansion of percent, rising to 2.9% next. the bank said manufacturing and trade are picking up, confidence improving, and financing conditions remain benign. hiring andys promoting women is something japan could consider. social policyons chief gives prime minister shinzo abe bay credit for trying
to raise the state of women in the workforce, but more needs to be done, especially in the private sector. japan's business culture is traditionally male-dominated, but the labor shortage means it needs more workers. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thanks for that. on friday, a disappointing u.s. jobs report raised doubts about the fed's ability to hike as much as expected this year come also another leg up in the u.s. bond market rally, the focus shifting to political risks in the u.k. and u.s. and global central-bank action. let's get it over to kathleen hays for more. these terrible events in london over the weekend, does it change market positioning ahead of the general election on thursday? >> we can say this for sure. fed meeting, the
jobs report, all important, but the general election that would have been a global market focus at any rate now has perhaps on heightened -- or have's heightened uncertainty after the london attack. don't forget james comey is also testifying this week, so again economic risks, fed risks, more politics and geopolitics. we have to look at the bond market and the report itself to get some of the details. let's do that. the june payrolls did fall short. revisedd may were lower. let's jump into the bloomberg and look at #1977, the white line, you can see the swings in the growth of jobs and see how the last month's tilting lower. the pink line is that
three-month moving average. if you go from a third of the way from the right of your screen, you can see momentum is definitely slowing. beyond that, let's take a look at unemployment. unemployment fell to 4.3%, at 16 year low. did that boost wages and reassure the fed that wages will rise and inflation will rise too? u.s. paychecks on a year-over-year rate are still stagnant. let's jump into the bloomberg # 189, the yellow line is unemployment, falling and falling since the great recession. however, even though average hourly earnings have recovered from dismally low levels, they were nowhere near where they were before the financial crisis , and they have leveled out again. as our bloomberg news story said on friday, looking at this report, it looks like the u.s. job market may have lost its mojo.
the federal reserve is still focused on the fact that even at an average of 160,000 jobs in pluse, down from 200,000 last year, still strong enough to keep the labor market tightening. we were talking all last week about just how ugly that nonfarm's number would have to be for it to change fed expectations. what does this mean for the fed and the bond market rally we are seeing spread to australia with the 10 year yield falling to a seven-month low? >> who would have said last year , six months ago, that the fed would be on track for three interest rate increases and bonds would be in rally mode again? very few. think about the june rate hike. they are not expected to step back from that. soft inflation numbers, a failure of unemployment to drive wages higher, they think that is
temporary and will happen, just wait and see them ultimately it will. let's jump into the bloomberg and look at world interest rate projections wirp . that is seen as a done deal. what is called into question is the odd of a september hike. over to the right, the last couple of sets of columns, you can see a number around 27%, not too much conviction there. when it comes to the bond rally, weekendndler over the writing that when he looks at the technicals, he does not see too much standing in the way of a further rally in the 10 year note, in the bond market overall. he says it could be heading towards 2%. again, pretty stunning given that the fed is in rate hiking mode, isn't it? rishaad: we have political risks as well, not least the u.k., the election on thursday, and
terrible it and send recent days, and james comey in the u.s. testifying, so no doubt a big factor in the bond markets. >> the fact of the matter is anotherjust saw explosive rally in the bond market after the jobs report, so it is not as though traders are waiting to gun that gas pedal again and by bonds, but if you are a bond trader, a currency trader, think of brexit i summer. this is not brexit. the snap election is not exist come and nevertheless that people have and a wondering how much follow tilde they will see early in the week. beyond that, the fbi director will testify. house apparently still reviewing whether there is any reason to invoke executive privilege to stop him from testifying, but that will also be at potential headline house apparentlyproducing kindm markets to be watching.
let's don't forget comes central banks. come on. we have to watch that. we have the reserve bank of india, the reserve bank of australia, and thursday when james comey is testifying and people are going to the polls in the u.k., the ecb will meet, traders waiting to see if mario draghi will start talking about reducing bond purchases as early as september, so the central banks will give us something to watch. if you are watching, all the politics, thate is what will be occupying a lot of attention. haidi: thank you for that. rishaad: coming up, our next guest believes the rally has some way to go. we are talking fx with standard chartered. that is on the way. this is bloomberg. ♪
hong kong. the latest business flash headlines. china investment corp. has agreed to buy blackstone's european logistics business, $13.8 billion. it would be the region's biggest ever real estate deal. icor has warehouses across europe and the u.k.. warren buffett is about to start his annual private lunch auction, aiming to raise more money for a homeless charity and san francisco. last year's winner paid almost 3.5 million dollars, tying the record in 2012. buffett has raised $24 million for the foundation since 2000. taking another
step towards affordable spaceflight, sending a recycled rocket to the international space station. was liftedcapsule into orbit by a falcon nine rocket from the kennedy space center in florida that had previously supplied laboratory in 2014. elon musk treating it is starting to feel normal to reuse rockets. good. that is how it is for cars and planes. fx next guest is the asia strategist at standard chartered. he is here with me now. we are seeing this strength come in. this is not something that is organic. there is something behind it. what is the motivation behind the strengthening in the yuan at the moment? >> the first key motivation has therewith the fact that was the moody's downgraded shock the market. the fact they loud it to
appreciate is sending a warning signal to the market that they don't want people to speculate. they are using this as a chance to basically allow the yuan to change expectations a bit. markets have been caught in a did creation -- in a depreciation cycle. they are trying to do this while the dollar is still weak. rishaad: why do it now in particular? are theyoody's, but trying to cover up for other trouble down the line? >> in terms of our views for china economic growth, q1 has peaked, q2 and q3 are a slowdown. rishaad: 6.5% is not really a slowdown ultimately. a country now entering into middle income terrain. >> it is a slow down from q1. we are trying to say this is not a hard landing, but still a slowdown. they are trying to manage market expectations and more don't want
this to two lead into a negative cycle. they are trying to stem this while they can. basically the dollar is helping them, weaker, so they can use this dollar weakness to allow the yuan to appreciate. it looks weird with the dollar and the cny weak as well. haidi: we have some breaking news. we are expecting china pmi numbers, the composite number at 51.5, picking up from 51.2 in april, and the may number when it comes to services, 52.8, quite a pick up from 51.5 in april, so certainly may china caixin pmi data suggesting rebalancing, looking at smaller
midsize private companies in china adding to the picture we got from the official pmi number , manufacturing services, both in better than expected, those out about five days ago. going back to the topic at hand , what aboutthe yuan this mysterious countercyclical adjustment mechanism that the pboc has been talking about, does this make the yuan less market oriented? >> i agree. what we have seen is the introduction allowing way more room for there to the elements in the fixing. it becomes a lot less transparent. however, it is not necessarily a step back in terms of internationalization. if you look at it, the one thing getwatching is what if you more volatility in spot rate? volatility and the spot rate is something you want in the longer term.
if china moves towards a free float. this is not a step back as many people think. atdi: are you still looking usd-cny as the sentiment driver for the yuan? if you look at the basket, it is telling a different story. >> i think markets are still focused on the dollar-see ny rate. we should focus on the basket, but it takes time to just -- i just. the cny basket has been falling a bit. rishaad: i will bring up a chart #6612 that should reflect this, this diversions. that is the point you're trying to allude to, right? haidi: yes, that's right. what are we watching essentially? we are seeing is basically a diversions in the cny-cnh.
we don't think that will be maintained. we think there is a range the pboc is where he of. they will not allow that to break. probably the more important thing to see here is that dollar-cny is gaining ground as the anchor. rishaad: the big thing is where the dollar goes next. ultimately that will be key. tell me about that. >> i think markets came in thinking the dollar would be stronger. rishaad: everybody thought there would be a stimulus package by now. but it's been 10 on the ground and details -- it has been thin on the ground in terms of details. fridayink the numbers on were strong enough to still mean the fed will be hiking in june. there is a question of what will happen in 2018. rishaad: even odds for a
september high cap gone down. >> we think there is room for another hike after june this year. that will be three hikes in 2017. the question is how many and 2018. i think markets are pulling back in terms that fed rate hike expectation. rishaad: people say don't look dollarling against the into what is happening in the u.k. with tragic events of the weekend, but look at the pound against the euro in particular as we head into that election on thursday. >> we are seeing the pound has been under pressure given a events. on the other side, there is talk about the ecb balance sheet to do so the euro macy's support near-term, and that may be better in terms of looking for upside. rishaad: thank you so much for coming. right, let's tell you about what we have coming up. , chief executive
rishaad: i am rishaad salamat in hong kong. haidi: i am haidi lun in sydney. the head of standard chartered spoke exclusively to bloomberg stephen engle in beijing. he said political challenges are the biggest risk to the global economy. what happens with brexit, what happens with the trump administration's approach to paris or trade agreements and so on, these are the big risks
businesses face. >> how significant is this election coming up? >> it makes the outcome of the brexit negotiations more .npredictable i think if we have some sort of coalition government going forward, it becomes harder to work out what will happen. that will translate into implications for businesses. businesses hate uncertainty, and you will see business sitting on their hands saying we will hold off on investment on the big decisions while we look for a little bit of clarity as to what will happen. ando think there will be acrimonious negotiation with the eu? i thinkad truth is that it will be difficult to avoid an
acrimonious negotiation. stakeis a lot of money at , and a lot of principles on both sides. on the eu side, you have to get agreement among all the other 27 members of the eu, all of whom have their own priorities and issues. a will be difficult within short timeframe, less than two years, to get agreement on all these things. a real prospect of what people to a hard brexit, not because people have aimed for it, but because getting to a compromise is more difficult than getting to a position of extreme. have talked about the resiliency of london and the light of this recent terror attack it is the golden age ending, the banking system? we have banks looking at headcounts on the continent. is london's banking edge ending? city ofnk london, the
london, will be one of the bits of the u.k. economy that will find it perhaps easiest to adapt to brexit. yes, there will be some thousands of jobs that will move to other parts of the eu for clearing ofeuro derivatives and things like this, but london is a global financial center. it is much harder if you are a small or middle sized manufacturing business based in england working with parts suppliers or component suppliers in other parts of europe, taking advantage of the fact that at that moment there is a seamless integration in supply chains across europe. that is a much more difficult problem. sands they are speaking exclusively with bloomberg steve engle's and beijing. let's tell you what we have coming up over the next 60 minutes.
says extremism has been tell rated for too long. -- tolerated for too long. rishaad: terrorism is said to be the leading threat in 2017. haidi: there could be a deal where 267 billion dollars is in talks. we are looking at politics. secretary -- we have the defense secretary in sydney today. there are other counterparts here in australia talking about some of these geopolitical risks in the region. we have heard about the prime turnbull, lastlm week, saying australia needs to do more to rein in terrorism. take a look at the chart. 1957, you have to wonder if this is going to come up in these
conversations. it is quite clear, if you take a look at the white line, the percentage of gdp, the u.s. is outstanding -- outspending china and australia. this goes to the heart of what president trump has been going on about, the divisive comments he has made to partners thing certain nato numbers have not been paying their fair share when it comes to defense spending. certainly we will be watching, even that we have these remarks over the weekend, the shangri-la dialogue. morning of the possibility of chinese aggression, we've had the stepped-up military presence in the south china sea. rishaad: he really wants them to mid to 2% of their gdp being spent on the fence. many of them have not been able to get there. let's get to what is going on
with the trading positions so far. we're pretty much in the red. ,> major benchmarks in asia sydney and soul down. when it comes to emerging markets, we are seeing them climb for a third day. drag ineeing the shanghai deepened when it comes to chinese markets. pmi is nots supporting sentiment. merging currency against a slightly weaker dollar. 680 for around the fourth straight day. pretty much in line with what was predicted. take a look at the barn space.
asian bonds tracking that move higher, and we saw the treasury is given a softer jobs report out of the united states, also seeing gold and the yen going up to dance been -- gains. i just want to show you what is going on with the town in the d in thethe -- the poun wake of the terror attack. we are also looking at the euro at 11271 against the dollar. morgan stanley turning bullish against the common currency for the first time since the gnc. aussie,ook at the raising the days losses. there was a first order gdp update. in hong kong, we're seeing a lot of them in shares for companies related to marker stocks. quoddy in tech surging the most,
shenhua surging. one of the power giants said to be considered for a merger was shenhua when these merger talks first began. haidi: that will be a massive deal. we're waiting to hear more confirmation that these talks are ongoing and if they will lead to a merger. let's get to first word news. sir malcolm turnbull has warned china that it will not be that -- that it's regional neighbors will not be pushed around. >> a coercive china would find its neighbors resenting demands and strategic space and the two counterweight beijing's power by bolstering alliances and
partnerships between themselves and especially with the united states. tothe pboc is committed putting a neutral policy course according to someone. the bank will continue to implement "neither lose nor tight" policy in order to enjoy stable liquidity. these comments come as policy makers are reducing financial leverage. drawn up a $10 billion supplementary budget to help meet present needs to boost jobs and wages. the government will spend almost $4 billion of the package on 86,000 new jobs, the vast majority in the public sector. south korea is struggling with rising used unemployment. 18-29s rates for those
was 20% in april. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪ haidi: terrorism topped the agenda at the shangri-la security conference where officials urged a counter to the growing threat in the region. david, given these events of the weekend, yet another tragedy, how did the crowd react at the form? the tragedy in london was overnight on saturday, which was after the speech that secretary mattress gave. sunday, it was focused on them message he had, which was one that the united states would remain engaged in asia, which a lot of people are worried about. it does seem the elephant in the
room, or not in the room, was donald trump. i had a singapore with the defense minister for six -- defense minister for singapore afterward. like the messenger, he praised mattis and rex tillerson. the one person he do not bring up was donald trump. the truth is, here in asia, people are very worried about donald trump because they don't understand what he actually believes in. when you look at what he does, pulls out of the paris climate accord. everybody was talking about how america's economic position have been weakened because donald trump pulled out of tpp. another, the defense minister has up me was yes, trump into the world order when it comes to international trade, but who is the only country
offering any decent initiative when it comes to economics? china. road, he told me singapore absolutely is. place, andt put into it could change the trajectory of asian growth and economics and good growth is the bedrock of security. some messages coming through about southeast asia and their intent was regarded terrorism. what about china? david: one is interesting speeches, and has led to was malcolmking about it, turnbull saying we can no longer rely on the great powers. he's talking about american engagement. he says smaller countries need to band together, and that is what we saw happen. trilateral controls ,eginning in the sulu sea
bordered by the philippines and malaysia and indonesia. these countries are extremely worried that these unregulated seas will be used as a conduit for terrorists getting into places like the southern philippines. patrol going to try a later this month. said heapore minister was happy to include many countries, but china was left off the list. he was very noncommittal. if chinarn is that gets involved in the patrols, it will try to legitimize its own territorial claims, as we have seen the china navy do around the atolls in the south china sea. it uses its navy and coast guard as a way of asserting its civilian rights and therefore it's sovereign rights over areas
of disputed territory. that makes asian countries extremely uneasy. rishaad: absolutely. the events over the weekend in of chieft must be interest at a conference such as this one. david: yes, of course. the reason why they are having these patrols in the sulu sea is precisely to combat terrorism and piracy. piracy is something terrorists used to fund themselves. there is a string -- is an extremely big concern that terrorists are going into countries in asia. we've seen it in the philippines come up we've seen islamic state bombings in indonesia and bangkok. there is a huge concern that these countries will be infected by these returning fighters. there is also extreme concern in
local groups, which are becoming radicalized and even more about these lone wolf killers. these individuals have become radicalized and carry out their operations. it is a huge problem, which is being recognized here in asia, southeast asia and particular. you see these countries are actually doing an unprecedented joint effort to step this out. they realize they cannot do it on their own. rishaad: thank you very much. looking at what we have on the ands and our interview with him a little later on. haidi: next, the movie industry in china. robert simmons joins us in beijing. this is bloomberg. ♪
♪ rishaad: let's take a look at the latest business flash headlines. that as it looks to increase its share of the payments market. it is any for fifth of india's estimated $6 billion smart cities payment market by the end of next year. blackrock is set to offer support at around $1 billion. using a lot,l be buying groceries, that has opened up fantastic opportunity to grow significantly before we become profitable. looking too are not far away, first or second
quarter of 2019. haidi: apple and amazon are supporting a pursuit of the toshiba memory chip unit. the two have also offered financial support for the bid. y haves the first time the confirmed interest in buying the unit. to hollywood. "wonder woman" has given a boost to warner bros.. millionjust over $100 in its debut. inptain underpants" come second -- came in second. warner bros. has been banking on wonder woman after its last couple of releases have been by critics.ed
haidi: there may be reasons for optimism in china's box office. last month, ticket sales recorded the first consecutive in any appeared is this a bounce or a meaningful recovery? it is a meaningful recovery. last year was a bit of a dip down, but these are cyclical things. you need to have a good slate of movies coming out, and it seems like in the first quarter of china, the movie industry is rebounding. my't take money -- no take robert's.take the industry is rebounding. is it a cyclical recovery and doesn't have legs? robert: in china? stephen: yes. robert: when you look the
success of furious eight. you look at movies like kung fu chan films.e chan movieackie coming out. we are feeling like it will do incredible business here. here and elsewhere, we are in good shape. stephen: how does your model -- how is your model working? you go for the sweet spot in to $40, the $20 million million range. robert: six major studios were making fewer but more expensive films. they were pushing toward large
franchise films, which left a vacuum in the middle we could make a movie with a star in a signature role for $40 million and have it work really well. we have built a robust slate should we will do about 12 movies this year. all with major global stars. it is a star in a signature role. it is a slightly different model than what the majors are doing, but we very much believe in it. stephen: you also have an exclusive partnership for distribution and all the other backend things are getting a movie appeared -- getting a movie out. i interviewed the founder, he said he wanted to renew and expand. the agreement expires next year. are you in negotiations right now? robert: they have been spectacular partners. when we formed stx, we wanted china to be part of the dna of
the company. instead of just being one of those countries trying to reach a hand into china, we want to reach into very large markets. ultimately, if you have both america and china, you have about 80% of the market that matters. pg, and incubated atabout p one of china's largest equity firms. so we have been really, really --essed with making sure really obsessed with making sure our partners are smarter than we are, more connected than we are some and making sure we do everything right. they have been integral part of that. i think ifour partners are smare are, more connected than we are some anything, our success has been because we have the right partners did stephen: have you see expansion going forward for the partnership? robert: we have 20 some odd
movies and tv shows in the pipeline. we have become the biggest provider of the are -- vr content to google and facebook. we are doing all of this other stuff and want to get into gaming. if a major, global branded star what's to bess wants to connect with the audience, it is important we have that in for structure in place. stephen: how is your fundraising for the slate of films you want to do? is an ipo in the cards? robert: we have a lot of options right now. that would be a really good option. that would be a really good option. goal is to have access to even more capital. we are fully funded to do everything we need to do. having access to capital that would allow us to expand more
aggressively is i think every ceo string. stephen: do you think now that negotiations are beginning between china and the united states, will go up to 34 or beyond? robert: that feels like the direction of things. stephen: thank you so much for your time. we have so much more coming on the jpmorgan summit, including the chairman himself, jamie dimon, in about two hours. exclusivef course, interview there, noon hong kong time. up, the challenges facing china trying to balance the forces of protectionism and globalization. more from j.p. morgan chase on the way. this is bloomberg. ♪
♪ jpmorgan kicks off its annual summit in beijing today. asiamorgan chase vice-chairman said china is entering an era of global leadership. >> china on the one hand does have to protect its domestic interest, it's corporations and enterprises. on the other hand, china also knows it's companies need to go global. so linked to the rest of the world these days, there is no way china can pull bank -- pull back from globalization. >> but debt fueled growth is not an economic role model. >> we all know that. indeed, the chinese economy has been charting a new course. but we have some concerns. china's gdp is 280%.
going forward, would think after the 19th party congress, the process had to begin, especially among state owned enterprises. >> how about china moving beyond the rhetoric and talk and opening market access? europe, they want access in europe, but europeans are wary of the chinese dumping into their market without reciprocal access tech here. what kind of market access -- and i know jpmorgan wants better access on the securities front. what walls need to come down in china? >> i think the service industry is front and center, on the minds of many global institutions. the service industry includes the financial services sector. we would like china to open up banking, insurance, securities and also markets in general. >> are they going to do it? >> i think they are doing it one
step at a time. everything is happening a steady pace. nothing is going to happen overnight, over the next five to 10 years, we believe the chinese capital market will be open to global institutions. >> what signal is the people's bank of china sending it out what has been reported to be the countercyclical factors into the daily fixing rate, which a lot of people say, this is more control by authorities of the rate -- yo one uan-dollar rate. i think it is meant to refine the rate. >> not control? >> i think the leadership wants to weigh -- two way fluctuation. to the: looking lunchtime break in tokyo,
♪ it is 10:29 in singapore. the u.k. prime minister theresa may will seek new anti-terror powers. speaking after the attack in said there has been to much taller some of extremism and the u.k. the election campaign has been suspended for a second time. it was also halted after the attack in manchester. calling for greater security corporation to counter the growing threat of extremists linked to the so-called islamic state militant group. the need to contain terrorist
activity was high on the agenda in singapore. the meeting came with the philippines fighting militants and renewed terror attacks in london. the world bank has maintained its outlook for the global economy, forecasting a modest .utput it sees expansion of 2.7% this year, rising to 2.9% next year. the bank says manufacturing and trade are picking up, confidence is improving, and financing conditions remain benign. anda's biggest coal miner one of its biggest coal-fired power generators are said to be talking about a merger. negotiations are at an early stage and may not succeed. the hong kong listed units of the state owned companies say they have been notified by the parents of significant matters come a while subsidiaries in
shanghai have requested a trading halt. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thank you so much for that. we are looking at a mixed picture when it comes to the first session of the week. one of the biggest movers is the australian tenure on yield falling to a seven-month low, tracking that bond rally in the u.s. 10 year following that disappointing jobs number. two keyooking ahead to releases, the rba decision on tuesday, widely expected to keep rates on hold at 1.5%. these expectations that they will put through a rate cut by the end of the year have doubled in the last month. stillstill only 20%, but worth looking at. 71, 26 years without a
recession, can we continue down that track? there are a lot of headwinds. we also have concerns over whether china will hold up the demand side of growth. all strain gdp this wednesday expected to be a bit sluggish. rishaad: absolutely. interest rates under pressure to go down that there. the property markets seen as the biggest tumbling block there. it is the other story in the u.s., week economic data in the form of the nonfarm payrolls report adding to this on to rally, shoving yields down further, 2.15% on the 10 year. you can see that on this chart earlier inthe gap
november 2016. another, i capr has to be filled, and we are filling it at the moment. what happens next? market, thehe bond equities market, what are they telling us? let's find out what is going on when it comes to the market action in the here and now. sophie: we did see the yen holding gains. it is giving us a mixed picture when it comes to japanese markets, closing out the morning session, the nikkei 225 up .1%, while the topix is on the back foot here. the gauge of small caps in japan is set for its highest close on record. there is a question between the correlation between the yen and japanese stocks being tested. we do have a hung saying reversing earlier gains, down 2015falling away from a
high. h-shares also on the decline with the shanghai composite. on the china market front, morgan stanley raising its 12 month forecast for the msci china index, as well as hong kong stocks, citing that stronger yuan. morgan stanley sing the climbing to 28,000 by the year end. they also see the h-sure gauge rising to 11,600, so the preference for banks and telcos relative to utilities. we do have utilities on the back foot, down .5% along with industrial banking stocks, down .3%, but property stocks on the rise come up .2%. we do have the hong kong government saying prices in ,pril exceeded the 1997 peak 89%. let's break it down by movers in
hong kong. taking a look at the laggards in the region, insurers leading the drag. flipsidelook at the when it comes to who is leading , china on hindsight energy of three point 8% come extending gains, jumping on reports that its parent company is in merger talks. rishaad: thank you for that. trump, beingent criticized for his response to the london terror attack's in the immediate aftermath. giving grounds for his so-called travel ban, and then later managed to break london's muslim mayor. quick to react on twitter here, very quick. >> even before the incident had been regarded as a terror attack. it was right after we knew about
the incident. the first thing he said was the travel ban, then the comments about the london mayor. this is not in gracia it in him with european leaders after he went through from the paris accord and there were other comments made during his european trip her. rishaad: he doesn't seem to react in terms of his tweets at least, james comey is the next thing he can look forward to in this testimony in congress, big issue for trump. >> yes, thursday schedule testimony before the senate intelligence committee in a public session, then a private session with committee members talking about the investigation into russian meddling in the election, and of course james comey's firing in may by president trump. i we expecting any progress when it comes to the policy front and what congress will be able to push for this week? a question.lways
given the level of distraction president's actions and congress itself looking at other things rather than policy, it is hard to see policy will be much of a discussion on the agenda instead of the investigation. haidi: thank you so much for that. ceo of standard chartered says there is too much debt in china, a familiar refrain. he expects more rigorous controls after this year's communist party congress. there is clearly too much abt in china, but i am not believer in the view that you should just put the brakes on in a sudden way. i think that would create more problems. china has to navigate a out of itsf growing
debt. i would anticipate you will see probably more rigorous controls following the 19th party congress. fundamentally what i would not want to underestimate, these challenges, i am still positive about the economic prospects. >> what leads you to that confidence? >> i am spending a lot of time in the states at the moment, and you can hear some very negative of onions about china is going to blow up with some sort of debt bubble, banking crisis, and so forth i don't see that happening. it could happen, but it would require policy mistakes i don't think are going to happen. there will be bumps and issues, and there is the opportunity in a sense to get it badly wrong. i don't think china's policymakers will. , i knowformer banker they are intervening in the currency markets, but are they a manipulator?
thisve added countercyclical factor that economists are saying it is the hand firmer on the tiller at a time when they are talking about liberalizing the exchange market. >> there is an element where they are exerting a greater degree of control i think the idea though that you are either a manipulator or you have totally free foreign-exchange markets is a bit of an illusion. china has done is strengthened its tools by which it can do that. i don't think it is manipulating the market. >> what opportunities do you see with the belt and road, and how will it be paid for? >> those are two different questions. question, one belt, one road is an interesting opportunity, particularly in a time when the u.s. appears to be stepping back from global leadership, for china to exert influence in really quite a
creative and different way. the question of how it all gets paid for his a very good question because of course everybody else wants someone else to pay for it. will havey is china to pay for a chunk of it because china is the initiator and the single most powerful economic entity. rishaad: some very big news ining out concerning events the gulf cooperation council, saudi arabia has cut diplomatic r, coming hot on bahrain doingh the same with the dough hot. oha.ill be -- doug that is something being done in tandem with what is going on with this move was saudi arabia.
the back ofng off criticism in recent days of saudi arabia accusing the qataris of helping to ferment and uprising and more conflict within bahrain, where it is ruled by a sunni monarchy. this is what they have at the moment. some of the implications of all this, this does create a schism with the gulf cooperation council.here it -- indeed, the mission in by her rain has been given 48 hours to leave. andill shut its airspace, waters into qatar as well. qatar has 14 days to leave her .ain -- bahrain saudi arabia following suit. the qatari that
rishaad: right. it tensions in the middle east. normally we mean israel and somebody else, but this time within the arab world. we were reporting about saudi arabia cutting diplomatic ties with qatar. bahrain has done this already. we are now talking about each of doing the same thing as it cuts to format it times with doha, shutting down crossings. doing likewise.
it doesn't have a land crossing, but does have a narrow bridge there as well or it egypt doing that. oileaction when it comes to prices. as slight move upward, but not much else at the moment. againstcutting ties this backdrop of accusations that the current regime in cairo blaming the muslim brotherhood and the previous incumbents of leadership there are being propped up by the qataris. that is some of the diplomatic background. topline, saudi arabia, egypt, and bahrain have cut the medic ties with qatar. -- cut diplomatic ties with qatar. ♪ u.s. andright australian bonds rallied as hiring came in below estimates on friday.
let's get more on the outlook and investment strategy. give us a broad-based view of what is going on. weekson't think the last number will derail the markets. that is another rate hike in june, pretty much intact. the hurdle to not hike rates is much higher. i think the question is after the june fomc meeting whether the language regarding the balance sheet, whether there will be a pause until december, that is more interesting rather than just looking at the -- rishaad: odds for september are lengthening. >> i think the consensus is that there will be a pause in september, then another hike in december, depending on the data
and the economic numbers. at the moment, the soft employment number one not derail the decision. rishaad: ok. what about what we have been seeing with the 10 year yield? we have had a bond rally once again. that doesn't happen often traditionally. why do we have this divorce from the previous normality? >> if you look at the shape of the curve, the short end is reacting to the rate rise, but the long end is discounting the in the fomcsstep decision and also because of the reflationary story losing steam because of the political noise in the u.s. whether the current president -- too things to be used
boost economic growth -- there are no details, no tax cuts, nothing at the moment. pushed torything is 2018, any tax cuts, any positive implications will become in 2019 , so that is why the long end of the curve is being pushed down. rishaad: are we seeing a pause or is there some concern at the start of some sort of disinflationary type effect because were not getting policies pushed through, or is there the case that there is still liquidity and global markets and they need somewhere to go, which is why you're seeing a rally in bonds and equities. mentioned, the u.s. underlying economic situation is quite healthy. lasteek employment number week, we think that is a soft patch rather than a significant
situation to derail the economic growth in the u.s.. the tax cuts and other reflationary measures will accelerate and amplify what is already a strong underlying economic recovery in the u.s. the private deleveraging cycle has stopped, so we expected the private sector to increase, which will help consumption. we think the rate at the moment is discounting not just the economic situation, but the so thes i mentioned, sur short end of the curve is reacting to this. ask you about china. i will start with sovereign notes. the yield on the 10 year has jumped 100 basis points since august. are we headed towards some sort of significant credit event in beijing, or will we keep a lid on that? curve inversion in
china is more technical than fundamental. i don't believe it is a sign there is a recession or hard landing in china. especially on the seven-year side, there is a spike. in seven do hedging years, but the short length futures are going higher, so we don't think there is a risk of recession in china at the moment. rishaad: thank you so much for coming in. right, let's say what we have coming up, india's second-biggest digital wallet seeing good times ahead. we talked of the ceo and hear about his ambitions. that is on the way. ♪
by users, merchants. we added more than one million merchants since demonetization. we are adding 10,000 more mom stores every day through our workforce and adding more than 4 million users every month, so it is just six celebrating. >> you are aiming to become profitable life april 2018, are you on track? >> we were before demonetization happened, but after demonetization, it is clear the market we were at imagining for digital payments, for financial services, is that these 20 times or 30 times bigger than what we were imagining, because people were not using mobikwik a lot for paying at the street on the road for buying groceries or buying train tickets, so that has opened up big opportunities to grow significantly before you become profitable, so we may not
get there by april 2018, but certainly we are not too far away from the first or second quarter. >> how is your series b funding going? >> it is going well p are we have a lot of interests, both strategic and financial investors. , quitethe investors close to the investing class, one of the largest companies in india. with their help, we are looking to transform our business from payments into complete financial services bank, so we want to become india's first consumer fintech brand. >> when can we expect an announcement on that? >> it is in the closing stages and we should expect an announcement by june. >> how does the rejection of mobikwik affect your business?
today, we realized the solution in india is not to open yet another bank the consumer wants simple payment options, simple user experience, and a bundling of financial products into the same app which the current banks are unable to solve. all the approaches are to not become another bank through our approaches to partner with existing banks and financial institutions, give them and their users our solution so that it becomes a win-win. boss speaking to shery ahn in hong kong. updating us on the big stories of the day. veringe, you been co events in the gcc. angie: definitely following that
story, also some big names, the ceo of fortescue, j.p. morgan china, an exclusive one-on-one, and commits the collapse of , how is he powering through. also out of beijing, another exclusive. china's one belt, one road helping to move that along, and a possible tie up between the andest coal miner in china one of china's largest coal-fired power generators. this is bloomberg. ♪
angie: i am angie lau. david: we are in the middle of the first trading session of the week. welcome to "bloomberg markets: asia." ♪ angie: the arab world is facing a historic split with saudi arabia, egypt, and bahrain all cutting ties with qatar. morgan stanley has raised its 12 month forecast for the index.
among the days winners, rising for a seventh day, building on a 23 year high. generators top power and coal miner discussing a $267 billion merger. it is breaking news out of the middle east as the united arab immigrants now joining along with saudi arabia and bahrain in cutting ties with qatar as tensions surface on alleged comments that cast qatar against the rest of the gcc, so we have you a joining saudi arabia and bahrain in cutting all ties with qatar, so we are watching that story closely. sky, water, and land crossings will be seized with qatar, so that is very significant for that region.
david, what else are you watching? david: absolutely. they are giving their qatari diplomatic mission about 48 hours to it essentially leave the country. markets across the region, a soft start to the week, the philippines 1.5 percent. over all, lower on the benchmark , pull down by australia .8%. banks, financials, energy and the mining stocks in that order pulling back. volume's are quite flat. assets, theoss dollar offered up against asian the way up, the yen stronger, and as you can see, green across the board, yields following treasuries on friday, pulling back across the board in the asia-pacific. have a look at the mexican peso.
we are also falling developments, key elections there, looking close to call it the moment. a notable weakening in the mexican peso. the dollar story and this follow-on move across the bond markets. my chart right here come at the 10 year yield and blue, and the austrian 10 year yield and white. we are basically back to levels right at the u.s. elections. that being said, what you want to follow here as well is the spread between the two. the spread has been falling. at the moment, 21 basis points between the two. the trend will hold and we will see yields down in australia falling quicker than what we are seeing across treasury markets. under pressure, but not under a whole lot in light of the events of the weekend. where are we now?
david: a tight trading range in sterling. 128 is right at the midpoint of range.y's trading basisange is about 50 or points. and take awatch out step back, here is your range and asia. london opens up, i expect this range to widen. it gives you a sense of what happens to which asset as these financial markets open up. london represented by the green line. gap lower this morning, and that's where we are at on sterling. let's see how things play out.
in the meantime, here is your first word news. arab world is facing a historic split with saudi arabia, the uae, bahrain, and egypt cutting ties to qatar. land and air borders with doha are to the shutdown. there is a significant worsening of relations in the middle east, the traditional sunni states have become intolerant of qatar alliance with iran and its support for the muslim brotherhood. the u.k. prime minister theresa seek new anti-terror powers if she wins the election. been too much has tolerance of extremism in the u.k.. the attack left seven dead and 21 critically injured. 12 people have so far been a less did. -- been arrested. the political campaign has been
halted for a second time. defense officials calling for greater security cooperation to counter extremists linked to isis. the need to contain terrorist activity was high on the agenda at a three-day shangri-la dialogue in singapore. it came with the philippines fighting militants and the news of the terror attacks in london. china's biggest coal miner and one of its biggest coal-fired power generators are sent to be talking about a merger. areces say the negotiations at an early stage and may not proceed. of hong kong listed units state owned companies say they have been notified by the parents of "significant matters" while subsidiaries in shanghai have requested trading halts. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. angie: iron ore has been in retreat since peaking near $95
in mid-february, part because of china slowing economy and partially because of beijing's trying to curb leverage. stephenur correspondent engle is in beijing. how is this pullback weighing on miners? >> absolutely. to our guest, the ceo of fortescue metals, 90% of their iron ore goes to the china market. thanks a lot. you and i were watching what is unfolding in the middle east. i know it is not your purview and don't sell iron ore to the middle east, but how d.c. the how challenges right now -- do you see the risk challenges right now? how you read the volatility right now? >> absolutely. world trade flows are really important to us, stability and
markets, financial markets are critically important, so any shocks like this have the ability to affect our markets generally as well. i guess from what we have seen out of the middle east in recent times, anything that creates instability is not a good thing for global trade and global politics. >> i know you don't comment specifically on iron ore prices, but they have been coming off oil. there seems to be a decoupling. #911 two, andt, iron ore prices. beenseem long to have brothers in arms, but are now decoupling. what is happening here? steel and rebar going up, but iron ore below $60? -- we havea scene seen a significant change in
that relationship driven predominantly by supply-side reform interventions in the chinese coal production market, and more recently in the steel production, particularly with the impact on induction furnaces. induction furnishes -- furnaces typically make rebar. as they have been shut down, it has created a shortage of rebar and incentivize mills to produce the maximum amount they can. that has driven them towards using high-grade iron ores, and we have seen the iron ore complex open up quite significantly. the margins being made in rebar at the moment we don't believe are wrong -- long-term. as production comes in, we will see those margins come back to normal and the iron ore market return with it. of yourdering 90% market is china, had you see the supply-demand balance right now?
most say the economy has peaked in the first quarter, how are you seeing the demand when big global producers are ramping up production like vale in brazil. >> demand in china has been strong. 5% overowing at about last year, so the demand side is good. ist happened in iron ore that we had oversupply. when the market goes into oversupply, that's why we saw the price overshoot on the upside, and now we are seeing the price come back to more sustainable levels. i think the issue for us as an atustry are the stockpiles the chinese ports, and we need to see this reduced slowly overtime to ensure there are no shocks to the industry. >> do think iron ore prices will still be lower by the end of the year? it seems like there is more precious on prices -- pressures
on prices? >> in the short-term, there is because of that overhang of port stocks. no one said -- should be surprised to see iron ore come back to around $65. $95 was the aberration and driven by the supply side reform actions. as these stocks come down, that will keep a lid on prices, but once things returned to normal, we should see a trade somewhere where the global supply curve is. >> how does the global environment affect your cows cutting -- cost-cutting efforts, and paying down debt, which has been a big emphasis? >> our strategy has been clear, to be low-cost so that we are able to trade through these sorts of volatility that we see in the market. we have been able to use her cash flows to prepay debt.
we have repaid $2.7 billion this 30%, the debt now around and a net-net around 22%. we will stay focused on that. we still have some work to do restructuring our balance sheet and an the next priority will be investing in our iron ore business. >> i don't mean to be disrespectful when i say you guys are a one trick pony, so when are you going to diversify and look at the opportunities, copper, lithium, when is the time to diversify? >> there is no problem at all being a one trick pony. is a goodron ore play commodity to be in right now. having said that, we are creating low-cost strategic options for the business, most of that is grassroots expiration -- exploration and low cost
entry. we are interested and looking at anywhere where we can create significant upside value, particular through exploration. belt and road accelerates those economies, means using steel and iron ore in their developments. deal to take a minority stake all. are you taking a look at other partners right now? product is our blended in the chinese markets. what we were looking at was to put an upstream blending crosson -- process in as a service to our customers. toyet, we have not been able find a suitable partner to do that upstream, therefore a continues to be done at the ports and at our customers. >> nothing imminent right now? >> nothing on the horizon.
the ceo of fortescue metals, like i promise, jamie dimon coming up in less than an hour. back to you guys. david: right, thanks for that. just to give you an update. the mexican peso, some headlines reflect the current political situation. that is a big drop. .0, quite sharp you do have to consider when you look at ancient that there is a lack of liquidity that could be exacerbating these moves. have a look at a longer-term chart. there you go. is a broader sort of weaker u.s.-dollar store. ahead, is hong
david: welcome back. this is "bloomberg markets: asia." angie: the quick check of your business flash headlines. nuclear unitgling has reached a deal with workers to end a two-week walkout in new hampshire. westinghouse electric has agreed to a three-year contract with the boilermakers union through may 2020, covering 170 two employees who will return to work on monday. the details of the agreement have not been released. david: toyota has confirmed it has sold all its holdings in tesla, a 1.4 percent stake in the carmaker as of last july, but the company confirms the end of their collaboration.
bought a stake in 2010 to introduce green cars in the united states. amidelationship soured culture clashes and recalls. buyinglogicor blackstone's european business in the region's biggest ever real estate deal. logicor has warehouses across europe, including france, germany, and the u.k. cic already owns 4.6 of lack stone. david: let's talk about potential deals. big one,d be a very the biggest coal miner in china in talks to merge with one of fireation's largest coal power generators. it is seeking to strike a deal worth roughly $270 billion. angie: if it happens.
now.are in talks right our asia energy editor is here with the details. why are they doing this? jinping's government is trying to restructure state on companies and cut back production. there are a few strategic industries that they need to keep a tight control on. you have the world's largest coal producing company and a very large power producer, they have been moving these pieces around the board, discussing how they can get these power producersand coal hooking up, even bringing in nuclear producers to bring gat r greater control on the power industry. the country produces more power than it needs. they have a look a lot right now. is coal production, it is the world's largest coal producer and consumer. they both have power.
it makes sense to bring these bring somer to help control and brass in relation to two industries that have a lot of overcapacity. david: we have a chart that shows this #6907. the blue line is the normalized share price. that spike toward september, november last year, this is when they shut down and limited the output of the minds. -- mines. how does this fit in to cutting further? >> what we saw in the second half of the last year, when they on reduction. cap one of the things not background was the huge debt piles these coal miners had. rather than bailing them out with cash come on reduction. one of the things not background it would be easier to cut back production and raised the price of coal to help pay back some debt to
banks. that was the first step in stabilizing the industry. that, ites go up like is bad for power producers who get hit on the other end of that. the government is trying to figure out the sweet spot for coal prices so both sides of the industry can find themselves in a better position. on top of that, they are trying coalt back on the overall burning in china. right now, it accounts for two thirds of primary energy production. they want that below 60 by the end of the decade. they want to slow the growth and political act little bit in terms of how much is used. you get to companies like this backactually have to cut on power plants, getting them together to coordinate that would go a long way. angie: how has this change from earlier plans?
secondly, how does this differ from china's reforms? >> the way these state owned enterprises have been going recently, there has been activity from the state-owned enterprises themselves rather than regulators top-down saying your company does this, your company does that. it appears they are getting input from the state owned enterprises. just a month ago, there was talk of taking eight of these power companies and bringing them together to form three giant power companies. one combination have this company with another company at that time. ,hose investors were not happy shares were down maybe 5%, 6%. some sort of talk or speculation or discussion on the ground between different mergers, but they seem to move quite quickly when the regulators get involved or other
state owned enterprises step up with their own proposals about how they can work together to achieve fit goals that xi jinping's government has set for them. david: thank you very much. coming up next, fleshing out the details of this breaking news. a saudi led alliance cutting their ties with qatar. that is next. this is bloomberg. ♪
it is a major, major step. if you look at the scale of integration between qatar and its golf fears, they have -- peers, they have always tried to create something like the european union. that you have heavyweights like saudi arabia cutting ties across sea, land, and air, that will reverberate around the world. it is not just what is happening in terms of why lateral trade. it is also global cooperation on issues like terrorism. where does all this come from. it started a few weeks ago when president donald trump this is you saw this global counterterrorism operation and widespread campaign, and off the back of that, the gulf felt that qatar was not telling the same line in terms of taking a clear stance against iran. what followed was a huge media campaign against qatar across
newspapers and media outlets isolating qatar, saying they are not living up to the responsibilities, and now this latest development, the diplomatic escalation, a step that is going to have significant impact on markets as well. david: i guess on that note, i'm looking at my function, a percentage of the overall production of opec. from theng at 2% country in terms of output. i'm wondering if there will be any sort of implications as far as compliance with the recent agreement to extend those cuts? .> there might the ultimately if you don't have diplomatic ties, it will be more difficult to cooperate. not say significantly to expect in the moves there. to keep pricess at a level to guarantee revenue.
haslinda: it is 11:9 in singapore. these of the latest first word news. the australian prime minister malcolm turnbull has warned china that it will not be pushed around. speaking at the shangri-la's summit, he said smaller nations could band together in the face of a bully. would find of china its neighbors recent think demands they see to their autonomy and strategic space. and look to counterweight beijing's power by bolstering alliances and partnerships between themselves and especially with united states. the pboc is committed
to plotting a neutral policy course according to one of its japanese governors. speaking in beijing, he said the pursue- bank will neither loosen or tight policy to ensure stable liquidity. reducemons come to national leverage concerned with excessive tightening. quotasd says monetary for hiring and promoting women is something japan could consider. the organization social policy chief gives shinzo abe credit for attempting to raise the status of women in the workforce, but says more needs to be done, especially the private sector. business culture is traditionally male-dominated, but the labor shortage means it needs additional workers. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. sophie: investors in asia cannot
ignore geopolitics this week. asian stocks slumping as on's climb, the yen is fluctuating, giving some divergence in tokyo. 1%, while the up topix is heading in the other direction. for theve jitters british pound after the london terror attack. bouncing aftero the results of a key state election indicate the pri candidate is ahead. gold holding near a six-week high at 1280. we are in a turbulent environment with the potential for more. we had a saudi legco attention -- saudi led coalition cutting ties with qatar. water ass treading opec's unity could be tested. a quick look at asian equities
markets, emerging markets on the sydney,la up 1.5%, but korea, down .5%. new investors digesting this mixed market day, that weaker than expected jobs report out of the u.s. and what it means for the fed rate hike potentially june 14. i want to dive into the #9084, the measure of the unemployment rate. , the at a really good low lowest unemployment rate in a decade, but let's look at the broader measure. this is the so-called underemployment rate, which includes those without jobs and unsuccessful, but or involuntarily working part-time to make ends meet. that stands at 8.6%. this is the gauge that janet yellen says she monitors ahead
of any fed rate decision. in fact, this ratio is higher than in the past, and analysts figure we will keep tropical in coming months -- dropping in coming months, although slowly. words, we arer getting more slack there. have a look at the dollar to give you a sense of where we are. sophie was taking us through the nuts and bolts of asian fx. this is your cold november dream for you guns and roses fans out there. coming back down, your bloomberg dollar index at the lowest level since the pre-u.s. election low. 1194 is the current level. next step is that yellow line, a triple bottom if you will. angie: more now on our top story, saudi arabia, egypt, and tiesin, and uae cutting
with qatar. what's going on there? the four countries have decided to close the borders, airspace, and territorial waters to basically all qataris. they have to leave those countries. this is a dramatic escalation from a much more than what we have seen in the past. there was a withdrawal of ambassadors from these countries , but they were able to patch up their differences behind closed doors. right now, the statements in the last hour, they were very aggressive, the uae specifically, talking about how qatar's supporting terrorist groups and trying to destabilize the region. it is part of an escalation that started a week ago with the
alledge it hacking of the qatari news agency. is breaking the unity of this gulf cooperation council, very wealthy and oil and natural gas as well. david: absolutely. at the moment, we are looking at four arab countries, saudi , the uae, andn egypt. is there any potential we could see this grow? >> sorry? david: is there any indication that we could see a grow from four countries to even more? this, toscalation from be honest, it is unclear. , it is quite an life is proceeding as normal, but the closing of the border is something that i can't recall from memory. you would probably have to go
back to world war ii to see that happening. prices, increase food and increase in significantly because qatar is a small state surrounded by much stronger ones. it will escalate into violence, but you never know in this region. david: absolutely. thank you for joining us with the breaking news, now 40 minutes back, the saudi let coalition cutting ties with qatar. angie: let's head back to the j.p. morgan china summit, stephen ingles is there with the chairman of one of the most profitable transport systems in the world. what opportunity does he see in asia and further afield? >> let's put that question right to our next guest. npr corporation , hong kong-based, railways, retail, a great model that has
worked so well for so long. there is a retail downturn in hong kong. is that model being tested right now? for having me on your program. our business model is one of rail and property. on the rail side, we not only operate, but build rail systems in hong kong and outside of hong kong. on the property's side, that value capture model allows us to build shopping centers above and over our stations and depots. when you look at our businesses, i recur and, which takes away the non-recurring property development part, that , so still decent growth and are recurrent profitability in 2016. when you look at our businesses in 2017, a key aspect would be our rail transportation. in hong kong, our passenger
volumes from january to april this year, and we put out a passenger numbers every month, that was up 3.2%. railwaypen to new extensions at the end of last year. >> i want to talk about property. a lot of people are concerned we inflatediting the levels of pre-handover, the crash then triggered by the asian financial crisis. fundamentalsferent now, but prices have surpassed 1997. we had that big $3 billion commercial parking lot in hong kong. is hong kong to frothy, and is there a risk of a crash? developing 18,000 residential properties for sale in hong kong. we have seen volumes in the primary residential market move up in the last few months.
we have also seen prices stabilize over the past few trnths, so we from an m perspective will be put into the market 18,000 units. was your reaction when moody's downgraded china and consequently hong kong and mtr corporation and that downgrade? >> how others look at the up toign and mtr would be moody's to have their own views. perspective, a strong balance sheet, low leverage ratios, a very strong recurrent profitability, and the property development we just mentioned. on top of that, there is significant growth opportunities for mtr in hong kong and outside of hong kong, so we are excited about the future. number of subway
lines here in beijing come in the u.k., and stockholm. years, what percentage of revenue will come outside your core market? andf you look at our profit loss account, one third of our topline revenue came from our businesses outside of hong kong. years, those few businesses will continue to expand. for instance, we were part of the consortium that one southwest trains in the u.k.. we start operating that in august this year. there are many opportunities of a similar nature. we are active in australia, here on the mainland of china. at the belt and wrote summit, your chairman talked about hoping to team up with crc for the kuala lumpur, singapore high-speed rail.
but we have had conflicting reports in the media and the crc that that is not necessarily the case. will you be jointly bidding with the chinese for that high-speed rail? moue are honored to sign an with crc. they operate 22,000 kilometers in the mainland of china, more than anyone anywhere else in the world, so we are honored to be a potential partner of theirs through this mou. in any aspect where we could be working together, we would like to work together with crc, looking at opportunities in high-speed rail outside the mainland of china, so we would explore opportunities with them, particularly if they would like us to participate. >> you think you will be a better? r? bidde >> that is still early days per we will have to wait and see if
crc wants us to work with them on that. >> china has been pushing belt and road and kuala lumpur-singapore as an extension of belt and road as well, that would be your first real project and southeast asia and the health and road. what projects are you aiming to take advantage of with the infrastructure and with the aiib ? >> in many of these belt and road countries, particularly southeast asia, many countries and many cities, they are already and have been building out their metro rail network, so for us, our strategy for the health and road, at least in the medium-term, would be to focus on what i would call the softer side. on that, we the end of last year established the mtr academy to work with and provide training for colleagues from belt and road countries and their rail
companies. opening andm getting into operation, and even after they have opened, to see if we can help from that software perspective. >> i have ask about the high-speed link to southern china from hong kong. it has been delayed and there have been cost overruns, but it is commissioned to start third quarter 2018. it is going to happen? >> the high-speed rail is so exciting. , 90% complete2018 now, more than 90% complete. third quarter 2018 is when the trgh-speed rail link from an m perspective would be completed and put into operation. be very exciting. it would do so much for hong kong and the community and businesses. >> i'm waiting for the invitation.
we will go deep underground and do a live report if we can get a signal from that tunnel. >> i will take you down there. >> back to you guys. david: good one. coming up, joined exclusively by jamie dimon from j.p. morgan chase at 12 noon hong kong, 1:00 p.m. at of tokyo. coming up, president trump suggests the london terror attack's strengthens his case for a travel ban. reaction to all of that next. this is bloomberg. ♪
angie: this is "bloomberg markets: asia." i am angie lau. have a quick look at the business flash headlines. foxconn chairman says apple and amazon are supporting his pursuit of toshiba's flash memory chip unit. the two have have also offered financial support for the bid. the first time the foxconn
boss has confirmed his interest in buying the unit. japanese authorities wanted domestic bidder to step forward to prevent it from going abroad. angie: warren buffett aiming to raise more money for a homeless charity in san francisco. it starts at 7:30 p.m. pacific time. it runs through friday. typically the big it's come towards the end. last year's winner paid almost $3.5 million, tying the record set by the 2012. buffett has raised $24 million for the foundation. david: spacex has taken another step to more affordable of a, sending a recycled rocket to the international space station. the dragon capsule was lifted into orbit by a falcon nine rocket from the kennedy space center in florida. it previously supplied the laboratory in 2014. elon musk tweeted it is starting
to be normal to reuse rockets. good that is how it is for cars and planes. angie: the recycling continues. has been trump criticized for his response to the london terror attacks in the immediate aftermath. he tweeted the incident in which seven people were killed gave grounds for his so-called travel ban, then later berated london's mayor. trump was very quick to react on twitter. >> that's right. he reacted to the event before it was announced it was believed to have been a terror attack. it had just become clear what had happened. so he is using this to try to further his will see agenda in terms of the travel ban, then the remarks about the london mayor were made as a way to presumably attack that and say we are serious about terrorism in our country.
angie: taken a little out of context. but the reaction is important. obviously he did not sign on to the paris accord on friday, and earlier there had been some tensions at the meetings there, so this is futile by european leaders has another we of 10 distancing himself from them. david: another one this week domestically is james comey's testimony. isthe former fbi director scheduled to testify before the senate intelligence committee thursday in public, and then in private with the committee members. it is a big day. this will be the first time he will have testified in the investigation into whether russia tampered with last year's presidential election. he willhat you think focus on, russia, or trump's comments on the investigation itself? >> he has been fired. he took notes apparently right as longtimeetings,
fbi people do, so one assumes he could say things. angie: what about his credibility after he has been fired? >> he is an fbi director and a so he isfbi person, viewed as someone who is trusted in washington. you can bet there will be very intense questioning by members of the senate intelligence committee on both sides of the iop or david: when will that be? >> this thursday. there was some talk last week whether the trump administration would try to have that put off or not occur, but that would be difficult not to do. bese comments would have to made in private, not public. it is unlikely to happen, although, stay tuned. angie: stay tuned indeed. monitoring that for us. thank you. david: let's look at oil prices in the wake of the news that for
record high on friday, that pairing that come in right now falling. asian equities retreating from a two-year high, focusing on that weaker u.s. jobs data. david: midweek, the r.b.i. with its decision. let's move things along. mobikwik has set its sights on becoming india's first global fintech brand. comes first.growth >> we are seeing fantastic growth month over month. users and merchants, we already added more than one million merchants since the monetization and accelerating. momre adding 10,000 more and pop stores every day. we are adding more than 4 million users every month. it is just accelerating. >> you were aiming to become
profitable by 2018 april. are you on track? >> we were before demonetization happen, but after demonetization, it is clear that the markets we were imagining for digital payments for financial services is at least 20 times or 30 times bigger than what he were a matching before demonetization. people were not using mobikwik a lot for paying at the street come on the road, buying groceries are buying train so that has., opened up fantastic, big opportunities to grow significantly before you become profitable, so we may not get there and april 2018, but certainly we are not looking too far away from the first or second quarter of 2019. >> how is your series e funding going? >> it is going well. we have a lot of interest from
strategic and financial investors. one of the investors, quite close to investing, is actually the largest companies in india, and they are looking to transform our business from payments to a complete financial services rand. so we want to become india's first consumer fintech brand. >> when can we expect an announcement? >> it is in the closing stages. we should expect an announcement by the end of june. back theb.i. has given license and rejected mobikwik. how has that affected your business? >> we are thankful in some way. the solution in india is not to open another bank. the consumer wants simple payment options, simple experience, and bundling of financial products and services into the same app, which the
current banks are not able to solve. our approach is not to become another bank, but to partner with the existing banks and financial institutions to work closely with them, give them and their users our solution so that it becomes a win-win. angie: that was the ceo of mobikwik. the markets, new zealand close, falling, also pressure on shanghai despite this merger speculation we are watching. falling on yen strength. ,he kospi gaining fractionally a $10 billion supplementary budget for moon jae-in. big one, getting the job machine up and running hopefully. the only onetimes seeing some pressure and
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